Adex Mining — Kabir Ahmed Opportunity Show podcast transcript

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Ellis Martin Interviews Adex Mining CEO, Kabir Ahmed _uacct = "UA-2662954-2"; urchinTracker();  | Investment Opportunities | Investing Articles | Financial News | Resources | Radio Show Podcasts | Ellis Martin Interviews Adex Mining CEO, Kabir Ahmed - Podcast March 02, 2009 - Hosted By Ellis Martin

Ellis Martin: I’m Ellis Martin, Executive Producer of The Opportunity Show and today I’m speaking with the CEO and President of Adex Mining Incorporated, Kabir Ahmed. Adex Mining trades on the TSX Venture Exchange under the symbol ADE, with home offices in Toronto, Ontario, Canada. Adex’s primary focus is the fast track development of it’s wholly owned Mount Pleasant Mine property, a tungsten-molybdenum and tin-indium project in Southwestern New Brunswick, Canada. Kabir thanks for joining us today.

Kabir Ahmed: Thank you Ellis. It’s my pleasure to be on your program.

Ellis Martin: Give us a little background on the company, if you don’t mind.

Kabir Ahmed: Sure. As you mentioned Ellis, Adex Mining trades on the TSX Venture Exchange under the stock symbol ADE. The company owns the Mount Pleasant Mine property, which is a tungsten-molybdenum and tin-indium project located in Southwestern New Brunswick in Canada. The site was the past production or the site of past production in the early 1980’s by major Australian mining company BHP Billiton, who operated the facilities until July 1985 and during the timeframe that they had the property in operation produced approximately a million tons or processed a million tons of tungsten ore. Since that time, Adex acquired the property and have instituted a development project with a view to reviving the project for production.

Ellis Martin: Now for some of us who are not familiar with many of the applications of tungsten would you mind elaborating on the more important uses of the metal.

Kabir Ahmed: Absolutely. Tungsten is one of the most high tensile strength metals that there is out there. I believe only second to diamond. It is used as a metal to strengthen steel and is used in heavy metal carbides or hard metal carbides. So for example, in the construction industry, tungsten is often used to strengthen the tensile strength of steel. So it’s used in the construction industry quite generously. Also as you mentioned tungsten is also used as a filament in candescent light bulbs and its other applications in the industrial sectors as well.

Ellis Martin: You mentioned Adex’s molybdenum assets, here’s another metal that has a high melting point and is an anticorrosive used in oil pipelines that are being refurbished and constructed not only in Alaska but elsewhere in the world. Is this not correct?

Kabir Ahmed: Yes it is. Molybdenum is often used again in high tensile strength alloys, which, is often used for construction and building of pipelines for the oil and gas industry. Molybdenum is often used also to catalyst in the oil and gas industry as well. And more recently molybdenum is a key component of pipelines for desalination plants and the reason being is that molybdenum is very resistant to salt corrosion. So in terms of desalination plants it’s an ideal metal for application in pipelines.

Ellis Martin: How is your company positioned with regards to the resource sector to meet the needs of the next coming ten (10) or fifteen (15) years?

Kabir Ahmed: Well, it’s very interesting. Mount Pleasant is a polymetallic deposit which means that there are more than one (1) metal deposit in our property. We have a tungsten-molybdenum deposit which is known as the Firetower Deposit Zone and that was the site of previous production. We have, as a result of a drilling program in 2008 we have brought the resource estimates to approximately thirteen and a half million tonnes of indicated resource of tungsten and molybdenum. In addition, we also completed a scoping study which provided us with a positive economic assessment for brining a mine into production at the tungsten-molybdenum deposit zone. So now that we have completed all that we are basically shovel ready for feasibility and then moving towards production. And our plan is that as soon as we get a little bit clarity in the market space and a revival for global demand for metals which, we anticipate as a result of the rollout of the infrastructure stimulus program all over the world we will be basically shovel ready to move forward on feasibility and hopefully to production as soon as markets revive. With regards to our second mineral deposit zone, which is known as the North Zone and which holds tin and indium and tin and indium are also used in various applications. Tin is used as a metal for construction as well as a lead based substitute for electronic circuitry. Indium as you may know is great relevance to the solar power energy sector because they’re used in photo voltaic cells which are basically cells which convert solar energy into electricity and indium is a coating in that technology. It’s also used as a coating for your flat screen plasma and LCD screens. So these are great consumer and commercial applications. And what we’ve done with the North Zone is we are working in brining that resource estimate to also an indicated 43-101 complaint category with a view to as soon as market conditions revive to move that zone forward to feasibility. We’re not grassroots project we’re actually closer to production than perhaps many other projects in indium and tungsten and molybdenum today.

Ellis Martin: Now did you acquire a mill from Billiton?

Kabir Ahmed: We acquired a number of infrastructure from Billiton but the mill and some of the other equipment was stripped by Billiton when they had shuttered down the mine facilities. But nevertheless what we do have, which is extremely valuable, is a fully permitted tailings and impoundment facility. If we were to construct a tailings impoundment facility today it would cost us anywhere perhaps near twenty (20) million dollars on the low end to as high as forty (40) million dollars on the high end. So what that means is that our capital expenditure costs of bringing the mine into production would be significantly less because of the intactness and the current viability of the number of pieces of infrastructure which we still have today.

Ellis Martin: I would imagine Kabir, that the capital cost of bringing your facility to the shovel ready position would be lower in this market than they were even a year or two years ago. So this is a prime time to prepare for the eventual economic rebound of this market and the growing worldwide demand for these assets.

