46
Developing a World-Class Deposit Eldor Rare Earth Element Project Private and Confidential October 2012
Developing a World-Class Deposit
Eldor Rare Earth Element Project
Private and Confidential
October 2012
Disclaimers and Cautionary Statements: The information contained in this presentation is provided by Commerce Resource Corp. (“Commerce”) for informational purposes only and does not constitute an offer to issue or arrange to issue, or the solicitation of an offer to issue, securities of Commerce or other financial products. The information contained herein is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. The views, opinions and advice provided in this presentation reflect those of the individual presenters, and are provided for information purposes only. The presentation has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, none of Commerce nor its directors, officers, employees or agents, nor any other person accepts any liability, including, without limitation, any liability arising out of fault or negligence, for any loss arising from the use of the information contained in this presentation.
Except for statements of historical fact, this presentation contains certain “forward-looking information” within the meaning of applicable securities laws. Forward-looking information is frequently characterized by words such as “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate” and other similar words, or statements that certain events or conditions “may” or “will” occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements, including, among others, the accuracy of mineral grades and related assumptions, planned expenditures, proposed exploration and development at the Eldor Rare Earth Element Project and the Blue River Tantalum/Niobium Project, anticipated rare earth element prices and the relationship between rare earth elements and Chinese and global demand, the anticipated timing and conclusions of drilling results, as well as those risk factors identified in Commerce’s Management Discussion & Analysis for the Year ended Oct 31, 2011 and other disclosure documents available at www.sedar.com under Commerce’s name. Commerce undertakes no obligation to update forward-looking information if circumstances or management’s estimates or opinions should change except as required by law. The reader is cautioned not to place undue reliance on forward-looking statements.
This presentation includes industry, market and competitive position data from industry journals and publications, data on websites maintained by private and public entities, including independent industry associations, general publications and other publicly available information. Commerce believes that all of these sources are reliable, but we have not independently verified any of this information and cannot guarantee its accuracy or completeness. Industry publications and surveys generally state that they have obtained information from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information. Further, because certain of these organizations are industry organizations, they may present information in a manner that is more favourable to the industry than would be presented by an independent source. In addition, forecasts are often inaccurate, especially over long periods of time. References in this presentation to research reports or articles should not be construed as depicting the complete findings of the entire referenced report or article. The information in each report or article is not incorporated by reference into this presentation.
Cautionary Notes regarding Technical Information: This presentation includes disclosure of scientific and technical information, as well as information in relation to the calculation of resources, with respect to the Eldor Rare Earth Element Project and the Blue River Tantalum/Niobium Project. Commerce’s disclosure of mineral resource information is governed by National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as may be amended from time to time by the CIM (“CIM Standards”). There can be no assurance that mineral resources will ultimately be converted into mineral reserves. Mineral resources are not mineral reserves and do not have demonstrated economic viability. Further information about the Blue River Tantalum/Niobium Project, including information relating to quality assurance and quality control procedures, is available in the NI 43-101 compliant technical report dated January 31, 2011 and entitled “Blue River Ta-Nb Project NI 43-101 Technical Report”, a copy of which is filed under Commerce’s profile on SEDAR at www.sedar.com. Further information about the Eldor Rare Earth Element Project, including information relating to quality assurance and quality control procedures, is available in the NI 43-101 compliant technical report dated April 15, 2011 and entitled “Technical Report Mineral Resource Estimation, Eldor Property – Ashram Deposit”, a copy of which is filed under Commerce’s profile on SEDAR at www.sedar.com.
Forward-Looking Information
2
3
Eldor Project Highlights
World-class deposit with the highest grade of large tonnage advanced-stage rare earth element (“REE”) deposits • Measured and Indicated resource of 29Mt at 1.90% TREO and Inferred resource of 220Mt at 1.88% TREO • Mineralized from surface with minimal overburden, allowing for a low cost open pit operation • Deposit is open to the north, south, at depth, and is not fully constrained to the east or west
Very favourable and well-balanced distribution containing significant amounts of the critical REEs • Large deposit capable of supplying light, middle, and heavy REE’s to the marketplace • Contains high demand, short supply REEs in significant amounts, including Nd, Eu, Tb, Dy, and Y
Positive Preliminary Economic Assessment (PEA) completed • Very robust economics – pre-tax NPV of $2.3 billion, IRR of 44%, and payback period of 2.25 years • Potential to be one of the largest and longest operating REE producers – 300 years using cut-off of 0.51% TREO • Relatively low cost operation – estimated CAPEX of $763 million and OPEX of $95.20/t of ore treated
Located in a top-ranked mining friendly jurisdiction • Quebec consistently ranked as a top destination globally for mining development • Government’s Plan Nord program to fund $1.6 billion of infrastructure in the immediate region
Advancing quickly to production • Simple mineralogy allows for rapid development – major ore minerals have been commercially processed • Preliminary Economic Assessment (PEA) completed in Q2 2012
Strong management team with expertise in REE deposits • Management and directors have extensive experience in rare metals and rare earth markets
Commerce Resources Corp.
4
Commerce Resources Corp.
