FOR IMMEDIATE RELEASE

ADANAC RUBY CREEK MOLYBDENUM PROJECT REVIEW

January 16, 2007 - Vancouver, British Columbia

 

Adanac Molybdenum Corporation (“Adanac”) (TSX.V: AUA, Pink Sheets: ANCGF, Frank: A9N) reports on recent events and a historical review of the Project situated 24 kilometers Northeast of Atlin, BC.

 

Historical Review:

 

The Ruby Creek property was acquired thru staking the claims in 2000.  The occurrence of molybdenum on the property was first discovered in 1905 but serious and systematic development didn’t get underway until the 1960’s.  Major Canadian companies (Kerr Addison Mines Ltd. and Placer Developments Ltd.) explored the property extensively and each completed feasibilities but neither proceeded to production on account of low molybdenum prices.

 

Adanac Gold Corp. (now Adanac Molybdenum Corporation) continued exploration to provide, along with much of the earlier exploration work, a sufficient and reliable basis to establish the molybdenum resource which met the most recent tight standards demanded by regulatory authorities – the National Instrument Policy 43-101.  This was achieved in April 2005.  On-going exploration in 2004, 2005 and 2006 has provided additional data; the 2006 results are currently providing the most up to date basis for Golder Associates to revise their earlier resource estimate (2005) which is shown below.

 

Based on a 0.04% Mo cut off the reserves are:

 

Proven tonnes	38.9 million at 0.077% Mo 1.2 million at 0.0.035% Mo (stockpile)
Probable tonnes	73.5 million at 0.060% Mo 30.1 million at 0.034% Mo (stockpile)
Total tonnes	143.7 million at 0.059% Mo

 

Ruby Creek Project Summary

Mine Life:	21 years
Milling Rate:	20,000 tonnes per day
Strip Ratio:	0.95 (waste) /1.0 (ore)
Proven and Probable ore is:	113.4 million tonnes @ 0.066% Mo 30.3 million tonnes @ 0.034% Mo
Ore grade first 5 years:	0.084% Mo
Mill recovery:	89%
Molybdenum in concentrate:	75.9 million kilograms (167.4 million lbs.)
Preproduction capital ($Cdn):	$434.4 million
Average Operating Cost (first 5 years):	$5.87 US/lb/. Mo
Base Case:	IRR=24.42%, NPV @ 8%=$222.2 million Payback = 3.1 years
With incorporation of the high pressure grinding rolls the economics are improved:	IRR=28.85% NPV @ 8% = $305.1 million Capital Payback – 2.9 years

 

 

Adanac has the following advantages over the predecessor companies:

 

·          Adanac has a 100% interest in the property, whereas the original property was burdened by a 3.5% NSR to Johns Manville. Kerr Addison, could only earn a 60% interest and Placer a 70% interest.

 

Adanac Molybdenum Corporation
Press Release - January 16, 2007
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·          The price of molybdenum is 14 times the price at which Kerr Addison undertook feasibility work in 1970 and 4 times the price when Placer undertook its feasibility studies.

·          Multi-billion dollar long-term contracts are being entered into by Chinese corporations for the supply of iron ore which bodes well for a long sustained demand for molybdenum due to its extensive use in stainless steel and other steel products. Indications are for a steadily increasing demand for molybdenum.

·          Currently surplus power is available from the Yukon Grid which would require the company to install only 100 kilometers of transmission line. Yukon power was not available in the 1970’s and 1980’s.

·          Road access to Skagway, Alaska’s deep water port is now available.

 

With the resource established (April 2005) the Company moved with speed to develop a preliminary feasibility.  The basis was set at 20,000 tonnes per day mill throughput and, to eliminate probable delay associated with having to permit an overland hydro line for 100 kms where none existed (in addition to permitting an upgraded line on approx 150 kms existing line).  The basis includes provision for electrical power, in the first 3 – 5 years, from diesel generators.

 

The preliminary feasibility was completed in a five month period (April – September 2005).  The recommendations to proceed with full bankable feasibility was acted on immediately and this was completed April 2006 with recommendation to study the applicability of High Pressure Grinding Rolls (HPGR) technology as an alternate to conventional Sag Mill technology.  This study indicated significant benefits for the project thru more energy efficient crushing/grinding.  It is now included in the updated bankable feasibility.

