Canadian small-cap miner Adanac Molybdenum is on the verge of cashing in a decision to snap up a neglected chunk of northern British Columbia that is now rich with promise, thanks to booming commodity prices.

Six years ago, Adanac, then called Stirrup Creek Gold, put down stakes on the Ruby Creek property near the tiny, far-flung gold rush town of Atlin, British Columbia, about 150 km (95 miles) northeast of Juneau, Alaska. Previous claims on the site dating back 40 years had lapsed due to the unwillingness of owners to invest in development.

Now the land, which is suddenly profitable as molybdenum prices outperform other industrial metals in the Asia-led building boom, is set to drop its fortune straight into the Adanac's lap.

"Not bad for the cost of staking," Adanac Chief Executive Michael McLeod told Reuters in a recent interview, while in Toronto to sell bankers on the company's plans to start construction of a mine he hopes will be producing by 2009.

With 167 million pounds of recoverable molybdenum, or moly, in the ground at an initial cost of under $6 a pound, the mine should be profitable even if prices retreat sharply.

And with expected initial annual production of 12 million pounds, the mine will immediately make Adanac a producer of note, with output a bit less than half of global No. 5 producer Thompson Creek Metals .

Demand for the metal, used primarily as a hardening agent for stainless steel, has grown as global growth drives demand for building products, while record oil prices boost pipeline construction.

The price has risen eightfold since early 2003 to about $33 a pound this week, while shares of pure moly producer Thompson Creek have quintupled over the past year.

Analysts don't see current price levels holding as more production comes on line, but Adanac's McLeod says the mine would be economically viable even given a sharp retreat.

"The long term projection for moly is they're going to move down over time to the $10 to $12 a pound range, which is still fine for us," he said.

In the near term, the higher prices should allow Adanac to get past the expensive start-up phase of the mine and get the capital costs paid off within three years, McLeod estimates.

STAKED, BUT UNMINED

The Ruby Creek site was initially staked in 1967 by a previous company, also called Adanac. Samples were taken, but low molybdenum prices stalled further development for more than a decade, when Placer Developments -- the predecessor to gold miner Placer Dome -- got involved.

Under Placer, the mine got close to construction as higher prices made the site economically viable. But development was was derailed in 1980 when British Columbia put a moratorium on uranium mining.

"They had to go in there and re-assay all of their ore to demonstrate there was no marketable uranium in the material. It took them the better part of 18 months to do that, and when it was completed, the price of molybdenum had fallen ... and it wasn't economic," said McLeod.

The claims then lapsed again, as Canada's westernmost province underwent a two-decade slump in mining production, before Stirrup Creek staked the property in 2001, just in time to catch the wave of a metals boom. Soon after, Stirrup took on the Adanac name.

Despite the past delays, McLeod is confident the price backdrop has shifted firmly to a more positive footing, helped by a recent decision by China to cap its molybdenum exports.

Adanac -- the word is "Canada" spelled backward -- is now just waiting for environmental approvals from the province, which it expects by early September.

"We're ready to go. We'll be breaking ground as soon as we possibly can after that," McLeod said.

The company's shares are up more than 40 percent year-to-date, although down from a high of C$2.75 in April. The shares closed at C$1.45 on the Toronto Stock Exchange on Wednesday.

($1=$1.06 Canadian)