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Adanac Updates Ruby Creek Bankable Feasibility Study Costs

VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 10/22/08 -- Adanac Molybdenum Corporation ("Adanac or the Company") (TSX: AUA)(PINK SHEETS: AUAYF)(FRANKFURT: A9N) announces that it has updated capital and operating costs for its 100% owned Ruby Creek Molybdenum mine project in Northern British Columbia (the "Ruby Creek Project") to the end of the third quarter of 2008.

In addition to the Bankable Feasibility Study cost update, Adanac has examined an alternative plan of increasing the mine production rate from the December 2007 Bankable Feasibility Study throughput of 23,000 tonnes per day to 30,000 tonnes per day after production year three. The alternative plan's economic results are encouraging and are also provided in this news release.

Adanac is seeking project financing which the Company plans to be in place before the end of 2008.

The Ruby Creek Project, with a production rate of 23,000 tonnes per day, has an updated capital cost estimate of Cdn. $647 million and life of mine average annual site operating costs of US$9.75 per pound of Molybdenum (Mo), generating a Net Present Value (NPV) at an 8% discount rate of US$110 million and an Internal Rate of Return (IRR) before tax of 12.0%. The December 2007 Bankable Feasibility Study had a capital cost estimate of Cdn. $640 million and life of mine average annual site operating costs of US$7.41 per pound of Mo, generating an NPV (at an 8% discount rate) of US$295 million and an IRR of 18.9%.

Compared to the updated Bankable Feasibility Study costs the alternative 30,000 tonne plan, examined by Adanac, has the same initial capital cost of Cdn. $647 million, as well as the same permitting and production rate to the end of production year three. During the life of mine an additional US$45 million of sustaining capital is required. The alternative 30,000 tonne plan life of mine average annual site operating costs of US$7.63 per pound of Mo, generates an NPV (at an 8% discount rate) of US$387 million and an IRR of 19.8%.

Peter Jones, Adanac's Chairman and CEO, said, "The alternative 30,000 tonne plan is very attractive and warrants pursuing in detail." He went on to say, "The world economic situation is challenging but we are driving ahead with the most advanced primary Moly project in the world, which is permitted and ready to start construction immediately funding is available. We are currently in discussions with several potential strategic partners to arrange off-take agreements and a possible joint venture partnership. Based on the updated capital and operating costs, which reflect pre-ordered long-lead equipment at fixed prices and the alternative 30,000 tonne per day plan, the economics are very attractive and are not reflected in our current share price especially as we have de-risked the project and have identified several upside opportunities."

NI 43-101 and Exploration

The previously reported February 22, 2007 NI 43-101 Mineral Resources were used in the December 2007 Bankable Feasibility Study, the updated feasibility costs and the alternative 30,000 tonne plan. This Mineral Resource contains Measured and Indicated mineral resources, using a 0.04% Mo cut-off grade, of 212.9 million tonnes at 0.063% Mo with Proven and Probable mineral reserves of 157.7 million tonnes at 0.058% Mo.

The February 22, 2007 Mineral Resources do not include exploration drill results from the Company's 2007 and 2008 program. This 60-hole program focussed on mineralization outside the northwest wall and below the feasibility design of the open pit. All the 2007/2008 exploration drill results are expected to be issued, and the NI 43-101 Mineral Resources are also expected to be updated, prior to the end of 2008. Exploration results to date are encouraging and Adanac expects additions to the Mineral Resources when they are updated, with a potential mine life extension.

Capital Cost Update - Feasibility Study

The capital cost estimate update is Cdn. $647 million and is accurate to +/-15%. It excludes production ramp up, interest costs and financing costs. It includes a contingency of Cdn. $51 million and long-lead equipment and other expenditures to date have not been deducted. The estimate compares to Cdn. $640 in the December 2007 Bankable Feasibility Study.

Pre-ordered long-lead delivery equipment

Adanac has ordered Cdn. $149 million of long lead equipment and has paid to date over Cdn. $48 million for this equipment. In addition, Cdn. $16 million has been expended on final design engineering by AMEC Americas and the road to site has been upgraded at a cost of Cdn. $9 million.

Project funding

Adanac is actively engaged in procuring project financing which is currently planned to be completed by the end of 2008. Bridge financing of US$80 million was obtained in May 2008. If project funding can be sourced by the end of 2008, a construction start is expected in February 2009 with construction completion by October 1, 2010 followed by a three month ramp up and with full production planned for January 1, 2011. The delivery schedule for the pre-ordered long lead equipment allows for this aggressive 20-month schedule to production.