 

2007 Projection:

·          Detailed engineering is priority.  As this work moves forward the procurement of “long lead time“ major pieces of plant/infrastructure is critical to maintaining the aggressive schedule to complete construction by end of 2008.

·          A production decision will be made in the first quarter.

·          Receipt of Mining & Environmental Permits are slated for end of first quarter

·          Start of construction is expected by mid-year when winter precipitation is clear of the property.

·          Major financing is expected to be structured and completed in the second quarter.

·          An Impacts Benefit Agreement (IBA) for Taku River Tlingit First Nations is to be completed in the second quarter of the year.

·          Approximately 1.5 kg of high grade Molybdenite concentrate product has been produced for samples to potential end users.

·          This year’s exploration programme will include further work to test the new zone of molybdenum mineralization discovered to the southwest in the 2006 field work.

·          An independent review of the geotechnical basis for the tailings impoundment, waste dumps & site water management has been completed and finds no significant errors/flaws in the feasibility work completed.

 

2006 Summary:

·          Currently, the Company has contracted with Amec Americas Ltd., (AMEC) to provide the detailed engineering and procurement services for the Ruby Creek Project.  The contract is expected to be completed in 13 months.

·          As well, the Company is expanding the Adanac management team starting with the employment of Rick Alexander, P. Eng., as Vice President of Project Development, and expects to hire several more key professionals in the next few months.  This will insure Adanac has the experience and capabilities to build and operate the 20,000 TPD Project.  This is in addition to adding expertise in engineering design, feasibility, financing, construction and mining operations to the Board of Directors over the past 12 months.

Adanac Molybdenum Corporation
Press Release - January 16, 2007
Page 3

 

·          Over the past six months G & T Metallurgical Laboratory of Kamloops, BC has completed testing and concentration of over 2,116 kgs. of material from the 2004, 2005 vertical and 2006 angle hole drill programs to produce a concentrate suitable for testing by potential strategic partners in the Ruby Creek Project.  Results from the 2006 metallurgical testing program will be available shortly.  The Company has had several meetings with potential strategic partners, funds and banks regarding possible strategic partnerships, joint ventures partnerships, debt and equity financings.  This process is ongoing.

·          2,668 metres of angle drilling was completed in thirteen holes in the high grade pit area.   Grade and continuity appear to be much better than the results from the previous vertical drill hole programs.  Golder Associates is currently completing a statistical NI 43-101 grade study in the high grade pit area (5 year pit averaging .084% Mo) which is expected in the next 6 weeks.  Total holes and meters drilled on the Ruby Creek Molybdenum Project since 1969 are 49,786 meters (163,300 ft.) in 283 drill holes.  This year’s exploration included 1,333 meters of diamond drilling in 3 holes to the west and southwest of the existing open pit plan.  This indicates a new, previously unknown zone of molybdenum mineralization exists to the southwest.  Further work is scheduled for the 2007 exploration program.

·          The Company successfully completed a financing at $1.02/share for $12,822,210.53 December, 2006.

·          CPM Group of New York, NY was appointed as Senior Financial Advisor.

·          Adanac signed a Phase 2 Collaborative Relationship Memorandum of Agreement with the Taku River Tlingit First Nation (TRTFN) in October of 2006.

·          Formal application for the Environmental Assessment Review process was submitted in August of 2006.

·          Formal application for the Mining Permit to the Chief Gold Commissioner was submitted in August 2006.

·          Golder Associates Ltd. updated The NI43-101 Study whereby resources increased to 206,375,000 tonnes grading .063% Mo at a .04% ore cutoff (285,604,000 lbs.).

·          Completed the Bankable Feasibility Study (Wardrop Engineering) in April, 2006 and final Bankable study using HPGR system in July 2006.

·          An independent review of the process design/infrastructure completed for the bankable feasibility found no significant errors/flaws in this work.

2005 Summary:

·          The Company completed 4,984 metres of diamond drilling in 19 holes:  the results provided basis for Golder Associates to revise and update the earlier NI 43-101 resource estimate.

