March 26, 2008
Adex Mining Inc.
Interview on Business@Night
CFRA AM 580 News Talk Radio (CHUM Radio Ottawa)
GREG HEBERT: The Mid-Week Mining segment takes us to New Brunswick this week for an update on the exploration activities at Adex Mining. Joining us now is Kabir Ahmed, President and CEO of Adex. Regular listeners will recognize his voice from a chat we had back in middle of the month of November, but since that time there have been quite a few developments at Adex to catch up on. So first off, Kabir, how are you today?
KABIR AHMED: I’m doing great - and thank you very much Greg for re-inviting me to your program.
HEBERT: Well, always a pleasure chatting with you, and there is certainly a lot to talk about, Kabir. This is a really exciting time for you company because it seems that a lot of your work in terms of getting to the testing and production stages is finally coming to fruition. Before we get into all the latest news, though, for those of our listeners who might have missed our last chat, maybe you can give a quick refresher on your operations in terms of your tungsten and molybdenum and base metals exploration.
AHMED: Sure, of course. Adex Mining trades under the symbol ADE on the TSX Venture Exchange. It owns the Mount Pleasant Mine property, which is located in southwestern New Brunswick. The property hosts four specific metals in two specific deposits. The first deposit, the Fire Tower Zone, hosts a very significant inferred resource estimate for tungsten and molybdenum, and was the site of a past producing mine between 1982 and 1985. The second zone, which is the North Zone, hosts significant mineralization for tin and indium. Now, all four of those metals are in great demand today. Tungsten and molybdenum are used primarily in the steel production industry, whereas tin and indium are used in the electronics manufacturing sector. Indium is being used as a thin-coat film for plasma-screen and LCD-flat-screen TVs.
HEBERT: Certainly all of these materials are highly in demand right now, whether you are talking about, as you mentioned, flat-screen display technology or the production of high grade alloys for pipeline materials. You’ve certainly got things that are in demand right about the world.
AHMED: Yes, and it’s interesting, Greg, that you mention molybdenum insofar as it being used in the composition of pipelines. It is also used as a key metal in desalination plants in California. As you know, there are severe water shortages, and desalination has been proposed as a solution to finding fresh drinking water supplies for the populations in those areas. Molybdenum is a very high strength metal which is also used to produce high strength alloys, especially pipelines and things of that nature, and it is also highly resistant to corrosion - and that is why there is a great demand for these metals. Just to give you an example, molybdenum currently trades at about US$30 a pound, while in 2004 it traded at US$4.50 a pound, so there has been significant price appreciation. In terms of future growth for molybdenum, according to the Roskill Report, which is a leading industry publication in the mining sector, growth is expected to rise five per cent per year. Eric Sprott of the Sprott Molybdenum Participation Corporation fund estimates, in fact, that the growth will be eight per cent per year. So just alone on the molybdenum aspect of our project, there is great demand and growth for the foreseeable future.
HEBERT: All right, so we’ve established why these materials are so valuable. Let’s talk about the Mount Pleasant property and how your company is trying to get those materials out of the ground. Now the last time we spoke, in November, we were talking about financing at Adex and how you were going to move forward with the next phase of testing and drilling. Since that time lots of things have happened, not the least significant of which is the commencement of drilling activity at the Mount Pleasant property. Tell us about all the latest news on that front.
AHMED: Well, we actually started drilling ahead of schedule. We started drilling in late February of this year. The purpose of the drill program is to serve two objectives. First of all, the drill program will have a portion of definition drilling which will allow us to upgrade the quality of the resource estimates for both the tungsten and molybdenum deposit and the tin and indium deposit to an indicated and measured category. That is significant because we need a minimum indicated and measured estimate in order to move the project forward to feasibility in the pathway to production. The second objective of the drill program is to do additional exploratory or exploration drilling, which basically enhances and increases the size of the mineralization at both deposit zones. The purpose of doing that is, of course, to increase the value of the project and to increase the mine life of any mine that we happen to develop on the property.
HEBERT: …And important to mention, something that I’m sure that we got to in our November chat but we haven’t talked about so far today, Kabir, is the fact that this is not a virgin property, as it were. In fact, it was previously owned and operated by BHP Billiton. So it’s not like you are starting right from square one here.
