China announced that imported REE feedstock has now surpassed domestic production. It is generally believed that China has a significant amount of REE resources, but the country has now found a more attractive source of REE from other countries.”

Christopher Grove

PRESIDENT, COMMERCE RESOURCES

June 13, 2019

How have developments in the market for rare earth elements impacted Commerce Resources in the last two years?

In the last two years, there have been several fundamental changes with regard to rare earth elements (REE). In 2016, the drive to find substitutes for REE in the manufacturing of permanent magnets for electric motors was put to rest because it was unsuccessful. Additionally, REE prices had reverted so much that there was no reason to continue the R&D activities geared towards discovering REE substitutes. In January 2017, following an exhaustion of the global drive to find substitutes, we started to see price appreciation in the REE market.

The second fundamental shift in the REE market happened in October 2018. China announced that imported REE feedstock has now surpassed domestic production. It is generally believed that China has a significant amount of REE resources, but the country has now found a more attractive source of REE from other countries. The Chinese government has been very active in shutting down illegal producers of commodities and projects that pollute heavily, which may provide opportunities for companies such as Commerce Resources.

Where are the majority of rare earth elements currently sourced?

For China, rare earth elements are now primarily sourced from North Korea, Myanmar, Vietnam, the United States and Australia. The irony is that although the American government is looking to eliminate their dependency on China, the Molycorp Mountain Pass mine has been bought by Chinese interests, and approximately 20,000 tonnes (mt) of REE feedstock produced in California is exported to China. At this stage, Commerce Recourses is receiving more interest from the United States with regard to eliminating REE dependency on China.

What is the current status of Commerce Resources’ Tantalum and Ashram projects?

Commerce Resources has optimized both the Blue River Tantalum & Niobium project in British Columbia and the Ashram REE Deposit in Québec since their preliminary economic assessments were released in November 2011 and May 2012 respectively. For our Ashram Deposit, we have optimized our flow sheet and have gone from producing a ~10% TREO concentrate to producing concentrates in the +45% TREO range. Furthermore, we realized that we had a free byproduct of fluorite, which attracted the interest of Glencore and NorFalco Sales. In 2017 we signed a memorandum of understanding where they agreed to give us a discount on acid supplies for our downstream processing facility in exchange for a future consideration on the Ashram’s fluorite byproduct.

Can you elaborate on Commerce Resources’ relationship with Saville Resources and Ucore Rare Metals, and how do you see these relationships taking shape moving forward?

Québec is the second largest niobium producer globally through the Niobec mine, and global niobium demand continues to appreciate at ~10% per annum. Commerce Resources has the world class Ashram REE Deposit in Québec, but we found that we did not have the financial wherewithal to continue advancing what are spectacular niobium results, and so the company saw it as an attractive opportunity to partner with a close sister company, Saville Resources, to advance these niobium claims. Saville Resources will be responsible for drilling the niobium rich areas, while Commerce Resources continues to focus on the developments at our Ashram REE project.

Commerce Resources’ association with Ucore continues to be in development. Ucore has an interest in being a significant processor of REE with the ultimate objective to be a long-term supplier of REE products to the U.S. market. As an REE processor, Ucore could use additional sources of REE feed stock, and thus they can benefit from a relationship with Commerce Resources. As we are both still juniors, we are looking for a capital injection that will allow us to develop this association fully.

Is the move away from fossil fuels driving the demand for rare earth elements?

Globally, there is an effort to eliminate dependency on fossil fuels, and electric vehicles are a major example of this effort. The Tesla facility in China has an intended capacity of producing 500,000 electric vehicles per annum – a vast number. REEs are essential in various green technologies such as robots, wind turbines and electric vehicles, and therefore the move towards green technologies is a great advantage for the REE and battery metals industry.

What are Commerce Resources’ main objectives moving forward?

Commerce Resources is excited about how the market has continued to grow. Moving forward, we are interested in finding a partner who recognizes how well our projects compare to the world’s largest REE producers. Commerce Resources has seen an increase in interest coming from manufacturers in the REE industry. These majors are concerned about the future supply of REE and do not want to depend on a Chinese source. Commerce Resources also aims to secure the capital required to finish its prefeasibility and bankable feasibility studies. We are looking forward to having the economic reports released, and will then apply for our mining permit from the Québec Government.

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