There are only a handful of companies positioned totake advantage of a potential tantalum supply deficit. One of these companies, Commerce Resources, has an attractive tantalum-niobium deposit in British Columbia.

“We are very focused at this point on developing the Upper Fir deposit,” says David Hodge, president and director of Commerce Resources. “With that in mind the company has become very involved in the tantalum industry.”

Cell phones, computers, digital cameras and flat- screen TVs are just a few of the everyday electronics that require the metal tantalum. Over half (55 per cent) of the metal produced per year is used in electronic applications. The metalworking industry accounts for 35 per cent of global demand, due to tantalum’s excellent strength, ductility, corrosion resistance and thermal conductivity properties. The remaining 10 per cent is used in chemical applications.

The U.S. Geological Survey and the Tantalum-Niobium International Study Center predict annual demand for tantalum (about six million pounds in 2007) will grow seven per cent per year over the next 20 years – a fourfold increase. »

S U M M E R 2 0 0 9 31

Commerce Resources

CATCHING THE NEXT TANTALUM WAVE

By Thomas SchusterPhotographs: Commerce Resources Corp.

A tantalizing

deposit: Geolo-

gist Dr. Alexei

Rukhlov (left)

and backhoe

operator and

trapper Scott

McDonald

plan a drill

site on the

Upper Fir

deposit at

Blue River.

Contract Diamond Drilling & Consulting

Box 2828, Smithers, BC V0J 2N0Offi ce: (250) 877-7729 Fax: (250) 877-7580

www.blackhawkdrilling.ca

32 S U M M E R 2 0 0 9

There are a number of developments on the supply side of the equation that could significantly tip the scales in favour of new primary tantalum producers:• Last November Talison Minerals announced

it would suspend mining at its Wodgina operation in Australia in order to negotiate higher long-term prices. Wodgina previously supplied 30 per cent of the world’s tantalum.

• Stockpile inventories have been significantly depleted over the past five years.

• The Kimberley Process (the system used to limit the sale of blood diamonds) has been expanded to include sanctions on the pro-duction of “blood tantalum” from conflict regions in Africa.If demand continues to outpace supply,

and supply continues to shrink, the future of tantalum looks very bright. Since the majority of tantalum is sold under long-term contract, there is a premium on material derived from conflict-free sources.

Based on producer reports, tantalum concentrate currently sells for US$35 to US$70 per pound. Ferro-niobium (a poten-tial byproduct from the Upper Fir deposit) sells for between US$7.50 and US$13.50 per pound. Niobium is used mainly to make stain-less steel and high-strength, low-alloy steels.

Commerce Resources’ Blue River Tanta-lum-Niobium Project spans about 151 square kilometres within the Kamloops Mining Division in east-central British Columbia. The company acquired the property in 2000 and holds a 100 per cent interest in the proj-ect with no underlying royalties, back-in pay-ments or other agreements.

The current Blue River property is actu-ally the combination of two historic proper-ties: Verity to the north and Fir to the south. The Fir property encompasses the tantalum-, niobium- and phosphate-bearing Fir, Bone Creek, Gum Creek and Upper Fir carbon-atites, situated 25 to 30 kilometres northeast of the town of Blue River, B.C. The Verity property covers the Verity, Mill, Paradise, Roadside and Serpentine 1 and 2 carbonatites and is situated within the northern half of the Blue River Property.

There is excellent infrastructure in the Blue River region. The Yellowhead Highway, the CN railway and BC Hydro power lines all cross Commerce’s property. Logging roads that branch out from Highway 5 allow access to the various deposits.

Last year Commerce Resources drilled over 131 holes on the Blue River project. A total of 118 holes (23,724 metres) targeted the

Upper Fir carbonatite in order to improve resource confidence via infill drilling and

Testing the waters: ground water quality sampling

at the Upper Fir deposit.

S U M M E R 2 0 0 9 33

expand the limits of the deposit. The drill-ing revealed a thick (over 70 metres in true width) carbonatite sill south of the main deposit. Tantalum and niobium assay results from this drill program are still pending.

In addition to extending currently defined deposits, Commerce geologists discovered several new carbonatites. As a result, 13 new claims were staked along the southeast margin of the existing claim block. Regional exploration also identified several areas con-taining elevated levels of rare-earth elements. Data is currently being compiled and analysis is ongoing.

Commerce has three separate NI 43-101- defined tantalum-niobium deposits on its property: Upper Fir, Fir and Verity. The company intends to focus its development efforts on the Upper Fir deposit. Explora-tion to date of this deposit has outlined a significant resource. In August of last year, the company tabled a NI 43-101-compliant resource estimate.

Based on a 150-gram-per-tonne tanta-lum pentoxide cut-off grade, resources at the Upper Fir deposit currently stand at 14.7 million tonnes, averaging 190 g/t of tantalum pentoxide and 1,300 g/t of niobium pentoxide. This translates into 6.1 million pounds of contained tantalum pentoxide and 42 million pounds of contained niobium pentoxide.