AHMED: Exactly. With regards to the tungsten and molybdenum zone, that was the site of a previously operating mine between 1982 and 85; almost a million tons of ore were milled at the site and a tungsten concentrate was produced as well as a molybdenum concentrate. So what we are looking at is not an exploration play; we’re looking at a company that is nearer production than perhaps our competitors are, because we are going to be reactivating the existing mine operations and facilities, as well as the infrastructure. Just to give you an example of why we think we are close to production, we have an existing tailings pond on our property which is fully permitted and has been granted an approval to operate by the provincial government (in November of 2007). What that means is that we are ready for production, whereas if we were to recreate the tailings pond today it would cost us a minimum of C$20 million and perhaps two to four years of regulatory and construction time. So we are basically at a finer and closer timeline to production than perhaps a virgin exploration property.
HEBERT: Now just as a side note, a few weeks back I had New Brunswick Premier Shawn Graham on the show talking about his efforts to really revitalize New Brunswick’s economy to try to attract ex-pat New Brunswick workers back to the province. In particular, he made mention of natural resources and the metal and mining industries and so forth. Obviously, the business environment in New Brunswick has kind of been given a shot in the arm here. Can you comment a bit on this and on doing business in New Brunswick and how much help you are getting from the province?
AHMED: I’ve met personally with the Honourable Premier Shawn Graham in Fredericton on a number of occasions, most recently in late November. He and his government have indicated that they believe mining is extremely critical for bringing the province of New Brunswick towards self-sufficiency by 2026. To date we’ve had a great deal of support from all members of his government, including the Department of Environment as well as the Department of Natural Resources. They have been guiding us and moving us forward with regards to the regulatory process, and they really believe that this project has the potential to create long-serving economic opportunities for the province, including the creation of new jobs when the mine is fully back into production.
HEBERT: Chatting with Kabir Ahmed, President and CEO of Adex Mining. All right Kabir, so we’ve established that you’ve got a proven property with testing well underway, and if everything goes according to plan a lot to be excited about. You’ve got your financial house in order, you’ve got the support of various levels of government and shareholders, and we’ve well established the demand for the materials you are harvesting. If everything goes according to expectations and hopes, what is the next big step that we can look forward to?
AHMED: The next big step is to complete the feasibility phase study for both deposits and to make sure we have an economically viable project at Mount Pleasant. Once we are able to fully commission the feasibility phase, we would then like to go back to the market to fully fund the development and production phase of the mine itself.
HEBERT: Let’s talk about the shareholders that I alluded to a moment ago. Now we know that junior mining shares have been beaten up a bit on the TSX Venture Exchange recently because of all the market volatility that we’ve been going through for the past six months or so. Obviously, when investors take a defensive position with their portfolios, the junior holdings typically are the first ones to suffer, and sometimes it’s kind of an unfair effect because the fundamental strength of your company is still there. Nothing’s really changed except for the surrounding market volatility. Do you have a message for your shareholders right now?
AHMED: Yes. The sub-prime mortgage problem that we see south of the border has perhaps spilled over to the Canadian market, but I think that is just a psychological knee-jerk response, and perhaps investors that face illiquidity in the financial services marketplace are trying to find liquidity in the much more robust mining sector. That’s why we are probably seeing a lot more selling in the mining sector than is really warranted. But as you mentioned, Greg, I believe the fundamentals in overseas demand for the metals generally that we are speaking about these days, and more particularly the four metals that are hosted at Mount Pleasant, remains very strong. India, China, Brazil, Russia, the Middle East, their plans for growth and development far exceed current levels, and as you can see more recently in India and China, their infrastructure development is a key priority for bringing those economies into the 21st century. And therefore all the metals, especially the base metals that we’re talking about, are going to be integral to the continued development of those overseas markets.
HEBERT: Certainly sounds, Kabir, like we will have to have you back on the program again in a couple of months time for an update on these operations, because despite some of the recent market volatility, which I think will be insignificant in the long run, there is a lot to be excited about at Adex Mining, and I wish you the best of luck with all of those drilling operations. In the meantime, I hope that the results live up to expectations and I look forward to having you back on the show for an update sometime soon.
AHMED: Thank you very much Greg - it was my pleasure to be on your program.