Commerce Resources Corp. Announces Mineral Resource Update for
Upper Fir Tantalum and Niobium Deposit, Blue River, British
Columbia
Highlights
Study results show Indicated Mineral Resources totalling 48.4
million
tonnes at 197 ppm Ta2O5 and 1,610 ppm
Nb2O5 and Inferred Mineral Resources
totalling 5.4 million tonnes at 191 ppm Ta2O5
and 1,760 ppm Nb2O5.
Changes result from improved geological interpretation of the
mineralized carbonatite host, the grade distribution found in
2011
infill diamond drilling and the increase in Ta metal price over
time.
Approximately 90% of the tantalum and niobium reside in
Indicated
resource category.
AMEC's "Blue River Tantalum-Niobium Project, British Columbia, Canada,
NI 43-101 Technical Report on Mineral Resource Update", with an
effective date of June 21, 2013, will
be filed for public disclosure (www.SEDAR.com) within 45 days
following this news release.
With the significant milestone of this resource update
successfully
achieved, AMEC has recommended a $13.9M program to support a
pre-feasibility level study on the Upper Fir deposit.
VANCOUVER, July 12, 2013 /PRNewswire/ - Commerce
Resources Corp. (TSXv: CCE; FSE: D7H; OTCQX: CMRZF) has
delineated a significant Ta- and
Nb-rich carbonatite deposit near the community of Blue River in central
eastern British Columbia, and is
pleased to announce the completion of
a National Instrument (NI) 43-101 compliant Mineral Resource
update
that incorporates drilling and other exploration results to the end
of
2012 for the Upper Fir Tantalum-Niobium Deposit. A technical
report
prepared by independent consultants, AMEC Americas Limited
("AMEC")
supports the findings of the Mineral Resource update and also
includes
summaries from a Preliminary Economic Assessment ("PEA") study
completed on the Blue River Project and reported in an NI
43-101
compliant Technical Report with an effective date of September 29, 2011
(2011 PEA- see Commerce news release dated November 3, 2011). The
results from the 2011 PEA have not changed in terms of their
outcomes
as their underlying assumptions remain reasonable.
AMEC constructed the updated carbonatite hosted resource model
using a
total of 271 holes comprising 59,110m of HQ diameter core and
15,512
samples. Most holes were at a nominal spacing of 50m with
dips
typically between -60 degrees to sub-vertical. 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 2011 PEA was developed assuming a sub-level open stoping method
with
no backfill and no pillar recovery using a processing rate of
7,500
tonnes per day for the Mineral Resource estimation and
conceptual
design of an underground mine for the Blue River Project. A
mineral
processing method using a standard-grind flotation process to make
a
concentrate of ferrocolumbite-pyrochlore was assumed for the Upper
Fir
material using a proposed process 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 processes are mature and already in
use
industrially.
Mineral Resource Statement
The Mineral Resource update is summarized in Table 1.
Table 1: Blue River Project Estimated Mineral Resource:
Effective Date
21 June 2013, Tomasz Postolski, P.Eng, Qualified
Person
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Ta price
[US$/kg]
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Confidence
Category
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Tonnes
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Ta2O5
[ppm]
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Nb2O5
[ppm]
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Contained
Ta2O5
[1000s of kg]
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Contained
Nb2O5
[1000s of kg]
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381
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Indicated
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48,410,000
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197
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1,610
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9,560
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77,810
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Inferred
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5,400,000
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191
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1,760
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1,000
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9,600
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Notes:
Assumptions include commodity prices of US$381/kg Ta, US$46/kg Nb,
process recoveries of 65.4% for Ta2O5 and
68.2% for Nb2O5, US$27/tonne bulk mining cost and US$48/tonne selective mining cost,
US$15/tonne process and refining
cost, US$3/tonne G&A cost.
Mineral resources are amenable to underground mining methods and
have
been constrained using a "Stope Analyzer".
An economic cut-off was based on the estimated operating costs
assuming
either the bulk or selective mining method. The block unit
value
cut-off was either US$45/t (bulk) or
US$66/t (selective).
No allowances were made for mining losses or external dilution;
planned
internal dilution within the minimum stope size is included.
In situ contained oxide reported. Discrepancies in contained
oxide
values are due to rounding.
This Mineral Resource estimate is constrained by a base case
price
assumption of US$381/kg Ta,
representing a 20% increase over the Ta2O5
metal price used to constrain previous Blue River Mineral
Resource
estimates. The US$381/kg base
case price is approximately equal to the
current price for Ta metal scrap and represents approximately a
$100/kg
premium on tantalite concentrate. The higher price for Ta metal
scrap
compared to the price or Ta2O5 in concentrate
is considered to be a proxy to the added value Commerce
could recognize by refining a Blue
River concentrate into a high purity
Ta2O5. Nb metal prices remain unchanged from
2010. The operating cost
assumptions used to support the 2013 Mineral Resources reflect
an
average escalation of 12% over costs assumptions established for
the
project in 2010.
