Technical Report: PEA Ashram Deposit at the Eldor Project

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 Canada

t (450) 433 1050 f (450) 433 1048 www.geostat.com www.met.sgs.com

Member of SGS Group (SGS SA)

SGS Canada Inc.

Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment ii

SGS Geostat

Table of Contents

1 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 ..................................................................................................................................... 18

2 Introduction .............................................................................................................................................. 19

2.1 General ............................................................................................................................................... 19

2.2 Terms of Reference .......................................................................................................................... 19

2.3 Units and Currency ........................................................................................................................... 20

2.4 Disclaimer .......................................................................................................................................... 22

3 Reliance on Other Experts...................................................................................................................... 23

4 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 .................................................................................................................................... 27

5 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

Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment iii

SGS Geostat

6 History........................................................................................................................................................ 31

6.1 Regional Government Surveys ....................................................................................................... 31

6.2 Mineral Exploration Work .............................................................................................................. 31

7 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...................................................................................................... 43

8 Deposit Types ........................................................................................................................................... 50

9 Exploration ................................................................................................................................................ 53

10 Drilling ................................................................................................................................................... 56

11 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 .................................................................................................................................... 84

12 Data Verification .................................................................................................................................. 86

13 Mineral Processing and Metallurgical Testing .................................................................................. 93

14 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 ................................................................. 111

15 Mineral Reserve Estimates ................................................................................................................ 112

Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment iv

SGS Geostat

16 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 ................................................................................................... 126

17 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 ............................................................................................................ 136

18 Project Infrastructure ......................................................................................................................... 141

18.1 Mackay’s Island ........................................................................................................................... 141

18.2 Kuujjuaq ....................................................................................................................................... 142

Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment v

SGS Geostat

18.3 All-weather Road (AWR) ........................................................................................................... 143

18.4 Mine Site ....................................................................................................................................... 145

18.5 Quebec Northern Infrastructure & Sustainable Development (Plan Nord) ..................... 151

19 Market Studies and Contracts ........................................................................................................... 153

19.1 Oxides Price Forecasts ............................................................................................................... 153

19.2 Oxide Value Discount ................................................................................................................ 159

20 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 ................................................................................................................. 174

21 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 ....................................................................................................................... 183

22 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 ...................................................................................................................... 187

23 Adjacent Properties ............................................................................................................................ 189

24 Other Relevant Data and Information ............................................................................................ 191

25 Interpretation and Conclusions ........................................................................................................ 192

26 Recommendations .............................................................................................................................. 195

27 References ............................................................................................................................................ 199

Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment vi

SGS Geostat

List of tables

Table 1-1: Metallurgical Testwork Results ................................................................................................... 14

Table 1-2: Operating Cost .............................................................................................................................. 18

Table 1-3: Ashram Base Case Consolidated Cash Flow Model ................................................................ 18

Table 2-1: List of Abbreviations .................................................................................................................... 20

Table 2-2: Element to Oxide and Total Rare Earth Definitions .............................................................. 22

Table 4-1: Summary of Mineralization Occurring on the Eldor Property .............................................. 28

Table 10-1: Drilling Program Attributes ...................................................................................................... 56

Table 10-2: Drill Hole Attributes (Ashram Deposit) 1/4 .......................................................................... 58




Table 11-1: Expected Values and QA/QC Ranges of SX18-01, SX18-05, and TRM-2 Analytical CRMs for Y and REEs ............................................................................................................................ 66

Table 11-2: Statistics of SX18-01, SX18-05, and TRM-2 Analytical CRMs for Y and REEs .............. 67

Table 11-3: Comparative Statistics for the Drill Core Duplicates ............................................................ 76

Table 11-4: Statistics for the Pulp Duplicates (Actlabs vs. ALS) .............................................................. 77

Table 11-5: Specific Gravity Statistics from 2010 Independent Check Sampling Program ................. 83

Table 11-6: Specific Gravity Statistics from the 2010 and 2011 Exploration Programs ....................... 84

Table 12-1: Statistics for the Independent Check Samples (Actlabs vs. SGS Minerals) ....................... 86

Table 12-2: Sign Test for the Independent Check Samples (Actlabs vs. SGS Minerals) ...................... 87

Table 12-3: Final Drill Hole Database .......................................................................................................... 92

Table 13-1: Metallurgical Testwork Results ................................................................................................. 94

Table 14-1: Summary Statistics of Analytical Data Used in the Mineral Resource Estimate ............... 97

Table 14-2: Summary Statistics for the 3 metres Composites ................................................................. 100

Table 14-3: Resource Block Model Parameters ......................................................................................... 105

Table 14-4: Ashram Deposit Mineral Resource Estimate........................................................................ 108

Table 14-5: Ashram Deposit Mineral Resource Estimate with Individual REO Values .................... 109

Table 14-6: MHREO Zone Mineral Resource Estimate ......................................................................... 110

Table 14-7: MHREO Zone Mineral Resource Estimate with Individual REO Values ...................... 110

Table 14-8: Ashram Deposit Mineral Resource Estimate per Zone ...................................................... 110

Table 14-9: Comparative Statistics of the Assays, Composites, and Blocks Datasets ......................... 110

Table 16-1: Economic Parameters of Pit Optimization ........................................................................... 115

Table 16-2: Resources Contained Into Base Case Pit Shell ..................................................................... 116

Table 16-3: Mineralization Contained Within Pit Design ........................................................................ 119

Table 16-4: Tonnage by Phase ..................................................................................................................... 121

Table 16-5: Oxides Contained in Mine Concentrate (using 66.5% Mill-Cracking Recovery) ............ 123

Table 16-6: Production Schedule Proposed by SGS ................................................................................ 124

Table 16-7: Drilling Parameters ................................................................................................................... 125

Table 16-8: Blasting Parameters................................................................................................................... 126

Table 16-9: Proposed Mining and Service Fleet ........................................................................................ 127

Table 18-1: Number of Employees per Department ............................................................................... 146

Table 19-1: Selected Oxide Prices ............................................................................................................... 158

Table 19-2: Selected Oxides Prices (after 25% discount) ........................................................................ 160

Table 21-1: Capital Expenditures (CAPEX) .............................................................................................. 177

Table 21-2: Equipment Listing .................................................................................................................... 178

Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment vii

SGS Geostat

Table 21-3: Operating Costs ........................................................................................................................ 179

Table 21-4: Average Mining Cost Breakdown ........................................................................................... 181

Table 21-5: Staff and Camp hourly salaries ................................................................................................ 182

Table 21-6: Estimated G&A Costs ............................................................................................................. 183

Table 22-1: DCF Parameters for the Base Case Scenario ........................................................................ 184

Table 22-2: DCF Results for the Base Case Scenario............................................................................... 185

Table 22-3: Discounted Cash Flows (DCF)............................................................................................... 186

Table 22-4: Sensitivity Analysis .................................................................................................................... 187

Table 26-1: Future Work Cost Summary ................................................................................................... 198

Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment viii

SGS Geostat

List of Figures Figure 4-1: General Location Map ................................................................................................................ 24

