The document summarizes a preliminary economic assessment for the Upper Fir Tantalum-Niobium Deposit in British Columbia. Key findings include:
1) The assessment indicates positive cash flow for a 7,500 tonne per day underground mining operation, with cash costs of $24.91 per kg of tantalum.
2) Resources total 36.4 million tonnes of indicated resources at 195 ppm Ta2O5 and 1,700 ppm Nb2O5, plus 6.4 million tonnes of inferred resources at 199 ppm Ta2O5 and 1,890 ppm Nb2O5.
3) Over a 10 year mine life, the
News Release: Positive Preliminary Economic Assessment for Upper Fir Tantalum and Niobium Deposit
1. Commerce Resources Corp. Announces Positive Preliminary Economic Assessment for
Upper Fir Tantalum and Niobium Deposit, Blue River, B.C.
Highlights
AMEC’s PEA Technical Report on the Blue River Tantalum-Niobium Project dated 29-
September-2011 will be filed shortly for public disclosure (www.SEDAR.com).
Study results show a positive cash flow for a potential 7500 tonnes per day underground
operation at the Upper Fir, with cash costs of $C24.91 per kilogram of tantalum metal (net of
niobium metal credits) in a technical grade oxide product.
AMEC’s economic evaluation was based on the September 29, 2011 mineral resource base of
36.4 million tonnes of Indicated mineral resource containing 195 ppm (gpt) Ta2O5 and 1,700 ppm
(gpt) Nb2O5 plus 6.4 million tonnes of Inferred mineral resource containing 199 ppm (gpt) Ta2O5
and 1890 ppm (gpt) Nb2O5.
The PEA identified opportunities for optimization in the geology and mining areas with the key
risks for project development lying in the sensitivity of the project to fluctuations in commodity
prices and the United States dollar to Canadian dollar exchange rates.
With the milestone of the PEA completed, AMEC has commenced work on an updated mineral
resource estimate that will include the results of drilling completed to the end of 2010 and assays
received as of September 29, 2011. This will be followed by a technical report that will incorporate
drilling, assaying, geological mapping and other work completed on the Upper Fir to the end of
Commerce’s 2010 field program. A subsequent update to this technical report is also planned
that will include results of the 2011 drilling and metallurgical test programs.
Results of the PEA represent forward-looking information. The preliminary economic assessment
is preliminary in nature and it includes Inferred mineral resources that are considered too
speculative geologically to have the economic considerations applied to them that would enable
them to be categorized as mineral reserves, and there is no certainty that the preliminary
economic assessment will be realized. Mineral resources are not mineral reserves as they do not
have demonstrated economic viability.
November 3, 2011 - Commerce Resources Corp. (TSXv: CCE; FSE: D7H; OTCQX: CMRZF) is
pleased to announce completion of a positive National Instrument 43-101 compliant Preliminary
Economic Assessment (“PEA”) for the Upper Fir Tantalum-Niobium Deposit at Blue River, B.C. The PEA,
prepared by independent consultants, AMEC Americas Limited (“AMEC”), indicates that the deposit can
be developed economically as an underground mine and recommends future studies to support a pre-
feasibility level assessment of the project. The Blue River Project is located near the village of Blue River,
which is approximately 250 km north of the city of Kamloops and approximately 90 km south of the town
of Valemount.
The PEA was prepared to define an overall proof of concept for further development of the Blue River
project. It includes geological and mineral resource modelling, preliminary mine planning, a description of
metallurgical test work and process design, a summary of environmental baseline work to date, and
estimates for capital and operating costs. As well it determines the economics to develop the project as
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an underground mine with process facility. Included also is an estimate of the direct cash costs to
produce tantalum contained in a technical grade oxide product. Readers are encouraged to review the
entire PEA Technical Report which is available for viewing at http://www.sedar.com. A link will also be
provided on the Company web site at http://www.commerceresources.com.
Key Findings of the PEA
The Indicated mineral resources totaled 36.35 million tonnes containing 195 ppm Ta2O5 and 1,700
ppm Nb2O5 and Inferred mineral resources totaled 6.40 million tonnes containing 199 ppm Ta2O5 and
1,890 ppm Nb2O5 (see news release dated 02-February-2011).
