NI 43-101 Technical Report                            Preliminary Economic Assessment                                 Ashr...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                                               ...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                                               ...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                                               ...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                                               ...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                                               ...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                                               ...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                                               ...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                                               ...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment   x                                     List o...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                          111      Summary 1.1 ...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                        12 1.5   Property Geolo...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                        13 1.7   Mining MethodT...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                         14                    ...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                           15 1.10 CrackingCrac...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                          16 1.12 PowerThe elec...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                          171.14.2 Federal Juri...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                         18inflation rate of 4%...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                         192      Introduction ...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                       20One of the authors, M....
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment         21ISE           Ion selective electrod...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                             22T               ...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                     233     Reliance on Other ...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                     244      Property Descript...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                       25 4.2   Property Owners...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment   26                    Figure 4-2: Map of the...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                       27 4.3   Royalties Oblig...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                                               ...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                          295      Accessibilit...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                     30ten metres thick, althou...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                        316      History 6.1   ...
Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment                 32geochemical analysis and pet...
Technical Report: PEA Ashram Deposit at the Eldor Project
Technical Report: PEA Ashram Deposit at the Eldor Project
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Technical Report: PEA Ashram Deposit at the Eldor Project
Technical Report: PEA Ashram Deposit at the Eldor Project
Technical Report: PEA Ashram Deposit at the Eldor Project
Technical Report: PEA Ashram Deposit at the Eldor Project
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Technical Report: PEA Ashram Deposit at the Eldor Project

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On July 5, 2012, Commerce Resources Corp. (TSXv: CCE) filed its National Instrument 43-101 Technical Report entitled, "Preliminary Economic Assessment, Ashram Deposit" on SEDAR [http://www.sedar.com] and on their corporate website [http://www.commerceresources.com].
The report was completed by SGS Geostat.

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Transcript of "Technical Report: PEA Ashram Deposit at the Eldor Project"

  1. 1. NI 43-101 Technical Report Preliminary Economic Assessment Ashram Rare Earth Deposit For Commerce Resources Corp. Respectfully submitted to: Commerce Resources Corp. Effective Date: July 5th 2012 Prepared by: Gaston Gagnon, Eng. SGS Canada Inc. (Geostat) Gilbert Rousseau, Eng. SGS Canada Inc. (Geostat) Yann Camus, Eng. SGS Canada Inc. (Geostat) Jonathan Gagné, Eng. SGS Canada Inc. (Geostat) Geostat 10 boul. de la Seigneurie Est, Suite 203, Blainville, Québec CanadaSGS Canada Inc. t (450) 433 1050 f (450) 433 1048 www.geostat.com www.met.sgs.com Member of SGS Group (SGS SA)
  2. 2. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment ii Table of Contents1 Summary .................................................................................................................................................... 11 1.1 Introduction....................................................................................................................................... 11 1.2 Property Location and Tenure........................................................................................................ 11 1.3 Royalties Obligations........................................................................................................................ 11 1.4 Mineralization .................................................................................................................................... 11 1.5 Property Geology.............................................................................................................................. 12 1.6 Resource Estimate ............................................................................................................................ 12 1.7 Mining Method ................................................................................................................................. 13 1.8 Mineral Processing, Metallurgical Testing ..................................................................................... 13 1.9 Recovery Methods ............................................................................................................................ 14 1.10 Cracking .......................................................................................................................................... 15 1.11 Infrastructure ................................................................................................................................. 15 1.12 Power .............................................................................................................................................. 16 1.13 Tailings and Water Management ................................................................................................ 16 1.14 Environmental ............................................................................................................................... 16 1.14.1 Provincial Jurisdiction - Environment Quality Act .............................................................. 16 1.14.2 Federal Jurisdiction - Canadian Environment Assessment Act ......................................... 17 1.14.3 Physical Environment .............................................................................................................. 17 1.15 Capital Cost Estimate ................................................................................................................... 17 1.16 Operating Cost Estimate ............................................................................................................. 17 1.17 Economic Analysis ....................................................................................................................... 18 1.18 Conclusion ..................................................................................................................................... 182 Introduction .............................................................................................................................................. 19 2.1 General ............................................................................................................................................... 19 2.2 Terms of Reference .......................................................................................................................... 19 2.3 Units and Currency........................................................................................................................... 20 2.4 Disclaimer .......................................................................................................................................... 223 Reliance on Other Experts...................................................................................................................... 234 Property Description and Location ....................................................................................................... 24 4.1 Location ............................................................................................................................................. 24 4.2 Property Ownership and Agreements ........................................................................................... 25 4.3 Royalties Obligations........................................................................................................................ 27 4.4 Permits and Environmental Liabilities .......................................................................................... 27 4.5 Mineralization .................................................................................................................................... 275 Accessibility, Climate, Local Resources, Infrastructure and Physiography...................................... 29 5.1 Accessibility ....................................................................................................................................... 29 5.2 Climate................................................................................................................................................ 29 5.3 Local Resources and Infrastructures .............................................................................................. 29 5.4 Physiography ..................................................................................................................................... 29 SGS Geostat