• Canadian junior exploration and development company
• Headquartered in Vancouver, BC, Canada
• Focused on rare metals and rare earth elements
Two advanced projects
• Eldor Rare Earth Element Project, Quebec:
- Positive Preliminary Economic Assessment
- Pre-feasibility Study commenced
- Major high-grade, large tonnage rare earth deposit, with middle and heavy rare earth enrichment confirmed
• Blue River Tantalum / Niobium Project, BC:
- Positive Preliminary Economic Assessment
- Advancing towards Pre-feasibility
5
Blue River Tantalum-Niobium Project
Summary Highlights • Tantalum facing a critical supply shortage as demand rises and
production declines, down 55% from 2001 to 2009
• Advanced tantalum and niobium project with significant work complete – CAD$25M+ spent to date
• PEA defines deposit as largest potential near-term supplier of conflict-free tantalum globally – 700,000 lbs Ta2O5 annually
• Fully serviced site in mining-friendly British Columbia
Upper Fir Resource Estimate (2010) • Indicated resource of 52M tonnes containing 9.9M kg Ta2O5
and 76.9M kg Nb2O5; Inferred resource of 9M tonnes containing 1.6M kg Ta2O5 and 14.6M kg Nb2O5
• Other historical resources on property (Fir and Verity)
Positive PEA demonstrates a potential large-scale low-cost producer of conflict-free tantalum • Based on an underground mine, mill and concentrator, and
processing facility to produce technical-grade tantalum and niobium oxides
• Comparatively low capital and operating costs
• Most essential infrastructure already existing on site
Financial Summary
Listings: TSX-V (Canada): CCE
FSE (Germany): D7H
OTCQX (USA): CMRZF
Share Price (October, 2012) $0.21
52 Week High $0.45
52 Week Low $0.21
Shares Out – Basic 147.9
Shares Out – FD 166.0
Average 90-day Volume 0.07
Market Cap – Basic $31.1
Cash $0.8
Debt $0.0
All amounts in M or CAD$M except per share amounts.
Top Institutional Holders % Ownership
Zimtu Capital Corp. (TSX-V:ZC) 2.5
ZKB Asset Management 0.5
Frankfurt-Trust Invest Luxemburg AG 0.4
Total Institutional 4.2
Total Insiders 1.4
Total Retail 94.4
Total Outstanding 100.0
Corporate Information Share Performance
Ownership
Analyst Coverage
Dealer Date Rating Target
Fundamental Research April 2012 Buy $1.37
6
Source: Commerce, Capital IQ, Deloitte
-
500
1,000
1,500
2,000
2,500
3,000
3,500
$0.00
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.35
$0.40
$0.45
$0.50
Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12
Trad
ing
Vo
lum
e (
M)
Shar
e P
rice
(C
$)
Daily Volume
Closing Price
Experienced Team
Axel Hoppe Chairman
Leader in the tantalum/
niobium field.
Former Member of the
Executive Board of one
of the
world’s largest
consumers
of tantalum raw
materials –
H.C. Starck GmbH.
David Hodge President &
Director
Veteran resource
executive
with over 20 years
experience.
Raised over $75 Million in
the past 10 years.
Director of Western
Potash Corp.
Jody
Dahrouge P.Geol, VP
Exploration,
Director
Instrumental in the
guidance
of company’s
exploration
programs.
Director of Fission
Energy
Corp.
Jenna Hardy M.Sc, MBA,
P.Geo,
Technical
Services,
Director
Project Manager for Blue
River Tantalum/Niobium
Project.
Director of Argentex
Mining Corp. and Critical
Elements Corp.
Ian Graham P.Geo, Director
Former Chief
Geologist with
the Project
Generation Group
at Rio Tinto.
Former Chair of the
University
of British Columbia’s
Mineral
Deposit Research
Unit.
Director and
President of
Discovery Harbour.
Chris Grove Managing
Director
Instrumental in raising
over $50 Million for
Commerce Resources
since 2004.
Extensive contacts in
the financial
community.
Responsible for
communications and
corporate
development.
Liaison with global
institutional investors
and governments.
7
Rare Earths – Market Overview
Rare earths are an indispensible input to high-technology applications, including electric and hybrid vehicles and bicycles, battery technology, wind turbines and consumer electronics.
8
37%
31%
14%
5% 4% 4%
3% 2%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Magnets Phosphors Metal Alloys Catalysts Ceramics Polishing Other Glass
Rare Earth Usage by Value
Source: Roskill (2008), Nissan, Deloitte
9
Rare Earths – Rapidly Growing Demand
Global demand is forecasted to grow by 9% per annum until 2015.
100,000
150,000
200,000
250,000
300,000
350,000
2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Ton
ne
s
Demand Forecasts
Each grey line represents forecast data from one source, from high to low: Dr. Chen (high case), Hudson Resources, Metal Pages, Lynas Demand Forecast, Avalon Rare Metals, Dr. Chen (low case), Roskill Report, Industrial Minerals Company of Australia
Average Demand
Source: Analyst and Company reports, Deloitte Rare Earth Market Summary
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Ton
ne
s
Global Supply of REE’s
China ROW
10
Rare Earths – Declining Supply
Global output peaked in 2006 and by 2011 had declined 18%. Supply outside China is further constrained by Chinese export quotas – creating an urgent need for viable new projects.