Underground mining at 7500 tpd using bulk mining with a variation of sublevel open stoping.
Production estimated at 2.7M t/a of mineralized material, over 10 years.
Mineral processing using a standard grind-flotation procedure to produce a concentrate of
ferrocolumbite-pyrochlore.
Metallurgical testing indicates that a mineral concentrate assaying about 30% combined Nb-Ta
pentoxide with a Ta-Nb recovery of 65-70% is possible.
Final products will be technical grade oxides of tantalum and niobium totaling 2,400 metric tonnes
and 18,610 metric tonnes of the respective metals over the life of the mine.
Total estimated capital cost to design and build is CAD$379M.
Operating costs over the life of mine are estimated at CAD$38.44/t milled.
Before tax, the net present value (NPV) for the project at an 8% discount rate is CAD$18.5M, with an
IRR of 9.1% and a 6.3 year payback period applying a discounted cash flow valuation method.
Cash costs of tantalum metal of CAD$24.91/kg contained in a technical grade oxide product (after
credit for the niobium contribution).
SUMMARY OF BEFORE TAX ECONOMIC MODELLING (Exchange rate: $1US=$C1.05)
METALS PRICING NPV @8% (000’s) Ta price/kg1 Nb price/kg1
BASE CASE $CAD18,500 $US317 $US46
+10% Ta price (Base Case Nb) $CAD65,800 $US349 $US46
+20% Ta price (Base Case Nb) $CAD113,000 $US380 $US46
+30% Ta price (Base Case Nb) $CAD160,300 $US412 $US46
+10% Nb price (Base Case Ta) $CAD71,600 $US317 $US50.60
+20% Nb price (Base Case Ta) $CAD124,700 $US317 $US55.20
+30% Nb price (Base Case Ta) $CAD177,900 $US317 $US59.80
1. of metal in technical grade oxide product
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Summary of Estimated Capital Costs
Total (x $CAD1,000)
Capital expenditure
Initial Capital Infrastructure 29,500
Process Initial Capital 116,200
Mining Initial Capital 89,400
Material Handling 8,000
Contingency 43,600
Indirect/Owner Costs 92,300
Total 379,000
Summary of Average LOM Total Cost per Tonne
Production Costs (x $CAD1,000) Milled ($CAD/t)
Mining 528,900 21.16
Process 338,500 13.54
Material Handling 18,500 0.74
G&A 75,000 3.00
Sub-total 960,900 38.44
Life of Mine Cash Cost Summary1
LOM Total Cost per Tonne
Cost per Kg Ta Payable
Summary of Cash Costs (CAD$ X Milled
(CAD$/Kg)
$1000) (CAD$/t)
Cash costs
Mining 528,900 21.16 220.13
Process 338,500 13.54 140.87
G&A 75,000 3.00 31.21
Material Handling 18,500 0.74 7.71
Sub-total 960,900 38.44 399.92
Credits
Nb (901,100) (36.04) (375.01)
Sub-total (901,100) (36.04) (375.01)
Adjusted cash costs
Total 59,800 2.40 24.91
1. The revenue gained from niobium is significant and even slightly exceeds the tantalum portion of revenue. Market analysts
generally agree that based on the existing demand and supply structure of tantalum markets prices for tantalum are likely to
increase strongly in the near term. For this reason, although tantalum and niobium values in the mineral resource estimate are
approximately equal at present pricing assumptions, AMEC elected to provide cash costs for tantalum net of niobium credits.
Property
The Blue River Project property covers 105,373 hectares (1,000 km2). Power transmission lines, rail, and
paved and gravel roads are all adjacent to, or within the property boundaries. Transalta Corp.’s 18 MW
Bone Creek run-of-river hydroelectricity project near the project was commissioned in June 2011.
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Resource Estimate
The resource comprises a series of sill-like carbonatite bodies with up to 91.2m in estimated cumulated
true thickness. The composite body extends more than 1,450m in a north-south direction and as much as
800m in an east-west direction. Tantalum and niobium are contained in the minerals ferrocolumbite and
pyrochlore.
