Commerce Resources Corp. Announces Positive Preliminary Economic Assessment for Upper Fir Tantalum and Niobium Deposit, Blue River, B.C.
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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) Nb2O5plus 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.
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VANCOUVER, Nov. 3, 2011 /PRNewswire/ - Commerce Resources Corp.
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 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
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 Summary(1)
LOM Total Cost per Tonne Cost per Kg Ta
Summary of Cash Costs (CAD$ X $1000) Milled Payable
(CAD$/t) (CAD$/Kg)
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 km(2)). 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.
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 $US46/kg Nb which reflect current market prices. These are higher than historic average prices, but reflect the general views of market analysts that current market conditions support the probability of sustained higher prices. There is no assurance the higher prices will be realized over the life of the project.
Table 2 below shows the sensitivity of the Blue River mineral resources to tantalum metal price.
Table 2: Blue River Project Sensitivity of Estimated Mineral Resources
to Tantalum Price:
Effective Date September 29, 2011, Tomasz Postolski, P.Eng,
Qualified Person. Base case is bolded.
Ta price Confidence Tonnes Ta2O5 Nb2O5 ContainedTa2O5 ContainedNb2O5
[US$/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 Ta(2)O(5) and 1,591ppm of Nb(2)O(5) 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.
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:
-- Ta2O5in 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 Ta(2)O(5) to US$100/kg contained Ta(2)O(5) (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 Ta(2)O(5) 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 Ta(2)O(5 )in concentrate is considered a proxy to the added value Commerce should recognize by refining the Blue River concentrate to high purity Ta(2)O(5.)
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 Nb(2)0(5 )(99.5%) of $US61-66/kg, and for average grade Ta(2)0(5) (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'.
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.
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 Ta(2)O(5) and 1,700 ppm Nb(2)O(5) and inferred mineral resources totaling 6.40 million tonnes containing 199 ppm Ta(2)O(5) and 1,890 ppm Nb(2)O(5); 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 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.
Commerce Resources Corp.
CONTACT: 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.