Source: Roskill, Deloitte
18% decline
11
Critical Rare Earth Elements
U.S. Department of Energy evaluated REEs to identify the 5 most critical: 1. Neodymium (Nd) - Used in high strength magnets included in hybrid vehicle electric motors 2. Europium (Eu) - Used in monitors, televisions and fluorescent lamps / glass 3. Terbium (Tb) - Used in solid-state devices and as crystal stabilizer of fuel cells 4. Dysprosium (Dy) - Used in control rods for nuclear reactors and in data storage applications 5. Yttrium (Y) - Used in making phosphors, such as in the production of televisions, lasers and superconductors
Source: U.S. Department of Energy 2011, Deloitte
Short Term (0 - 5 years) Long Term (5 - 15 years)
4 (high) Y Dy Eu
Tb 4 (high) Nd Dy
3 Ce La
Te Nd 3
Li
Te
Eu
Y Tb
2 Li Ni Co Ga
Mn Pr In 2 Ni
Ce La
Co Mn
Ga Pr
In
1 (low) Sm 1 (low) Sm
1 (low) 2 3 4 (high) 1 (low) 2 3 4 (high)
Imp
ort
ance
to
cle
an e
ne
rgy
Imp
ort
ance
to
cle
an e
ne
rgy
Supply risk Supply risk
Critical
Near Critical
Not Critical
12
Introduction to the Eldor Project
Attractive Location
• Situated in Northern Quebec
• ~130 km south of the town of Kuujjuaq
• ~250 km north of Schefferville
• ~85 km north of Adriana Resources’ Lac Otelnuk Iron Ore Deposit
100% Ownership
• One claim block covering 190 km2
Advancing Infrastructure
• Quebec government’s Plan Nord examining road/rail link from Schefferville to Kuujjuaq
• Also hydro-electric links to main grid
13
Favourable Locale for Mining Investment
Quebec ranked as one of the most favourable jurisdictions globally
• Survey of mining executives by the Fraser Institute, an independent policy think-tank consistently ranked Quebec 1st out of 93 global jurisdictions in terms of “attractiveness”
• Quebec’s operating costs are among the lowest in North America
• Company has established contact with the Quebec Government and has met the Premier, the Deputy Minister of Natural Resources, and the Minister of Mines on the new budget and Plan Nord
• Company has established contact and hired from Inuit in Kuujjuaq since 2007
• First Nations land claims settled with James Bay and Northern Quebec Agreement (JBNQA)
“Plan Nord”: Provincial Government has committed $1.6 billion to build infrastructure
• A highly flexible fund devoted to development of Northern Quebec – road, rail and hydro power
• First action plan covering 2011 to 2016 comprises measures totaling $1.6 billion
• Focuses on projects that provide access to areas with greatest economic potential
Investissement Quebec: Financial institution / economic development agency
• Provides loans, loan guarantees, public/private partnerships and working capital to support projects in Quebec
• Currently invested in 11 mining and metals companies (equity and debt)
• Received $500 million for new fund “Resource Quebec” (Budget March 20, 2012) specifically for projects in Plan Nord
14
Northern Quebec Regional Geology
Superior Province (West)
• Archean granitoid rocks (>2.5 Ga)
Labrador Trough (Centre)
• Fold and thrust belt
• Paleoproterozoic (approximately 2.17 – 1.87 Ga)
• NW trending meta-sedimentary / volcanic sequence
• Thrusting from east to west
• Increasing metamorphism from west to east
Churchill Province (East)
• Proterozoic / Archean granitoid rocks (>1.8 Ga)
Eldor Carbonatite Complex
• 7 km x 4 km carbonatite
• Igneous rock composed of >50% carbonate minerals by volume
• Only 500 – 600 occurrences known worldwide
Eldor Project
The Eldor Property
15
Ashram Deposit
16
World-Class Carbonatite
Main area of interest:
• Historic assays: +10% Nb2O5, +4% REO
• Ashram Deposit – Rare Earth Elements, Fluorine
Many additional prospective areas of interest with various commodities:
• Beckling – Rare Earth Elements, Fluorine
• West Rim – Rare Earth Elements
• Northwest – Niobium, Phosphate
• Southeast – Niobium, Tantalum, Fluorine, Phosphate
• Star Trench – Tantalum, Phosphate
The Eldor Carbonatite measures at least 7 x 4 km, making it one of the largest carbonatites globally.
17
History of Discovery
Eldor Resources
1981-83 Regional water and sediment survey; airborne survey; ground samples with 7% Nb and 4% REE’s
Unocal Canada
1985 Re-sampled showings and cut trenches; completed orientation surveys and petrographic study
Virginia Gold Mines
2001 Field program to assess Ta and Nb potential
Commerce Resources
2007 Acquired property; short field program; airborne magnetic‐electromagnetic‐radiometric survey
2008 Expanded property with 184 additional claims; drilled 5,842 m over 26 holes; prospecting, soil sampling and trenching
2009 Acquired 1 additional claim; prospecting discovers Ashram REE Zone in outcrop
2010 Acquired 38 additional claims; drilled 5,390 m over 21 holes to confirm deposit; prospecting, soil sampling and trenching
2011 Property claims total 404 (19,006 ha); drilled 13,776 m over 41 holes (winter & summer) to confirm importance of Ashram; prospecting, soil sampling, trenching and reclamation; ground gravity and airborne gravity surveys; initial resource estimate on Ashram Zone
18
2009 Major Discovery: Ashram Deposit
Discovery via prospecting in 2009
• Boulder field identified
• Airborne geophysics (1,000 m x 800 m magnetic low)
• Soil sampling
Traced south to Ashram area
• Glacial direction ~350° ± 20°
• Mineralized outcrop was found (3%+ TREO)
Followed up with drilling in 2010
• EC10-027 – ‘discovery’ hole
• 1.72% TREO over 215.30 m (3.74 m to 219.04 m)
Ashram discovery outcrop ~2% TREO
19
Significant Work in 2010 and 2011
Initial Resource Estimate defined world-class deposit based on 12 drill holes (3,313 m) • Inferred Resource of 117 million tonnes averaging 1.74%
TREO at a 1.25% TREO cut-off grade
• Significant near surface middle and heavy rare earths enrichment
Completion of 33 additional drill holes (12,379 m), highlights include: • 586.92 m of 2.10% TREO including 36.99 m of 3.00% TREO
• 344.49 m of 2.06% TREO
• 325.31 m of 1.96% TREO
• 454.60 m of 2.00% TREO
Confirmation of Middle and Heavy Rare Earth Oxide (MHREO) Enriched Zone • 104.19 m of 12.7% MHREO at 1.54% TREO
• 176.43 m of 12.3% MHREO at 1.56% TREO
Completed preliminary mineralogical and metallurgical work
$18 million CAD spent to date on exploration and deposit definition
(net of government rebates)
20
Updated NI 43-101 Resource in 20121
Middle and Heavy Rare Earth Oxide Zone
• M&I Resource: 6.55M tonnes averaging 1.63% TREO
• Inferred Resource: 2.79M tonnes averaging 1.57% TREO
One of the largest and highest grade REE deposits globally with a near-surface zone enriched with critical REOs (neodymium, europium, terbium, dysprosium, and yttrium).
