Commerce Resources Corp. Reports Solid Cost-Effectiveness in the Preliminary Economic Assessment for the Ashram Rare Earth Element Deposit in Northern Quebec
The most important points
The results of the study show a solid positive cash flow for an ashram open pit mine (4.000 tonnes per day) with a 25 life expectancy of the mine, net present value (NPV) before tax and before financing of 2,32 billion CAD with a discount factor of 10%, an internal rate of return before tax / before financing of 44% and a payback period before tax / before financing of 2,25 years.
SGS's performance assessment was based on the 6 resource calculation. March 2012, which used a cut-off grade of 1,25% TREO and delineated an explored and indicated resource of 29,3 million tonnes and an inferred resource of 219,8 million tonnes averaging 1,88% TREO.
The rare earth elements (REE) on Ashram occur in a simple and well-understood mineralogy. The REEs are primarily hosted in the mineral monazite and, to a lesser extent, in the minerals bastnaesite and xenotime. These minerals dominate the currently known economical extraction methods for REEs.
May 31.05.2012, 0 - Commerce Resources Corp. (WKN2J3Q43; TSX-V: CCE; OTCQX: CMRZF) (“the company” for short) gives the results of a positive Preliminary Economic Assessment (“PEA”) for the rare earth element (Rare Earth Element, "REE") - known as the Ashram deposit on the Eldor Project in the north of the Canadian province of Quebec. The PEA, which was prepared by the independent consultancy SGS Canada Inc. - Geostat (SGS Geostat) of Montreal (Blainville), indicates that the deposit can be developed economically using the open pit method and suggests further to support a feasibility study and feasibility study for the project Work ahead. The Eldor property is located within the Labrador Trough, in northeast Quebec, approximately 101 km south of the Kuujjuaq community.
“The PEA demonstrates robust economics for the ashram deposit and recommends the next steps in the economic evaluation of this very large and extremely strategic resource. The high NPV is due in part to the value of the ashram ore as it is enriched in all 5 of the critical REEs, neodymium, europium, dysprosium, terbium and yttrium, "stated David Hodge, President and CEO of Commerce Resources Corp. "Management believes that given the simple mineralogy of the deposit and the history of the successful economic processing of the three host minerals found at the Ashram, further significant results will be realized during the next phase of metallurgy based on testing completed to date. We look forward to starting the pre-feasibility study to demonstrate this. "
The main results of the PEA
Opencast mine (4.000 tons per day) with a overburden ratio of 0,19: 1 (overburden: ore) over the life of the mine from 25 years.
Net present value (NPV) before tax of 2,32 billion CAD with a discount factor of 10%.
internal rate of return (Internal Rate of Return) before tax of 44% and a payback period before tax of 2,25 years.
estimated investment costs of 763 million CAD (including 25% contingencies).
estimated operating costs of 95,20 CAD per tonne processed or approximately 7,91 CAD per kg of rare earth oxide (REO) produced.
using 1,25% TREO cut-off content (CoG) for more than 175 years of mineable ore (open pit + underground mining).
Annual average production of about 16.850 tons of REO during the mine life, including 2.870 tons of Nd oxide, 96 tons of Eu oxide, 26 tons of Tb oxide, 106 tons of Dy oxide and 440 tons of Y oxide.
The host minerals of the rare earth elements (monazite, bastnaesite and xenotime) include phases that can be treated and applied by conventional and proven techniques.
Basis for the Study: the Base Case Scenario
The base case used for the PEA provides for open pit mining with a production of 4.000 tonnes per day (350 days per year). The mineralized material is processed on-site into a mineral concentrate containing at least 10% total rare earth oxide (TREO). This is done by conventional flotation techniques that result in a mass reduction of 87,3%. The material is digested on site by sulfuric acid to produce a mixed rare earth carbonate (REC). The mineral concentrate and acid digestion rates are expected to be at least 70% and 95% respectively for a final total yield of 66,5%. When using ore grade 1,81% TREO, it is estimated that approximately 16.850 tonnes of REO will be produced annually over the 25 mine life.
The mixed carbonate product will be transported 185 km north to the storage areas and port facilities on Mackay's Island, north of Kuujjuaq on Ungava Bay, on a year-round drivable road that Commerce will build. The product is stored and then shipped during the 3 or 4 ice-free months of the year.