Operating Cost Update - Feasibility Study

The following shows the estimated life of mine average annual site operating costs:

US$/ lb. Mo
-----------
Administration $0.90
Mining 1.90
Processing 6.95
-----------
Total average operating costs $9.75
-----------
Similar operating costs from the December 2007 Bankable Feasibility Study were US $7.41 per pound of Mo. The higher cost is primarily due to US$90 per barrel of crude oil and site power generation used for the life of mine.

Alternative 30,000 tonnes per day Plan

Adanac has investigated increasing the production rate at its Ruby Creek Project from the December 2007 Bankable Feasibility Study rate of 23,000 tonnes per day to 30,000 tonnes per day after production year three. This expansion has not been studied at the feasibility level of accuracy. The expansion uses the February 22, 2007 NI 43-101 Mineral Resources and the same open pit extraction plan. The rate of mining is increased and the higher production rate through the concentrator is expected to result in a lower recovery of Mo compared to the December 2007 Bankable Feasibility Study. The capital cost and operating costs through production year three are similar to the December 2007 Bankable Feasibility study.

The 30,000 tonnes per day alternative plan:

- Increases production to 30,000 tonnes after production year 3;

- Reduces Mo concentrator recovery from about 90% to about 83.5% after production year 3;

- Installs grid power, after production year 5; and

- Uses CPM Group's higher range Mo price forecast (see below).

Capital Cost - Alternative 30,000 tonnes per day Plan

The capital cost is estimated to be Cdn. $647 million, identical to the feasibility study update and other aspects of the production ramp up and schedule to production are identical to the feasibility study update. A sustainable capital cost increase, over the life of mine, of US$45 million is required for the alternative plan over the feasibility study update.

Operating Cost - Alternative 30,000 tonnes per day Plan

The following shows the estimated life of mine average annual site operating costs:

US$/ lb. Mo
-----------
Administration $0.77
Mining 1.95
Processing 4.91
-----------
Total site operating costs $7.63
-----------
CPM Group - July 2008 Price Forecast

In addition to updating its capital and operating costs, the Company has updated its molybdenum price assumptions based on a July 2008 update to CPM Group's molybdenum market research which includes a long-term price of US$16.50 per pound.

The following graph indicates the price forecasts provided by the CPM Group:

To view the graph accompanying this release please click on the following link: http://media3.marketwire.com/docs/AdanacGraph.pdf

The CPM Group is based in New York and provides commodity forecasting for a variety of commodities. Mo prices are shown in US$.

Economics Results (1)

The following table shows the key operating and investment indicators on a life of mine basis:

Feasibility Alternative
Update 30,000 tonnes Plan
----------- ------------------Selling price (US$ lb. Mo) $ 17.90 $ 20.12
Capital cost (Cdn. $ millions) $ 647 $ 647
Sustaining capital (US$ millions) $ 83 $ 128
Operating costs (US$ lb. Mo) $ 9.75 $ 7.63
EBITDA (US$ millions) $ 1,332 $ 1,970
Pre tax NPV(8) (US$ millions) $ 110 $ 387
Pre-tax IRR 12.0% 19.8%(1) Values have been translated at US$0.85 equals Cdn. $1.00 during the
20-month construction period and US$0.80 equals Cdn. $1.00 thereafter. Operating costs are annual average site costs.

Updated Reports

The December 2007 Bankable Feasibility Study was posted on SEDAR in December 2007. Adanac will post on SEDAR two reports by Wardrop Engineering Inc. entitled "Ruby Creek Feasibility Study Operating Cost Update" and "Ruby Creek Feasibility Study Capital Cost Update", which contains detailed cost update information. Wardrop did not study the alternative 30,000 tonne plan.

Qualified Person

Richard C. Alexander, B.Sc., P. Eng., who is a qualified person under NI 43-101 and is independent of the Company, has reviewed the 23,000 tonne per day Bankable Feasibility Study updated capital and operating costs but has not reviewed the alternative 30,000 tonne plan or other economic results shown on page four of this news release.

About Adanac Molybdenum Corporation

Adanac Molybdenum Corporation is listed on the TSX and Frankfurt exchanges and owns the Ruby Creek Project in northern British Columbia. The Company has advanced the project through feasibility studies, a production decision and has previously ordered long-lead equipment, completed permitting for construction, constructed a road to the site and secured US$80 million in bridge financing. The Company is sourcing construction funding and plans a site construction start in February 2009 and production in the fourth quarter of 2010.

Cautionary Notice: This news release contains "forward-looking information" within the meaning of applicable Canadian securities legislation and United States securities laws. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate", or "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved". Forward-looking information is based on the opinions and estimates of management at the date the information is made, and is based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward looking information. Many of these assumptions are based on factors and events that are not within the control of the Company and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward looking information include risk factors discussed in the Annual Information Form for the year ended April 30, 2008 for the Company available at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. The Company undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking information.

