TORONTO (miningweekly.com) – Canadian molybdenum hopeful Adanac Molybdenum has updated the mineral resource estimate for its Ruby Creek deposit, in British Columbia, increasing the measured and indicated resources to 407-million pounds of contained molybdenum.

Investors responded gratefully to the rare bit of good news from the company, which is currently under credit protection, sending Adanac's shares up 360% on Wednesday morning, to11,5 Canadian cents apiece by 11:18 in Toronto.

The contained molybdenum in the measured and indicated resource categories has increased by 38%, compared with the figures used in the December 2007 feasibility study on Ruby Creek.

At a cutoff grade of 0.04% molybdenum, the resources at Ruby Creek are now estimated at 43,6-million tons, at an average grade of 0,078% molybdenum (with 75,4-million pounds of contained molybdenum) classified as measured mineral resources, and 231,7-million tons at an average grade of 0,065% molybdenum (with 332,6-million pounds of contained molybdenum) classified as indicated mineral resources.

There are also 39,1-million tons at an average grade of 0,062% molybdenum (with 53,7-million pounds of contained molybdenum) in the inferred category.

The increase in the resources “surpassed my expectations and suggests significant upside potential to increase the mine life or production rate,” said Adanac president and CEO Christopher Kirby.

The company has also announced that the Canadian government has completed its environmental assessment of Ruby Creek, opening the way for the project to enter the final approval stage for operating a tailings impoundment area.

The process will be conducted by Fisheries and Oceans Canada, with assistance from Environment Canada, and Adanac expects to receive the final approval before the end of the year.

This is the final permit needed to start up mining operations at Ruby Creek, the firm said.

Last year, Adanac arranged an $80-million bridging loan to see it through until it raised project finance for the C$647-million mine, and had planned to have secured the funds by the end of 2008.

Construction was scheduled to begin in February this year, with the first production expected in 2010.

However, after molybdenum prices dropped sharply and credit markets dried up, the firm was unable to raise the necessary funds, and sought creditor protection in December.

The company has since reduced its employee count substantially and cut down on all but essential expenses, which enabled it to pay down some of its senior debt.

However, Adanac remains under creditor protection – the latest extension was until July 3 – and the company has retained Canaccord Capital “to assist in the evaluation of possible strategies including a potential investment in Adanac by a strategic partner or sale of Adanac or its assets”.