1. Includes results to end of 2011 drilling
Ashram Deposit
• M&I Resource: 29.3M tonnes averaging 1.90% TREO
• Inferred Resource: 219.8M tonnes averaging 1.88% TREO
Classifi-cation
Tonnage (Mt)
La2O3 (ppm)
Ce2O3 (ppm)
Pr2O3 (ppm)
Nd2O3 (ppm)
Sm2O3 (ppm)
Eu2O3 (ppm)
Gd2O3 (ppm)
Tb2O3 (ppm)
Dy2O3 (ppm)
Ho2O3 (ppm)
Er2O3 (ppm)
Tm2O3 (ppm)
Yb2O3 (ppm)
Lu2O3 (ppm)
Y2O3 (ppm)
F (%)
TREO (%)
LREO (%)
MREO (%)
HREO (%)
MHREO (%)
MH/T Ratio
M&I 29.26 4916 8699 906 3129 407 96 232 24 95 13 28 3 17 2 389 2.94 1.90 1.77 0.073 0.057 0.13 6.9%
INFERRED 219.80 4895 8775 911 3137 386 88 209 20 77 10 22 2 13 2 302 2.21 1.88 1.77 0.068 0.045 0.11 6.0%
COG 1.25% TREO (BASE CASE)
Classifi-cation
Tonnage (t)
La2O3 (ppm)
Ce2O3 (ppm)
Pr2O3 (ppm)
Nd2O3 (ppm)
Sm2O3 (ppm)
Eu2O3 (ppm)
Gd2O3 (ppm)
Tb2O3 (ppm)
Dy2O3 (ppm)
Ho2O3 (ppm)
Er2O3 (ppm)
Tm2O3 (ppm)
Yb2O3 (ppm)
Lu2O3 (ppm)
Y2O3 (ppm)
F (%)
TREO (%)
LREO (%)
MREO (%)
HREO (%)
MHREO (%)
MH/T Ratio
M&I 6.56 3543 7098 809 3029 486 126 313 37 155 22 45 5 25 3 635 3.95 1.63 1.45 0.093 0.093 0.19 11.3%
INFERRED 2.79 3423 6823 783 2910 448 115 289 34 145 21 43 5 25 3 605 3.43 1.57 1.39 0.085 0.088 0.17 11.1%
COG 1.25% TREO (BASE CASE)
21
Lower Cut-Off Nearly Doubles Resource
Cut-off (%) Confidence
Category Tonnage
(t) TREO (%)
LREO (%)
MREO (%)
HREO (%)
MHREO (%)
MH/T Ratio
0.50 Measured Indicated
Inferred
1,980,000 37,200,000
383,560,000
1.55 1.61 1.45
1.40 1.49 1.35
0.079 0.065 0.058
0.074 0.050 0.042
0.15 0.11 0.10
9.9% 7.1% 6.9%
0.75 Measured Indicated
Inferred
1,600,000 30,130,000
336,610,000
1.77 1.83 1.56
1.60 1.70 1.46
0.089 0.071 0.061
0.084 0.054 0.043
0.17 0.12 0.10
9.8% 6.8% 6.6%
1.00 Measured Indicated
Inferred
1,600,000 28,680,000
259,400,000
1.77 1.88 1.76
1.60 1.75 1.65
0.089 0.072 0.065
0.084 0.055 0.044
0.17 0.13 0.11
9.8% 6.7% 6.2%
1.25 Measured Indicated
Inferred
1,590,000 27,670,000
219,800,000
1.77 1.90 1.88
1.60 1.77 1.77
0.089 0.073 0.068
0.085 0.056 0.045
0.17 0.13 0.11
9.8% 6.7% 6.0%
1.50 Measured Indicated
Inferred
1,320,000 25,420,000
210,590,000
1.85 1.95 1.91
1.68 1.82 1.79
0.088 0.072 0.069
0.084 0.054 0.045
0.17 0.13 0.11
9.3% 6.5% 5.9%
* Base case is in bold * LREO (Light Rare Earth Oxides) = La2O3 + Ce2O3 + Pr2O3 + Nd2O3; MREO (Middle Rare Earth Oxides) = Sm2O3 + Eu2O3 + Gd2O3 ;HREO (Heavy Rare Earth Oxides) = Tb2O3 + Dy2O3 + Ho2O3 + Er2O3 + Tm2O3 + Yb2O3 + Lu2O3 + Y2O3
* MHREO (Middle and Heavy Rare Earth Oxides) = MREO + HREO * MH/T = MHREO/TREO, expressed as a percent
Based on a 0.5% cut-off grade, the Ashram Deposit Inferred Resource is 383.6M tonnes averaging 1.45% TREO and the Measured and Indicated Resource is 39.2M tonnes averaging 1.61% TREO.
