Adex Mining Inc. has released the results of a mineral resource estimate of the north zone of Mount Pleasant, 80 kilometres south of Fredericton in the Canadian province of New Brunswick. The report showed 10.88 million tonnes of tin-indium-zinc based on sample analysis and geologic projections and another 7.6 million tonnes of the resources from projections alone.
Based on "back of envelope calculations," the company said the partially sample-based resources estimates could be worth about $900 million and the projected resources could be worth $600 million.
"The results from our drill program, a 43-101 compliant mineral resource estimate, has not only significantly increased the size of the resource but it also has upgraded the quality of the resource," Adex president and chief executive Kabir Ahmed said. A 1997 report had estimated 3.65 million tonnes of resources in the north zone.
"Because of the dramatic increase in the size of the resource we have most likely increased the economic viability of this project," Ahmed said.
But Adex is holding back on development given the current low metal prices and tight credit markets.
"We are sort of taking a wait-and-see approach," Ahmed said. "The moment we see a revival of metal prices and a relaxing of the capital markets we would then proceed to feasibility, because feasibility would cost anywhere between three and five million dollars."
He said a 20 to 30 per cent increase on the current prices would be enough incentive to move ahead.
Tin is currently trading just under $11 per kilogram on the London Metal Exchange but last spring was at a high of $26 per kilogram. Indium is currently trading at around $300 per kilogram but was at about $700 per kilogram last spring.
When Adex came up with the $1.5 billion estimation it was based on a $12 per kilogram tin price and a $500 per kilogram indium price, which the company believed to be conservative given the prices were $17 and $675, respectively, at the time.
Though current prices are below Adex's estimates University of New Brunswick economic geology professor David Lentz said the company had the right approach considering "metal prices are still fluctuating much more than they ever have before."
Once prices increase to a stable level again, Adex's first course of action will be to have an economic assessment done to provide a more scientific estimate. In December Adex announced the results of a similar assessment of its Fire Tower zone, also at Mount Pleasant. That zone was said to have 13.5 million tonnes of resources, mainly tungsten, worth $1 billion over a thirteen year mine life.
Australian mining company BHP Billiton Ltd. (NYSE:ADR) had extracted a tonne of tungsten from the Fire Tower zone in the 1980s, but stopped mining because of low prices. Adex bought the Mount Pleasant site in 1997 and looked to mine the north zone as well.
With a possible $2.5 billion in resources Lentz said Adex is well positioned.
"It's not money in the bank but it's wealth in the ground," he said. "When we compare this world wide, Mount Pleasant is a very significant resource. One of the biggest indium resources in the world."
"We're looking at something that is going to be economically viable in high times and low times," Lentz said.
Indium is used in plasma, LCD and touch screens as well as solar panels, where as most of the other resources under Adex's land, like tin and tungsten, are used in various construction materials.
Source: Saint John Telegraph-Journal, Canada
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