  3. 3. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment iii6 History........................................................................................................................................................ 31 6.1 Regional Government Surveys ....................................................................................................... 31 6.2 Mineral Exploration Work .............................................................................................................. 317 Geological Setting and Mineralization................................................................................................... 34 7.1 Regional Geology.............................................................................................................................. 34 7.2 Property Geology.............................................................................................................................. 36 7.3 Property Mineralization ................................................................................................................... 39 7.4 Ashram Deposit Geology ................................................................................................................ 40 7.5 Ashram Deposit Mineralization...................................................................................................... 438 Deposit Types ........................................................................................................................................... 509 Exploration................................................................................................................................................ 5310 Drilling ................................................................................................................................................... 5611 Sample Preparation, Analyses and Security ...................................................................................... 63 11.1 Sampling Method and Approach ................................................................................................ 63 11.2 Sample Preparation and Analyses ............................................................................................... 64 11.3 Quality Assurance and Quality Control Procedure .................................................................. 65 11.3.1 Analytical Certified Reference Materials ................................................................................ 65 11.3.2 Analytical Blanks ....................................................................................................................... 73 11.3.3 Drill Core Duplicates ................................................................................................................ 75 11.3.4 Pulp Duplicates.......................................................................................................................... 77 11.3.5 QA/QC Conclusion ................................................................................................................. 82 11.4 Specific Gravity ............................................................................................................................. 83 11.5 Conclusions.................................................................................................................................... 8412 Data Verification .................................................................................................................................. 8613 Mineral Processing and Metallurgical Testing .................................................................................. 9314 Mineral Resource Estimates................................................................................................................ 96 14.1 Introduction ................................................................................................................................... 96 14.2 Exploratory Data Analysis ........................................................................................................... 96 14.2.1 Analytical Data........................................................................................................................... 97 14.2.2 Composite Data....................................................................................................................... 100 14.2.3 Specific Gravity ....................................................................................................................... 101 14.3 Geological Interpretation ........................................................................................................... 102 14.4 Spatial Analysis ............................................................................................................................ 102 14.5 Resource Block Modeling .......................................................................................................... 105 14.6 Grade Interpolation Methodology ........................................................................................... 105 14.7 Mineral Resource Classification ................................................................................................ 107 14.8 Mineral Resource Estimation .................................................................................................... 107 14.9 Mineral Resource Validation ..................................................................................................... 110 14.10 Comments about the Mineral Resource Estimate ................................................................. 11115 Mineral Reserve Estimates ................................................................................................................ 112 SGS Geostat
  4. 4. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment iv16 Mining Methods.................................................................................................................................. 113 16.1 Mining Method............................................................................................................................ 113 16.2 Overall Pit Slope Angle .............................................................................................................. 113 16.3 Pit Optimization .......................................................................................................................... 114 16.3.1 Pit Optimization Procedure ................................................................................................... 114 16.3.2 Pit Optimization Parameters ................................................................................................. 115 16.3.3 Pit Optimization Results ........................................................................................................ 116 16.4 Ultimate Pit .................................................................................................................................. 118 16.4.1 Pit Design Parameters ............................................................................................................ 118 16.4.2 Ultimate Pit Design ................................................................................................................. 118 16.4.3 Mineralization Contained Within Pit Design ...................................................................... 119 16.5 Mine Development and Production Schedule........................................................................ 120 16.5.1 Pushback Width ...................................................................................................................... 120 16.5.2 Pit Dewatering ......................................................................................................................... 120 16.5.3 Mine Development ................................................................................................................. 121 16.5.4 Production Schedule ............................................................................................................... 123 16.6 Mine equipment selection .......................................................................................................... 125 16.6.1 Drilling ...................................................................................................................................... 125 16.6.2 Blasting ..................................................................................................................................... 126 16.6.3 Major Equipment Selection ................................................................................................... 12617 Recovery Methods .............................................................................................................................. 128 17.1 Historical Background ................................................................................................................ 128 17.2 Milling ........................................................................................................................................... 128 17.2.1 Processing Description ........................................................................................................... 129 17.2.1.1 Run of Mine Ore ........................................................................................................................................................................ 129 17.2.1.2 Crushing ....................................................................................................................................................................................... 129 17.2.1.3 Grinding and Classification ...................................................................................................................................................... 129 17.2.1.4 Flotation ....................................................................................................................................................................................... 130 17.2.1.5 Thickening – Filtration.............................................................................................................................................................. 130 17.2.2 Milling Operation Costs ......................................................................................................... 130 17.2.2.1 Consumables (wear parts, grinding media, lubricants and chemical reagents) .............................................................. 131 17.2.2.2 Spare Parts ................................................................................................................................................................................... 131 17.2.2.3 Electrical Power .......................................................................................................................................................................... 131 17.2.2.4 Manpower .................................................................................................................................................................................... 132 17.2.2.5 Salaries .......................................................................................................................................................................................... 133 17.2.3 Mill Cost Control and Instrumentation ............................................................................... 133 17.2.4 Mill Services and Other Mill Common Spaces ................................................................... 134 17.2.5 Mill Capital Cost Estimate ..................................................................................................... 134 17.2.6 Construction Schedule............................................................................................................ 134 17.3 Thermal Cracking........................................................................................................................ 135 17.3.1 Process Description ................................................................................................................ 135 17.3.2 Recovery ................................................................................................................................... 136 17.3.3 OPEX and CAPEX ................................................................................................................ 136 17.3.4 Construction schedule ............................................................................................................ 13618 Project Infrastructure ......................................................................................................................... 141 18.1 Mackay’s Island ........................................................................................................................... 141 18.2 Kuujjuaq ....................................................................................................................................... 142 SGS Geostat
