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The MAX Molybdenum Project - "a Company-builder"

Fast-tracked high-grade mine...large-scale deposit...outstanding bluesky.

In 2003, with molybdenum prices on the rise, Roca began a series of negotiations which lead to the acquisition and consolidation of a 100% interest in a molybdenite deposit known as the Trout Lake Deposit, located 60 kilometres southeast of Revelstoke, British Columbia. Now renamed, the MAX Molybdenum Deposit ("MAX") is distinguished amongst others by its significant high-grade resources within a much larger deposit (see current resources in the following table and by reading the MAX Molybdenum Project 43-101 Technical Report).

MAX Molybdenum 43-101 Compliant Resource Estimate

Cutoff Grade (% MoS2) Measured Indicated Measured + Indicated
Tonnes Grade (% MoS2) Tonnes Grade (% MoS2) Tonnes Grade (% MoS2)
0.10 27,870,000 0.21 15,070,000 0.18 42,940,000 0.20
0.20 9,340,000 0.35 2,010,000 0.41 11,350,000 0.36
0.50 1,010,000 1.01 370,000 0.77 1,380,000 0.94
1.00 260,000 1.95 20,000 1.87 280,000 1.95
In addition to these estimates, Inferred Resources total 8,900,000 tonnes averaging 0.16% MoS2 at the 0.10 cutoff, including 460,000 tonnes averaging 0.33% at the 0.20 cutoff.

MAX has been the subject of a significant exploration and engineering program conducted by Newmont Mines Ltd. and Esso Minerals Canada Ltd. in the late 1970's and early 1980's. Despite the extent and quality of the previous work, the project was never put in production by the joint venture.

Fast-track Mining Opportunity

As a result of previous operators' $15 million effort at MAX, the project boasts a large production-sized access adit and a comprehensive geological, engineering and environmental database. The high-grade zones and existing access at MAX provide an opportunity for fast-tracked production.

Roca recently retained Hatch Associates Ltd., to conduct independent engineering studies and preliminary economic assessments for a 500 tonne per day operation at the MAX Project (MAX Molybdenum Project Preliminary Assessment). These preliminary economic cost estimates and financial models were further refined by Roca and its consultants resulting in the filing of an application for a British Columbia "Small Mines Permit" in the name of Roca's wholly-owned operating subsidiary, FortyTwo Metals Inc.

FortyTwo Metals has applied for a production permit from the British Columbia Ministry of Energy, Mines and Petroleum Resources. Initial production will focus on the rich, "HG Zone" within the centre of the "B-Zone" to produce a readily saleable premium specification concentrate of approximately 95% MoS2.

The initial phase of mining is expected to produce approximately 1.5 million lbs of contained molybdenum (US$45 million at $30 for molybdenum in oxide) from a first year production run of 72,000 tonnes. Total annual operating costs (mine, mill and overhead) are estimated at US$7.2 million (approximately $100/tonne) and start-up capital of only US$12.5 million. Payback of start-up capital is approximately 9 months from construction startup or 4 months from mill startup. Using a campaigned mining-milling approach, Roca plans to recover much of the 260,000 tonnes of 1.95% MoS2 within the first few years of production, and to make a decision regarding expansion based on prevailing molybdenum prices during 2007.

Expansion potential - Large-scale Mining

With total cash costs conservatively estimated at US$100/tonne, the high grade zones within the deposit (see MAX Display Section) provide compelling economics down to a price of $5 for contained molybdenum in oxide, a luxury most pure molybdenite porphyry deposits do not share. As many metals analysts see molybdenum prices staying in the $10-$15 per pound range for years to come, Roca is advancing concepts for rapid expansion of the operation using internally generated cash-flow should molybdenum prices justify. Hatch has also prepared Roca's preliminary engineering studies for a 2,500 tpd bulk tonnage operation, based on the measured and indicated resource of 11,350,000 tonnes grading 0.36% MoS2 at a 0.20% MoS2 cutoff.

Exploration and Bluesky

The global measured and indicated resource, 42,940,000 tonnes grading 0.20% MoS2 at a 0.10% MoS2 cutoff contains in excess of $3 billion contained metal value (at $30/lb molybdenum, not including any inferred resources) and remains open at depth. Future exploration will focus on expanding this resource both at depth and in areas surrounding the main deposit. Several molybdenum deposit experts have pointed to the similarities between the MAX deposit and the URAD deposit (the uppermost deposit associated with the famous +700 million tonne Henderson deposit) owned and operated by Climax Molybdenum Company. Henderson has operated since 1976 as a primary molybdenum underground mine and should be a profitable operation for parent company Phelps Dodge Corporation for another 20 years.

Climax started mining the relatively small (approx. 13.7 million tons of .35% MoS2) URAD orebody while geologists theorized that the deposit was an offshoot of a larger and deeper deposit. After several years of exploration, a 1965 deep drillhole tagged what is now the Henderson deposit within Red Mountain. 40 years later, the Henderson mine is capable of operating at 30,000 Tpd, making it one of the largest underground mines in the world.

Could the 43 million tonne Max deposit be an upper offshoot of something much bigger lurking under Trout Mountain?


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