Mineral resource costing and geological framework
The PEA uses the mineral resource estimate (SGS Geostat 2012) updated for the Ashram deposit on 6. March 2012 was released. This calculation shows an increase in tonnage of 100% compared to the initial calculation of an inferred mineral resource. This resource estimate includes all drill holes drilled to date at the Ashram Deposit (45 15.691,74 total length drill holes). Following the mineral resource calculation:
The 2012 Mineral Resource Calculation Base TREO Cut-Off Content (CoG) comes from the 2011 Base Case CoG, 1,25% TREO. Using the ashram basket price of 35,02 USD per kg, the marginal (mill) CoG of 0,51% TREO was calculated. Although all of the material is considered to be economical through 0,51% TREO, a CoG of 1,25 TREO was selected for mining to maximize the grade of the production ore.
LREO (Light Rare Earth Oxides, light rare earth element oxides) = La2O3 + Ce2O3 + Pr2O3 + Nd2O3
MREO (Middle Rare Earth Oxides, medium rare earth oxide) = Sm2O3 + Eu2O3 + Gd2O3
HREO (Heavy Rare Earth Oxides, heavy rare earth element oxides) = Tb2O3 + Dy2O3 + Ho2O3 + Er2O3 + Tm2O3 + Yb2O3 + Lu2O3 + Y2O3
MHREO (Middle and Heavy Rare Earth Oxides, medium and heavy rare earth element oxides) = MREO + HREO
MHREO / TREO, expressed as a percentage
The Ashram deposit hosts a balanced REE distribution in addition to a significant enrichment of all 5 REEs considered “critical” (Nd, Eu, Tb, Dy and Y). Within the total resource there is a zone with greater MHREO enrichment, called the "MHREO zone". This type of MHREO enrichment is unique to Ashram and extends from the surface with significant tonnage and grade (6,55 million tons with 1,63% TREO in the explored and indicated category and 2,79 million tons with 1,57, 175% TREO in the category concluded). Overall, the Ashram deposit is widely enriched with MHREOs, with the MHREO Zone being an area of higher enrichment that extends from the surface to a depth of over XNUMX meters.
The REE mineralization on Ashram stretches beyond 500 m over 700 m over 600 m and extends to a depth above XNUMX m. Mineralization remains open to the north, south, and to the deep, and is not fully demarcated to the west and east.
Mine design and operation
Mining is planned for mining (4.000 tonnes per day), which will support an initial mine life of 25 years. With the current CoG of 1,25% TREO, the deposit contains sufficient material to support a mining operation over 175 years (open pit mining + underground mining). Using the calculated economic CoG of 0,51% TREO, mining could operate over 300 years (open pit + underground mining) and there is a possibility for significant expansion as the deposit is still open.
The minefield infrastructure will include a camp, an aerodrome, a power plant, fuel and acid tanks, an emulsion plant, and reconditioning / tailing facilities to manufacture the REC product.
The initial open pit will be almost entirely within the minable ore in the center of the MHREO zone and will consist of three “push-back phases”. Conventional mining equipment such as mining equipment is used on 5 m wide mining terraces. B. trucks, loaders and hydraulic excavators are used. The material in the open pit includes 35 million tons of ore with a content of 1,81% TREO with only 6,7 million tons of overburden. The deposit has only a small overburden, which leads to an almost negligible overburden ratio of 0,19: 1 (overburden: ore). The ore grade will continue to increase over time. The dead rock and spoil will be used as construction material in year 0, including for the dike in the northern part of Center Pond, where the site of the future open pit is currently 0,5 to 3 m underwater.
The mining will take place on 350 days of the year. This will lead to the reduction of 1.400.000 tons of ore per year. During the initial life of the 25 mine, approximately 16.850 tonnes of REO will be produced each year in the form of an REC product. The pit will reach a depth of about 175 m. This will make it possible to continue open pit mining for many years after the initial 25 years. The production schedule proposed by SGS can be seen in tables 1 and 2.
Table 1: Proposed production during mine life
Table 2: Production of individual REO
Metallurgy and processing
The metallurgical test work on a representative sample from the ashram deposit is currently being conducted at Hazen Research Inc. (Hazen), Colorado. After initial experiments with different separation techniques, flotation was identified as the most promising process and has been used as the main enrichment process to date. To date, the test work has focused on the initial grinding and determination of the best rare earth element collectors and carbonate buffers.