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Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment v 18.3 All-weather Road (AWR) ........................................................................................................... 143 18.4 Mine Site ....................................................................................................................................... 145 18.5 Quebec Northern Infrastructure & Sustainable Development (Plan Nord) ..................... 15119 Market Studies and Contracts ........................................................................................................... 153 19.1 Oxides Price Forecasts ............................................................................................................... 153 19.2 Oxide Value Discount ................................................................................................................ 15920 Environmental Studies, Permitting and Social or Community Impact ...................................... 161 20.1 Methodology ................................................................................................................................ 163 20.1.1 Physical Environment ............................................................................................................ 163 20.1.2 20.1.2- Biological Environment ............................................................................................ 165 20.1.3 20.1.3- Human Environment ................................................................................................ 167 20.2 Environmental permitting framework ..................................................................................... 169 20.2.1 Provincial Jurisdiction............................................................................................................. 169 20.2.2 Federal Jurisdiction ................................................................................................................. 170 20.3 Potential Issues ............................................................................................................................ 171 20.4 Recommendations for Future Studies ..................................................................................... 172 20.4.1 Physical Environment ............................................................................................................ 172 20.4.2 Biological Environment ......................................................................................................... 173 20.5 Human Environment ................................................................................................................. 17421 Capital and Operating Costs ............................................................................................................. 176 21.1 Capital Cost .................................................................................................................................. 176 21.2 Operating Costs........................................................................................................................... 179 21.2.1 Mining Cost.............................................................................................................................. 180 21.2.2 General and Administration (G&A) Costs.......................................................................... 181 21.2.3 Processing costs ....................................................................................................................... 18322 Economic Analysis ............................................................................................................................. 184 22.1 DCF Method – Base Case Scenario ......................................................................................... 184 22.2 Tax Rate and Royalties ............................................................................................................... 184 22.3 DCF Results for the Base Case Scenario ................................................................................. 185 22.4 Sensitivity Analysis ...................................................................................................................... 18723 Adjacent Properties ............................................................................................................................ 18924 Other Relevant Data and Information ............................................................................................ 19125 Interpretation and Conclusions ........................................................................................................ 19226 Recommendations .............................................................................................................................. 19527 References............................................................................................................................................ 199 SGS Geostat
  6. 6. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment vi List of tablesTable 1-1: Metallurgical Testwork Results ................................................................................................... 14Table 1-2: Operating Cost .............................................................................................................................. 18Table 1-3: Ashram Base Case Consolidated Cash Flow Model ................................................................ 18Table 2-1: List of Abbreviations .................................................................................................................... 20Table 2-2: Element to Oxide and Total Rare Earth Definitions .............................................................. 22Table 4-1: Summary of Mineralization Occurring on the Eldor Property .............................................. 28Table 10-1: Drilling Program Attributes ...................................................................................................... 56Table 10-2: Drill Hole Attributes (Ashram Deposit) 1/4 .......................................................................... 58Table 10-3: Drill Hole Attributes (Ashram Deposit) 2/4 .......................................................................... 59Table 10-4: Drill Hole Attributes (Ashram Deposit) 3/4 .......................................................................... 60Table 10-5: Drill Hole Attributes (Ashram Deposit) 4/4 .......................................................................... 61Table 11-1: Expected Values and QA/QC Ranges of SX18-01, SX18-05, and TRM-2 Analytical CRMs for Y and REEs ............................................................................................................................ 66Table 11-2: Statistics of SX18-01, SX18-05, and TRM-2 Analytical CRMs for Y and REEs .............. 67Table 11-3: Comparative Statistics for the Drill Core Duplicates ............................................................ 76Table 11-4: Statistics for the Pulp Duplicates (Actlabs vs. ALS) .............................................................. 77Table 11-5: Specific Gravity Statistics from 2010 Independent Check Sampling Program ................. 83Table 11-6: Specific Gravity Statistics from the 2010 and 2011 Exploration Programs ....................... 84Table 12-1: Statistics for the Independent Check Samples (Actlabs vs. SGS Minerals) ....................... 86Table 12-2: Sign Test for the Independent Check Samples (Actlabs vs. SGS Minerals) ...................... 87Table 12-3: Final Drill Hole Database .......................................................................................................... 92Table 13-1: Metallurgical Testwork Results ................................................................................................. 94Table 14-1: Summary Statistics of Analytical Data Used in the Mineral Resource Estimate ............... 97Table 14-2: Summary Statistics for the 3 metres Composites ................................................................. 100Table 14-3: Resource Block Model Parameters......................................................................................... 105Table 14-4: Ashram Deposit Mineral Resource Estimate........................................................................ 108Table 14-5: Ashram Deposit Mineral Resource Estimate with Individual REO Values .................... 109Table 14-6: MHREO Zone Mineral Resource Estimate ......................................................................... 110Table 14-7: MHREO Zone Mineral Resource Estimate with Individual REO Values ...................... 110Table 14-8: Ashram Deposit Mineral Resource Estimate per Zone ...................................................... 110Table 14-9: Comparative Statistics of the Assays, Composites, and Blocks Datasets ......................... 110Table 16-1: Economic Parameters of Pit Optimization........................................................................... 115Table 16-2: Resources Contained Into Base Case Pit Shell ..................................................................... 116Table 16-3: Mineralization Contained Within Pit Design ........................................................................ 119Table 16-4: Tonnage by Phase ..................................................................................................................... 121Table 16-5: Oxides Contained in Mine Concentrate (using 66.5% Mill-Cracking Recovery) ............ 123Table 16-6: Production Schedule Proposed by SGS ................................................................................ 124Table 16-7: Drilling Parameters ................................................................................................................... 125Table 16-8: Blasting Parameters................................................................................................................... 126Table 16-9: Proposed Mining and Service Fleet ........................................................................................ 127Table 18-1: Number of Employees per Department ............................................................................... 146Table 19-1: Selected Oxide Prices ............................................................................................................... 158Table 19-2: Selected Oxides Prices (after 25% discount) ........................................................................ 160Table 21-1: Capital Expenditures (CAPEX) .............................................................................................. 177Table 21-2: Equipment Listing .................................................................................................................... 178 SGS Geostat
