Workers collect a bulk sample at Commerce Resources´ Eldor REE project in Quebec´s Nunavik region. Credit: Commerce Resources
Vancouver-based Commerce Resources (TSXV: CCE; US-OTC: CMRZF) is trying to confirm feasibility of what could be the first rare earth element (REE) mine in Canada and one of the most significant outside of China.
The company is currently raising money to further develop its 100% owned Ashram property, 130 km south of the town of Kuujjuaq in the Nunavik area of northern Quebec. The property has a measured resource of 1.6 million tonnes at 1.77% total rare earth oxide (TREO), an indicated resource of 28 million tonnes at 1.90% TREO and an inferred resource of 220 million tonnes at 1.88% TREO.
Prior to 2005, Commerce had little interest in REEs and was focused on tantalum and niobium. Only after talking to a friend did company president Chris Grove considered looking for REE deposits.
“That’s when I got this phone call from this Texas-based magnet manufacturer who then said, ‘You should go and re-assay your drill core at your project in B.C.,’ and I said, ‘Why would I want to do that?’ and he goes, ‘Rare earth elements,’ and I said, ‘I still don’t get it.’”
At the time, as is the case now, China had a real command of the REE market. As Grove puts it, nobody was even looking for rare earth elements outside of China because China would put you out of business. But when China put an export tax on REEs in 2005, they inadvertently ignited interest in finding alternate sources.
Commerce’s search eventually led out of B.C. and into Quebec.
“We sent our guys out and they were looking for rare earth elements and niobium at the same time,” Grove explains. “So we did a bunch of drilling in ‘08-‘09 and it was in sampling season of ‘09 that we found the Ashram outcrop.”
A 2012 preliminary economic assessment (PEA) of Ashram projected the company could mine 4,000 tonnes per day from an open-pit with a 0.19:1 stripping ratio over a 25 year mine life. It could produce an annual average of 16,850 tonnes of rare earth oxide (REO). The study estimated a $763 million capital cost with operating costs of $95.20 per tonne treated and $7.91 per kg REO produced.
The study also estimated a pre-tax net present value of $2.3 billion at a 10% discount rate; a pre-tax internal rate of return of 44%; and a payback period of 2.25 years.
That was all based on a 10% REO at 75% recovery. With further metallurgical work, Commerce now expects to produce at least 45% REO at 70% recovery.
So far, Commerce appears to have strong support on the provincial level. The government of Quebec became the company’s biggest shareholder in February 2017 after investing $1 million. Groves hopes the government exercises its warrants to add another $1.5 million.
And then there are the indigenous groups in the Nunavik area, primarily the Inuit. Grove says that the James Bay Agreement simplifies indigenous relations.
“Everything is codified in a way that no other jurisdiction in Canada is, so basically all of the steps are set forward at how to do the consultation. There are basically no wild cards out there. And ultimately we’ve always hired from the Inuit, we always expedite out of Kuujjuaq.”
Ashram would feature an open pit mine with a processing plant on site. Flotation concentrate would be transported north of the facility on a proposed 180 km haul road to an as-yet unbuilt barge facility near Ungava Bay. The total cost for the haul route and barge facility has been estimated at $195 million or less. Concentrate would then be sailed up the St. Lawrence River to be processed at a hydrometallurgy facility.
A nice by-product of the process would be the production of fluorspar. With further processing, fluorspar could be converted to met-spar or acid-spar. Acid-spar is considered the premium fluorspar product and accounts for two-thirds of the global market. It’s used mainly in aluminum and hydrofluoric acid production. It could also be produced for no additional cost, because it occurs naturally as a result of the primary REE recovery process.
A primary use for REEs is in the expanding green technology market. As an industry that it would look to supply, Commerce sees value in supporting the industry it looks to profit from in what Groves calls a “holistic way.”
“The reality is that rare earth elements are then used in green tech and so logically we should use as much green tech as possible to increase the demand for rare earth elements, but that is what we are interested in as well.
“Our goal is basically to have a fully electric mine, electric mining vehicles, induction charging plates to recharge the vehicles, and potentially even bringing the PSO electric roads, potentially just around the mine site where you’ve got the mining trucks and you will get the best bang for your buck in terms of capturing that power.”
Looking forward, Commerce wants to establish an office in Quebec City, update the deposit’s resource estimate and finalize the location of the proposed hydrometallurgical facility.