The PEA conducted was based on a mineral resource estimate announced in February 2011 (“Blue River
Ta-Nb Project NI 43-101 Technical Report, Blue River, British Columbia” by AMEC with effective date 31-
January-2011). AMEC used the drill results up to the end of 2009, which includes 183 drill holes
comprising 37,446 metres of HQ drill core and 8,218 sawn core samples to develop the mineral resource
estimate. Most drill holes were at a nominal spacing of 50m with dips typically between -60 to sub-vertical.
Results from the 54 holes drilled in 2010 were compared to the existing resource model and were found
to be reasonably consistent with the geology predicted by the model. As well, the 2011 preliminary drill
results were inspected at site on vertical cross-sections and were also found to be consistent with the
predicted geological model.
The new effective date of the mineral resource estimate, based on the review of recent drill results, is now
29 September 2011 (Table 1). There has been no change to the closure date of the database used in the
estimate, which is confined to all drilling that was completed up to the end of December 2009.
Table 1: Blue River Project Estimated Mineral Resources. Effective Date September 29, 2011.
Tomasz Postolski, P.Eng, Qualified Person
Confidence Tonnes Ta2O5 Nb2O5 ContainedTa2O5 ContainedNb2O5
Category [ppm] [ppm] [1000s of kg] [1000s of kg]
Indicated 36,350,000 195 1,700 7,090 61,650
Inferred 6,400,000 199 1,890 1,300 12,100
1. Assumptions include US$317/kg Ta, US$46/kg Nb, 65.4% Ta2O5 recovery, 68.2% Nb2O5 recovery, US$32/tonne
mining cost, US$17/tonne process and refining cost. Mining losses = 0% and dilution = 0%.
2. Mineral resources are amenable to underground mining methods and have been constrained using a “Stope Analyzer”.
3. An economic cut-off was based on the Ta and Nb values per block which is variable based on the location of blocks
used in the mineral resource estimate. A block unit value cut-off ranged from $52 to $59.
4. Discrepancies in contained metal values are due to rounding.
5. In situ contained oxide reported.
The mineral resource estimate, on which the PEA is based, uses base case price assumptions of
US$317/kg Ta, and $US46/kg Nb which reflect current market prices. These are higher than historic
average prices, but reflect the general views of market analysts that current market conditions support the
probability of sustained higher prices. There is no assurance the higher prices will be realized over the life
of the project.
Table 2 below shows the sensitivity of the Blue River mineral resources to tantalum metal price.
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Table 2: Blue River Project Sensitivity of Estimated Mineral Resources to Tantalum Price:
Effective Date September 29, 2011, Tomasz Postolski, P.Eng, Qualified Person. Base
case is bolded.
Ta price Confidence Tonnes Ta2O5 Nb2O5 ContainedTa2O5 ContainedNb2O5
[US$/kg] Category [ppm] [ppm] [1000s of kg] [1000s of kg]