  7. 7. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment viiTable 21-3: Operating Costs ........................................................................................................................ 179Table 21-4: Average Mining Cost Breakdown........................................................................................... 181Table 21-5: Staff and Camp hourly salaries................................................................................................ 182Table 21-6: Estimated G&A Costs ............................................................................................................. 183Table 22-1: DCF Parameters for the Base Case Scenario........................................................................ 184Table 22-2: DCF Results for the Base Case Scenario............................................................................... 185Table 22-3: Discounted Cash Flows (DCF)............................................................................................... 186Table 22-4: Sensitivity Analysis .................................................................................................................... 187Table 26-1: Future Work Cost Summary ................................................................................................... 198 SGS Geostat
  8. 8. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment viii List of FiguresFigure 4-1: General Location Map ................................................................................................................ 24Figure 4-2: Map of the Mineral Titles, Eldor Property .............................................................................. 26Figure 7-1: Regional Geology Map ............................................................................................................... 35Figure 7-2: Property Geology Map ............................................................................................................... 37Figure 7-3: 2011 Ashram Model View to West ........................................................................................... 41Figure 7-4: 2011 Ashram Model Plan View ................................................................................................. 42Figure 7-5: Western Contact .......................................................................................................................... 45Figure 7-6: Drill Core from Hole EC10-028 Showing the A, B, BD, and Contact Zone .................... 46Figure 8-1: Schematic Representation of St-Honore Carbonatite ............................................................ 51Figure 9-1: Eldor Exploration Areas............................................................................................................. 54Figure 10-1: Ashram Drill Hole Locations .................................................................................................. 57Figure 11-1: Variation of Reported Values with Time for Analytical CRM TRM-2 (Y, La, Ce, Pr, Nd, and Sm) ...................................................................................................................................................... 68Figure 11-2: Variation of Reported Values with Time for Analytical CRM TRM-2 (Eu, Gd, Tb, Dy, Ho, and Er) ............................................................................................................................................... 69Figure 11-3: Variation of Reported Values with Time for Analytical CRM TRM-2 (Yb and Lu) ....... 70Figure 11-4: Variation of Reported Values with Time for Analytical CRM SX18-01 (Y, La, Ce, and Nd).............................................................................................................................................................. 71Figure 11-5: Variation of Reported Values with Time for Analytical CRM SX18-05 (Y, La, Ce, and Nd).............................................................................................................................................................. 72Figure 11-6: TREE in the Original ‘Qtz’ Blank .......................................................................................... 74Figure 11-7: TREE in the ‘Qtz-A’ Blank...................................................................................................... 75Figure 11-8: Correlation Plot of the Drill Core Duplicates for TREE and F......................................... 76Figure 11-9: Correlation Plot of the Pulp Duplicates for TREE, Y, La, and Ce (Actlabs vs. ALS).... 78Figure 11-10: Correlation Plot of the Pulp Duplicates for Pr, Nd, Sm, and Eu (Actlabs vs. ALS) .... 79Figure 11-11: Correlation Plot of the Pulp Duplicates for Gd, Tb, Dy, and Ho (Actlabs vs. ALS) ... 80Figure 11-12: Correlation Plot of the Pulp Duplicates for Er, Tm, Yb, and Lu (Actlabs vs. ALS) .... 81Figure 12-1: Correlation Plot of the Independent Checks Samples for TREE, Y, La, and Ce (Actlabs vs. SGS Minerals) ..................................................................................................................................... 88Figure 12-2: Correlation Plot of the Independent Checks Samples for Pr, Nd, Sm, and Eu (Actlabs vs. SGS Minerals) ..................................................................................................................................... 89Figure 12-3: Correlation Plot of the Independent Checks Samples for Gd, Tb, Dy, and Ho (Actlabs vs. SGS Minerals) ..................................................................................................................................... 90Figure 12-4: Correlation Plot of the Independent Checks Samples for Er, Tm, Yb, and Lu (Actlabs vs. SGS Minerals) ..................................................................................................................................... 91Figure 14-1: Histogram of Samples Length from Ashram Database....................................................... 98Figure 14-2: Plan View of the Drill Holes at Ashram ................................................................................ 99Figure 14-3: Longitudinal View of the Drill Holes at Ashram (looking north) ...................................... 99Figure 14-4: Plan View Showing the Spatial Distribution of the Composites ...................................... 101Figure 14-5: Longitudinal View Showing the Distribution of the Composites (looking north) ........ 101Figure 14-6: Modeled 3D Wireframe Envelope in Longitudinal View (looking south)...................... 102Figure 14-7: Variograms of TREO Grade of 3 Metre Composite for Central Zone .......................... 103Figure 14-8: Variograms of TREO Grade of 3 Metre Composite for Inner Zone ............................. 104Figure 14-9: Variograms of TREO Grade of 3 Metre Composite for Outer Zone ............................ 104Figure 14-10: Different Search Ellipsoids Used for the Interpolation Process in Plan View ............ 106 SGS Geostat
  9. 9. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment ixFigure 14-11: Plan View Showing Block Model Interpolation Results.................................................. 106Figure 14-12: Longitudinal View Showing Block Model Interpolation Results (looking south) ....... 107Figure 14-13: Comparative Histograms of the Assays, Composites, and Blocks Datasets ................ 111Figure 16-1: Cases of Rock Slope With Stable and Failed Conditions Distinguished ......................... 114Figure 16-2: Plan View of the Base Case Pit Shell .................................................................................... 116Figure 16-3: Section View (6,312,175N) of the Base Case Pit Shell ....................................................... 117Figure 16-4: Ramp Width, Single and Double Lanes (annotations in metres) ..................................... 118Figure 16-5: Plan View of Designed Pit and Dimensions ....................................................................... 119Figure 16-6: Minimum Push-back Width ................................................................................................... 120Figure 16-7: Plan View - Pushback’s 1, 2 and 3 (Optimal Pit Design) .................................................. 122Figure 16-8: Pushback’s 1, 2 and 3 (Optimal Pit Design) ........................................................................ 122Figure 16-9: Production Schedule Proposed by SGS ............................................................................... 124Figure 17-1: Mill Plan Drawing.................................................................................................................... 137Figure 17-2: Crushing – Grinding Process Diagram ................................................................................ 138Figure 17-3: Flotation – Thickening – Filtering Process Diagram ......................................................... 139Figure 17-4: Cracking Process Diagram ..................................................................................................... 140Figure 18-1: Docking Location (Mackays Island) .................................................................................... 141Figure 18-2: All-weather Road Elevation Profile ...................................................................................... 143Figure 18-3: Typical Road Section............................................................................................................... 143Figure 18-4: 185 km All-Weather Road ...................................................................................................... 144Figure 18-5: Preliminary Infrastructure Arrangement .............................................................................. 145Figure 18-6: Proposed Accommodation Complex ................................................................................... 146Figure 18-7: Proposed Dewatering Dikes .................................................................................................. 148Figure 18-8: Airport Location vs. Site Infrastructure ........................................................................... ....150Figure 19-1: REEs Demand Forecast ......................................................................................................... 153Figure 19-2: Analyst Consensus Average REE Supply Demand............................................................ 154Figure 19-3: Lanthanum Price History and Forecasts .............................................................................. 155Figure 19-4: Cerium Price History and Forecasts ..................................................................................... 155Figure 19-5: Praseodymium Price History and Forecasts ........................................................................ 