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Commerce Resources Corp. Announces Positive Preliminary Economic Assessment for Upper Fir Tantalum and Niobium Deposit, Blue River, B.C.

November 3, 2011

——————————

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.

——————————

VANCOUVER, Nov. 3, 2011 /PRNewswire/ – 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 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.

 

 

 

SOURCE Commerce Resources Corp.


Source: PR Newswire