·          In November, the Company announced a $2,000,000 flow through and $500,000 non-flow through private placements @ $0.75 and the Company is now listed on the Frankfurt Exchange (ticker symbol: A9N).

·          Adanac entered into stage one work plan initiative with the Taku River Tlingit First Nation in July.

·          Amec PLC completed NI 43-101 Resource Study reporting 205,000,000 tonnes grading .062% Mo at a .04% Mo cutoff.  Total moly is 278,100,000 lbs.

·          Pre-feasibility Awarded – Pre-feasibility work was contracted to the following engineering firms (These firms continued on with the bankable feasibility study).

a)      GOLDER ASSOCIATES LTD. (GOLDER) – for mine design, rock slope stability, and updating the resource model to include the diamond drilling just completed. GOLDER is a world renowned company recognized as a leader in resource and reserve estimation/evaluation and for its mining and geological expertise.

b)      WARDROP ENGINEERING INC. (WARDROP) – for detailed development of the mill process and infrastructure including the diesel-electric power plant to be used in the initial years of operation; and to evaluate specific alternative options for process unit operations. WARDROP is a full service engineering company with 50 years of successful history serving the Canadian mining industry.

Adanac Molybdenum Corporation
Press Release - January 16, 2007
Page 4

 

c)       MINNOVEX TECHNOLOGIES INC. (MINNOVEX) – for completion of comminution and flotation test work to optimize these processes for the Ruby Creek resource. The test work results are essential components for detailed process design, and the geometallurgical parameters will also be incorporated into GOLDER’s resource model. MINNOVEX is a recognized leader in comminution & flotation test work for process plant design and recently became part of the Lakefield SGS group.

d)      KLOHN CRIPPEN CONSULTANTS LTD. (KLOHN CRIPPEN) – continuation of site geotechnical engineering services for site water management, tailings storage and waste rock storage. KLOHN CRIPPEN is a recognized leader in the design of tailings dams.

2004 Summary:

·          Amec PLC appointed for NI43-101 Resource Study.

·          Adanac completes 9,022 meters (29,592 ft.) of diamond drilling in 36 holes for the NI43-101 resource study being completed by Amec PLC. Previously, 31,950 meters (104,846 ft.) were completed by Placer Development Ltd., Adanac Mining Exploration Ltd., Kerr Addison mines Ltd., and Climax molybdenum Corporation. In addition, Kerr Addison completed a program of underground development of 1,116 meters (3,660 ft.) entailing adit access, cross-cutting and raising six holes to produce 9,545 tonnes of ore for on-site processing in a 100 tonnes/day pilot mill. Test work in 1971 was to determine mill head recoveries which averaged 91% and were used in subsequent feasibility studies (three) carried out by Kerr Addison in 1970, Placer in 1978 and 1979. Head grades from the milling process showed a 20% increase in grade over the drill hole assays.

·          Klohn Crippen contracted to initiate environmental and socio-economic studies.

2003 Summary:

·          Adanac engages DW Phillip Mining to produce an economic evaluation on the Ruby Creek Molybdenum Project. DW Phillips, P. Eng. Recommend the company to begin preliminary feasibility studies and obtain a NI43-101 Resource Study. Moly trading at (US) $6.00/lb.

2001 - 2002 Summary:

·          Adanac begins acquisition, collection and compilation of all previous geological, engineering and environmental work.

2000 Summary:

·          Adanac stakes Ruby Creek Molybdenum deposit.

 

On Behalf of Management

 

ADANAC MOLYBDENUM CORPORATION

 

“Michael MacLeod”

Michael MacLeod, President and Chief Executive Officer

Adanac Molybdenum Corporation 2A 15782 Marine Drive, White Rock, BC  CANADA  V4B 1E6 Telephone: 604-531-9639     Facsimile: 604-531-9634     Email:  info@adanacmoly.com   Visit  www.AdanacMoly.com for more information European Investor Relations contact: Nick Fuller or Samantha Fletcher – Fuller Fletcher & Associates Ltd. Visit: www.fullerfletcher.com email: nick@fullerfletcher.com Tel +44 207 256 5204 Fax +44 207 256 5678