These securities have not been and will not be registered under the United States Securities Act of 1933, as amended, or any state securities law, and may not be offered or sold in the United States unless an exemption from registration is available.

Contacts:

Adanac Molybdenum Corporation

Peter R. Jones

Chairman & CEO

(604) 535-6834

(604) 536-8411 (FAX)

Email: info@adanacmoly.com

Website: www.adanacmoly.com

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And the 'Beat goes On'
Molybdenum’s diversity keeps demand firm

http://metalsplace.com/news/?a=12761

James Finch submits: If one believes the forecasts recently made by Terry Adams of UK-based Adams Metals and the Albemarle Corporation (ALB), then the escalating demand for molybdenum products could impact the stainless steel business of POSCO (PKX). The Korean-based steelmaker, with about 6.5 percent of sales coming from stainless steel, is the world’s fourth or fifth largest, depending upon production or market capitalization.

According to the company’s 2006 annual report, POSCO exports more than 70 percent of its steel products across Asia, mainly to China, Japan and southeastern Asia. In response to record high nickel prices, the steelmaker announced it would begin manufacturing nickel-free stainless steels. So did European steelmakers ThyssenKrupp and Outokumpu, which has heavily relied on its austenitic products.

Would a sustained rally in the moly price result in the same backlash nickel recently suffered? Unfortunately for steelmakers, molybdenum has a broader range of applications than nickel.

At a recent industry conference, Terry Adams shocked his audience by warning of potential supply/demand imbalances commencing as early as 2011. He believes by 2015, the molybdenum price could get ‘interesting.’

But, this wasn’t the first sign of brewing trouble for molybdenum buyers. In early May, one trader told American Metal Market magazine, “We just don’t have any supply available.” He lamented that primary moly producers, also known as swing producers, have ‘nothing to sell right now.’

On June 18th, China is expected to announce the export quotas for molybdenum products it has assigned to a limited number of exporters. Potential labor disputes at copper mines in Mexico and Chile could further reduce available molybdenum supply later in June. A Chilean labor spokesman warned of a ‘hard and prolonged strike.’ Molybdenum mined as a byproduct of copper production accounts for about 60 percent of the global supply.

At this pace, molybdenum pricing could be severely impacted as early as this summer. By next year, if primary molybdenum production doesn’t quickly rise to meet the demand, the pricing climate could worsen for end-users. Some traders believe moly prices could soon creep above previous price peaks two years ago. “Things are going to get a lot firmer because there’s a lack of material,” one trader reported earlier this week. “There’s not a lot on the ground.”

According to different down-the-road forecasts, the magic demand number is 460 million pounds of molybdenum. Adams predicts that projected western world demand could reach this consumption by 2015. Others believe strong moly demand could bring this target consumption a few years earlier.

Another concern is one we highlighted in a previous article when USGS molybdenum commodity specialist Michael Magyar warned of a bottleneck, “… we can’t roast much more moly right now. No one is actively permitting for more roasting capacity in North America.

Additional roasting capacity is, however, coming online this year or next, courtesy of Molymet. Adams points out, “With the growth in demand a new roaster, the size of the new Molymet roaster is needed every two years.” Adams further explained, “Without further investment a roaster bottleneck could occur in 2011. Molymet plans another roaster about this time, but this would only allow another two years growth.”

In his presentation, Adams glimpsed in the future. While western world demand should continue to annually increase by three percent, demand in China and the C.I.S. could increase by more than 10 percent every year. “The combined global effect would be an annual growth rate of about 4.5 percent,” he predicted. “Western mines will have to increase production !
by at least 6 percent per annum.”

As we and others have concluded, Adams forecast, “Increased output at primary (moly) mines will be needed to fill the gap beyond 2009.”

We presume delegates from the junior molybdenum mining attendees mentally began popping champagne corks after Adams announced this point. But it was his next two points which investors should digest:

• New or shuttered primary mines will have to open by 2011
• By 2013, current primary mines and Climax could be at capacity
High-Level Growth in the Molybdenum Chemical Market

Having researched molybdenum for more than one year, only recently did a couple of technical experts help us understand how much molybdenum is utilized in the condenser tubes of nuclear and desalination plants. Because of the diversified applications for this metal, there is less reliable information about the molybdenum sector than in others we’ve explored, e.g. uranium.

We continue to gather data for our next publication, Investing in the Great Molybdenum Bull Market, and will present our detailed research in late August.

We have discovered two strong-growth areas for molybdenum applications.