Table 2 shows the sensitivity of the Blue River Mineral Resources
to
tantalum metal price. Sensitivities are based on a
fluctuating metal
price but could also represent fluctuating mining or processing
costs
or metallurgical recoveries or a combination of all of these
factors.
Table 2: Blue River Project Sensitivity of Estimated Mineral
Resources
to Ta Price: Effective Date
21 June 2013 Tomasz Postolski,
P.Eng. Ta
price was varied and all other assumptions remained the
same.
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Ta price
[US$/kg]
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Confidence
Category
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Tonnes
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Ta2O5
[ppm]
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Nb2O5
[ppm]
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Contained
Ta2O5
[1000s of
kg]
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Contained
Nb2O5
[1000s of kg]
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564
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Indicated
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56,570,000
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191
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1,460
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10,800
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82,350
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Inferred
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6,600,000
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187
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1,670
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1,200
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11,000
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470
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Indicated
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54,400,000
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193
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1,490
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10,500
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81,250
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Inferred
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6,200,000
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189
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1,690
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1,200
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10,500
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381
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Indicated
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48,410,000
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197
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1,610
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9,560
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77,810
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Inferred
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5,400,000
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191
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1,760
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1,000
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9,600
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317
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Indicated
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41,189,000
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201
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1,760
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8,280
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72,670
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Inferred
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4,600,000
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194
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1,870
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900
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8,500
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272
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Indicated
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35,138,000
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203
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1,910
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7,130
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67,240
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Inferred
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3,800,000
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196
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1,990
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700
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7,600
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238
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Indicated
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29,916,000
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204
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2,030
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6,110
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60,740
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Inferred
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2,800,000
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198
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2,060
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600
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5,800
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Notes: Base case is in bold.
Since underground mining methods are envisioned, the mining
recovery may
vary from 65% to 85% depending on the success in which pillars can
be
mined on retreat and/or fill is utilized.
Resource Classification and Methodology
The Mineral Resource is classified in accordance with the 2010
Canadian
Institute of Mining, Metallurgy, and Petroleum (CIM) Definition
Standards for Mineral Resources and Mineral Reserves, whose
definitions
are incorporated by reference into NI 43-101.
Geological interpretations were provided by Commerce to AMEC in the
form
of electronic three dimensional (3D) solid wireframes. Capped
drill
core assays were composited down the hole to a fixed length of
2.5m
respecting lithological boundaries. Exploratory data analysis
(EDA)
was performed on the composites. The coefficients of
variation are low
and support the use of linear grade interpolation methods such
as
inverse distance methods. Blocks within the model were coded
by
lithology solids. Specific gravity values were assigned
by
lithological unit. Ta2O5 and
Nb2O5 grades were estimated in the
carbonatite using an inverse distance to
the power of 3 (ID3) interpolation method. A four-pass
interpolation
approach was used with each successive pass having greater
search
distances. The block model grades were validated by visual
inspection
comparing composites to block grades on-screen, declustered
global
statistics checks, local biases checks using swath plots, and
finally
model selectivity checks.
The criteria are the same as those used in the June 22, 2012, Mineral
Resource. The current model also incorporates the most recent
drill
hole spacing studies completed by AMEC, and composites data
statistics
and variography which show little change from those used in the
prior
Mineral Resource. Resource classification is restricted to
Indicated or
Inferred, based on the following:
Confidence limits in drill hole spacing studies;
Concerns over analytical precision and provisional accuracy for
the
sample dataset from 2005 to 2008; and
Required metallurgical test work on the final stage of the
proposed
metallurgical process is still ongoing to support
proof-of-concept.
To assess reasonable prospects for economic extraction AMEC assumed
that
the Upper Fir deposit would be mined utilizing self-supported,
underground bulk mining methods under a conceptual scenario
that
considers mining and processing at a rate of 7,500 tonnes per
day.
2011 PEA Outcomes and the Mineral Resource Update
Commerce completed a Preliminary Economic Assessment of the Blue
River
Project in 2011 (2011 PEA). The findings of the 2011 PEA
are
summarized in an NI 43-101 compliant Technical Report prepared by
AMEC
and dated September 29, 2011.
The present 2013 Mineral Resource
estimate includes greater tonnes but has similar grades compared
with
the Mineral Resource estimate used to support the 2011 PEA.