22
Evolution of Ashram Model – MHREO Zone
Ashram remains open to the north, south, at depth and is not fully constrained to the east and west. Mineralized footprint is 700 m along strike, over 500 m
across and 600 m deep.
Definition of near-surface MHREO Enriched Zone by the end of 2011:
-
2
4
6
8
10
12
-
100
200
300
400
500
600
700
TREO
Gra
de
(%
)
Ton
ne
s (M
)
Comparable Deposit Size and Grade – Advanced-Stage Projects*
Total Tonnage (Mt) TREO (%)
23
Ashram is Both Large and High Grade
Highest grade of large advanced-stage projects
*PEA-stage projects or more advanced. Source: Technology Metals Research, Deloitte
24
Ashram Contains a Balanced Distribution
Ashram has the potential to be a key supplier to rare earth end-users, producing a well-balanced distribution of Light, Middle and Heavy REOs.
Ashram Deposit REO:TREO (Wt %)
Ashram MHREO Zone REO:TREO (Wt %)
CeO2, 46.5%
La2O3, 26.0% Nd2O3, 16.6%
Pr6O11, 4.8%
Sm2O3, 2.1%
Y2O3, 1.7%
Gd2O3, 1.1%
Eu2O3, 0.5%
Dy2O3, 0.4%
Er2O3, 0.1%
Tb4O7, 0.1%
Yb2O3, 0.1%
Ho2O3, 0.1%
Tm2O3, 0.0%
Lu2O3, 0.0%
CeO2, 43.5%
La2O3, 21.7%
Nd2O3, 18.6%
Pr6O11, 5.0%
Sm2O3, 2.9%
Y2O3, 3.9%
Gd2O3, 1.9%
Eu2O3, 0.8%
Dy2O3, 0.9%
Er2O3, 0.3%
Tb4O7, 0.2%
Yb2O3, 0.2%
Ho2O3, 0.1%
Tm2O3, 0.0%
Lu2O3, 0.0%
Note: see Appendix A for more detail.
25
Ashram Contains REOs in Demand
Ashram distribution
matches global demand
Source: Roskill, Deloitte
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Estimated 2015 Demand(Global total of 180,000 tonnes REO) Eldor (Ashram Deposit)
REO
:TR
EO (
Wt
%)
Relative Distribution of REOs
Other
Y2O3
Dy2O3
Tb4O7
Eu2O3
Sm2O3
Nd2O3
Pr6O11
CeO2
La2O3
26
Future Long Term Supplier of Dysprosium
Source: Deloitte, Roskill, Metals Pages, street research, peer technical reports, US Department of Energy, Critical Metals, Emerging Money, Dysprosium.com.au
Eldor has the potential to produce 110 tonnes per year of Dysprosium for 125 years, at the current 4,000 tonne per day scenario and assuming a conservative 70% recovery.
• Potential for 165 tpy for 85 years at increased production scenario of 6,000 tpd
• Ashram Deposit = contained total resource of 19,705 tonnes Dy (at 100% recovery)
• MHREO Zone = contained total resource of 1,421 tonnes Dy (at 100% recovery)
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
2002 2005 2008 2011 2014E 2017E 2020E
Dysprosium Price History and Forecasts
Dysprosium Analyst Consensus Forecast
Dysprosium In High Demand / Short Supply
• Currently only 100 tonnes produced worldwide per year, with 99% coming from China
• Demand predicted to explode by 2,600% in next 25 years
• Used in high strength magnets for hybrid electric vehicles and wind turbines, and in control rods for nuclear reactors
• Pricing expected to remain high – spot price >$1,000/kg
“Dysprosium has emerged as the metal most vital to clean energy industries yet most vulnerable to supply
disruptions” (Dudley Kingsley 2011)
• Unlike many deposits focused on HREOs, Eldor has simple mineralogy – Dy often concentrated in ionic absorption clay and xenotime
0.08 0.10 0.10 0.11
0.14
0.37 0.39 0.40 0.41
0.45 0.47
0.53
0.59 0.62
0.76 0.77
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
Euro
piu
m:T
REO
(%
)
Europium Content – Advanced-Stage Projects*
27
Especially High in Europium
Europium is a key input to monitors and TVs, laser material, ceramics and nuclear applications.
*PEA-stage projects or more advanced. Source: Technology Metals Research, Deloitte
10.87 12.00 12.14
12.90 13.36 14.12
15.65 15.88 16.63
17.89 17.95 18.13 18.56 18.82 19.20
21.20
0.00
5.00
10.00
15.00
20.00
25.00
Ne
od
ymiu
m:T
REO
(%
)
Neodymium Content – Advanced-Stage Projects*
28
Especially High in Neodymium
Neodymium is a key input to high-strength magnets used in electronics, hybrid cars and turbines.