Figure 4-2: Map of the Mineral Titles, Eldor Property .............................................................................. 26

Figure 7-1: Regional Geology Map ............................................................................................................... 35

Figure 7-2: Property Geology Map ............................................................................................................... 37

Figure 7-3: 2011 Ashram Model View to West ........................................................................................... 41

Figure 7-4: 2011 Ashram Model Plan View ................................................................................................. 42

Figure 7-5: Western Contact .......................................................................................................................... 45

Figure 7-6: Drill Core from Hole EC10-028 Showing the A, B, BD, and Contact Zone .................... 46

Figure 8-1: Schematic Representation of St-Honore Carbonatite ............................................................ 51

Figure 9-1: Eldor Exploration Areas............................................................................................................. 54

Figure 10-1: Ashram Drill Hole Locations .................................................................................................. 57

Figure 11-1: Variation of Reported Values with Time for Analytical CRM TRM-2 (Y, La, Ce, Pr, Nd, and Sm) ...................................................................................................................................................... 68

Figure 11-2: Variation of Reported Values with Time for Analytical CRM TRM-2 (Eu, Gd, Tb, Dy, Ho, and Er) ............................................................................................................................................... 69

Figure 11-3: Variation of Reported Values with Time for Analytical CRM TRM-2 (Yb and Lu) ....... 70

Figure 11-4: Variation of Reported Values with Time for Analytical CRM SX18-01 (Y, La, Ce, and Nd) .............................................................................................................................................................. 71

Figure 11-5: Variation of Reported Values with Time for Analytical CRM SX18-05 (Y, La, Ce, and Nd) .............................................................................................................................................................. 72

Figure 11-6: TREE in the Original ‘Qtz’ Blank .......................................................................................... 74

Figure 11-7: TREE in the ‘Qtz-A’ Blank...................................................................................................... 75

Figure 11-8: Correlation Plot of the Drill Core Duplicates for TREE and F......................................... 76

Figure 11-9: Correlation Plot of the Pulp Duplicates for TREE, Y, La, and Ce (Actlabs vs. ALS).... 78

Figure 11-10: Correlation Plot of the Pulp Duplicates for Pr, Nd, Sm, and Eu (Actlabs vs. ALS) .... 79

Figure 11-11: Correlation Plot of the Pulp Duplicates for Gd, Tb, Dy, and Ho (Actlabs vs. ALS) ... 80

Figure 11-12: Correlation Plot of the Pulp Duplicates for Er, Tm, Yb, and Lu (Actlabs vs. ALS) .... 81

Figure 12-1: Correlation Plot of the Independent Checks Samples for TREE, Y, La, and Ce (Actlabs vs. SGS Minerals) ..................................................................................................................................... 88

Figure 12-2: Correlation Plot of the Independent Checks Samples for Pr, Nd, Sm, and Eu (Actlabs vs. SGS Minerals) ..................................................................................................................................... 89

Figure 12-3: Correlation Plot of the Independent Checks Samples for Gd, Tb, Dy, and Ho (Actlabs vs. SGS Minerals) ..................................................................................................................................... 90

Figure 12-4: Correlation Plot of the Independent Checks Samples for Er, Tm, Yb, and Lu (Actlabs vs. SGS Minerals) ..................................................................................................................................... 91

Figure 14-1: Histogram of Samples Length from Ashram Database ....................................................... 98

Figure 14-2: Plan View of the Drill Holes at Ashram ................................................................................ 99

Figure 14-3: Longitudinal View of the Drill Holes at Ashram (looking north) ...................................... 99

Figure 14-4: Plan View Showing the Spatial Distribution of the Composites ...................................... 101

Figure 14-5: Longitudinal View Showing the Distribution of the Composites (looking north) ........ 101

Figure 14-6: Modeled 3D Wireframe Envelope in Longitudinal View (looking south) ...................... 102

Figure 14-7: Variograms of TREO Grade of 3 Metre Composite for Central Zone .......................... 103

Figure 14-8: Variograms of TREO Grade of 3 Metre Composite for Inner Zone ............................. 104

Figure 14-9: Variograms of TREO Grade of 3 Metre Composite for Outer Zone ............................ 104

Figure 14-10: Different Search Ellipsoids Used for the Interpolation Process in Plan View ............ 106

Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment ix

SGS Geostat

Figure 14-11: Plan View Showing Block Model Interpolation Results .................................................. 106

Figure 14-12: Longitudinal View Showing Block Model Interpolation Results (looking south) ....... 107

Figure 14-13: Comparative Histograms of the Assays, Composites, and Blocks Datasets ................ 111

Figure 16-1: Cases of Rock Slope With Stable and Failed Conditions Distinguished ......................... 114

Figure 16-2: Plan View of the Base Case Pit Shell .................................................................................... 116

Figure 16-3: Section View (6,312,175N) of the Base Case Pit Shell ....................................................... 117

Figure 16-4: Ramp Width, Single and Double Lanes (annotations in metres) ..................................... 118

Figure 16-5: Plan View of Designed Pit and Dimensions ....................................................................... 119

Figure 16-6: Minimum Push-back Width ................................................................................................... 120

Figure 16-7: Plan View - Pushback’s 1, 2 and 3 (Optimal Pit Design) .................................................. 122

Figure 16-8: Pushback’s 1, 2 and 3 (Optimal Pit Design) ........................................................................ 122

Figure 16-9: Production Schedule Proposed by SGS ............................................................................... 124

Figure 17-1: Mill Plan Drawing .................................................................................................................... 137

Figure 17-2: Crushing – Grinding Process Diagram ................................................................................ 138

Figure 17-3: Flotation – Thickening – Filtering Process Diagram ......................................................... 139

Figure 17-4: Cracking Process Diagram ..................................................................................................... 140

Figure 18-1: Docking Location (Mackay's Island) .................................................................................... 141

Figure 18-2: All-weather Road Elevation Profile ...................................................................................... 143

Figure 18-3: Typical Road Section............................................................................................................... 143

Figure 18-4: 185 km All-Weather Road ...................................................................................................... 144

Figure 18-5: Preliminary Infrastructure Arrangement .............................................................................. 145

Figure 18-6: Proposed Accommodation Complex ................................................................................... 146

Figure 18-7: Proposed Dewatering Dikes .................................................................................................. 148

Figure 18-8: Airport Location vs. Site Infrastructure ........................................................................... ....150 Figure 19-1: REEs Demand Forecast ......................................................................................................... 153

Figure 19-2: Analyst Consensus Average REE Supply Demand ............................................................ 154

Figure 19-3: Lanthanum Price History and Forecasts .............................................................................. 155

Figure 19-4: Cerium Price History and Forecasts ..................................................................................... 155

Figure 19-5: Praseodymium Price History and Forecasts ........................................................................ 155

Figure 19-6: Neodymium Price History and Forecasts ............................................................................ 156

Figure 19-7: Samarium Price History and Forecasts................................................................................. 156

Figure 19-8: Europium Price History and Forecasts ................................................................................ 156