470 Indicated 51,130,000 188 1,410 9,610 72,300
Inferred 8,100,000 192 1,700 1,600 13,800
381 Indicated 44,430,000 192 1,530 8,530 68,020
Inferred 7,300,000 196 1,780 1,400 13,000
317 Indicated 36,350,000 195 1,700 7,090 61,650
Inferred 6,400,000 199 1,890 1,300 12,100
272 Indicated 29,990,000 197 1,850 5,910 55,480
Inferred 5,500,000 201 2,010 1,100 11,100
238 Indicated 25,130,000 197 2,000 4,950 50,240
Inferred 4,900,000 202 2,110 1,000 10,400
1. Ta price was varied and all other assumptions remain the same as base case.
2. Base case is in bold.
3. Mineral resources are amenable to underground mining methods and have been constrained using a “Stope Analyser”.
4. Discrepancies in contained metal values are due to rounding.
5. In situ contained oxide reported.
Mining and Mineral Processing
AMEC believes the preferred concept for mining the Blue River Deposit is by underground methods using
variations of sublevel stoping under a conceptual scenario that considers mining and processing at a rate
of 7,500 tonnes per day. The deposit will be accessed via two main portals located in places where the
deposit outcrops on the hillside at a distance of about 4km from the proposed plant site. Material to be
mined by bulk mining methods represents 84% of the mineral resource. An additional 2% of waste was
identified as internal dilution. Geotechnical studies indicate that an extraction ratio of 67.5% can be
achieved, providing an overall mining recovery of 58%. Considering waste inside stopes and external
dilution the overall resource grades were diluted to 185 ppm Ta2O5 and 1,591ppm of Nb2O5 for the run of
mine estimates.
Mining and economic parameters were adjusted based on AMEC’s experience with analogous deposits
and mining methods. A mineral processing method using a standard-grind flotation process to make a
concentrate of ferro-columbite-pyrochlore is assumed for the Upper Fir material. The proposed process is
similar to that being used commercially at Iamgold’s Niobec Mine in Quebec. The concentrate would be
further processed to produce marketable separate oxides of tantalum and niobium. The proposed
process methods are mature and already in use industrially.
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End Products and Base Case Metal Pricing
The processes proposed for the Blue River Project will produce 99.9% pure tantalum and niobium oxides,
generally known as technical grade oxide products. These products are generally sold under contract and
the prices are typically kept confidential between buyer and seller to preserve competitive advantages.
Tantalum
Tantalum is commonly quoted as two separate products:
Ta2O5 in tantalite concentrate: a non-refined, tantalum-bearing concentrate of variable
composition and trace element content; and
tantalum metal scrap (99.9% pure Ta): this form of tantalum product receives a premium price
in the market relative to tantalite concentrate
Over the last six years, tantalite concentrate prices have ranged from US$75/kg contained Ta2O5 to
US$100/kg contained Ta2O5 (US$34/lb to US$45/lb). In the same period tantalum metal scrap prices
ranged from US$110/kg Ta to US$180/kg Ta metal (US$50/lb to US$82/lb).
In 2010, prices rose dramatically in response to numerous conditions including reduced production,
increased concerns about “conflict minerals” specifically tantalum production in Africa, and depletion of
known strategic stockpiles. In October 2010 the price for Ta2O5 in tantalite concentrate was US$195/kg
(US$89/lb) and for tantalum metal scrap was US$280/kg (US$127/lb).
The higher price for tantalum metal scrap compared to the price for Ta2O5 in concentrate is considered a
proxy to the added value Commerce should recognize by refining the Blue River concentrate to high
purity Ta2O5.
Niobium
Niobium generally trades as Nb metal or ferroalloy and the price has remained relatively constant at
US$44.08/kg (US$20/lb) Nb over the last several years. A base case price of US$46/kg Nb (US$21/lb)
metal was assumed.
PEA Price Assumptions
The metal price assumptions used in the mining cut-off and financial analyses in the PEA are US$317/kg
Ta metal and US$46/kg Nb metal contained in oxide product.
Comments of Commerce President
“We are extremely pleased with the results of this study which represents a major milestone in the
progress to develop the Upper Fir. The AMEC PEA reported today is further confirmation of Commerce’s
belief that we are in the process of building a very important long-term source of conflict free and ethical
tantalum which could potentially supply 10% of the current world’s market for a near-ten year period.” said
Dave Hodge, Commerce’s President. “Results remain pending for additional drilling completed in 2011,
and we are eagerly awaiting the results of AMEC’s next resource update which will be based on drilling to
the end of the 2010 field season. All indications are that we will be able to enhance even further the
quality of the resource.
“Of necessity, the resource estimate upon which the PEA was completed was based on an assumed long
term pricing which may prove to be conservative. Recent developments in global tantalum and niobium
markets provide indication of substantially higher prices than those used to define the resource on which
the PEA is based. For example, information available through Asian Metals provides 30-September-2011
pricing (CAD=.961492 US) for average grade Nb205 (99.5%) of $US61-66/kg, and for average grade
Ta205 (99.95% min) of $US378-403/kg. Such prices may provide an opportunity for the ongoing resource
update to the end of 2010 to be based on higher, though still conservative, pricing. We believe there will
be significant near-term upside for investors who believe that projected trends for increased prices will
continue”.