It’s not just the steel market which uses molybdenum. Although the stainless and low alloy markets represent about two-thirds of molybdenum usage, the fastest growing market appears to be catalysts in the moly chemical market.

According to a spokesman for the Albemarle Corporation, moly consumption in the catalyst section could grow by more than 30 percent by 2011. The chemical sector could consume as much as 30 million more pounds in the 2006 to 2011 time period.

The global catalyst market is expected to reach US$13 billion in sales this year. Of this the petroleum refining sector should consume about 35 million pounds of molybdenum. The moly is used as a hydroprocessing [HPC] catalyst.

Growing global demand for crude oil, changing fuel specifications and strength in demand for aviation and diesel fuel should contribute to molybdenum demand.

Because the overall quality of crude oil has significantly deteriorated, over the past 25 years, more molybdenum could be consumed as a catalyst during the refinery process. Sulfur content in U.S.-imported oil has doubled over this same time period. Molybdenum-based catalysts are utilized to remove sulfur from petroleum, petrochemicals and coal-derived liquids.

Tighter specs over the past 15 years have demanded a higher performing catalyst and more contained molybdenum in those catalysts. Over this time frame, catalyst demand per barrel of crude oil has doubled – an average growth rate of five percent per year.

One industry expert expects global HPC catalyst growth to annually increase by eight percent between 2006 and 2010. Molybdenum consumption for this use could increase by 46 percent through 2010. Annual consumption could rise to more than 60 million pounds of molybdenum.
Lack of New Primary Mining Supply

The typical molybdenum concentrates being sold by the copper producers, as byproduct mining, contain 40 – 45 percent Mo. Concentrates from primary producers often average 50 – 55 percent.

As a result, primary molybdenum mining operations offer a more desirable concentrate. Technical moly, also known Mo03 (molybdenum trioxide) specifies 57 percent Mo and contains less than 0.05 percent copper and 0.1 percent sulfur. Primary molybdenum producers provide concentrates with lesser amounts of deleterious elements.

Because the concentrate is ‘cleaner,’ less roasting is required to upgrade the material to tech oxide spec. Less electricity is expended to power the multi-hearth furnaces during the roasting process. The cleaner primary moly concentrate offers the roaster more flexibility. The higher spec concentrates can be blended with lower spec concentrates to upgrade the overall product, or the roaster can refine the higher spec material separately if the end-user requires it.

The less roasting to bring material up to spec could also help avoid the bottlenecks a few years from now.

Although byproduct molybdenum producers are expected to bear the brunt of increased demand, the copper producers aren’t cooperating. Codelco’s molybdenum production dropped by 25 percent in 2006 to 60 million pounds this past year. Moly production could drop another 15 percent or more this year.

Because of the recent molybdenum price revival, dozens of exploration companies have ‘suddenly’ become molybdenum companies. There are scarce few with a potentially viable project.

Those primary molybdenum producers and future producers we’ve been monitoring appear to be moving their projects forward.

Thompson Creek is Thompson Creek. This has emerged as the ‘primary’ primary player in North America while the world waits for Climax to come online again. Some believe the company’s Davidson moly deposit in British Columbia may not arrive on the company’s timetable. If so, then this could further pressure the moly price.

Roca Mines (ROCAF.PK) should become a producer during July. But, this company also hopes to expand its operations deeper and should also commence those exploration efforts this summer. In the interim, the high-grade molybdenum found at the company’s MAX mine should become a cash cow in the third and fourth quarters of this year. And for several years forward. Although the company is not yet in production, there appears to be no scarcity of molybdenum traders clamoring for the company’s future production. Another indication of a tight market.

Last month, Adanac Molybdenum Corp (AUAYF.PK) ordered its long-lead time equipment for the construction of its mining and milling complex at Ruby Creek. Expenditures totaled nearly C$40 million, for which the company has made its down payments. Also, some time this summer, Adanac should finally receive its permits and commence construction. While the company boasts of 220 million pounds of molybdenum, a recent chat with Adanac consultant Ken Reser suggests Ruby Creek have more pounds than was previously thought. Ongoing drilling results could later confirm this speculation.

We continue to watch United Bolero (UBDVF.PK) as a promising development company in Montana. We were told drilling at Bald Butte began over the weekend to upgrade the resource category. Hopefully, the drilling program will also move to its nearby Cannivan Gulch property. Historically, but not technically documented, major miners, who worked these properties in the previous moly cycle, estimated the company’s properties could host more than 400 million pounds of molybdenum.

Primary producers, such as these and possibly others, is what molybdenum end-users are depending upon to meet their needs as we approach 2009, 2010 and beyond.

SC.

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