155Figure 19-6: Neodymium Price History and Forecasts ............................................................................ 156Figure 19-7: Samarium Price History and Forecasts................................................................................. 156Figure 19-8: Europium Price History and Forecasts ................................................................................ 156Figure 19-9: Gadolinium Price History and Forecasts ............................................................................. 157Figure 19-10: Terbium Price History and Forecasts ................................................................................. 157Figure 19-11: Dysprosium Price History and Forecasts .......................................................................... 157Figure 19-12: Yttrium Price History and Forecasts .................................................................................. 158Figure 19-13: Processing Costs and Recovery Converted into RoM ..................................................... 159Figure 20-1: Study Areas of the Ashram Rare Earth Project .................................................................. 162Figure 20-2: Precipitations and Temperatures Averages.......................................................................... 163Figure 20-3: Environmental Assessment Procedure for Mining Projects North of 55th Parallel ...... 169Figure 21-1: Total Operating Cost Breakdown ......................................................................................... 179Figure 21-2: Mining Cost per Tonne Through Mine Life ....................................................................... 180Figure 22-1: Sensitivity Analysis (Spider Graph)....................................................................................... 188Figure 23-1: Map of Adjacent Properties in the Vicinity of the Eldor Property .................................. 190 SGS Geostat
  10. 10. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment x List of AppendicesAppendix A: Certificates of Qualified PersonsAppendix B: Eldor Property Mineral Title AttributesAppendix C: Analytical Laboratory Protocols (Actlabs, ALS, SGS Minerals) SGS Geostat
  11. 11. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 111 Summary 1.1 IntroductionSGS Canada Inc. (Geostat) was commissioned by Dahrouge Geological Consulting Ltd. on behalfof Commerce Resources Corp. (Commerce) to complete a preliminary economic assessment (PEA)of the Ashram Rare Earth Element Project (the ‘Project’). SGS Geostat has prepared this technicalreport in general accordance with the guidelines provided in National Instrument 43-101 (NI 43-101) Standards of Disclosure for mineral projects. 1.2 Property Location and TenureThe Eldor Property (the ‘Property’) is located in the Nunavik Region of the Province of Québec,approximately 130 km south of the community of Kuujjuaq (Figure 4-1). The Property is situatedabout longitude 68°24’0” west and latitude 56°56’0” north at its centre and covers portions of NTSmap sheets 24C15, 24C16, and 24F01. The Property is only accessible by float or ski-equippedairplane, helicopter or by snowmobile during winter months.As of June 2012, the Property consists of one block totalling 404 claims covering 19,006.52 ha. TheProperty area extends approximately 17.5 km in an east-west direction and 24 km in a north-southdirection. Figure 4-2 displays the claims that comprise the Property with a detailed listing included inAppendix B.Of the 404 claims comprising the Property, eight claims were acquired in May 2007 by a purchaseagreement with Virginia Mines Inc (Virginia). The other 396 claims were acquired by map stakingbetween May 2007 and October 2010 1.3 Royalties ObligationsThe original eight claims acquired from Virginia are subject to a 1% NSR royalty in favour ofVirginia and a 5% NPI royalty in favour of two individuals. Commerce has the right to buy back the5% NPI royalty in consideration of $500,000. The Ashram Rare Earth Deposit is not situated withinthe Virginia claims, and is not subject to any royalties. 1.4 MineralizationSeveral different types of mineralization, related to the carbonatite intrusive complex, occur at theEldor Property. The main commodities of interest include rare earth elements (REEs) and fluorineas discovered at the Ashram Zone; however they also occur in other areas on the Property.Niobium, tantalum, and phosphate mineralization also occur on the Property; mainly at the StarTrench, Southeast, and Northwest areas. SGS Geostat
  12. 12. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 12 1.5 Property GeologyThe Property is situated within the central portion of the New Quebec Orogen, also known as theLabrador Trough, straddling two lithotectonic zones that are separated by a major thrust fault. Tothe east is the SC Zone, comprising Proterozoic paraschist, paragneiss, and amphibolites; to the westis the Gerido Zone, comprising the Le Moyne Group, Doublet Group, and the Le Moyne Intrusion,also known as the Eldor CarbonatiteHistoric exploration of the Eldor Carbonatite has shown that it has an elliptical shape withapproximate dimensions of 7.3 km long by 3 km wide (Sherer, 1984). More recently, Clark andWares (2006) suggested a carbonatite extent of almost double, at 15 km long by 4 km wide.Emplacement occurred near the end of the second cycle of the belts formation, approximately 1.88– 1.87 Ga (U - Pb dating). Multiple carbonatite intrusive events are believed to have occurredduring emplacement of the Eldor Complex with calcio-carbonatite, magnesio-carbonatite, and ferro-carbonatite present.The geology of the Eldor Carbonatite is very complex, with several lithological subdivisionsproposed/identified (Wright et al., 1998) and separate eruptive centres postulated (Demers andBlanchet, 2002). Simplistically, the Eldor Complex can be separated into three major divisions:early, mid, and late-stage carbonatite. The mid-stage carbonatite is most closely related to tantalum-niobium mineralization (pyrochlore, columbite) with late-stage carbonatite crosscutting all earlierphases and is the primary host to the REE mineralization observed at the Ashram Deposit.The carbonatite is thought to have undergone minimal weathering, mainly due to the sub-arcticclimate, with glaciation believed to be the major eroding force. Only a thin veil of overburdencovers the complex, with fresh rock being encountered essentially at the soil-rock interface. Thisgeological history prevented the formation of the deep lateritic weathering profile that sometimesproves problematic in rare earth deposits due to rare earth mineral re-crystallization etc. 1.6 Resource EstimateThe base case cut-off grade (CoG) for the reporting of the 2012 mineral resource estimate of theAshram Project was retained from 2011 and a base case CoG of 1.25% total rare earth oxide(TREO) was selected. Using the Ashram basket price of $35.02 per kg, the marginal (mill) CoG wascalculated at 0.51% TREO. Although all the material above 0.51% TREO is economical, a miningCoG of 1.25% TREO was selected in order to maximise the mill feed grade when evaluating theeconomic potential of the Project.The mineral resource estimate utilized in the PEA for the Eldor Property was released on March 6,2012 and includes all drilling completed at the Ashram Deposit to date, totalling 15,691.74 m over45 holes. At a base case CoG of 1.25% TREO the resource totals 29.3 million tonnes averaging1.90% TREO in the measured and indicated categories and 219.8 million tonnes averaging 1.88%TREO in the inferred category. SGS Geostat
  13. 13. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 13 1.7 Mining MethodTaking into account the proximity of the mineralized zone with the surface topography and thepresence of high grades of REEs at shallow depth, the mining method selected to mine the AshramDeposit is open-pit mining. Conventional mining machinery, such as trucks, loaders, and hydraulicshovels will be used on 5 metre benches.At a rate of 4,000 tonnes of ore per day processed at a CoG of 1.25%, the Ashram Deposit containsenough resource to support an operation for more than 177 years (open pit and undergroundmining). Therefore, the main purpose of the optimization process was to highlight a section of thedeposit providing a sufficient TREO grade (over 1.25% TREO) with a reasonable stripping ratio,rather than determining the optimum pit limit.Gems WhittleTM was used to create a series of nested pit shells based on varying revenue factors(RF). In order to maximise the mined TREO grade, the smallest shell containing sufficient resourcesfor 25 years of production at a mining CoG of 1.25% TREO was selected as the base case.The mining operation will be carried out with a mining fleet of two 100 mm blast hole drills, oneCAT 988H loader, one CAT 385 shovel and four CAT 773 off the road trucks, supplemented bysupport equipment such as tracked dozers, graders, water trucks, and emulsion tankers backed byother minor equipment. 1.8 Mineral Processing, Metallurgical TestingThe rare earth mineralization at Ashram consists primarily of monazite and lesser bastnäsite andxenotime in a matrix of ferro-dolomite, fluorite, and lesser apatite. Particle size of the rare earthminerals is very fine, typically less than 30 m down to <5 m with an average of 15-20 m.Metallurgical testwork on a representative sample of the Ashram Deposit is currently beingcompleted at Hazen Research Inc. in Colorado and UVR-FIA GmbH in Germany. Of the materialreceived, the rare earth head assay for the main light rare earths are as follows:Ce: 0.75%La: 0.41%Nd: 0.27%After initial experimentation with several separation techniques, flotation was identified as the mostpromising and has thus been the chief upgrading process utilized so far. Numerous potentialcollectors for direct rare earth mineral flotation have been tested under a variety of operationalparameters with significant upgrading achieved at reasonable recoveries. No optimization of theprocess has been attempted as the primary focus is currently on determining the best rare earthcollector and carbonate depressant. A listing of the most promising test results is presented in Table1-1. SGS Geostat
  14. 14. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 14 Table 1-1: Metallurgical Testwork Results TEST # % of Original CONCENTRATE DISTRIBUTION Weight GRADE % % Ce La TREO Ce La TREO (EST) (EST) 3475-102 14.0 4.07 1.98 9.95 68.5 67.3 67.9 3475-125 15.0 4.04 1.96 9.87 63.7 62.5 63.1 3503-28 10.0 4.44 2.36 11.18 68.1 68.9 68.5 3503-29 7.9 4.81 2.54 12.09 55.9 55.9 55.9 3503-34 15.1 4.05 2.25 10.37 74.0 72.7 73.4A mineral concentrate with a grade of 10% TREO and 70% recovery (12.7% of the original feedweight) is used as a base case result of physical upgrading at the mine site via conventional grindingand flotation techniques. The base case selection is considered conservative and constrained by thebest Hazen testwork result thus far as this is standard policy for SGS Geostat.The waste rock and the mine tailings are not considered acid generating due to the high amount ofcarbonates and corresponding low sulphide content. This conclusion is currently being confirmedby Hazen, however, initial testwork is supportive. Moreover, the tailings are not deemed to beradioactive since the amount of the only radioactive element (thorium) in the tailings will be, for allpractical purposes, in the same order of magnitude as in the mill feed. 1.9 Recovery MethodsA 4,000 tpd mill is proposed in this study. The mill process will be conventional with operationrelying on operators’ experience and skill supported by electronic monitoring and instrumentation.It is anticipated that the head grade will be 1.81% TREO, the mineral concentrate grade will be aminimum of 10% TREO, while recovery will be in the 70% range. Rare earth mineral concentratingand cracking is proposed in the PEA to be completed on site with a 99.9% pure mixed rare earthcarbonate (REC) concentrate to be produced for the market.The process plant is designed to produce a rare earth mineral concentrate by froth flotation. It willincorporate the following sections: run-of-mine ore storage, a one-stage crushing plant, crushed orestorage, SAG milling with screen classification followed by a single-stage ball milling with cycloneclassification, flotation of the rare earth minerals, concentrate thickening and filtering, tailingshandling, water and reagents distribution. SGS Geostat