Figure 19-9: Gadolinium Price History and Forecasts ............................................................................. 157

Figure 19-10: Terbium Price History and Forecasts ................................................................................. 157

Figure 19-11: Dysprosium Price History and Forecasts .......................................................................... 157

Figure 19-12: Yttrium Price History and Forecasts .................................................................................. 158

Figure 19-13: Processing Costs and Recovery Converted into RoM ..................................................... 159

Figure 20-1: Study Areas of the Ashram Rare Earth Project .................................................................. 162

Figure 20-2: Precipitations and Temperatures Averages .......................................................................... 163

Figure 20-3: Environmental Assessment Procedure for Mining Projects North of 55th Parallel ...... 169

Figure 21-1: Total Operating Cost Breakdown ......................................................................................... 179

Figure 21-2: Mining Cost per Tonne Through Mine Life ....................................................................... 180

Figure 22-1: Sensitivity Analysis (Spider Graph) ....................................................................................... 188

Figure 23-1: Map of Adjacent Properties in the Vicinity of the Eldor Property .................................. 190

Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment x

SGS Geostat

List of Appendices

Appendix A: Certificates of Qualified Persons

Appendix B: Eldor Property Mineral Title Attributes

Appendix C: Analytical Laboratory Protocols (Actlabs, ALS, SGS Minerals)

Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment 11

SGS Geostat

1 Summary

1.1 Introduction

SGS Canada Inc. (Geostat) was commissioned by Dahrouge Geological Consulting Ltd. on behalf of 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 technical report 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 Tenure

The 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 situated about longitude 68°24’0” west and latitude 56°56’0” north at its centre and covers portions of NTS map sheets 24C15, 24C16, and 24F01. The Property is only accessible by float or ski-equipped airplane, 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. The Property area extends approximately 17.5 km in an east-west direction and 24 km in a north-south direction. Figure 4-2 displays the claims that comprise the Property with a detailed listing included in Appendix B. Of the 404 claims comprising the Property, eight claims were acquired in May 2007 by a purchase agreement with Virginia Mines Inc (Virginia). The other 396 claims were acquired by map staking between May 2007 and October 2010

1.3 Royalties Obligations

The original eight claims acquired from Virginia are subject to a 1% NSR royalty in favour of Virginia and a 5% NPI royalty in favour of two individuals. Commerce has the right to buy back the 5% NPI royalty in consideration of $500,000. The Ashram Rare Earth Deposit is not situated within the Virginia claims, and is not subject to any royalties.

1.4 Mineralization

Several different types of mineralization, related to the carbonatite intrusive complex, occur at the Eldor Property. The main commodities of interest include rare earth elements (REEs) and fluorine as 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 Star Trench, Southeast, and Northwest areas.


SGS Geostat

1.5 Property Geology

The Property is situated within the central portion of the New Quebec Orogen, also known as the Labrador Trough, straddling two lithotectonic zones that are separated by a major thrust fault. To the east is the SC Zone, comprising Proterozoic paraschist, paragneiss, and amphibolites; to the west is the Gerido Zone, comprising the Le Moyne Group, Doublet Group, and the Le Moyne Intrusion, also known as the Eldor Carbonatite Historic exploration of the Eldor Carbonatite has shown that it has an elliptical shape with approximate dimensions of 7.3 km long by 3 km wide (Sherer, 1984). More recently, Clark and Wares (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 belt's formation, approximately 1.88 – 1.87 Ga (U - Pb dating). Multiple carbonatite intrusive events are believed to have occurred during 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 subdivisions proposed/identified (Wright et al., 1998) and separate eruptive centres postulated (Demers and Blanchet, 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 earlier phases 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-arctic climate, with glaciation believed to be the major eroding force. Only a thin veil of overburden covers the complex, with fresh rock being encountered essentially at the soil-rock interface. This geological history prevented the formation of the deep lateritic weathering profile that sometimes proves problematic in rare earth deposits due to rare earth mineral re-crystallization etc.

1.6 Resource Estimate

The base case cut-off grade (CoG) for the reporting of the 2012 mineral resource estimate of the Ashram 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 was calculated at 0.51% TREO. Although all the material above 0.51% TREO is economical, a mining CoG of 1.25% TREO was selected in order to maximise the mill feed grade when evaluating the economic 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 over 45 holes. At a base case CoG of 1.25% TREO the resource totals 29.3 million tonnes averaging 1.90% TREO in the measured and indicated categories and 219.8 million tonnes averaging 1.88% TREO in the inferred category.


SGS Geostat

1.7 Mining Method

Taking into account the proximity of the mineralized zone with the surface topography and the presence of high grades of REEs at shallow depth, the mining method selected to mine the Ashram Deposit is open-pit mining. Conventional mining machinery, such as trucks, loaders, and hydraulic shovels 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 contains enough resource to support an operation for more than 177 years (open pit and underground mining). Therefore, the main purpose of the optimization process was to highlight a section of the deposit 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 resources for 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, one CAT 988H loader, one CAT 385 shovel and four CAT 773 off the road trucks, supplemented by support equipment such as tracked dozers, graders, water trucks, and emulsion tankers backed by other minor equipment.

1.8 Mineral Processing, Metallurgical Testing

The rare earth mineralization at Ashram consists primarily of monazite and lesser bastnäsite and xenotime in a matrix of ferro-dolomite, fluorite, and lesser apatite. Particle size of the rare earth minerals is very fine, typically less than 30 µm down to <5µm with an average of 15-20 µm. Metallurgical testwork on a representative sample of the Ashram Deposit is currently being completed at Hazen Research Inc. in Colorado and UVR-FIA GmbH in Germany. Of the material received, 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 most promising and has thus been the chief upgrading process utilized so far. Numerous potential collectors for direct rare earth mineral flotation have been tested under a variety of operational parameters with significant upgrading achieved at reasonable recoveries. No optimization of the process has been attempted as the primary focus is currently on determining the best rare earth collector and carbonate depressant. A listing of the most promising test results is presented in Table 1-1.


SGS Geostat

Table 1-1: Metallurgical Testwork Results

TEST # % of Original Weight

CONCENTRATE GRADE %

DISTRIBUTION %

Ce La TREO (EST)

Ce La TREO (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 73.4

A mineral concentrate with a grade of 10% TREO and 70% recovery (12.7% of the original feed weight) is used as a base case result of physical upgrading at the mine site via conventional grinding and flotation techniques. The base case selection is considered conservative and constrained by the best 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 of carbonates and corresponding low sulphide content. This conclusion is currently being confirmed by Hazen, however, initial testwork is supportive. 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 the mill feed.

1.9 Recovery Methods

A 4,000 tpd mill is proposed in this study. The mill process will be conventional with operation relying 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 a minimum of 10% TREO, while recovery will be in the 70% range. Rare earth mineral concentrating and cracking is proposed in the PEA to be completed on site with a 99.9% pure mixed rare earth carbonate (REC) concentrate to be produced for the market. The process plant is designed to produce a rare earth mineral concentrate by froth flotation. It will incorporate the following sections: run-of-mine ore storage, a one-stage crushing plant, crushed ore storage, SAG milling with screen classification followed by a single-stage ball milling with cyclone classification, flotation of the rare earth minerals, concentrate thickening and filtering, tailings handling, water and reagents distribution.