The flotation results achieved so far show a significant enrichment to a rare earth mineral concentrate. At present, the best results obtained in the laboratory are a mineral concentrate containing approximately 10,37% TREO at a rate of 73,4% and another containing 11,18% TREO at an application rate of 68,5%. Conventional flotation techniques have been used without attempting to optimize. This corresponds to a TREO enrichment of almost six times the original content at favorable yield, with a corresponding reduction of 85 to 90% of the original starting weight. It has also been demonstrated that all three REE-leading minerals (monazite, bastnasite and xenotime) co-release the REEs and share conventional processing techniques.
The PEA base case envisages physical fortification on the mine site by conventional crushing and flotation techniques to produce 10% TREO mineral concentrate at 70% yield (12,7% of initial weighed).
The processing plant, as planned, will produce a rare earth mineral concentrate by conventional foam flotation. It will include the following areas: conveyor ore stock, single-stage shredder, crushed material storage, SAG grinder with screen, followed by a single-stage ball mill with air classifier, rare earth mineral flotation, concentrate thickening and filtering, tailings processing, water and reagent distribution.
According to Roland Schmidt, head of Hazen's Mineralogical Laboratory, who also oversees ashram testing:
“There are no technical obstacles that would prevent the current target of 20% TREO (concentrate) from being achieved with an application of 60 to 70%. It is expected that an improvement of this magnitude should be possible with a view to the simple, albeit fine-grained mineralization and also because the flotation chemistry for the separation of the mineral types occurring in the carbonate matrix is an established and commercially proven technology. "
Digestion of the mineral concentrate is completed at the mine site using standard techniques common to the rare earth minerals monazite, bastnasite and xenotime. Acid digestion with concentrated sulfuric acid will remove the impurities (eg Ca, F, P, Th, Fe) and precipitate the rare earth elements as carbonates sold on the market. The process and economics of producing a mixed REO end product as a potential alternative to a REC product will be explored in a feasibility study.
Economic analysis
Capital expenditures (CAPEX)
Total investment required for the Ashram Deposit is estimated at 763 million CAD and includes an eventuality of 25%. The costs have been broken down into table 3.
Table 3: breakdown of capital expenditures
The largest expense for the project is the construction of a 185 km long, year-round drivable road from the mine area to the port facilities on Mackay's Island north of Kuujjuaq. The PEA includes 100% the cost of building and maintaining the road. However, the Quebec government recently announced its ambitious infrastructure and sustainable development plan for the northern part of the province, called the North Plan. Part of the plan is the completion of a road or railway line and a high-voltage line connecting Kuujjuaq with the south via the Labrador Trough. The currently proposed route would pass the ashram site at a distance of 35 km. The Quebec government has highlighted the flexible and dynamic nature of Plan North and the need for industry involvement to help fund and develop the final route. Commerce intends to work with the government to incorporate our planned shipping route and transport route into the government's infrastructure plan. These efforts could offset the construction and associated maintenance costs.
Operating expenses (OPEX)
For the Ashram Deposit, the total estimated operating expenses will be 95,20 CAD per ton of processed REO or 7,91 CAD produced per kg of REO. Operating expenses are relatively low due to the negligible overlap, open pit methodology, and simple mineralogy suitable for conventional processing techniques. The expenses have been broken down into table 4.
Table 4: breakdown of operating expenses
Much of the G&A cost comes from the transportation of the acid and other consumables. Offset studies will be conducted to assess the economic savings from building some of these facilities further south. However, this was outside the scope of the PEA.
Price forecast and market analysis
The selected oxide values used to estimate the economic potential of the Ashram project are a combination of several analyst forecasts up to 2017, as compiled by Delotte. Many of the most recent analyst and market reports have been consulted, including Roskill Information Services, CIBC, MetalPages.com, IMCOA, Mackie Research Capital Corporation, Dundee Securities Corporation, and Cormark Securities Inc., in addition to reviewing the values that have been used in recent years PEA / PFS studies of comparable companies.
The scenario used in the PEA rates the sale of a pure mixed REC product rather than separate oxides. For this, a discount of 25% was applied to the price forecast, as Commerce should not fully benefit from the individual oxide prices. This discount was calculated based on the valuation of the separation plant costs for similar projects in addition to an eventuality. The REO price forecast used in addition to the 25% reduced prices in the PEA is shown in table 5.