  15. 15. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 15 1.10 CrackingCracking of the mineral concentrates generated by Hazen is currently underway. Although onlypremliminary results are available, a TREO recovery of 95% is foreseen at the cracking plant basedon applicable and well-known cracking techniques. Because the radioactivity of the mill concentrateis not fully quantified at this time (testwork results pending), for the purpose of this report, it isassumed thermal cracking will be done directly at the mine site with any radioactive materialremaining on site. A trade-off study will be completed in pre-feasibility level evaluation to determineif it is more practical to complete cracking on site or at a location further south (e.g. near Montreal).The major components of the Acid Cracking Section include the following units: roasting, leaching,calcium and fluorine removal, thorium and iron precipitation and removal, REE carbonateprecipitation, centrifuging and drying of the REE carbonate, free of radioactivity. The potential by-product of phosphate, primarily from the cracking of monazite, is not considered in this economicevaluation. Further, the recovery of fluorite as a by-product is also not considered as part of thisstudy.A trade-off study will be completed during pre-feasibility work to evaluate conventional sulphuricacid cracking versus caustic cracking techniques. Both techniques are expected to be applicablebased on the simple and well-known Ashram mineralogy. Such evaluation will assist in determiningif a mixed REO product is more economic/practical than and mixed REC product. 1.11 InfrastructureThe on-site and off-site infrastructure will comprise: primary crushing and associated stockpilingarea, camp and mill complex, waste rock stockpile, tailings storage facility, power plant, mine garagefacility, acid and fuel farms, access roads, airstrip, concentrate storage shed and port facility.Site roads will be located to provide access to all operational areas of the mine. A road will be builtfrom the mine site to Kuujjuaq, mainly for the transportation of fuel, acid, chemicals plus otherspare parts to the mine and for the shipping out of the REE carbonate to the port facility.The camp and mill complex will be designed for a harsh environment and will include the followingbuildings: processing mill and laboratories, cracking plant, office complex, mine dry including shiftchange rooms, general maintenance work shop, mine garage, fuelling station, warehouse facility,staff and employees dormitories, kitchen/cafeteria, sulphuric acid depository, power house,emulsion plant, powder houses, garbage incineration plant and airstrip.In addition, the recent announcement of the Quebec Government northern infrastructure andsustainable development plan (Plan Nord) and its potential impact on the Project is discussed inSection 18.5. SGS Geostat
  16. 16. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 16 1.12 PowerThe electrical power will be supplied by 5 x 3640 kW diesel generators with an output voltage of4160 V at 60 Hz. Four of the units will operate permanently while the fifth one will be available as astand-by unit. The generators will be located near the mill building as it has the largest loads. Excessheat from the power generators will be used to heat part of the camp buildings. 1.13 Tailings and Water ManagementThe mill and cracking plant tailings will be stored and confined into a dry natural valley ordepression nearby the mining area. This valley or depression will be dammed and strategicallylocated to take into account the environmental constraints. Decant water from the polishing pondwill be reused at the process plant.The mill and cracking plant tailings are not considered acid generating and will contain nodeleterious elements or heavy metals that will necessitate the installation of a lime plant. Moreover,the tailings are not deemed to be radioactive since the amount of the only radioactive element(thorium) in the tailings will be, for all practical purposes, in the same order of magnitude as in themill feed. 1.14 Environmental1.14.1 Provincial Jurisdiction - Environment Quality ActQuebec’s Environment Quality Act (EQA) comprises two chapters. Chapter I set out generalprovisions including protection of living species, protection of the environment, environmentalimpact assessments, depollution attestation, land and water resource protection, residual materialmanagement, etc. The Act says that no one shall alter the quality of the environment (Section 20)and provides a framework for activities likely to alter it, when unavoidable. Chapter II sets outprovisions applicable to the James Bay and Northern Quebec Region.The environmental assessment procedures established for northern projects vary according towhether the project is located south or north of the 55th parallel. Section 168 of the EQA definesthe territory north of the 55th parallel as: “the whole territory located to the north of the 55thparallel, except in Category I and II lands for the Crees of Great Whale River”. The Eldor Propertyis located within the territory described above (north of the 55th parallel and on Category III lands). SGS Geostat
  17. 17. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 171.14.2 Federal Jurisdiction - Canadian Environment Assessment ActEven though the Project is subject to a joint federal-provincial review panel, some distinct permitsmay be required to satisfy federal bodies such as Fisheries and Oceans Canada. However, it shouldbe noted that the Federal Government has recently announced plans to amend certain aspects of theAct.1.14.3 Physical EnvironmentIn terms of environment, the Project involves three main elements: the mine site, the road linkingthe mine site to Kuujjuaq, and the shipment port.The Project will be subjected to an environment impact assessment potentially from both the federaland provincial governments. The environment impact assessments will measure the potentialeffects of the Project on the natural environment. Also, the Project will be subject to a socio-economic impact assessment, which will assess the potential effects of the Project on the humanmilieu. The water management plan for the mining-milling site will be developed during subsequentProject planning stages. No wastewater investigation has been completed to date but will bescheduled for the pre-feasibility study (PFS) as part of the environment permitting review in order tospecifically identify any issues or parameters of concern and treatment requirements.Given the general nature of the resource being mined, acid rock drainage/metal leaching from thewaste rock or the mill tailings are not a likely concern for this Project as the waste rock consistsmainly of carbonates and sulphur is, for all practical purposes, absent. However, confirmatorytesting is still required. At this time, even if metal leaching does not seem to be an issue, it will betested along with the turbidity of the water discharging from the tailings pond. 1.15 Capital Cost EstimateThe total capital expenditure cost (CAPEX) is estimated at an overall accuracy of ±30%. TheCAPEX were defined by SGS using in-house database and the Mine & Mill Equipment CostsEstimators Guide: Capital & Operating Costs (2010). The costs from the Guide were updated to2012 using an inflation rate of 4% per year. The total required investment is estimated at$763,000,000 and includes a contingency of 25%. The CAPEX assumes that all costs for thetransport road and the port facility are covered entirely by Commerce, with no potential outsideassistance from third parties evaluated (e.g. Plan Nord). 1.16 Operating Cost EstimateThe operating costs (OPEX) are estimated at an overall accuracy of ±30%. The operating costswere defined by SGS using in-house database and the Mine & Mill Equipment Costs EstimatorsGuide: Capital & Operating Costs (2010). The costs from the Guide were updated to 2012 using an SGS Geostat
  18. 18. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 18inflation rate of 4% per year. The OPEX assumes that all costs for maintenance of the transportroad and port facility are covered entirely by Commerce, with no potential outside assistance fromthird parties evaluated (e.g. Plan Nord).The total operating cost for the mine and processing over the life of the mine is estimated at$3,331,850,000 which represents $95.20 per tonne of ore treated or $7.91 per kg of rare earth oxide(REO) produced. Table 1-2 summarizes the main costs used to evaluate the Project economics. Table 1-2: Operating Cost Item Cost Unit Mining 5.32** $/t mined (RoM*) G&A 47.70 $/t treated (RoM*) Processing (flotation) 23.87 $/t treated (RoM*) Processing (cracking) 17.40 $/t treated (RoM*) *RoM = Run of mine, ** Equivalent to $6.23 per tonne treated 1.17 Economic AnalysisThe Ashram base case consolidated cash flow model is presented in Table 1-3. The economicanalysis illustrates a base case for a 4,000 tpd operation (350 days per year) producing a 10% TREOmineral concentrate and further processing to a mixed rare earth carbonate (REC) product via acracking stage on-site with an overall final recovery of 66.5% (70% to concentrate + 95% atcracking). Based on an open-pit head grade of 1.81% TREO, a total of approximately 36,000tonnes of 99.9% pure mixed REC is anticipated to be produced annually, representingapproximately 16,850 tonnes of REO. The economics of producing a mixed REO product directlyon-site instead of a mixed REC product will be evaluated in subsequent studies. Table 1-3: Ashram Base Case Consolidated Cash Flow Model Item Unit Value Pre-tax and Pre-finance NPV $ 2,317,600,000 Pre-tax and Pre-finance IRR % 44 Pre-tax and Pre-finance Payback period* year 2.25 1.18 ConclusionSince this Project is certainly one of merit, it is recommended that Commerce continue themetallurgical testing in order to establish the optimal flotation reagents and increase the concentrategrade. These metallurgical tests should be followed by a pre-feasibility study supported by a pilotplant operation on a minimum 300-tonne sample. Pilot testing should include cracking of theflotation concentrate and further, evaluation of the optimal cracking technique and subsequentmarketable product. SGS Geostat