The 2011 PEA conceptual mine plan is based on a subset of the
2013
Mineral Resource estimate that remains essentially unchanged
since
2011. Capital and operating costs likely have increased since
2011 but
AMEC is assuming that any increase in costs have been offset by
the
increase in the Ta price over the same period. Overall AMEC
concluded
the 2011 Preliminary Economic Analysis (2011 PEA) outcomes
remain
reasonable and valid in 2013.
The PEA was prepared to define an overall proof of concept for
further
development of the Blue River Project. It indicated that the
deposit
can be developed economically as an underground mine and
recommended
future studies to support an eventual pre-feasibility level
assessment
of the project. The PEA included geological and mineral
resource
modeling, 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
determined the economics to develop the project as an underground
mine
with process facility, and included 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 www.sedar.com. A
link is also available on the Company web site at
www.commerceresources.com.
In preparing the 2013 Mineral Resource update AMEC reviewed the
2011
PEA. AMEC considers that the following work and outcomes of the
2011
PEA remain reasonable as any cost escalation is considered to be
offset
by increases in long term Ta price:
Underground mining at 7,500 tpd using bulk mining with a variation
of
sublevel open stoping.
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.
Cash costs of tantalum metal of CAD$24.91/kg contained in a technical
grade chloride product (after credit for the niobium
contribution).
Production estimated at 2.7M t/a of mineral resources, over 9.3
years.
Estimated Internal rate of return: 9.1% (before tax). If the
project is
developed it will be subject to taxes which will result in cash
flows
and an NPV less than reported.
Estimated Net present value: CAD$18.5
million at 8% discount rate
(before tax).
Estimated Payback: 6.3 years.
Average diluted grade in the conceptual mine plan to the mill: 185
ppm
Ta2O5 and 1,591 ppm
Nb2O5.
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.
Proposed product: High purity Ta and Nb chloride products
containing
2,400 metric tonnes and 18,610 metric tonnes of the respective
metals
over the life of the mine and that are suitable for several
markets.
Conceptual Mine Life: 9.3
years based upon the mineral resources
(effective date 20 September 2011)
defined for the PEA using
information to the end of 2009 drilling.
NPV Sensitivity: The Upper Fir deposit is most sensitive to
changes in
exchange rate, commodity prices, and mining costs.
Results of the Mineral Resource update and the PEA represent
forward-looking information. The PEA 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 PEA will be realized. Mineral resources are
not
mineral reserves as they do not have demonstrated economic
viability.
Opportunities Arising from the Mineral Resource Update
Though a 25 Mt life-of-mine plan prepared in 2011 for the PEA
remains
valid, the 2013 Mineral Resource is larger than the 2011
Mineral
Resource used to prepare the plan. This shows potential to extend
the
life-of-mine plan, though its impact on the economics of the Upper
Fir
deposit has not yet been examined. Further opportunities exist that
may
allow additional improvements to the economics of the project
including
optimizing the mine plan by mining higher grade zones earlier in
the
mine life and optimizing the mine layout to minimize development
costs,
as well as preparation of a geotechnical model to examine
opportunities
to increase the size of the stopes.
AMEC's Recommendations in Support of Prefeasibility
Study
AMEC's recommended work program is expected to take two years
to
complete and will include the budgeted items recommended in Table
3
which follows.
Table 3: Summary of Proposed Work to Support a Pre-Feasibility
Study (in
CAD$)
Task
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Estimated
Budget
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Comment
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Database
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$50,000
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Prepare standards for accuracy monitoring
|
Local Anisotropic Kriging:
mineral resource estimate
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$40,000
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Improve local grade estimate
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Drilling
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$5,460,000
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125 Infill, step-out, hydrological, and condemnation
holes, totaling 27,300m
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Mineral Resource Update
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$400,000
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Geologic interpretation and grade estimation
|
Mining studies
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$750,000
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Geotechnical and hydrological models, mining
method, access, and ventilation
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Metallurgical test work
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$1,550,000
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Flotation, filtration, and hardness test work. Preparation
of concentrate. Aluminothermic and Chlorination test
work.
|
Co-disposal studies
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$400,000
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Geotechnical/hydrological design
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Environmental
|
$400,000
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Extend baseline studies to local infrastructure
|
Waste Rock Characterization
|
$350,000
|
Static and kinetic geochemical testing
|
Marketing Studies
|
$100,000
|
Examine marketing requirements
|
Project Management
|
$2,400,000
|
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Sub-total
|
$11,900,000
|
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Contingency
|
$2,000,000
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@ 20%
|
TOTAL
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$13,900,000
|
Pre-Feasibility Study
|
Comparison of Mineral Resources
The inclusion of the results from the 2011 drill campaign into
the
updated Upper Fir model has not resulted in any significant changes
to
the interpreted size or geometry, but has resulted in increased
local
confidence in the geometry and grade.
