Commerce pushing for Canada’s first rare earth mine

Vancouver-based Commerce Resources (TSXV: CCE; US-OTC: CMRZF) is trying to confirm the feasibility of what could be the first large-scale rare earth element (REE) mine in Canada and one of the most significant outside of China.

The company is raising money to develop its wholly 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 oxides (TREO), an indicated resource of 28 million tonnes at 1.90% TREO and an inferred resource of 220 million tonnes at 1.88% TREO. –

Before 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 consider 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 reassay your drill core at your project in British Columbia.’ 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.’”

Metals trader Kazuo Machida at the Commerce’s 100% owned Ashram rare earth elements property in Quebec’s Nunavik region. Credit: Commerce Resources.

At the time, as is the case now, China had a real command of the REE market. As Grove puts it, few even looked for rare earth elements outside of China because China would likely put them 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 says. “So we did a bunch of drilling in 2008 and 2009, and it was in the sampling season of 2009 that we found the Ashram outcrop.”

A 2012 preliminary economic assessment of Ashram projected the company could mine 4,000 tonnes per day from an open pit with a 0.2-to-1 stripping ratio over a 25-year mine life, and annually produce 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 kilogram REO produced.

The study also estimated a $2.3-billion pre-tax net present value at a 10% discount rate, a 44% pre-tax internal rate of return and a 2.25-year payback.

This was based on a 10% REO at 75% recovery. With more metallurgical work, Commerce expects to produce at least 45% REO at 70% recovery.

Commerce appears to have strong support at 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 as to 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.”

Drillers at a drill pad at the Ashram zone at Commerce Resources’ Eldor REE project in northern Quebec in 2012. Credit: Commerce Resources.

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 for processing at a hydrometallurgical facility.

A nice by-product of the process would be the production of fluorspar. With more 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 at no additional cost, because it occurs naturally from the primary REE recovery process.

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.”

Commerce wants to establish an office in Quebec City, update the deposit’s resource estimate and propose a location for the hydrometallurgical facility.

“Our goal is to finish the pilot plant and finish the production of all of the samples for all the potential joint-venture partners that have expressed an interest in our material, with the hope that one of them finds it attractive to enter into a project-level investment, putting in the capital that will then allow us to finish the prefeasibility and the bankable feasibility study.”

Commerce has a $23-million market capitalization. Shares are valued at 8¢.