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NI 43-101 Disclosure
The following Qualified Persons for the report are AMEC employees, based out of Vancouver: Albert
Chong, Principal Geologist, P.Geo; Tomasz Postolski, Senior Geostatistician, P.Eng; Ramon Mendoza
Reyes, Principal Mining Engineer, P.Eng.; Tony Lipiec, Principal Metallurgical Engineer, P.Eng.,; and Mr.
Behrang Omidvar; Financial Analyst, P.Eng. All of the Qualified Persons have read and approved the
contents of this news release.
Mr. Jody Dahrouge, B.Sc., P.Geol., Commerce Resources Corporation, is a Qualified Person as defined
by National Instrument 43-101, read and approved the disclosure of the technical information in this news
release with respect to the exploration. A Technical Report compliant with National Instrument 43-101
standards summarizing the Preliminary Economic Assessment will be filed on SEDAR (www.sedar.com)
within 45 days.
About Commerce Resources Corp.
Commerce Resources Corp. is an exploration and development company with a particular focus on
tantalum, niobium and rare metal deposits with potential for economic grades and large tonnages. The
Company is specifically focused on the development of its Upper Fir Tantalum and Niobium Deposit in
British Columbia and is also exploring its Eldor Rare Earth Element Project in northern Quebec.
For more information please visit the corporate website at http://www.commerceresources.com or contact
Investor Relations at 1.866.484.2700 or info@commerceresources.com.
On Behalf of the Board of Directors
COMMERCE RESOURCES CORP.
David Hodge
President and Director
Tel: 604 484 2700
TF: 866.484.2700
Email: info@commerceresources.com
Web: http://www.commerceresources.com
Forward-Looking Statements
This news release contains forward-looking information which are subject to a variety of risks
and uncertainties and other factors that could cause actual events or results to differ from those
projected in the forward-looking statements. Forward looking statements in this press release
include that we will have positive cash flow for a potential 7500 tonnes per day underground
operation at the Upper Fir property with cash costs of $C24.91 per kilogram of tantalum metal;
that we will have opportunities for optimization in the geology and mining areas; that our
property has indicated mineral resources totaling 36.35 million tonnes containing 195 ppm
Ta2O5 and 1,700 ppm Nb2O5 and inferred mineral resources totaling 6.40 million tonnes
containing 199 ppm Ta2O5 and 1,890 ppm Nb2O5; that total estimated capital cost to design and
build a mine is CAD$379M; that operating costs over the life of mine are estimated at
CAD$38.44/t milled; and the projected method of mining and its results. These forward-looking
statements are based on the opinions and estimates of management and its consultants at the
date the information is disseminated. It is subject to a variety of risks and uncertainties and
other factors that could cause actual events or results to differ materially from those projected in
the forward-looking information. Risks that could change or prevent these statements from
coming to fruition include changing costs for mining and processing and their impact on the cut
off grade established; increased capital costs; changing forecasts of mine production rates; the
timing and content of upcoming work programs; geological interpretations based on drilling that
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may change with more detailed information; potential process methods and mineral recoveries
assumption based on limited test work and by comparison to what are considered analog
deposits that with further test work may not be comparable; the availability of labour, equipment
and markets for the products produced; market pricing for the products produced; and despite
the current expected viability of the project, conditions changing such that the minerals on our
property cannot be economically mined, or that the required permits to build and operate the
envisaged mine can be obtained. The forward-looking information contained herein is given as
of the date hereof and the Company assumes no responsibility to update or revise such
information to reflect new events or circumstances, except as required by law.
For a description of the data verification procedures, analytical and testing procedures and a
description of the identification of any known legal, political, environmental, or other
risks that could materially affect the potential development of the mineral resources, see Blue
River Ta-Nb Project NI 43-101 Technical Report, Blue River, British Columbia” by AMEC with
effective date 31-January-2011 that is filed on SEDAR.
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