SGS Geostat

1.10 Cracking

Cracking of the mineral concentrates generated by Hazen is currently underway. Although only premliminary results are available, a TREO recovery of 95% is foreseen at the cracking plant based on applicable and well-known cracking techniques. Because the radioactivity of the mill concentrate is not fully quantified at this time (testwork results pending), for the purpose of this report, it is assumed thermal cracking will be done directly at the mine site with any radioactive material remaining on site. A trade-off study will be completed in pre-feasibility level evaluation to determine if 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 carbonate precipitation, 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 economic evaluation. Further, the recovery of fluorite as a by-product is also not considered as part of this study. A trade-off study will be completed during pre-feasibility work to evaluate conventional sulphuric acid cracking versus caustic cracking techniques. Both techniques are expected to be applicable based on the simple and well-known Ashram mineralogy. Such evaluation will assist in determining if a mixed REO product is more economic/practical than and mixed REC product.

1.11 Infrastructure

The on-site and off-site infrastructure will comprise: primary crushing and associated stockpiling area, camp and mill complex, waste rock stockpile, tailings storage facility, power plant, mine garage facility, 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 built from the mine site to Kuujjuaq, mainly for the transportation of fuel, acid, chemicals plus other spare 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 following buildings: processing mill and laboratories, cracking plant, office complex, mine dry including shift change 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 and sustainable development plan (Plan Nord) and its potential impact on the Project is discussed in Section 18.5.


SGS Geostat

1.12 Power

The electrical power will be supplied by 5 x 3640 kW diesel generators with an output voltage of 4160 V at 60 Hz. Four of the units will operate permanently while the fifth one will be available as a stand-by unit. The generators will be located near the mill building as it has the largest loads. Excess heat from the power generators will be used to heat part of the camp buildings.

1.13 Tailings and Water Management

The mill and cracking plant tailings will be stored and confined into a dry natural valley or depression nearby the mining area. This valley or depression will be dammed and strategically located to take into account the environmental constraints. Decant water from the polishing pond will be reused at the process plant. The mill and cracking plant tailings are not considered acid generating and will contain no deleterious 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 the mill feed.

1.14 Environmental

1.14.1 Provincial Jurisdiction - Environment Quality Act

Quebec’s Environment Quality Act (EQA) comprises two chapters. Chapter I set out general provisions including protection of living species, protection of the environment, environmental impact assessments, depollution attestation, land and water resource protection, residual material management, 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 out provisions applicable to the James Bay and Northern Quebec Region. The environmental assessment procedures established for northern projects vary according to whether the project is located south or north of the 55th parallel. Section 168 of the EQA defines the territory north of the 55th parallel as: “the whole territory located to the north of the 55th parallel, except in Category I and II lands for the Crees of Great Whale River”. The Eldor Property is located within the territory described above (north of the 55th parallel and on Category III lands).


SGS Geostat

1.14.2 Federal Jurisdiction - Canadian Environment Assessment Act

Even though the Project is subject to a joint federal-provincial review panel, some distinct permits may be required to satisfy federal bodies such as Fisheries and Oceans Canada. However, it should be noted that the Federal Government has recently announced plans to amend certain aspects of the Act.

1.14.3 Physical Environment

In terms of environment, the Project involves three main elements: the mine site, the road linking the mine site to Kuujjuaq, and the shipment port. The Project will be subjected to an environment impact assessment potentially from both the federal and provincial governments. The environment impact assessments will measure the potential effects 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 human milieu. The water management plan for the mining-milling site will be developed during subsequent Project planning stages. No wastewater investigation has been completed to date but will be scheduled for the pre-feasibility study (PFS) as part of the environment permitting review in order to specifically 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 the waste rock or the mill tailings are not a likely concern for this Project as the waste rock consists mainly of carbonates and sulphur is, for all practical purposes, absent. However, confirmatory testing is still required. At this time, even if metal leaching does not seem to be an issue, it will be tested along with the turbidity of the water discharging from the tailings pond.

1.15 Capital Cost Estimate

The total capital expenditure cost (CAPEX) is estimated at an overall accuracy of ±30%. The CAPEX were defined by SGS using in-house database and the Mine & Mill Equipment Costs Estimator's Guide: Capital & Operating Costs (2010). The costs from the Guide were updated to 2012 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 the transport road and the port facility are covered entirely by Commerce, with no potential outside assistance from third parties evaluated (e.g. Plan Nord).

1.16 Operating Cost Estimate

The operating costs (OPEX) are estimated at an overall accuracy of ±30%. The operating costs were defined by SGS using in-house database and the Mine & Mill Equipment Costs Estimator's Guide: Capital & Operating Costs (2010). The costs from the Guide were updated to 2012 using an


SGS Geostat

inflation rate of 4% per year. The OPEX assumes that all costs for maintenance of the transport road and port facility are covered entirely by Commerce, with no potential outside assistance from third 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 Analysis

The Ashram base case consolidated cash flow model is presented in Table 1-3. The economic analysis illustrates a base case for a 4,000 tpd operation (350 days per year) producing a 10% TREO mineral concentrate and further processing to a mixed rare earth carbonate (REC) product via a cracking stage on-site with an overall final recovery of 66.5% (70% to concentrate + 95% at cracking). Based on an open-pit head grade of 1.81% TREO, a total of approximately 36,000 tonnes of 99.9% pure mixed REC is anticipated to be produced annually, representing approximately 16,850 tonnes of REO. The economics of producing a mixed REO product directly on-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 Conclusion

Since this Project is certainly one of merit, it is recommended that Commerce continue the metallurgical testing in order to establish the optimal flotation reagents and increase the concentrate grade. These metallurgical tests should be followed by a pre-feasibility study supported by a pilot plant operation on a minimum 300-tonne sample. Pilot testing should include cracking of the flotation concentrate and further, evaluation of the optimal cracking technique and subsequent marketable product.


SGS Geostat

2 Introduction

2.1 General

SGS 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 Economic Assessment (PEA) of the Ashram Rare Earth Project. This technical report was prepared by SGS Geostat for Commerce to support the disclosure of the PEA for the Project. Commerce Resources Corp. is a Canadian exploration and development company with a particular focus on deposits of rare metals and rare earth elements. The Company is specifically focused on the development of its Upper Fir Tantalum and Niobium Deposit at the Blue River Project in British Columbia, and the exploration of the Eldor Rare Earth Property in northern Quebec, which is the subject 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 the OTCQX U.S. marketplace under the symbol CMRZF. The Eldor Property is located in northern Quebec approximately 130 km south of the community of Kuujjuaq and ~85 km north of Adriana Resources' Lac Otelnuk Iron Deposit. The property is 100% owned by Commerce and encompasses 404 claims totalling approximately 19,006 hectares. In 2009, the exploration program by Dahrouge Geological Consulting Ltd. (Dahrouge), on behalf of Commerce, led to the discovery of a significant new rare earth element deposit known as the Ashram Deposit. The purpose of this report is to evaluate the preliminary economic potential of the Ashram Project based on the analytical results from diamond drilling during the 2010 and 2011 exploration programs. The economic scenario takes into account the most recent resource estimation, a processing scenario based on tests results, a mining scenario, a list of required infrastructure, and economic parameters such as oxide prices from market studies. The report also provides recommendations for future work.