*PEA-stage projects or more advanced. Source: Technology Metals Research, Deloitte
Positive Ashram PEA Completed
PEA Highlights
• PEA indicates the potential to be one of the largest and longest operating REE producers in the world.
• Study based on a 4,000 t/d, open-pit operation with 0.19:1 (waste:ore) strip ratio over 25 year mine life.
• Base case indicates very robust economics:
– Pre-tax NPV of $2.3 billion at a 10% discount rate
– Pre-tax IRR of 44%
– Payback period of 2.25 years
• Potential for a low cost operation:
– Estimated capital cost of $763 million (including 25% contingency)
– Estimated operating cost of $95.20/tonne treated or $7.91/ kg of rare earth oxide produced
• Greater than 175 years worth of mineable ore (open pit + underground) using a cut-off grade of 1.25% TREO
• Average annual production ~16,850 tonnes of rare earth oxide, including significant Nd, Eu, Tb, Dy and Y.
• Rare earth element host mineralogy (monazite, bastnäsite, and xenotime) comprises phases amenable to processing and recovery using conventional and proven techniques.
29
Production Scenario
CAPEX $763M (total) $160M (21% of total) $35M (5% of total)
OPEX $6.23/t $23.87/t $17.40/t
Stage Ore Mineral concentrate Mixed rare earth carbonate
Recovery N/A 70.0% 95.0% (overall 66.5%)
% TREO N/A 10.0% + 50.0%
Mass reduction N/A 87.3% 79.8%
Basis for the PEA is the production of a mixed rare earth carbonate through on site conventional flotation techniques and acid cracking, then ready to be transported for final separation.
Current planned end-product in PEA
Product to be considered in PFS
Commerce Resources Contractor
N/A
N/A
Separated rare earth oxides
100.0%
99.9%
55.6%
Ship to Kuujjuaq via 185km road
30
Oxides:
Robust Economics
PEA indicates a pre-tax NPV of $2.3 billion at a 10% discount rate, IRR of 44%, and payback period of 2.25 years in a base case scenario.
1,028
1,458
1,888
Base Case 2,318
2,747
3,177
3,607
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
$24.52 $28.02 $31.53 $35.05 $38.53 $42.04 $45.54
NP
V (
$M
)
Basket Price
Sensitivity Analysis - Basket Price
1,029
1,458
1,888
Base Case 2,318
2,747
3,177
3,607
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
47% 53% 60% 67% 73% 80% 86%
NP
V (
$M
)
Recovery
Sensitivity Analysis - Recovery
IRR: 25% 32% 38% 44% 50% 56% 63% IRR: 25% 32% 38% 44% 50% 56% 63%
31
32
Low Operating Costs
Low operating expenses of $95.20 per tonne of ore treated, or approximately $7.91 per kg rare earth oxide (REO) produced. Breakdown includes:
• Mining (drilling, blasting, mucking, hauling, auxiliary) = $6.23/t
• G&A (salaries, maintenance, transportation, storage, goods) = $47.70/t
• Processing (flotation, acid cracking) = $41.27/t
269.00 253.39
194.10
170.00
105.00 101.94 95.20
47.97
-
50.00
100.00
150.00
200.00
250.00
300.00
Nechalacho,NWT
Zandkopsdrift,South Africa
Bear Lodge,Wyoming
Zeus,Quebec
Sarfartoq Carbonatite,Greenland
Strange Lake,Quebec
Eldor,Quebec
Norra Karr,Sweden
OP
EX (
$/t
)
Selected Comparable Development Stage Projects - Operating Expenses
Source: company releases, Deloitte
33
Low Capital Expenditures
Comparatively low capital expenditures of $763 million including 25% contingency. • PEA assumes the Quebec Government will not fund transportation infrastructure, although $5B has been
budgeted in Plan Nord for the region.
42.0
204.0
287.0 21.0
56.0
153.0 763.0
-
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
Port Facility Upgrades (Mackay’s Island)
Road(Kuujjuaq to mine site)
Infrastructure(mine site)
Equipment ECPM/Administration(10%)
Contingency(25%)
Total capitalexpenditures
Cap
ital
Exp
en
se (
C$
M)
Capital Expenditures Breakdown
World-Class Deposit Supports Long Mine Life
Potential to be one of the largest and longest operating REE producers in the world.
• At the current cut-off grade of 1.25% TREO, Ashram contains enough material to support an operation of more than 175 years (open pit and underground mining).
• If the calculated economic cut-off 0.51% TREO is used instead, the mining operations could be sustained for 300 years with potential for expansion as the deposit remains open.
• The initial open pit will lie almost entirely within mineable ore grade material, centered on the MHREO Zone.
LAKE BED 500 m
Maximum depth = 175m from surface
Plan View of Designed Pit and Dimensions
34
Efficient Mine Plan and Low Strip Ratio
1.5
1.6
1.7
1.8
1.9
2
2.1
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
%TR
EO
TON
NES
YEAR
Waste
Ore
%TREO
At surface mineralization results in a very low strip ratio of 0.19:1 over the 25 year mine life.
• Stripping will begin during construction (year 0) in order to use waste material to build infrastructure.
The mine development uses a number of phases to meet the following objectives:
• Enable the mining of high grade mineralization as early as possible.
• Effectively reduce stripping ratio in the initial mining stage.
• Balance the stripping ratio over the period of the mine life.
• Maintain a minimum mining width between two working phases.