  19. 19. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 192 Introduction 2.1 GeneralSGS Canada Inc - Geostat (SGS Geostat) was commissioned by Commerce Resources Corp.(Commerce or Company) on May 17, 2011 to prepare a NI 43-101 compliant Preliminary EconomicAssessment (PEA) of the Ashram Rare Earth Project. This technical report was prepared by SGSGeostat for Commerce to support the disclosure of the PEA for the Project.Commerce Resources Corp. is a Canadian exploration and development company with a particularfocus on deposits of rare metals and rare earth elements. The Company is specifically focused on thedevelopment of its Upper Fir Tantalum and Niobium Deposit at the Blue River Project in BritishColumbia, and the exploration of the Eldor Rare Earth Property in northern Quebec, which is thesubject of the present report. Commerce trades on the Toronto Stock Venture Exchange (TSX.V)under the symbol CCE, on the Frankfurt Stock Exchange under the symbol D7H, and on theOTCQX U.S. marketplace under the symbol CMRZF.The Eldor Property is located in northern Quebec approximately 130 km south of the communityof Kuujjuaq and ~85 km north of Adriana Resources Lac Otelnuk Iron Deposit. The property is100% owned by Commerce and encompasses 404 claims totalling approximately 19,006 hectares. In2009, the exploration program by Dahrouge Geological Consulting Ltd. (Dahrouge), on behalf ofCommerce, led to the discovery of a significant new rare earth element deposit known as theAshram Deposit.The purpose of this report is to evaluate the preliminary economic potential of the Ashram Projectbased on the analytical results from diamond drilling during the 2010 and 2011 explorationprograms. The economic scenario takes into account the most recent resource estimation, aprocessing scenario based on tests results, a mining scenario, a list of required infrastructure, andeconomic parameters such as oxide prices from market studies. The report also providesrecommendations for future work. 2.2 Terms of ReferenceThis preliminary economic assessment was prepared by:Gaston Gagnon, Eng. Responsible for all sections except 11.3, 11.4, 11.5, 12, 13, 14 and 17Yann Camus, Eng. Responsible for sections 11.3, 11.4, 11.5, 12 and 14Gilbert Rousseau, Eng. Responsible for sections 13 and 17Jonathan Gagné, Eng.This technical report was prepared according to the guidelines set under “Form 43-101F1 TechnicalReport” of National Instrument 43-101 Standards and Disclosure for Mineral Projects. Thecertificates of qualification for the Qualified Persons responsible for this technical report can befound in Appendix A. SGS Geostat
  20. 20. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 20One of the authors, M. Gaston Gagnon, Eng. visited the Property, accompanied by Robert Del’Étoile, Eng. from SGS Geostat, between September 18 and 21, 2011, for a review of explorationmethodology, sampling procedures, and to conduct independent check sampling of selectedmineralized drill core.Information in this report is based on critical review of the documents, information and mapsprovided by personnel of Commerce and Dahrouge, in particular Mr. Darren L. Smith, M.Sc.P.Geol., Project Geologist/Manager, and Mr. Wayne McGuire, Senior GIS Technician. 2.3 Units and CurrencyAll measurements in this report are presented in International System of Units (SI) metric system,unless otherwise stated, with all currency amounts in Canadian Dollars (C$) unless otherwise stated.Abbreviations used in this report are listed in Table 2-1. Table 2-1: List of Abbreviations°C Degree Celcius m MicrometreActlabs Activation LaboratoriesALS ALS GroupBn BillionBTW Core diameter (B-thin wall, 42 mm)C$ Canadian DollarsCA Certificate of AuthorizationCAPEX Capital expendituresCCME Canadian Council of Ministers of the EnvironmentCDD Counter current decantationCEAA Canadian Environment Assessment ActCDPNQ Centre de données sur le patrimoine naturel du Québec (CDPNQ)cm CentimetreCoG Cut-off-gradeCommerce Commerce Resources CorporationCRMs Certified reference materialsDahrouge Dahrouge Geological Consulting Ltd., Edmonton, Alberta, CanadaD DiameterDCF Discounted Cash FlowEI Environement Illimité inc.Eldor Eldor Property (site of Ashram Deposit)FS Feasibility StudyEng EngineerEQA Environment Quality ActG&A General and Administrativeg/cc Gram per cubic centimetreg/t Gram per tonneGa Billion yearsGSC Geological Survey of CanadaH Heightha HectaresHazen Hazen Research Inc., Denver, ColoradoHz HertzICP Inductively coupled plasmaICP-MS Inductively coupled plasma mass spectrometryIRR Internal rate of return SGS Geostat
  21. 21. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 21ISE Ion selective electrodeIUGS International Union of Geological Sciencesk Kilokg Kilogramkm KilometrekW KilowattkW-h Kilowatt-hourLFO Light fuel oilLoM Life of mineLREO Light rare earth oxidem MetreM Millionm2 Square metreMa Million yearsMCC Motor Control CentreMDDEP Ministère du Développement Durable, de l’Environnement et des Parcsmg MilligramMHREO Middle and heavy rare earth oxidemin Minutemm MillimetreMMER Metal Mining Effluent RegulationMREO Middle rare earth oxideMRNF Ministère des Ressources Naturelles et de la FauneMW MegawattNAD83 North American datum of 1983NI 43-101 National Instrument 43-101NPI Net profit interestNPV Net present valueNQ Core diameter (47.6 mm)NSR Net smelter returnNTS National Topographic System of CanadaNWPA Navigable Waters Protection ActOK Ordinary Kriging methodologyOPEX Operating expendituresPEA Preliminary economic assessmentPFS Pre-feasibility studyPGE Platinum Group Elements (six elements)pH Potential of hydrogen (acidity scale)PLC Programmable logic controllerppm Part per millionProject Ashram ProjectProperty Eldor PropertyQA/QC Quality assurance/Quality controlQP Qualified PersonQtz QuartzREC Rare earth carbonateREE Rare earth elementREO Rare earth oxideRF Revenue factorsRoM Run of mineRPD Relative percent differenceSAG Semi-Autogenous Grinding MillSECP Southeastern Churchill ProvinceSEDAR System for Electronic Document Analysis and RetrievalSG Specific GravitySGS-Geostat SGS Canada Inc, Geostat’s office in Blainville, QCSI International System of Units metric system SGS Geostat
  22. 22. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 22T Metric tonnet/m3 Tonne per cubic metretpd Tonne per daytpy Tonne per yeartpa Tonne per yearTREE Total REE (Sum of the Rare Earth Elements (La through Lu) + Yttrium)TREO Total REO (Sum of the Rare Earth Oxides (La through Lu) + Yttrium)TRM-2 Certified Reference Material for analytical work, from MongoliaUS$ United States dollarsUTM Universal transverse mercatorV VoltVirginia Virginia Mines IncXRF X-ray fluorescenceTable 2-2 presents some factors to convert elements to oxides and also provides total rare earthdefinitions. Table 2-2: Element to Oxide and Total Rare Earth Definitions Name Element Definitions Conversion Factor Oxide Definitions (Element to Oxide) Lanthanum La 1.17276 La2O3 Cerium Ce 1.17127 Ce2O 3 LREOPraseodymium Pr LREE 1.17031 Pr2O3 Neodymium Nd 1.16638 Nd2O 3 Samarium Sm 1.15961 Sm2O3 Europium Eu MREE 1.15793 Eu2O 3 MREO Gadolinium Gd 1.15261 Gd2O 3 Terbium Tb TREE 1.15100 Tb2O 3 TREO Dysprosium Dy 1.14768 Dy2O 3 Holmium Ho 1.14551 Ho2O 3 Erbium Er 1.14348 Er2O3 Thulium Tm HREE 1.14206 Tm2O3 HREO Ytterbium Yb 1.13868 Yb2O 3 Lutetium Lu 1.13716 Lu2O3 Yttrium Y 1.26993 Y2O 3 2.4 DisclaimerIt should be understood that mineral resources, which are not mineral reserves, do not havedemonstrated economic viability. The mineral resources presented in this Technical Report areestimated based on available sample data and on assumptions and parameters available to theauthors. The comments in this Technical Report reflect the authors and SGS Canada Inc. – Geostatbest judgement in light of the information available. SGS Geostat
  23. 23. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 233 Reliance on Other ExpertsSGS Geostat did not rely on any experts other than Hazen Research Inc, (Hazen), CommerceResources Corp., and Dahrouge Geological Consulting Ltd. during the writing of this report. Allinformation, estimations, opinions and conclusions presented in this report are based on a thoroughreview of the literature and on data, reports and other information supplied by Commerce, and onSGS expertise including in-house database.For the purpose of the report, SGS has relied on Hazen, Commerce, and Dahrouge for informationpertaining to the following sections:4- Property Description and Location5- Accessibility, Climate, Local Resources, Infrastructure and Physiography6- History7- Geological Setting and Mineralization8- Deposit Types9- Exploration10- Drilling13- Mineral Processing and Metallurgical Testing17- Recovery MethodHowever, these sections were read, revised and approved by SGS experts. SGS is of the opinion thatthe data provided by Hazen, Commerce, and Dahrouge is acceptable compared to standards andthat the work done by Hazen, Commerce, and Dahrouge is professional and trustworthy. SGSexperts are comfortable to use such data in assessing the preliminary economic potential of theAshram Project. SGS Geostat
  24. 24. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 244 Property Description and Location 4.1 LocationThe Eldor Property is located in the Nunavik Region of the Province of Québec, approximately 130km south of the community of Kuujjuaq (Figure 4-1). The Property is situated about longitude68°24’0” west and latitude 56°56’0” north at its centre and covers portions of NTS map sheets24C15, 24C16, and 24F01. The Property is only accessible by float or ski-equipped plane, helicopterand by snowmobiles during winter months. Figure 4-1: General Location Map SGS Geostat
  25. 25. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 25 4.2 Property Ownership and AgreementsAs of June 2012, the Property consists of one block totalling 404 claims covering 19,006.52 ha. TheProperty area extends approximately 17.5 km in an east-west direction and 24 km in a north-southdirection. Figure 4-2 shows the claims that comprise the Property with a detailed listing included inAppendix B.Of the 404 claims comprising the Property, eight claims were acquired in May 2007 by a purchaseagreement with Virginia Mines Inc (Virginia). The other 396 claims were acquired by map stakingbetween May 2007 and October 2010. SGS Geostat
  26. 26. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 26 Figure 4-2: Map of the Mineral Titles, Eldor Property SGS Geostat
  27. 27. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 27 4.3 Royalties ObligationsThe original eight claims acquired from Virginia are subject to a 1% NSR royalty in favour ofVirginia and a 5% NPI royalty in favour of two individuals. Commerce has the right to buy back the5% NPI royalty in consideration of $500,000. The Ashram Rare Earth Deposit is not situated withinthe Virginia claims, and is not subject to any royalties. 4.4 Permits and Environmental LiabilitiesCommerce is conducting exploration work under valid permits and authorisations delivered by theprovincial Ministère des Ressources Naturelles et de la Faune (MRNF) and the Ministère duDéveloppement Durable, de l’Environnement et des Parcs (MDDEP). On March 19, 2011, theCompany confirmed having the following work permits in good standing: • Intervention permit (by the MRNF); • Camp authorisation (by the MDDEP); • Certificate of authorisation (by the MDDEP); • Attestation of exemption (by the MDDEP).There are no known environmental liabilities pertaining to the Property, according to the Company. 4.5 MineralizationSeveral different types of mineralization, related to the carbonatite intrusive complex, occur at theEldor Property. The main commodities of interest include rare earth elements and fluorine asdiscovered at the Ashram Zone; however they also occur in other areas on the Property. Niobium,tantalum, and phosphate mineralization also occur on the Property; mainly at the Star Trench,Southeast, and Northwest areas, Table 4-1 summarises the mineralization currently known on theProperty. SGS Geostat