2.2 Terms of Reference

This preliminary economic assessment was prepared by: Gaston Gagnon, Eng. Responsible for all sections except 11.3, 11.4, 11.5, 12, 13, 14 and 17 Yann Camus, Eng. Responsible for sections 11.3, 11.4, 11.5, 12 and 14 Gilbert Rousseau, Eng. Responsible for sections 13 and 17 Jonathan Gagné, Eng. This technical report was prepared according to the guidelines set under “Form 43-101F1 Technical Report” of National Instrument 43-101 Standards and Disclosure for Mineral Projects. The certificates of qualification for the Qualified Persons responsible for this technical report can be found in Appendix A.


SGS Geostat

One of the authors, M. Gaston Gagnon, Eng. visited the Property, accompanied by Robert De l’Étoile, Eng. from SGS Geostat, between September 18 and 21, 2011, for a review of exploration methodology, sampling procedures, and to conduct independent check sampling of selected mineralized drill core. Information in this report is based on critical review of the documents, information and maps provided 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 Currency

All 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 µm Micrometre Actlabs Activation Laboratories ALS ALS Group Bn Billion BTW Core diameter (B-thin wall, 42 mm) C$ Canadian Dollars CA Certificate of Authorization CAPEX Capital expenditures CCME Canadian Council of Ministers of the Environment CDD Counter current decantation CEAA Canadian Environment Assessment Act CDPNQ Centre de données sur le patrimoine naturel du Québec (CDPNQ) cm Centimetre CoG Cut-off-grade Commerce Commerce Resources Corporation CRMs Certified reference materials Dahrouge Dahrouge Geological Consulting Ltd., Edmonton, Alberta, Canada D Diameter DCF Discounted Cash Flow EI Environement Illimité inc. Eldor Eldor Property (site of Ashram Deposit) FS Feasibility Study Eng Engineer EQA Environment Quality Act G&A General and Administrative g/cc Gram per cubic centimetre g/t Gram per tonne Ga Billion years GSC Geological Survey of Canada H Height ha Hectares Hazen Hazen Research Inc., Denver, Colorado Hz Hertz ICP Inductively coupled plasma ICP-MS Inductively coupled plasma mass spectrometry IRR Internal rate of return


SGS Geostat

ISE Ion selective electrode IUGS International Union of Geological Sciences k Kilo kg Kilogram km Kilometre kW Kilowatt kW-h Kilowatt-hour LFO Light fuel oil LoM Life of mine LREO Light rare earth oxide m Metre M Million m2 Square metre Ma Million years MCC Motor Control Centre MDDEP Ministère du Développement Durable, de l’Environnement et des Parcs mg Milligram MHREO Middle and heavy rare earth oxide min Minute mm Millimetre MMER Metal Mining Effluent Regulation MREO Middle rare earth oxide MRNF Ministère des Ressources Naturelles et de la Faune MW Megawatt NAD83 North American datum of 1983 NI 43-101 National Instrument 43-101 NPI Net profit interest NPV Net present value NQ Core diameter (47.6 mm) NSR Net smelter return NTS National Topographic System of Canada NWPA Navigable Waters Protection Act OK Ordinary Kriging methodology OPEX Operating expenditures PEA Preliminary economic assessment PFS Pre-feasibility study PGE Platinum Group Elements (six elements) pH Potential of hydrogen (acidity scale) PLC Programmable logic controller ppm Part per million Project Ashram Project Property Eldor Property QA/QC Quality assurance/Quality control QP Qualified Person Qtz Quartz REC Rare earth carbonate REE Rare earth element REO Rare earth oxide RF Revenue factors RoM Run of mine RPD Relative percent difference SAG Semi-Autogenous Grinding Mill SECP Southeastern Churchill Province SEDAR System for Electronic Document Analysis and Retrieval SG Specific Gravity SGS-Geostat SGS Canada Inc, Geostat’s office in Blainville, QC SI International System of Units metric system


SGS Geostat

T Metric tonne t/m3 Tonne per cubic metre tpd Tonne per day tpy Tonne per year tpa Tonne per year TREE 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 Mongolia US$ United States dollars UTM Universal transverse mercator V Volt Virginia Virginia Mines Inc XRF X-ray fluorescence Table 2-2 presents some factors to convert elements to oxides and also provides total rare earth

definitions.

Table 2-2: Element to Oxide and Total Rare Earth Definitions

Name Element Definitions Conversion Factor Oxide Definitions

(Element to Oxide)

Lanthanum La

LREE

TREE

1.17276 La2O3 LREO

TREO

Cerium Ce 1.17127 Ce2O3

Praseodymium Pr 1.17031 Pr2O3

Neodymium Nd 1.16638 Nd2O3

Samarium Sm MREE

1.15961 Sm2O3 MREO Europium Eu 1.15793 Eu2O3

Gadolinium Gd 1.15261 Gd2O3

Terbium Tb HREE

1.15100 Tb2O3

HREO

Dysprosium Dy 1.14768 Dy2O3

Holmium Ho 1.14551 Ho2O3

Erbium Er 1.14348 Er2O3

Thulium Tm 1.14206 Tm2O3

Ytterbium Yb 1.13868 Yb2O3

Lutetium Lu 1.13716 Lu2O3

Yttrium Y 1.26993 Y2O3

2.4 Disclaimer

It should be understood that mineral resources, which are not mineral reserves, do not have demonstrated economic viability. The mineral resources presented in this Technical Report are estimated based on available sample data and on assumptions and parameters available to the authors. The comments in this Technical Report reflect the authors and SGS Canada Inc. – Geostat best judgement in light of the information available.


SGS Geostat

3 Reliance on Other Experts SGS Geostat did not rely on any experts other than Hazen Research Inc, (Hazen), Commerce Resources Corp., and Dahrouge Geological Consulting Ltd. during the writing of this report. All information, estimations, opinions and conclusions presented in this report are based on a thorough review of the literature and on data, reports and other information supplied by Commerce, and on SGS expertise including in-house database. For the purpose of the report, SGS has relied on Hazen, Commerce, and Dahrouge for information pertaining to the following sections: 4- Property Description and Location

5- Accessibility, Climate, Local Resources, Infrastructure and Physiography

6- History

7- Geological Setting and Mineralization

8- Deposit Types

9- Exploration

10- Drilling

13- Mineral Processing and Metallurgical Testing

17- Recovery Method

However, these sections were read, revised and approved by SGS experts. SGS is of the opinion that the data provided by Hazen, Commerce, and Dahrouge is acceptable compared to standards and that the work done by Hazen, Commerce, and Dahrouge is professional and trustworthy. SGS experts are comfortable to use such data in assessing the preliminary economic potential of the Ashram Project.