Proposed Mine Life Production Schedule
35
Mineral Processing and Cracking
Mineralogy is well-known and simple with all three rare earth-bearing minerals (monazite, bastnäsite, and xenotime) sharing conventional processing techniques.
• Ore will be upgraded on site to a minimum 10% total rare earth oxide (TREO) mineral concentrate, using conventional flotation techniques, resulting in a mass reduction of 87.3%.
• The mineral concentrate will be subjected to sulphuric acid cracking on site to produce a mixed rare earth carbonate (REC) product.
• Recoveries at the mineral concentrate and acid cracking stages are anticipated to be at least 70% and 95% respectively, for a final overall recovery of 66.5%.
• Using an in-pit average head grade of 1.81% TREO, a total of approximately 16,850 tonnes of a rare earth oxide (REO) is anticipated to be produced annually over a 25 year mine life.
• Metallurgical testwork on a representative sample is currently being completed at Hazen Research Inc. in Colorado and UVR-FIA GmbH in Germany.
Mineral Occurrence at Ashram Concentrating and Processing
Monazite Primary host to LREE’s High-density mineral that can be concentrated using flotation methods
and commonly treated with sulfuric acid or by alkaline processing
Xenotime Primary host to Middle and Heavy REE’s Commercially processed for M-HREO at facilities in India
Bastnäsite Secondary host to LREE’s Concentrated using flotation to produce intermediate products at
Mountain Pass; have been commercially processed in China
36
Significant Production of Critical REEs
Annual production will average ~16,850 tonnes of rare earth oxide over life of mine, including production of critical REE’s.
7,717
4,144
2,872
820
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Ce La Nd Pr
Ave
rage
An
nu
al P
rod
uct
ion
(to
nn
es)
Oxide
Average Annual Production of LREOs
440
395
236
106 96
26
0
50
100
150
200
250
300
350
400
450
500
Y Sm Gd Dy Eu Tb
Ave
rage
An
nu
al P
rod
uct
ion
(to
nn
es)
Oxide
Average Annual Production of MHREOs
Critical REEs
Other REEs
Current Price
$26 $55 $113 $116 $135 $65 $89 $1,125 $2,425 $2,150
37
Additional Upside
Opportunities for improved economics have been identified in multiple areas, including:
• Additional upgrading of the mineral concentrate, where no technical obstacle has been observed, and further optimization once the proper collectors and depressants have been identified.
• Improved recoveries based on favourable results and trends thus far.
• Economic trade-off studies for concentrate cracking further south (e.g. near Montreal).
• Potential partnering with the Quebec Government on the advancing infrastructure of Plan Nord.
• Potential of higher grade ore at surface directly north of the current pit location that may be included in the pit during a PFS.
• Potential for acid-grade fluorspar and phosphate by-products.
“There is no technical obstacle that would prevent [the project] from reaching the current target of 20% TREO
[concentrate] at a recovery of 60 to 70%. It is expected that an improvement of this magnitude should be possible in view of the relatively simple, albeit fine-grained, mineralization and also because the flotation chemistry for separation of the types of minerals present from a carbonate matrix, is an established and
commercially proven technology.”
-- Mr. Roland Schmidt, Director of Hazen Mineralogy Laboratories
38
Summary Highlights
The world’s highest grade of large tonnage (>50Mt), advanced-stage rare earth element deposits with mineralization from surface
Deposit has a very favourable distribution containing significant amounts of critical REEs from surface to depth
Highly enriched MHREO Zone near surface Positive Preliminary Economic Assessment completed with very robust economics
Located in a top-ranked mining friendly jurisdiction
Project is advancing quickly to production
Strong management team with exploration expertise in REE deposits
39
40
Rapidly Advancing Ashram to Production
Commerce is planning a $8 million work program in 2012/2013 to accelerate development.
2012/2013 Work Program:
• In-fill and step-out drilling program – Ashram remains open to the north, south, at depth, and is not fully constrained to the east and west
• Complete a Pre-feasibility Study (PFS) on the Ashram Deposit – Quebec engineering firm Roche Ltd. has been engaged and work on the PFS has commenced
– Planned for completion in Q4 2013 / Q1 2014
• Advance mineralogical, metallurgical, engineering and environmental work – Hazen Research Inc. has been conducting metallurgical work since April 2011
– Specialist environmental consulting companies Forchemex Ltd. and Environnement Illimité Inc. are engaged
• Advance community and government relations (Plan Nord, etc.)
• Secure strategic partner to assist in accelerating development – Expertise in rare earth processing and end-markets
The Opportunity
• Eldor presents an immediate investment opportunity to participate in a world-class REE deposit
• Deloitte is engaged to advise on project financing and development options, which may include:
– Public company private placement
– Project level joint venture
– Strategic alliance on processing and refining facilities
– Value creating downstream joint ventures
• Ideal partner would have experience in end-markets and processing to complement Commerce’s exploration and development expertise
• Next steps:
– Electronic data room available once Confidentiality & Standstill Agreement signed
– Site visits to be arranged
41
Deloitte Contacts
All inquiries, expressions of interest, or offers should be directed to:
Deloitte & Touche Corporate Finance Canada Inc.