Inferred resources are estimated to be 19.8 million tonnes, averaging 188 g/t of tantalum pentoxide and 1,612 g/t of niobium pentoxide, or 8.2 million pounds of contained tantalum pentoxide and 70.4 million pounds of contained niobium pentoxide.

This estimate is based on 20 diamond drill holes completed between 2005 and 2006, and an additional 18 diamond drill holes com-pleted in 2007.

The holes outlined a series of sill-like carbonatite bodies ranging up to 100 metres in total thickness. These bodies have been outlined over a strike length of 1,300 metres in a north-south direction and are up to 600 metres wide. The carbonatite remains open to expansion to the east and to the south.

The Fir deposit, defined by 15 diamond drill holes, contains an indicated resource of 5.65 million tonnes, averaging 203.1 g/t of tantalum pentoxide and 1,047 g/t of niobium pentoxide. The current geological model sug-gests the Fir deposit may be part of a larger mineralized system.

The Verity deposit is host to an inferred resource of 3.06 million tonnes, grading 196 g/t of tantalum and 646 g/t of niobium. It remains open for expansion in three directions.

Carbonatites are igneous rock bodies composed of more than 50 per cent carbonate minerals. They are typically either classified as magmatic (emplaced as an intrusion) or metasomatic (altered by chemicals dissolved in fluids).

The Blue River property is underlain by Proterozoic-aged metasediments. Inter-fingered within these often highly deformed rocks are carbonatite intrusions of varying sizes. These carbonatites are mainly com-posed of the carbonate minerals dolomite and calcite, which are of magmatic origin.

Tantalum and niobium are generally contained within disseminated pyro-

chlore crystals, while phosphate (another potentially salable product) is carried in the mineral apatite.

Preliminary metallurgical test work on the property first occurred in 2002 and deter-mined that gravity concentration methods could recover tantalum and niobium miner-als into a rougher concentrate. Additional work the following year produced tantalum-niobium recovery rates of about 80 per cent, with a concentrate grade of about 20 per cent combined tantalum and niobium.

In 2004, SGS Lakefield Research dem-onstrated a tantalum-niobium gravity con-centrate could be upgraded significantly by reverse sulphide flotation, and this upgraded concentrate could be successfully leached using hydrofluoric and/or sulphuric acids.

In November 2008, Commerce took a 2,000-tonne representative carbonatite bulk sample from three different pits. The com-pany sent this material to Process Research Associates of Richmond, B.C. for continued metallurgical analysis. This work will support the development of a preliminary flow sheet for a pilot plant program at PRA’s facility.

Exploration on the property has shown the carbonatite systems contain low amounts of uranium and thorium as accessory ele-ments. These amounts are, for the most part, lower than the 0.05 per cent uranium and 0.15 per cent thorium government reporting thresholds. Commerce Resources has moni-tored and continues to monitor the levels of these elements in samples it collects, both as an exploration tool and for environmental assessment purposes.

Sample-seeking: Mike Hodge, field technician, takes a bulk

sample for metallurgical test work (far left); geologists

Brad Ulry and Rob Tyson review core samples (centre);

water-quality sampling at the Upper Fir deposit (above).

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34 S U M M E R 2 0 0 9 Photograph: Commerce Resources Corp .

Commerce has been collecting environ-mental baseline data since 2006, including meteorological information on temperature, wind directions and speeds, rain and snow accumulation and seasonal variation of these parameters; information on water quality and quantity; surveys of fish, fish habitat, wildlife and wildlife habitat; soil surveys; vegetation surveys; metal leaching and acid rock drainage testing; and terrain hazards assessment. The company continues to advance environmen-tal baseline work and regulatory programs to ensure the Blue River Tantalum and Niobium Project is well-positioned to enter the envi-ronmental assessment process once a devel-opment decision is made.

With $15 million in the bank, Commerce has its eye on starting an engineering scoping study on the Upper Fir carbonatite tantalum-niobium deposit on its Blue River property. If this study is positive, Commerce will move directly into a feasibility study with the ulti-mate goal of becoming a leading low-cost pro-ducer of tantalum and niobium, as well as a stable supply source for industry end-users.

“Commerce is certainly in a position, given the current market situation, to expect participation from the tantalum industry,” says Hodge, “not just through take-or-pay contracts, but through participation in the company itself. We are looking for some of those large consumers of tantalum or even the end-users of tantalum to become more involved with the company on a corporate level because that’s how they are going to gain real security.” n

Thomas Schuster is a contract geologist and inde-pendent consultant for Jordan Capital Markets.

The lay of the land: geologist Ashley Peter-

Rennich mapping deformed carbonatite.