SGS Geostat

4 Property Description and Location

4.1 Location

The Eldor 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 situated about longitude 68°24’0” west and latitude 56°56’0” north at its centre and covers portions of NTS map sheets 24C15, 24C16, and 24F01. The Property is only accessible by float or ski-equipped plane, helicopter and by snowmobiles during winter months.

Figure 4-1: General Location Map


SGS Geostat

4.2 Property Ownership and Agreements

As of June 2012, the Property consists of one block totalling 404 claims covering 19,006.52 ha. The Property area extends approximately 17.5 km in an east-west direction and 24 km in a north-south direction. Figure 4-2 shows the claims that comprise the Property with a detailed listing included in Appendix B. Of the 404 claims comprising the Property, eight claims were acquired in May 2007 by a purchase agreement with Virginia Mines Inc (Virginia). The other 396 claims were acquired by map staking between May 2007 and October 2010.


SGS Geostat

Figure 4-2: Map of the Mineral Titles, Eldor Property


SGS Geostat

4.3 Royalties Obligations

The original eight claims acquired from Virginia are subject to a 1% NSR royalty in favour of Virginia and a 5% NPI royalty in favour of two individuals. Commerce has the right to buy back the 5% NPI royalty in consideration of $500,000. The Ashram Rare Earth Deposit is not situated within the Virginia claims, and is not subject to any royalties.

4.4 Permits and Environmental Liabilities

Commerce is conducting exploration work under valid permits and authorisations delivered by the provincial Ministère des Ressources Naturelles et de la Faune (MRNF) and the Ministère du Développement Durable, de l’Environnement et des Parcs (MDDEP). On March 19, 2011, the Company 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 Mineralization

Several different types of mineralization, related to the carbonatite intrusive complex, occur at the Eldor Property. The main commodities of interest include rare earth elements and fluorine as 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 Star Trench, Southeast, and Northwest areas, Table 4-1 summarises the mineralization currently known on the Property.


SGS Geostat

Table 4-1: Summary of Mineralization Occurring on the Eldor Property

UTM East UTM North

538000 6311000 SoutheastNb, Ta, F,

Phosphate

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.

12.7% F over 32.42 m;

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)

Drill Core,

Boulders, Soils

535900 6312700 NorthwestNb, Ta,

Phosphate

EC08-008: 0.46% Nb2O5 over 46.88 m;

28.2% P2O5 (outcrop); 5.74% Nb2O5, 0.46% Ta2O5 (outcrop)

Drill Core,

Outcrop, Soils

537300 6310100 Star TrenchTa, Nb,

Phosphate

EC08-025: 0.31% Nb2O5, 0.060% Ta2O5, and 16.60% P2O5 over 4.37 m;

37.3% P2O5 (outcrop); 4.23% Nb2O5 (boulder); 0.14% Ta2O5 (boulder)

Drill Core,

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

541400 6311700 MC Exposure REE, FEC10-037: 1.73% TREO over 7.87 m;

2.03% TREO (outcrop)

Drill Core,

Outcrop

537400 6313000 MirannaNb, REE,

Phosphate2.42% Nb2O5 (boulder); 15.8% P2O5 (boulder); 1.25% TREO (soils) Boulders, Soils

535700 6313500 Triple-D REE EC11-055: 1.38% TREO over 10.00 m Drill Core

535100 6312700 West Rim REE, Nb, Ta

EC11-069: 1.96% TREO over 2.85 m;

2.27% TREO (boulder); 16.09% Nb2O5, 0.754% Ta2O5 (boulder);

21.0% P2O5 (boulder)

Drill Core,

Boulders

539100 6312900 Beckling REE, FEC11-081: 1.36% TREO and 2.3% F over 10.45 m;

4.30% TREO, 20.1% F (outcrop)

Drill Core,

Outcrop

LocationArea Name Commodities Significant Results Sampling Type


SGS Geostat

5 Accessibility, Climate, Local Resources, Infrastructure and Physiography

5.1 Accessibility

Due to its remoteness, the Property is only accessible by float or ski-equipped plane, helicopter or by snowmobiles during winter months.

5.2 Climate

The 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 last 10 years in the region is 41 cm of rain and 174 cm of snow (weather base website, 2011). Lake freeze-up generally begins in early to middle October and ice break-up usually occurs around the end of May-early June.

5.3 Local Resources and Infrastructures

The regional resources regarding labour force, supplies and equipment are challenging due to the remoteness of the Project. The nearest communities are Kuujjuaq, located 130 km north with a population 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. Kuujjuaq has 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 the remaining river transportation. Schefferville is the northern terminus of the Tshiuetin railway (formerly operated by the Quebec North Shore & Labrador), which connects to Labrador City then Sept-Iles to the south. Exploration work on the Property is completed from a temporary base camp (known as Eldor camp) located nearby the Ashram REE Deposit. The camp can be open year-round and currently has 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 core archive of the Project. No permanent access road has been built on the Property although a network of temporary access trails connects the camp to the Ashram Deposit and is passable by quad and side-by-side all terrain vehicles

5.4 Physiography

The Property is characterised by a rolling hill topography generally created by the underlying glacial drumlins and eskers. Glacial sediments, mostly till, cover most of the Project area and can be up to


SGS Geostat

ten 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 Ungava Bay using small creeks and local poorly drained swampy area connecting to larger lakes and major rivers. The vegetation is generally forest-covered in the central portion of the Property, populated mainly by black spruce and tamarack trees, with generally barren areas occurring in the more elevated southern area. Willow and alder shrubs, often densely populated, also occur in low-lying areas throughout the Property.


SGS Geostat

6 History

6.1 Regional Government Surveys

Several regional surveys have been conducted in the area of the Property by the Geological Survey of Canada (GSC) and the MRNF. Between the 1950s and the 1970s, different authors from the GSC and 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 various geological surveys conducted in the area was completed (Dressler and Ciesielski, 1979). Since the end of the 1970’s, only a few localised and more detailed geological surveys were completed by the MRNF. The geological syntheses reported by the MRNF for the area since the 1990’s include a 1:250,000 scale map of the mineral occurrences of the New Quebec Orogen (Avramtchez et al., 1990), a preliminary 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 in 1974 (Dressler, 1974), followed in 1987 by a regional lake sediment geochemical survey (Baumier, 1987).