  28. 28. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 28 Table 4-1: Summary of Mineralization Occurring on the Eldor Property Location Area Name Commodities Significant Results Sampling Type UTM East UTM North EC10-032: 0.43% Nb2O5 over 155.95 m, incl. 0.71% Nb2O5 over 15.33 m EC10-033: 0.58% Nb2O5, 8.9% P2O5, and 0.47% TREO over 74.25 m, incl. Nb, Ta, F, Drill Core, 538000 6311000 Southeast 12.7% F over 32.42 m; Phosphate Boulders, Soils EC08-015: 0.55% Nb2O5 over 26.1 m, incl.16.1% F over 13.78 m 0.065% Ta2O5 (boulder); 1.21% Nb2O5 (boulder); 19.2% P2O5 (boulder) Nb, Ta, EC08-008: 0.46% Nb2O5 over 46.88 m; Drill Core, 535900 6312700 Northwest Phosphate 28.2% P2O5 (outcrop); 5.74% Nb2O5, 0.46% Ta2O5 (outcrop) Outcrop, Soils Ta, Nb, EC08-025: 0.31% Nb2O5, 0.060% Ta 2O5, and 16.60% P2O5 over 4.37 m; Drill Core, 537300 6310100 Star Trench Phosphate 37.3% P2O5 (outcrop); 4.23% Nb2O5 (boulder); 0.14% Ta2O5 (boulder) Outcrop, Boulders 536300 6312100 Ashram REE, F EC11-048: 2.10% TREO over 586.92 m, incl. 3.00% TREO over 36.99 m Drill Core EC10-037: 1.73% TREO over 7.87 m; Drill Core, 541400 6311700 MC Exposure REE, F 2.03% TREO (outcrop) Outcrop Nb, REE, 537400 6313000 Miranna 2.42% Nb2O5 (boulder); 15.8% P2O5 (boulder); 1.25% TREO (soils) Boulders, Soils Phosphate 535700 6313500 Triple-D REE EC11-055: 1.38% TREO over 10.00 m Drill Core EC11-069: 1.96% TREO over 2.85 m; Drill Core, 535100 6312700 West Rim REE, Nb, Ta 2.27% TREO (boulder); 16.09% Nb2O5, 0.754% Ta 2O5 (boulder); Boulders 21.0% P2O5 (boulder) EC11-081: 1.36% TREO and 2.3% F over 10.45 m; Drill Core, 539100 6312900 Beckling REE, F 4.30% TREO, 20.1% F (outcrop) Outcrop SGS Geostat
  29. 29. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 295 Accessibility, Climate, Local Resources, Infrastructure and Physiography 5.1 AccessibilityDue to its remoteness, the Property is only accessible by float or ski-equipped plane, helicopter or bysnowmobiles during winter months. 5.2 ClimateThe climate is sub-arctic continental with average temperatures ranging from -25°C in February to+11°C in July for the nearest community of Kuujjuaq. The average annual precipitation for the last10 years in the region is 41 cm of rain and 174 cm of snow (weather base website, 2011). Lakefreeze-up generally begins in early to middle October and ice break-up usually occurs around theend of May-early June. 5.3 Local Resources and InfrastructuresThe regional resources regarding labour force, supplies and equipment are challenging due to theremoteness of the Project. The nearest communities are Kuujjuaq, located 130 km north with apopulation of more than 2,000 citizens, and Schefferville (including the nearby native community)situated approximately 250 km southeast with a population of about 800 citizens (2006 census).Both communities are serviced by a regional airport, float plane base, and helicopter base. Kuujjuaqhas no sea port facilities. Cargo boats must unload at Mackay’s Island (on the Koksoak River)located approximately 35 km northeast of Kuujjuaq, due to shallow waters, and use barges for theremaining river transportation. Schefferville is the northern terminus of the Tshiuetin railway(formerly operated by the Quebec North Shore & Labrador), which connects to Labrador City thenSept-Iles to the south.Exploration work on the Property is completed from a temporary base camp (known as Eldorcamp) located nearby the Ashram REE Deposit. The camp can be open year-round and currentlyhas the capacity to accommodate up to 35 persons. The camp is equipped with core logging,sampling facilities, core photography, and core fluorescence installations. It also hosts the drill corearchive of the Project. No permanent access road has been built on the Property although a networkof temporary access trails connects the camp to the Ashram Deposit and is passable by quad andside-by-side all terrain vehicles 5.4 PhysiographyThe Property is characterised by a rolling hill topography generally created by the underlying glacialdrumlins and eskers. Glacial sediments, mostly till, cover most of the Project area and can be up to SGS Geostat
  30. 30. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 30ten metres thick, although is typically less than 1-3 m over the Ashram Deposit. Outcrops are rare,but boulders are abundant. The elevation above sea level ranges from 200 m to 320 m.Drainage in the area, typical of the transitional taiga to tundra regions, is northward toward UngavaBay using small creeks and local poorly drained swampy area connecting to larger lakes and majorrivers. The vegetation is generally forest-covered in the central portion of the Property, populatedmainly by black spruce and tamarack trees, with generally barren areas occurring in the moreelevated southern area. Willow and alder shrubs, often densely populated, also occur in low-lyingareas throughout the Property. SGS Geostat
  31. 31. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 316 History 6.1 Regional Government SurveysSeveral regional surveys have been conducted in the area of the Property by the Geological Surveyof Canada (GSC) and the MRNF. Between the 1950s and the 1970s, different authors from the GSCand the MRNF conducted regional geological surveys in the New Quebec Orogen at varying scales,from 4 miles per inch (1:253,440) to 1 mile per inch (1:63,360). In 1979, a compilation of the variousgeological surveys conducted in the area was completed (Dressler and Ciesielski, 1979). Since theend of the 1970’s, only a few localised and more detailed geological surveys were completed by theMRNF.The geological syntheses reported by the MRNF for the area since the 1990’s include a 1:250,000scale map of the mineral occurrences of the New Quebec Orogen (Avramtchez et al., 1990), apreliminary lithotectonic and metallogenic synthesis at a 1:500,000 scale (Bandyayera et al., 2002),and more recently a complete lithotectonic and metallogenic synthesis of the New Quebec Orogen(Clark and Wares, 2006).In addition to regional geological surveys, a stream sediment geochemical survey was completed in1974 (Dressler, 1974), followed in 1987 by a regional lake sediment geochemical survey (Baumier,1987). 6.2 Mineral Exploration WorkThe information reported in this section relates mainly to mineral exploration work conducted forthe mineralization related to the carbonatite intrusive complex occurring on the Property. TheEldor Carbonatite Intrusive Complex was first discovered in 1981 by Eldor Resources Ltd. (EldorRes.) following a regional lake-water and sediment sampling program completed in the northern partof the Labrador Trough for uranium exploration.In 1982, after the acquisition of an exploration permit in the area of the Property, Eldor Res.completed a 982 line-km airborne radiometric survey that outlined several radiometric anomalies inthe area.In 1983, Eldor Res. followed up the airborne anomalies with a prospecting program. During theprogram, many of the anomalies were explained, using a scintillometer in hand-dug pits or trenches,or by radioactive carbonatite outcrops or boulders. The samples collected returned anomalousthorium values with some of the samples returning up to 7% Nb, 0.18% Ta, and 4% totallanthanides. A reconnaissance geological mapping survey was also conducted in the area of thenewly discovered carbonatite (Meusy et al., 1984; Lafontaine, 1984).In 1985, Unocal Canada Ltd. carried out a five-day field program consisting of magnetic-radiometricgeophysical and soil geochemical orientation surveys along with prospecting. Samples collected for SGS Geostat
  32. 32. Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 32geochemical analysis and petrographic study confirmed the historical results by Eldor Res. andadditional Nb-Ta occurrences were outlined in the area (Knox, 1986).The Eldor Carbonatite was staked in April, 2002 by Virginia Gold Mines Ltd. (now Virginia MinesInc.) based on the historical Ta values reported by Eldor Res. Virginia conducted a small programand re-sampled the known Nb-Ta showings, confirming the historical results. No additional workwas performed in the area by Virginia (Demers and Blanchet, 2002).In April, 2007, Commerce concluded a purchase agreement with Virginia on the 8 original claimsand subsequently acquired an additional 396 claims over the next three years, covering thecarbonatite and immediate vicinity. During the summer of 2007, the Company mandated DahrougeGeological Consulting Ltd. (Dahrouge) to conduct an exploration program consisting ofprospecting (56 observation points) and rock sampling (60 samples), soil sampling (901 samples),and ground radiometric (scintillometer) and magnetic surveys. In addition to the field program, an862 line-km airborne magnetic-electromagnetic-radiometric survey was flown over the Property at200 m line spacing (Smith et al., 2008).During 2008, Dahrouge, on behalf of Commerce, conducted an exploration program on theProperty consisting of prospecting and rock sampling, regional soil sampling, ground geophysics,trenching, and diamond drilling. A total of 5,482.29 metres of drilling was completed over 26 holesin three areas of the Property (Star Trench, Northwest, and Southeast). From these holes, 3,471samples totalling 4,003 metres were collected and analysed during 2008 (2,928 samples) andsubsequent infill sampling programs during 2009 (97 samples) and 2010 (446 samples), not includingduplicates. Some of the best results from the initial drilling and sampling are as follows:Star Trench Area: EC08-025 - 4.37 m grading 597 ppm Ta2O5, 3,058 ppm Nb2O5, 736 ppm U3O8, and 16.6% P2O5Northwest Area: EC08-008 - 46.88 m grading 4,562 ppm Nb2O5Southeast Area: EC08-015 - 26.10 m grading 5,466 ppm Nb2O5Fifteen (15) trenches, with 71 samples collected, were documented on the Property. The groundgeophysics consisted of magnetic and scintillometer surveys. The soil sampling program significantlyextended the 2007 regional grid and returned 685 samples collected at 50 m intervals along 1 km-spaced lines. The prospecting work totalled 270 observation points and returned a total of 93 rocksamples.In 2009, Dahrouge, on behalf of Commerce, completed a relatively small exploration program withfield work consisting of prospecting and additional sampling of 2008 drill core (97 samples).Additional work was completed in the office and consisted of air-photo interpretation and re-interpretation of the 2007 airborne geophysical survey. The most significant result from the 2009exploration program was the discovery of REE mineralization in outcrop on the Ashram Peninsula,highlighting the exploration potential for rare earth elements on the Property. Of the 70 rock SGS Geostat

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