Commerce Resources Corp. Announces Positive Preliminary Economic Assessment for Upper Fir Tantalum and Niobium Deposit, Blue River, B.C.
-- 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.
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.
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 $US46/kg Nb which reflect
current market prices. These are higher than historic average prices,
but reflect the general views of market analysts that current market
conditions support the probability of sustained higher prices. There is
no assurance the higher prices will be realized over the life of the
Table 2 below shows the sensitivity of the Blue River mineral resources
to tantalum metal price.
Table 2: Blue River Project Sensitivity of Estimated Mineral Resources to Tantalum Price: Effective Date September 29, 2011, Tomasz Postolski, P.Eng, Qualified Person. Base case is bolded.
Ta price Confidence Tonnes Ta2O5 Nb2O5 ContainedTa2O5 ContainedNb2O5 [US$/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
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 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 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
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.
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.