Kabir Ahmed: I would agree with you. Just to give you a little bit of a reference back in the early 1980’s BHP Billiton spent a hundred and fifty (150) million dollars to bring the tungsten and molybdenum deposit zone into production. So that was 1980’s dollars. Aker Solutions, which is an international global mining, engineering and consulting firm they recently completed a scoping study for us on the economic viability of the tungsten-molybdenum zone. Their estimate was that under current dollars it would cost us approximately one hundred thirty (130) million dollars to bring the mine into production. That report was done sometime in December of 2008 and as you say rightly say a lot of the costs have significantly decreased today maybe three (3), six (6) months thereafter, when the original report was being done and then finally concluded. So we anticipate yes there would be great costs savings if we were able to access capital markets and conduct a feasibility which would then allow us to move forward to actual construction of the mining operations for a view to production.

Ellis Martin: For the speculator or the long term investor all eyes seem to be on gold and silver right now. Why should the savvy potential investor consider a company like yours at this time for a possible investment opportunity?

Kabir Ahmed: I look at three (3) specific reasons. The first reason would be that its under management by very experienced and savvy team, lead by myself, who have been in this industry a long time and we have basically guided and shepherded companies from scratch to significant value creation. The second point is that we are basically shovel ready to move forward on feasibility. That means our timeline to production is a lot shorter than just simply grassroots operation exploration companies. So the minute that we sense that the markets are reviving and global demand for metals has returned to the marketplace we can initiate feasibility immediately because all the preparatory work has been done. And then we can move on an accelerated basis to bring one or both of our deposit zones to near production and production eventually. The third reason which I believe is the most important on a macroeconomic level, if you believe as I believe that the global infrastructure stimulus programs that have been announced in countries such as India and China and Canada and most recently in the U.S. and if you believe that, that global infrastructure programs will once implemented will increase construction activities and infrastructure development than metals such as tungsten and molybdenum will be in great demand again. Tungsten and molybdenum as I mentioned to you, are directly involved in production of steel and strengthening of steel which is a core product which is required for construction of infrastructure programs around the world.

Ellis Martin: This is not your first experience Kabir, running a public company. You’ve had some successes in the past.

Kabir Ahmed: Yes I have. I’ve been behind a number of companies that have been very successful under my leadership. Of course currently they’re under new management or management that is developing these companies and obviously all of the companies have been dramatically impacted by global economic conditions. But during my leadership we had great success behind a number of successful resource companies where we basically started them from scratch and developed them to a hundred (100) million dollars market capitalization or more. Clearly that was the intention of our management team with regards to Adex and we have been moving along very nicely and meeting all of our milestones and objectives that we had set out to our shareholders but of course, as you know, we have not been immune to the global market conditions. Of course, that has impacted our share price as well as our ability to determine whether or not we’re able to move forward towards production. The unique situation that we have, as opposed to our competitors, is we ran our treasury very prudently and as of the third quarter of 2008, for which financial statements have not been released to the public, we have an excess of four (4) million dollars in cash in our treasury and that figure hasn’t changed dramatically today.

Ellis Martin: And your operating expenses at this time are not significant, are they?

Kabir Ahmed: No. We have made every measure to preserve capital and cut costs wherever necessary and at the present moment we’re simply on a wait and see mode. As soon as I mentioned, we see some hint that global markets will improve we can immediately start initiating feasibility and ramping up our activities.

Ellis Martin: How long have you been with this company?

Kabir Ahmed: I joined the company as President and CEO in August of 2006.

Ellis Martin: Now you selected this company for a particular reason to participate in?

Kabir Ahmed: Yes I did. I was very interested in the metals because of their application to construction and development and global infrastructure programs and I thought that New Brunswick as a province had a great reputation for supporting mining in general. And most importantly, my chief financial officer, who I work with on a number of different projects identified the project as something I should be involved in and to take it from basically a dormant stage, the mine as I mentioned to you had been in operation in the 1980’s and had been shuttered down and to revive the project which I thought would be a great challenge to take something like that and bring some economic importance to the region that it situated in.

Ellis Martin: And one final question Kabir, would you consider Adex Mining to be a green company?

Kabir Ahmed: Well, it’s very difficult for a mining company or a mineral exploration company to have specific green type policies but having said that it is not impossible. Why we have been very green is that we are extremely compliant with all of our environmental obligations and regulations. So we coordinate and cooperate directly with the Department of Environment in the province of New Brunswick as well as the Department of Fisheries and Oceans under the federal government. And we ensure that our property maintains and complies with all environmental regulations and in fact we implemented our infrastructure improvement program over the summer of 2008 simply to comply with current environmental standards. So for example, we have a monthly water quality monitoring protocol in place and the reports of our monthly water quality monitoring is directly submitted to the Department of Environment and they do constant site visits onto the property to ensure that we are in fact working in cooperation with the environmental guidelines of the day and I think that makes us extremely proactive and very green as a company.

Ellis Martin: We’ve been speaking today with the President and CEO of Adex Mining Incorporated, Kabir Ahmed. Adex trades under the symbol ADE on the TSX Venture Exchange. Kabir, thank you very much for joining me today.

Kabir Ahmed: Thank you Ellis. It’s been my pleasure.

Ellis Martin: If you’d like more information on Adex Mining Incorporated, go to AdexMining.com or TalkingTungsten.com as well as our website, TheOpportunityShow.com. I’m Ellis Martin. Thanks for joining us. |