Commerce Resources (TSXV: CCE ; US-OTC: CMRZF) has produced its largest rare earth oxides sample yet from its Ashram project in northern Quebec as it develops what it calls the biggest deposit in North America for building electric vehicle magnets.
Ashram, located about 1,300 km north of Montreal, produced 1.2 kg of mixed rare earth carbonate concentrate graded at about 52% total rare earth oxides including 21.9% neodymium-praseodymium (NdPr) oxide, Commerce president Christopher Grove said in an interview on Thursday.
“This material would be the ideal feedstock for any rare earth element processor on planet earth,” Grove said by phone from Vancouver where Commerce is based. “That percentage of NdPr, being as high as it is, is extremely attractive to those processors because it [has] more of the largest-volume rare earth elements used in magnet manufacturing.”
Commerce is among a growing number of companies trying to tap into the rising demand for the rare earth elements (REE) used in electric vehicle magnets as nations target net-zero emissions. This clean energy transition is worth trillions of dollars globally, and in Canada the federal government announced in April a $3.8-billion strategy to help develop the country’s critical minerals industry.
Brussels-based processor Solvay is among the three largest REE processing companies outside of China that will receive parts of the 1.5 kg sample, Grove said. Two others declined to be named publicly, he said.
Commerce produced smaller samples this year graded at 21.6% and 24.2% NdPr from the Ashram site which it says is one of the world’s largest. It measures 700 metres along strike, more than 300 metres across and 600 metres deep.
The Ashram project has a 2012 measured resource of 1.6 million tonnes at 1.77% total rare earth oxides and 3.8% fluorite. A new resource estimate is due with a prefeasibility report in the first or second quarter of 2023, Grove said. It will include 15,000 new metres of mostly infill drilling.
“It’s lower grade than a lot of projects and that’s the confusing thing for a lot of investors,” he said. “What is much more important is the percentage distribution of the four rare earth elements used for magnet manufacturing.”
Ashram has 5% praseodymium oxide, 18.6% neodymium oxide, 0.2% terbium oxide and 0.9% dysprosium oxide, totaling 24.7% of these minerals used to make magnets.
Vital Metals’ (ASX: VML) Nechalacho project in the Northwest Territories has similar levels of NdPr to Ashram, but it is unclear in company filings how much terbium and dysprosium oxides it contains. A project spokesperson said on Thursday he couldn’t immediately provide information on the oxide amounts.
Ashram’s 24.7% of magnet minerals ranks higher than other projects such as Lynas Rare Earths’ (ASX: LYC) Mount Weld mine in western Australia; the world’s largest REE deposit at the Chinese state-owned Baogang Group’s Bayan Obo mine northwest of Beijing; and MP Materials’ (NYSE: MP) California-based Mountain Pass mine about 100 km southwest of Las Vegas, North America’s only REE producer, Commerce said.
Still, there’s been a high failure rate among the hundreds of REE projects in the West that have tried to replace Chinese supply after Beijing imposed export duties on its REEs in 2005. REE projects in the West must also contend with tougher environmental regulations concerning toxic waste and the presence of radioactive thorium and uranium among the deposits that can make them difficult to handle.
Also, Commerce is a junior miner with shares down from a 52-week high of 32¢ in April to just 13¢ this week, valuing the company at $11.9 million with 91.6 million shares issued. On July 31, it had nearly 40.5 million warrants at an exercise price of 33¢, and about $1.7 million in cash after paying around $780,000 in compensations including $320,000 in geological services during the previous nine months, according to filings.
But Grove is bullish, contending Ashram has the right geology — carbonatite host rocks — and the right mineralogy balance of monazite and bastnaesite deposits to be successful.
“The production of rare earth elements is primarily dominated by monazite and bastnaesite deposits,” he said. “Geology first, mineralogy second, but you need to have both to achieve positive economics.”
Ashram, which could start production by 2026 after US$700 million in construction, aims to earn about US$550 million in annual revenue from yearly production of 50,000 tonnes of REE concentrate, Grove said. Ore would be mined at a rate of 2.1 million tonnes per year from a resource of 250 million tonnes, he said. At that rate, the mine could last more than a century.
Commerce will apply for federal and provincial funding to help build a US$200-million road from the project to a port 180 km north that might also benefit local projects such as Midland Exploration‘s (TSXV: MD) Alliance SOQUEM copper project and joint venture nickel project with BHP (NYSE: BHP; ASX: BHP), and the currently dormant NextSource Materials’ (TSX: NEXT; US-OTC: NSRCF) Sagar cobalt property, Grove said.
Commenting on the financial environment around rare earths, Grove drew a parallel with The Big Short, the movie starring Christian Bale and Steve Carrell about the 2007 housing market crash caused by mortgages approved without due diligence.
“The similarity between The Big Short and rare earth elements is that the majority of the projects out there don’t have the fundamentals that on paper would ever allow them to be economic,” he said.
“’Rare’ is extremely appropriate in terms of the name of this commodity because economic deposits of rare earth elements are extremely rare.”