Table 5: Price forecast of rare earth oxides for PEA
It should be noted that there remains a great deal of uncertainty about future rare earth element prices, and forecasts over a period of more than 5 years must be made with caution. The supply forecasts vary considerably, laying the foundation for the drastic differences in industry price forecasts seen in the past 12 months. With the real possibility that China will continue to reduce exports and curtail the production of its REE producers as it seeks to consolidate the industry, new start-up producers will not automatically result in lower prices in the rare earth element sector , The economics of the PEA show that the ashram deposit can absorb a significant decline in the values used for this price forecast and may still be profitable.
Discounted cash flow analysis
The aggregated cash flow model for ashram can be seen in table 6. The project has a net present value (NPV) before tax of 2.318.000.000 CAD and an internal rate of return before taxes of 44% and a payback period of 2,25 years with a discount factor of 10%.
Table 6: discounted cash flow for base case
The total operating cost of the project is estimated at 3.331.850.000 CAD, the total revenue estimated at 12.059.196.450 CAD. The pre-tax profit would then be at 8.727.346.450 CAD. The PEA did not consider possible fluorite or phosphate byproducts.
sensitivity analysis
For the base case, a sensitivity analysis was performed. Important variable variables were used that had the greatest impact on the project's overall economy: reduction of oxide value, basket price (or total output revenue), capital expenditure (CAPEX) and operating expenses (OPEX). The analysis suggests that project economics are most affected by oxide prices and total output revenue, which is generally the case for these projects. The results are shown in Table 7
Table 7: Sensitivity analysis with a discount factor of 10%
Opportunities for improvement
Opportunities to improve efficiency have been identified in various areas. These include:
further enrichment of the mineral concentrate where no technical obstacles were observed and further optimization after identifying the appropriate collectors and buffers;
improved application rates based on the recent favorable results and trends;
additional digestion information to determine the exact amount of acid required (according to estimates less than 1 ton of acid per 1 ton of concentrate as used in the PEA);
comparative economic studies for concentrate digestion in southern Quebec (eg near Montreal);
economic comparative studies for concentrate digestion to produce a mixed REO rather than a REC;
possible partnership with the Government of Quebec in the progressive infrastructure of Plan North;
Potential for more abundant ore at the surface immediately north of the current open pit, which could be trapped in the open pit during a PFS; and
Potential for hydrofluoric and phosphate by-products.
NI 43-101 Notice
The following National Instrument 43-101 Qualified Persons involved in the report are employees of SGS Geostat, based in Montreal, Blainville: Gaston Gagnon, Senior Mining Engineer, Ing. And Gilbert Rousseau, Chief Metallurgist, Ing All of these Qualified Persons have read and approved the contents of this release.
Mr. Jody Dahrouge, B.Sc., P.Geol., Commerce Resources Corporation, a Qualified Person in accordance with NI 43-101, has read and released the notice of technical information regarding exploration.
A technical report on the Preliminary Economic Assessment on the Eldor Project will be completed within 45 days and submitted to SEDAR (www.sedar.com). He is also on the company's website to read.
The results of the PEA are forward-looking information. This Economic Assessment is a preliminary one in nature and includes inferred mineral resources which, because of geology, are considered too speculative to be considered economic, which would place them in the Mineral Reserves category. It is also uncertain whether the preliminary economic feasibility report will be implemented. The terms and conditions of the project are subject to changes based on the final filing of the PEA on SEDAR within 45 days of the date of this press release. Mineral resources are not mineral supplies as they have not demonstrated economics.
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 concentrations and high tonnage. In particular, the company is focusing on the development of its rare earth element project Eldor in northern Quebec and the Upper Fir tantalum and niobium deposit in British Columbia, Canada.
For more information, please visit the company's website at http://www.commerceresources.de or contact the Investor Relations department at +1.604.484.2700 or at [email protected]
For further information please contact:
Commerce Resources Corp.
David Hodge, President and Director
Suite 1450 - 789 West Pender Street
Vancouver, BC, Canada V6C 1H2
Tel. + 1 (604) 484-2700
Fax + 1 (604) 681-8240
This is a translation of the original English press release. Only the original English press release is authentic. A liability for the correctness of the translation is excluded.
