Adanac Molybdenum Corporation
TSX VENTURE : AUA
FRANKFURT : A9N

Adanac Molybdenum Corporation

April 07, 2006 16:59 ET

Adanac Moly Corp.: Feasibility Given Green Light for Ruby Creek Molybdenum Project, Atlin, B.C.

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - April 7, 2006) -

Mr. Larry W. Reaugh, President & CEO, Adanac Moly Corp. (TSX VENTURE:AUA)(FWB:A9N) ("Adanac"), is pleased to report successful completion of the feasibility for its Ruby Creek Molybdenum Project located near Atlin, B.C.

The result of the feasibility is positive, and Wardrop Engineering Inc. recommends continuing development through detailed engineering, which is set to commence during the 2nd quarter of 2006.

The feasibility is based on Golder Associates Ltd. updated Technical Report Mineral Resource Estimate for Ruby Creek Molybdenum Project prepared by Mr. Paul Palmer, P.Geo., P.Eng. (received February 8th, 2006), a qualified person in accordance with requirements described in the National Instrument NI 43-101 Standard of Disclosure for Mineral Projects.

The mineral resource estimate summary calculated using ordinary Kriging for feasibility (at cutoff grade of 0.04 % Mo):



Measured tonnes: 38.9 million at 0.079 % Mo
Indicated tonnes: 167.4 million at 0.059 % Mo
Total tonnes: 206.4 million at 0.063 % Mo


Of this, the mineable reserves are:



Proven tonnes: 38.9 million @ 0.077 % Mo
1.2 million @ 0.035 % Mo (stockpile)
Probable tonnes: 73.5 million @ 0.060 % Mo
30.1 million @ 0.034 % Mo (stockpile)
Total tonnes: 143.7 million @ 0.059 % Mo


The salient points of the study are drawn from work done by Golder Associates Ltd. (Golder), Wardrop Engineering Inc. (Wardrop), SGS-MinnovEX (MinnovEX) and Klohn Crippen Berger Consultants (Klohn).

Golder has developed a detailed mining evaluation, based on its geological model; geotechnical study completed in February 2006 and associated pit optimizations including economic pit shells. Their report was prepared by Kirk Rodgers, P.Eng., and Gordon Zurowski, P.Eng., independent qualified persons as defined by NI 43-101. Mr. Rodgers visited the Ruby Creek Property on June 21, 2005.

MinnovEX was contracted by ADANAC to do metallurgical test work for process simulations. Wardrop worked closely with MinnovEX to develop the process and infrastructure design. Wardrop's report was supervised and reviewed by Rick Alexander, P.Eng., an independent qualified person as defined by NI 43-101. Mr. Alexander visited the property on June 21, 2005.

Klohn successfully completed comprehensive site investigations and detailed designs for tailings dam, waste dumps and site water management. Klohn's report was prepared by Franky Li, MASc, P.Eng., and Howard D. Plewes, MSc, P.Eng., independent qualified persons as defined by NI 43-101. Mr. Plewes and Mr. Li visited the Ruby Creek property on June 22, 2005.

PROJECT SUMMARY

Mine Life: 21 years

Milling Rate: 20,000 tonnes per day

Strip Ratio: 0.95 (waste)/1.0 (ore)

Tonnage milled: 143.7 million tonnes, average grade 0.059 % Mo

Average Recovery: 89%

Molybdenum in concentrate: 75.9 million kilograms (167.4 million pounds)

Preproduction capital ($CDN): $434.4 million

The increase in pre-production capital is attributed to an accounting change which now books all pre-production mining costs as capital expenses rather than operating expense, and an increased working capital requirement.

Average operating cost ($CDN): Years 1-5, $11.61/tonne milled; Years 6-21, $8.05/tonne milled

The Ruby Creek ore is easily processed by using proven technologies to produce a premium quality MoS2 concentrate. Waste rock and tailings are mostly benign, and provision for sub-aqueous containment of any potentially acid generating waste rock is provided within tailings impoundment.

Electrical power for the project initially comes from on-site diesel generators. Replacement with grid electrical power is expecting by 2012.

To take advantage of the high metal price in the early years, an initial payback pit has been developed which will maximize Mo production in the first five years. The estimated metal production, operating cost, projected molybdenum prices and gross margins are summarized in the following table.



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TOTAL TOTAL PROJECTED
ANNUAL COST/ TOTAL PROJECTED GROSS
PRODUCTION TONNE COST/LB PRICE MARGINS
YEAR (LBS MO x 10(6)) ($CDN) MO ($US) ($US/LB MO) ($US/LB MO)
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2008 13.943 11.60 4.99 20 15.01
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2009 13.228 11.44 5.20 18 12.80
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2010 9.818 11.36 6.94 17 10.06
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2011 10.664 12.05 7.25 16 8.75
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2012 10.688 9.80 5.5 15 9.50
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In the long term, Mo prices are expected to revert toward US $8 per pound. A pretax economic model has been developed by Wardrop from the estimated costs and the open-pit production schedule. The base case has an internal rate of return of 24.42 per cent and a net present value of $222.2 million (CDN) at an 8 per cent discount rate for 21 year mine life. The payback of the initial capital is within three years. The comparative indicators for the base case and selected economic sensitivities are presented in the table below:



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PAYBACK
NPV at 8% PERIOD
CASE DESCRIPTION IRR% (CDN$ x 10(6)) (Years)
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Base Case 24.42 222.2 3.1
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Capital Cost (+15%) 18.66 164.8 4.0
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Capital Cost (-15%) 32.07 279.6 2.7
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Operating Cost (+15%) 19.62 135.0 3.5
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Operating Cost (-15%) 28.56 309.4 2.9
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Increase Mo Price by 5% 29.43 323.5 2.9
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Decrease Mo Price by 10% 10.49 19.7 4.4
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Grid Hydro Electric Power
Advance to Year 4-6 25.96 246.1 3.1
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Increase Head Grade by 15% 35.03 405.2 2.6
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Include Phase 5 Resources 24.26 223.5 3.1
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Replace SAG Mill with HPGR 28.85 305.1 2.9
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Include Phase 5 Resources using HPGR 28.57 308.4 2.9
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The potential head grade increase is based on a detailed drill hole-bulk sample comparison which was recorded in the results of work completed by former operator, Kerr Addison Mines Ltd., which is not compliant with current reporting standards. In the work bulk samples from underground development were significantly (20%) higher than results recorded from diamond drilling. Within the mineral resources, Phase 5 represents a potential mine expansion which could add 24.7 million tonnes grading 0.043 % Mo to the production schedule, and is economically marginal based on forecast long term Mo prices.

Mr. Rick Alexander, P.Eng., has reviewed this press release and concurs with the pretax economics as shown in the above table.

ADANAC through its consultants and contractors will continue to make every effort to develop the Ruby Creek project to minimize any long term environmental effects. The Company believes that substantial benefits will accrue to the Taku River Tlingit First Nations, local community and the Province.

The technical information contained in this press release is compiled by John W. Fisher, C.Eng., P.Eng., an independent qualified person as defined by NI 43-101. Mr. Fisher visited the Ruby Creek property on June 21, 2005.

On Behalf of Management

ADANAC MOLY CORP.

Larry W. Reaugh, President and Chief Executive Officer

The TSX-Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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