6.2 Mineral Exploration Work

The information reported in this section relates mainly to mineral exploration work conducted for the mineralization related to the carbonatite intrusive complex occurring on the Property. The Eldor Carbonatite Intrusive Complex was first discovered in 1981 by Eldor Resources Ltd. (Eldor Res.) following a regional lake-water and sediment sampling program completed in the northern part of 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 in the area. In 1983, Eldor Res. followed up the airborne anomalies with a prospecting program. During the program, 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 anomalous thorium values with some of the samples returning up to 7% Nb, 0.18% Ta, and 4% total lanthanides. A reconnaissance geological mapping survey was also conducted in the area of the newly discovered carbonatite (Meusy et al., 1984; Lafontaine, 1984). In 1985, Unocal Canada Ltd. carried out a five-day field program consisting of magnetic-radiometric geophysical and soil geochemical orientation surveys along with prospecting. Samples collected for


SGS Geostat

geochemical analysis and petrographic study confirmed the historical results by Eldor Res. and additional 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 Mines Inc.) based on the historical Ta values reported by Eldor Res. Virginia conducted a small program and re-sampled the known Nb-Ta showings, confirming the historical results. No additional work was performed in the area by Virginia (Demers and Blanchet, 2002). In April, 2007, Commerce concluded a purchase agreement with Virginia on the 8 original claims and subsequently acquired an additional 396 claims over the next three years, covering the carbonatite and immediate vicinity. During the summer of 2007, the Company mandated Dahrouge Geological Consulting Ltd. (Dahrouge) to conduct an exploration program consisting of prospecting (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, an 862 line-km airborne magnetic-electromagnetic-radiometric survey was flown over the Property at 200 m line spacing (Smith et al., 2008). During 2008, Dahrouge, on behalf of Commerce, conducted an exploration program on the Property 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 holes in three areas of the Property (Star Trench, Northwest, and Southeast). From these holes, 3,471 samples totalling 4,003 metres were collected and analysed during 2008 (2,928 samples) and subsequent infill sampling programs during 2009 (97 samples) and 2010 (446 samples), not including duplicates. 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% P2O5

Northwest Area: EC08-008 - 46.88 m grading 4,562 ppm Nb2O5

Southeast Area: EC08-015 - 26.10 m grading 5,466 ppm Nb2O5

Fifteen (15) trenches, with 71 samples collected, were documented on the Property. The ground geophysics consisted of magnetic and scintillometer surveys. The soil sampling program significantly extended 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 rock samples. In 2009, Dahrouge, on behalf of Commerce, completed a relatively small exploration program with field 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 2009 exploration 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

samples collected in the Ashram area, more than half returned TREO greater than 1%, with the best sample grading more than 3% TREO (Smith and Peter-Rennich, 2010). After the success of the abbreviated 2009 program, and improvement in the global market conditions, Dahrouge, on behalf of Commerce, initiated an aggressive follow-up drilling, prospecting, and soil sampling program during 2010. Five trenches were completed on the Property with 30 samples collected. The soil sampling program returned 839 samples collected mostly along extensions of the regional 2007-8 grid (50 m intervals along 1 km-spaced lines). The prospecting work totalled 297 observation points and returned nearly 300 rock samples. Prospecting and soil sampling work led to the discovery of the ‘Miranna’ REE target near J Lake as well as the ‘MC Exposure’ carbonatite showing located to the east and outside of the main complex as inferred by magnetics. In addition to the ground work, detailed satellite imagery at 0.5 m resolution was acquired over the entire property. A total of 5,389.98 metres of drilling was completed over 21 holes in four different areas of the Property (Star Trench, Southeast, MC Exposure, and Ashram). Some of the best results are as follows:

Star Trench Area: No significant intersections were returned, with the area proving to be enigmatic. Strong mineralization was encountered but only over very narrow widths.

Southeast Area: EC10-033 – 74.25 m grading 5,750 ppm Nb2O5, 140 ppm Ta2O5, 0.47% TREO, and 8.9% P2O5

MC Exposure: EC10-037 – 7.37 m grading 1.73% TREO

Ashram Area: EC10-045 – 309.18 m grading 1.99% TREO and 2.6% F

The chief highlight of the 2010 drill program was the confirmation of significant rare earth mineralization extending from surface to considerable depth on the Ashram Peninsula. A total of 3,312.67 m over 12 drill holes completed during the summer and fall of 2010 formed the basis for an initial NI 43-101 compliant mineral resource estimate released in March, 2011 by SGS-Geostat of Montreal (Blainville). The estimate yielded a total inferred resource of 117.4 Mt grading 1.74% TREO at a cut-off grade of 1.25% (Laferrière, 2011).


SGS Geostat

7 Geological Setting and Mineralization

7.1 Regional Geology

The Eldor Property is located in the Paleoproterozoic New Quebec Orogen (also known as the ‘Labrador Trough’ or ‘Fosse du Labrador’), which is interpreted to be the western margin of the Southeastern Churchill Province (SECP). The New Quebec Orogen is bounded to the west by the Archean Superior Province, to the south by the Proterozoic Grenville Province, and extends as far as Ungava Bay to the north. To the east, the New Quebec Orogen is in contact with a composite terrain of the SECP named the Core Zone, composed of Archean and Paleoproterozoic lithologies (James et al., 2003; Clark and Wares, 2006)


SGS Geostat

Figure 7-1: Regional Geology Map


SGS Geostat

The New Quebec Orogen is interpreted to be an early Proterozoic (Aphebian) fold and thrust belt with an age of 2.17 to 1.87 Ga. The older stratigraphic and structural subdivision of the New Quebec Orogen outlined three supracrustal belts defined as 1) a western foreland, parauthochthonous to allochthonous “miogeosynclinal” belt composed mainly of platform sediment rocks; 2) a central foreland, allochthonous “eugeosynclinal” belt composed mainly of greenschist facies, deeper-water environment, volcano-sedimentary rocks intruded by numerous gabbro sills; and 3) an eastern allochthonous belt marking the beginning of the hinterland and composed of amphibolitic facies rocks. The recent interpretation defines the New Quebec Orogen as three cycles of sedimentation and volcanism, which make up the Kaniupiskau Supergroup. The cycles thicken eastwards and are separated from each other by erosional unconformities. The first two cycles are volcano-sedimentary in nature with an emplacement age, via U-Pb dating, of between 2.17 and 2.14 Ga and between 1.88 and 1.87 Ga respectively. Overlying this sequence is a syn-orogenic suite of meta-sedimentary rocks that form the third cycle. The belt is subdivided into eleven lithotectonic zones separated by major thrust faults. The first cycle of the belt was prompted by continental rifting, followed by passive continental margin development, then additional rifting, and finally the re-establishment of the platform. A period of approximately 175 Ma, characterized by relatively little tectonic activity, followed the first cycle of the Orogen. The second cycle is characterized by a transgressive sequence composed of platform sediments (sandstones and iron formations) and turbidites (sandstones and mudstones) later intruded in the central part of the belt by several ultramafic sills, tholeiitic in composition, known as the Montagnais Sills. Near the end of the second cycle, the Le Moyne Intrusion (Eldor Carbonatite) was emplaced within basaltic to rhyolitic volcanic units. Finally, the third cycle, consisting of molasse-type sedimentation at the margin of the Superior Province, occurred between 1.82 and 1.77 Ga. In general, metamorphic grade increases from west to east across the New Quebec Orogen. The foreland changes from sub-greenschist to upper greenschist facies, and the hinterland goes from upper greenschist to amphibolite/granulite facies. The Eldor Carbonatite suite of rocks is interpreted to have undergone greenschist facies metamorphism and was deformed, along with the surrounding rocks, during the Hudsonian Orogen.

