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Rare Earths In Abundance

December 19th, 2011

Commerce Finds Up to 44 Pounds per Ton at Eldor

By Ted Niles

The phrase “more of the same” has an uncharacteristically positive implication when applied to Commerce Resources Corp’s TSXV:CCE Eldor project. In 2010, when analyst John Kaiser of Kaiser Research Online called Eldor “the most important new grassroots rare earth discovery since market interest in rare earths took off in 2009,” the assessment was based on the discovery hole. Since then, much has occurred to vindicate Kaiser’s claim. “Every time we’ve started a new program,” President Dave Hodge remarks, “we had to bring in a different drill, one that would go deeper, because the deposit just seemed to keep going and going. This drill program was no different.”

Commerce acquired Eldor—located in northern Quebec’s Labrador Trough—in 2007 with a focus on tantalum and niobium. In the process, says Hodge, “[We] discovered what we believe will be one of the world’s largest resources of rare earths in a small portion of a very large carbonatite complex.” This is small only relatively—given Eldor’s 19,006 hectares—and is called the Ashram deposit. On March 3, Commerce released an NI 43-101 inferred resource estimate for Ashram of 117.34 million tonnes grading 1.74% total rare earth oxides (TREO) at a 1.25% cut-off. This was based on Commerce’s 2010 12-hole drill campaign, consisting of 3,300 metres.

Commerce Finds Up to 44 Pounds per Ton at Eldor

Since then the company has completed two more drill programs with the objective, first, of upgrading the resource to the indicated category, then completing a preliminary economic assessment, both of which Hodge expects to be completed by summer 2012.

December 8 results of the company’s summer drill campaign include

  • 2.04% TREO over 491.1 metres
  • 2.2% TREO over 218.7 metres
  • 2.47% TREO over 123.4 metres

Included within those intersections, “And fortunately near surface,” Hodge adds, “is a zone that’s enriched with heavy rare earths.” (Rarer even than light rare earths, and likewise more valuable, their presence makes for a significant sweetener to the deposit.)

The last holes of the winter drill program were reported August 4 and included

  • 2.06% TREO over 344.5 metres (including 2.35% over 38.8 metres)
  • 1.99% TREO over 243.5 metres (including 2.83% over 37.2 metres)
  • 1.67% TREO over 237 metres (including 1.99% over 117.8 metres)

Note too that June 28 Commerce reported a result of 2.1% TREO over an impressive 586.9 metres. “These numbers just get silly. That’s 44 pounds of rare earths per ton!” Hodge told Resource Clips at the time, continuing, “[Eldor] stands to be the largest, richest, rare earth deposit in the world; second only to Baiyun Obo, which is the Chinese deposit that is currently controlling the world.”

Controlling the world now, yes, but not for long. Until recently, China has been the producer of 97% of world supply, but it announced in September 2010 that it would be cutting exports by as much as 70%. The news was met with consternation and saw rare earths prices soar this summer. While prices have since settled (but remain considerably higher than mid-2010) the crisis in supply remains. Indeed, recent news that Baotou Steel—producer of nearly half of the world’s supply of rare earths—has been barred from exporting by the Chinese government suggests the crisis is only now really beginning to manifest itself. With the market for rare earths projected to as much as double over the next five years, alternatives to China are becoming a matter of some urgency.

Every time we’ve started a new program we had to bring in a different drill, one that would go deeper, because the deposit just seemed to keep going and going —Dave Hodge

The opportunity this affords rare earths explorationists such as Commerce is considerable. Citing Chinese investment in Australian companies Lynas Corporation Ltd and Arafura Resources Ltd, Hodge comments, “The Chinese bought as much of those companies as the Australian government would allow. China has stated quite clearly that they intend on moving from an exporter of rare earths to an importer. That shows that the future market for rare earths is really a huge opportunity. They’re all growth markets, and I would anticipate they are going to continue growing even if the global economy cools a little bit. There’s so much opportunity in those spaces that it’s not going to have a dampening effect on them.”

Commerce also announced November 3 a positive preliminary economic assessment for its Blue River tantalum-niobium project in BC. Blue River has an NI 43-101 indicated resource estimate of 36.35 million tonnes containing 195 parts per million tantalum and 1,700 ppm niobium; it has inferred resources of 6.4 million tonnes containing 199 ppm tantalum and 1,890 ppm niobium. The PEA projected total $379 million in capital costs to design and build the mine, estimating a 10-year mine life with production of 2.7 million tonnes per year. “We are gaining some traction in the tantalum industry with that PEA,” Hodge reports. “It’s a good example for us to show the world that we are capable of taking a project from early exploration through the PEA stage. We intend that Blue River will lead the way for some kind of deal with industry.”

Commerce hasn’t been immune to the downward pressure on virtually all metals equities, but does not repine. “I like people to think that our stock is on sale at the moment—like the January sales after Christmas. We’re very happy with the progress we’re making in particular at the Ashram deposit. It’s a spectacular, world-class kind of deposit. It is challenged with the infrastructure a little bit; however, the size and grade of the deposit will certainly overcome those challenges very easily. We’re going to turn the Eldor carbonatite into a huge, multi-resource asset for Commerce Resources and its shareholders.”

At press time, Commerce had 130.6 million shares trading at $0.275 for a market cap of $35.9 million.