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Resource Intelligence Interviews Commerce Resources’ Chris Grove

Apr. 08, 2011 5:44 AM ET
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Check out Commerce Resources huge resource estimate on their RI Analytics profile HERE, where you can calculate metal values and more.

RI: Commerce Resources has two projects, a rare metals project and a rare earth project. You had new resource estimates on both projects this year that are very significant for the company. Can you tell us about your Eldor project first?

CG: The first 43-101 resource for our rare earth element discovery came out last Thursday and we have moved through the ranks relatively quickly to where we are now, which is the third-largest rare earth element deposit in the western world. It has a 43-101 compliant resource of 117 million tonnes grading at 1.74 % total rare earth element oxides. It’s the third-largest but it’s actually richer than the two that are bigger than us. The largest is Greenland with 1% TREO on average and the second largest is Avalon Rare Metals with 1.34% TREO on average.

RI: This project has a good deal of light rare metals but it’s also got the heavies, hasn’t it?

CG: Yes. It’s really interesting because it is very unusual if not unique to be significantly enriched with both. What we originally released was drill hole assays in August and September that were basically all light REEs with huge intersections of 200 to 300 metres of about 2% TREO. We got a lot of attention based on that but on November 24 we released a couple of holes that were new to us and in those holes we had an area that was about 60 metres and of the 2% rare earth elements it was over 40% heavy rare earth elements.

RI: We’re looking at europium, dysprosium, and gadolinium. Looking at recent prices, two of those are between $300 and $600 per kg.

CG: Yes. Dysprosium is a really important heavy rare earth element. A pretty good simplification of the whole rare earth element space is the fact that you need neodymium, which is a light, and dysprosium, which is a heavy, to go together to make the magnets that then go together in the manufacturer of electric cars.

In terms of the europium, which is usually one of the top three most valuable rare earth elements, europium in heavy rare earth metal deposits is often leached out and has something to do with the feldspar. For some geological reason all of our europium there is present and potentially should be recoverable although that is to be defined later on.

RI: I realize this is a very early stage project at this point but you’ve had a couple of people look at the potential values for the project. John Kaiser came out with some numbers for example, can we talk about that?

CG: John Kaiser came out with some numbers and I think he was working with the minerals that are present there in situ and using a 60% recovery rate he came out with a figure of $460 to $480 per tonne. Even using $400 a tonne times 17 million tonnes you come to a very large number.

RI: You’ve got a long way to go and a lot to prove up and move this from a non-economic category to indicated and measures resources. How long will it take you to get there and get that drilling done?

CG: It’s difficult to answer that question but I will say that we are absolutely fast tracking this deposit and we are right now drilling in -30 degree Celsius weather on site with the third drilling program in less than 10 months. We are looking to, weather permitting, in the next month double the drill data on this project.

Additionally, the first two drilling programs were done with a rig that can only drill down to 380 metres and one of the longest holes that started our mineralization two metres below surface was mineralized continuously for the rest of the 378 metres and ended up in mineralization. The drill rig that we have on site right now can drill down to 600 metres and yesterday that rig was down below 500 metres in a hole that was mineralized from the surface all the way down. The interesting thing is potentially we are going to test the true thickness of the deposit with this current drilling program.

RI: What steps do you have to take to show investors that this is going to move ahead on time as you are planning?

CG: We’ve announced the initiation of this current winter drilling program and we have announced that a mineralogical study is underway. We will announce that we are initiating metallurgy which should start this week. We will deliver as soon as we can on all of these things. I think having three drilling programs underway in less than ten months speaks some amount.

RI: You’ve completed over 5,000 meters of drilling last year.

CG: Last year was about 4,500 metres in the Ashram zone, the rare earth element zone, and about another 1,000 metres in the other areas that are prospective for tantalum, niobium and phosphate in the Eldor complex. Then we did 13,000 metres of drilling at our Blue River project in BC.

RI: You put out a resource estimate on the Blue River project and you’re now working on a preliminary economic assessment. How is that going?

CG: In the tonnage category at Blue River we have over 7 million kg in the indicated category and about 1,300 kg in the inferred category making 8.4 million kg of tantalum. That works out to about 18 million lbs of tantalum in total and additionally the niobium number is somewhere around 160 million lbs.

RI: At today’s prices can you give a ballpark of what that would be worth on an in situ basis?

CG: The value for tantalum has basically at least doubled in the last year. The tantalum concentrate value historically was about $60/lb when we started the scoping study and is now north of $120/lb. It would be very conservative to say that tantalum on a per pound basis in an oxide is about $200/lb. So, 18 million times $200 adds up to $3.6 billion for the tantalum.

At 7,500 tonnes per day we would also be delivering to market about six million pounds of niobium. The value of niobium has gone from $6 when we started to $22/lb. I think that will be reflected in the preliminary economic assessment.

RI: What is the exploration potential for the Blue River project?

CG: The whole property at Blue River is about 1,000 square kilometers. We have two other deposits that we delivered 43-101 resource calculations for in 2003 and 2004. There are as well about 20 other carbonatite showings on our property. There is a lot of exploration potential there.

RI: How well cashed is Commerce to move this forward?

CG: We have a minimum of $10 million available to us right now. There are around 6 million warrants at $0.54 that are likely to be exercised currently and for the next six months or so. That should bring in about $3 million to the company. As well, Quebec being the number one mining jurisdiction on the planet, we get back about 40 percent of all the money we spend on the project and we have spent probably $5 or $6 million there last year. As well, we are in a pine beetle affected zone in BC, so we get back 30 percent of the money we spent on the project there which was around $8 million last year.

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