End Products and Base Case Metal Pricing
The processes proposed for the Upper Fir deposit 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 and niobium price
assumptions
used to support the 2013 Mineral Resources are based on
publically
available and subscription service reports.
Tantalum
Tantalum is commonly quoted as two separate products:
Ta2O5 in 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.
Between January 2010 and January 2013, tantalite concentrate prices
have
risen from US$88/kg to US$285/kg. In the same period Ta metal scrap
prices have risen from US$145/kg to
US$385/kg. Prices rose
dramatically
in 2010 in response to changing market conditions including
reduced
production, increased concerns about tantalum mined from
conflict
regions (i.e. conflict tantalum), depletion of known strategic
stockpiles, and curtailed exports from China. These market conditions
remain in 2013.
Niobium
Nb generally trades as Nb metal, or ferroalloy, and the price
has
remained relatively constant at US$50/kg Nb metal over the last several
years. A base case price of US$46/kg Nb metal was assumed for
consistency with previous estimates.
AMEC's Comment on Resource Update Price Assumptions
Tantalum is not a freely traded commodity and information regarding
Ta
and Nb market prices is not as readily available as it is for base
and
precious metals; Ta and Nb are typically sold on a contract basis.
The
Ta and Nb price assumptions used to support the Mineral
Resource
estimate and the preliminary economic analysis are based on
current
market trends which are considered volatile. AMEC concludes that
the
price assumptions used reflect current market conditions but
acknowledges there is a risk these price assumptions may not
reflect
long term prices.
Comments of Commerce President
"We are again extremely pleased with the results of this study
which
represents a major milestone in the progress to develop the Upper
Fir.
The resource 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 the
long
term." said Dave Hodge, Commerce's
President. "Results of all the
technical work completed to date give solid evidence of the quality
of
the mineral resource. Commerce continues to be active in its
search
for a strategic partner who will work with us to define
appropriate
project financing options to support the recommended
pre-feasibility
studies."
Property
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
90km south of the town of Valemount. The Project comprises 105,373
hectares (1,000 km2) of mineral claims. 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.
NI 43-101 Disclosure
The following Qualified Persons for the report are AMEC employees,
based
out of Vancouver: Mr.
Greg Kulla, P.Geo., Principal
Geologist,; Mr.
Tomasz Postolski, P.Eng., Senior
Geostatistician,; Mr. Ramon
Mendoza
Reyes, P.Eng., Principal Mining Engineer,; Mr. Tony Lipiec, P.Eng.,
Director, Process Engineering, , and Mr. Behrang Omidvar, P.Eng;
Financial Analyst. All of the Qualified Persons have read and
approved
the contents of this news release that are extracted or summarized
from
the "Blue River Tantalum-Niobium Project, British Columbia, Canada, NI
43-101 Technical Report on Mineral Resource Update" with an
effective
date of June 21, 2012.
Ms. Jenna Hardy, M.Sc., P.Geo.,
Commerce Resources Corp., 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 Mineral Resource
Update
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 its Ashram Rare Earth Element
Project in Quebec.
On Behalf of the Board of Directors
COMMERCE RESOURCES CORP.
"David Hodge"
David Hodge
President and Director
Tel: 604.484.2700
Email: dhodge@commerceresources.com
Neither TSX Venture Exchange nor its Regulation Services
Provider (as
that term is defined in the policies of the TSX Venture
Exchange)
accepts responsibility for the adequacy or accuracy of this
release.
Forward-Looking Statements
This news release contains forward-looking information which is
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
7,500 tonnes per day underground operation at the Upper Fir
property
with cash costs of CAD$24.91 per
kilogram of tantalum metal; that we
will have opportunities for optimization in the geology and
mining
areas and enhance the quality of the resource; that prices for
our
potential products are conservatively estimated and may trend
upwards;
that our property has Indicated Mineral Resources totalling
48.4
million tonnes at 197 ppm Ta2O5 and
1,610 ppm Nb2O5. Inferred Mineral
Resources total 5.4 million tonnes at 191 ppm
Ta2O5 and 1,760 ppm
Nb2O5; that total estimated capital cost to
design and build a mine is CAD$379M
and other assumptions listed will be accurate; 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 will be accurate.
These
forward-looking statements are based on the opinions and estimates
of
management and its consultants at the date the information is
disseminated. They are 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 value 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 analogous 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 on Mineral
Resource
Update", by AMEC with effective date 21 June-2013 that is filed
on
SEDAR.
SOURCE Commerce Resources Corp.