Rare Earth Elements

In 2012, Commerce Resources completed a positive Preliminary Economic Assessment on the Ashram Rare Earth Project in northern Quebec. In 2015, we filed an amended Technical Report on SEDAR. Highlights of the study were as follows:

Highlights

  • Study results show a strongly positive cash flow from a 4,000 tonne per day open-pit operation at Ashram with a 25-year mine life, a pre-tax and pre-finance Net Present Value (NPV) at a 10% discount rate of $2.32 billion, a pre-tax/pre-finance Internal Rate of Return (IRR) of 44% and a pre-tax/pre-finance payback period of 2.25 years. The current Ashram Technical Report dated January 7, 2015 explains why no after-tax case is included, and that a combined tax rate of around 32.5% may apply to production.
  • SGS's economic evaluation was based on the March 6, 2012 resource estimate which used a base case geologic cut-off grade of 1.25% TREO and provided 1.59 million tonnes (Mt) averaging 1.77% TREO of measured resource, 27.67 Mt averaging 1.90% TREO of indicated resource, and 219.8 Mt averaging 1.88% TREO of inferred resource. Mineral resources are not mineral reserves as they do not have demonstrated economic viability.
  • The rare earth elements at Ashram occur in simple and well-understood mineralogy, being primarily in the mineral monazite and to a lesser extent in bastnaesite and xenotime. These minerals dominate the currently known commercial extraction processes for rare earths.

Mineral Resource Estimate

The PEA uses the updated mineral resource estimate for the Ashram Deposit (SGS Geostat, 2012), released March 6, 2012. This resource incorporates all drilling completed at the Ashra Deposit through 2011 (15,691.74 m in 45 holes). The mineral resource estimate is as follows:

Cut-off Confidence
Category
Tonnage
(t)
TREO
(%)
LREO
(%)
MREO
(%)
HREO
(%)
MHREO
(%)
MHREO/TREO
(%)
1.25 Measured 1,590,000 1.77 1.60 0.089 0.085 0.17 9.8%
Indicated 27,670,000 1.90 1.77 0.073 0.056 0.13 6.7%
Inferred 219,800,000 1.88 1.77 0.068 0.045 0.11 6.0%

  • The base case TREO cut-off grade (CoG) for the reporting of the 2012 mineral resource estimate was retained from the 2011 base case CoG of 1.25% TREO.
  • LREO (Light Rare Earth Oxides) = La2O3 + Ce2O3 + Pr2O3 + Nd2O3
  • MREO (Middle Rare Earth Oxides) = Sm2O3 + Eu2O3 + Gd2O3
  • HREO (Heavy Rare Earth Oxides) = Tb2O3 + Dy2O3 + Ho2O3 + Er2O3 + Tm2O3 + Yb2O3 + Lu2O3 + Y2O3
  • MHREO (Middle and Heavy Rare Earth Oxides) = MREO + HREO
  • MHREO / TREO, ratio expressed as a percent

Results of the PEA represent forward-looking information. This economic assessment is by definition preliminary in nature and it includes inferred mineral resources that are considered too speculative to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. 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.

The Ashram Deposit hosts a well-balanced rare earth distribution throughout in addition to significant enrichment over all five of the rare earths considered to be ‘critical’ (Nd, Eu, Tb, Dy, and Y). Within the overall resource, there exists a zone of more intense Middle and Heavy Rare Earth Oxide (MHREO) enrichment, termed the ‘MHREO Zone’. This type of MHREO enrichment is unique to Ashram and extends from surface with significant tonnage and grade. The current resource for the Ashram MHREO zone is 1.1 Million tonnes (Mt) at 1.69% TREO of measured, 5.4 Mt at 1.62% TREO of indicated, and 2.79 Mt at 1.57% TREO of inferred. Overall, the Ashram Deposit has a pervasive enrichment in the MHREOs, with the MHREO Zone itself an area of more intense enrichment occurring directly at surface that extends to depths in excess of 175 m.

Key Findings of the PEA

  • 4,000 t/d, open-pit operation with 0.19:1 (waste:ore) strip ratio over 25 year mine life
  • Pre-tax Net Present Value (NPV) of $2.32 billion dollars at a 10% discount rate*
  • Pre-tax Internal Rate of Return (IRR) of 44% and pre-tax payback period of 2.25 years*
  • Estimated capital cost of $763 million (including 25% contingency)
  • Estimated operating cost of $95.20/tonne treated, or approximately $7.91/ kg of rare earth oxide (REO) produced
  • Annual production averaging ~16,850 tonnes of rare earth oxide over life of mine, including 2,870 tonnes Nd oxide, 96 tonnes Eu oxide, 26 tonnes Tb oxide, 106 tonnes Dy oxide, and 440 tonnes Y oxide
  • Rare earth element host mineralogy (monazite, bastnaesite, and xenotime) comprises phases amenable to recovery with processing using conventional and proven techniques

* The current Ashram Technical Report dated January 7, 2015 explains why no after-tax case is included, and that a combined tax rate of around 32.5% may apply to production.

NI 43-101 Disclosure

Results of the PEA represent forward-looking information. This economic assessment is by definition preliminary in nature and it includes inferred mineral resources that are considered too speculative to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. 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.

Darren L. Smith, M.Sc., P.Geol., Dahrouge Geological Consulting Ltd., a Qualified Person as defined by National Instrument 43-101, has prepared, read and approved all scientific and technical information that relates to the Ashram Rare Earth Element Project on this website.