Box 49279, Four Bentall Centre
2800 – 1055 Dunsmuir Street
Vancouver, BC V7X 1P4
Canada
Fax: 604-602-1583
42
Douglas Beaton
Vice-President & Director
Tel: 604-640-3058
Graeme Falkowsky
Managing Director
Tel: 604-640-4947
Appendix A
Detailed REO Distribution at Ashram and Comparable Projects
43
REO 2012E Price
(US$/kg) Bear Lodge (Bull Hill)
Cummins Range
Dubbo Zirconia
Eldor (Ashram Deposit)
Eldor MHREO
Zone
Hoidas Lake
Kipawa Kvanefjeld Montviel
(Core) Mountain
Pass Nechalacho (Thor Lake)
Nolans Bore
Norra Karr Strange Lake (B)
Zandkopsdrift
Co
nta
ined
REE
's (
000'
s to
nn
es)
LREO
La2O3 62.22 164.75 19.18 124.44 1,220.44 32.76 13.95 11.42 1,795.10 927.22 606.92 716.93 166.10 30.25 66.01 240.35
CeO2 59.68 265.66 33.36 241.56 2,166.91 65.53 31.89 24.47 2,785.50 1,804.32 873.63 1,683.23 401.66 72.60 137.11 419.52
Pr6O11 162.51 30.89 3.34 29.28 224.16 7.48 3.99 3.26 309.50 200.48 76.20 218.20 48.32 12.10 15.23 43.70
Nd2O3 225.48 109.15 11.26 95.16 772.12 27.96 13.95 11.42 866.60 601.44 209.56 810.45 181.20 36.30 55.86 148.58
MR
EO
Sm2O3 75.36 16.47 1.25 14.64 99.63 4.43 1.99 1.63 123.80 50.12 13.61 155.86 21.14 6.05 10.16 21.85
Eu2O3 3019.49 4.12 0.42 0.00 24.91 1.15 0.28 0.00 0.00 0.00 2.72 31.17 3.02 0.00 0.00 4.37
Gd2O3 120.38 8.24 0.83 14.64 49.81 2.86 0.85 1.63 61.90 25.06 2.72 124.68 9.06 12.10 10.16 13.11
HR
EO
Tb4O7 1446.89 0.00 0.00 0.00 0.00 0.33 0.00 0.00 0.00 0.00 0.00 31.17 0.00 0.00 5.08 0.00
Dy2O3 1640.67 2.06 0.42 14.64 24.91 1.42 0.28 3.26 61.90 0.00 0.00 62.34 3.02 18.15 15.23 8.74
Ho2O3 N/A 0.00 0.00 0.00 0.00 0.20 0.00 0.00 0.00 0.00 0.00 0.00 0.00 6.05 5.08 0.00
Er2O3 N/A 0.00 0.00 7.32 0.00 0.41 0.28 1.63 61.90 0.00 0.00 31.17 0.00 12.10 10.16 4.37
Tm2O3 N/A 0.00 0.00 0.00 0.00 0.04 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Yb2O3 N/A 0.00 0.00 7.32 0.00 0.23 0.00 1.63 61.90 0.00 0.00 31.17 0.00 12.10 10.16 0.00
Lu2O3 N/A 0.00 0.00 0.00 0.00 0.03 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Y2O3 100.76 6.18 1.25 102.48 74.72 5.85 0.85 18.43 495.20 25.06 0.00 342.88 12.08 114.95 116.79 39.33
TREO 607.51 71.31 651.48 4,657.61 150.69 68.34 78.80 6,623.30 3,633.70 1,785.37 4,239.26 845.60 332.75 457.02 943.92
LREO 570.44 67.14 490.44 4,383.63 133.73 63.78 50.57 5,756.70 3,533.46 1,766.32 3,428.81 797.28 151.25 274.21 852.15
MREO 28.83 2.50 29.28 174.35 8.44 3.13 3.26 185.70 75.18 19.05 311.71 33.22 18.15 20.31 39.33
HREO 8.24 1.67 131.76 99.63 8.52 1.42 24.96 680.90 25.06 0.00 498.74 15.10 163.35 162.50 52.44
44
Ashram Contains Light, Middle & Heavy REOs
Ashram has the potential to offer long-term supply of Light, Middle and Heavy REOs, including significant amounts of neodymium, europium, terbium, dysprosium, and yttrium.
Note: Data from other projects is based on Technology Metals Research, which is rounded to three decimal places. Source: Technology Metals Research, MEG, Deloitte
Appendix B
PEA Pricing Assumptions
45
Price Deck and Market Analysis
A conservative long-term price assumption was used in the PEA
• An additional 25% discount was applied based on the evaluation of separation facility costs for similar projects.
Oxide Original $/Kg Discounted $/kg* FOB China (Jun 2012)
Lanthanum $ 15.00 $ 11.25 $ 54.50
Cerium $ 10.00 $ 7.50 $ 25.50
Praseodymium $ 76.00 $ 57.00 $ 116.29
Neodymium $ 77.00 $ 57.75 $ 112.50
Samarium $ 12.00 $ 9.00 $ 64.50
Europium $ 905.00 $ 678.75 $ 2,425.00
Gadolinium $ 45.00 $ 33.75 $ 89.20
Terbium $ 980.00 $ 735.00 $ 2,150.00
Dysprosium $ 800.00 $ 600.00 $ 1,125.00
Yttrium $ 28.00 $ 21.00 $ 135.00 **Ashram Basket Price (Overall
Resource) $ 35.03 $ 26.27
Ashram Basket Price (In-pit Resource)
$ 38.43 $ 28.82
* Discount of 25% applied to each individual oxide ** Resource effective March 6, 2012
Source: Asian Metal
46