7.2 Property Geology

The Property is situated within the central portion of the New Quebec Orogen, straddling two lithotectonic zones that are separated by a major thrust fault. To the east is the SC Zone, comprising Proterozoic paraschist, paragneiss, and amphibolites; to the west is the Gerido Zone, comprising the Le Moyne Group, Doublet Group, and the Le Moyne Intrusion, also known as the Eldor Carbonatite (Figure 7-2).


SGS Geostat

Figure 7-2: Property Geology Map


SGS Geostat

Figure 7-2B: Geology of the Eldor Carbonatite Map


SGS Geostat

The older Doublet Group rocks underlay the Le Moyne Group rocks and consist of mafic pyroclastics, basalts, dolomites, and gabbros. The Le Moyne Group consists of volcanic and sedimentary rocks of the Douay Formation (rhyolites, rhyodacites, felsic tuffs, dolomites, shales, and pelites), and the sedimentary Aulneau Formation (conglomerate, mudstones, dolomite, and dolomite tuff), which includes mafic pyroclastics coeval with the Le Moyne Intrusion. Finally, a sub-volcanic carbonatite intrusion (‘Le Moyne Intrusion’ or ‘Eldor Carbonatite’) was emplaced within the Le Moyne Group. Local structure and geology indicate that volcanism was violent and may have occurred in a shallow-water environment. The carbonatite complex has been mapped by Clark and Wares (2006) as intrusive (massive and brecciated ultramafic) with marginal extrusive equivalents interpreted to be a possible volcanic apron. This notion of extrusive carbonatite components is still a matter of debate. Historic exploration of the Eldor Carbonatite has shown it to have an elliptical shape with approximate dimensions of 7.3 km long by 3 km wide (Sherer, 1984). More recently, Clark and Wares (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 belt's formation, approximately 1.88 – 1.87 Ga (U - Pb dating). Multiple carbonatite intrusive events are believed to have occurred during emplacement of the Eldor Complex with calico-carbonatite, magnesio-carbonatite, and ferro-carbonatite present. The geology of the Eldor Carbonatite is very complex, with several lithological subdivisions proposed/identified (Wright et al., 1998) and separate eruptive centres postulated (Demers and Blanchet, 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 earlier phases 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-arctic climate, with glaciation thought to be the major eroding force. Only a thin veil of overburden covers the complex, with fresh rock being encountered essentially at the soil-rock interface. This geological history prevented the formation of the deep lateritic weathering profile that sometimes proves problematic in rare earth deposits due to rare earth mineral re-crystallization etc.

7.3 Property Mineralization

The primary targeted commodities of exploration on the Eldor Property are niobium-tantalum and rare earth element deposits associated with the carbonatite. Secondary targets include phosphate (apatite) and fluorine (fluorite), which tend to occur with the other primary commodities of interest. Carbonatites have been defined in several ways; a detailed review of the methodologies and arguments is presented in Mitchell (2005). However, for the purposes of this report they are defined, according to the IUGS system, as igneous rocks containing more than 50% carbonate minerals by volume with less than 20 wt.% SiO2 (Le Maitre, 2002). Geochemical classification (calcio, magnesio, ferro) follows that presented in Woolley and Kempe (1989).


SGS Geostat

Niobium and tantalum mineralized bodies are thought to be formed by primary igneous concentrations of the minerals pyrochlore, columbite, and others located in geochemically enriched phases of a carbonatite intrusion. Primary niobium-tantalum deposits tend to run parallel to the mineral banding in the host carbonatite. Mineralized bodies are characterized by an increased concentration of non-carbonate minerals, as well as increased quantities of actinide elements (U and Th). This results in mineralized zones that tend to be more radioactive than the unmineralized wall rocks. Niobium-tantalum mineralization often occurs in calcio to magnesio phases, in the middle stages of carbonatite emplacement, with earlier-stage carbonatite often barren. Rare earth element deposits tend to be associated with the final phases of intrusion/veining of a carbonatite complex and are often located near the centre of carbonatite/alkaline complexes. Typically, the highly oxidized nature of the late carbonatite phases makes these areas magnetic lows. Geochemically, these deposits tend to occur in the magnesio to ferro phases, with the ferro phases typically representing the latest stages of emplacement. Rare earth mineralization may occur in a wide variety of minerals in this type of geological environment. The rare earth minerals are typically non-silicate, and light and middle rare earth enriched, with rare earth phosphate and fluorocarbonate minerals common (e.g., monazite, bastnäsite). It is highly unusual for carbonatites to display heavy rare earth enrichment; however, it has been known to occur under specific conditions (e.g. Ashram).

7.4 Ashram Deposit Geology

The Ashram Rare Earth Deposit is central to the Eldor Carbonatite Complex, lies within a magnetic low at the apex of a REE-mineralized boulder train, is marked by a gravity anomaly, and appears to be bordered by an earlier stage calcio-carbonatite and various ‘glimmerite’ related units. Currently, the deposit’s geometry and geology can best be described as a moderate to steeply NE dipping ovoid or sheet, with simple rare earth mineralogy (monazite, bastnäsite, xenotime). Although mineralogically simple, it is texturally complex with multiple later stage episodes of dolomitic carbonatite emplacement (ferro/magnesio), coupled with deformation and brecciation (cataclasis), and low-temperature hydrothermal overprinting. No major off-setting structures have been identified within the main ore body, however, additional drilling and ongoing interpretation is required.

In general, the body can be divided into a higher grade (typically 1.5–3+% TREO) body comprising predominantly the A and B zones, with an outer lower grade halo (typically <1% TREO) predominantly comprising the BD-Zone type lithology. These zones are typically bordered by a relatively unmineralized phlogopite rich unit to the west and a relatively unmineralized calico-carbonatite unit to the east. A near-surface central zone of more intense middle and heavy rare earth oxide (MHREO) enrichment, termed the ‘MHREO Zone’, is also identified within A-Zone material (Figure 7-3 and Figure 7-4). The A, B, BD, and MHREO zones, as well as contact units, are further defined in Section 7.5.


SGS Geostat

Figure 7-3: 2011 Ashram Model View to West


SGS Geostat

Figure 7-4: 2011 Ashram Model Plan View


SGS Geostat

The rare earth mineralized footprint at Ashram extends approximately 700 metres along strike, over 500 metres across, and reaches depths exceeding 600 metres. Mineralization remains open to the north, south, at depth, and is not fully constrained to the west and east. The deposit outcrops at surface or is covered by only a thin veil of overburden, typically <1 to 3 m thick, hosting well-mineralized boulders. The Ashram Deposit displays a pervasive and well-balanced rare earth distribution that is prevalent throughout the deposit. The deposit averages over 16% neodymium oxide (% of TREO), and 6% MHREO (% of TREO), including appreciable amounts of the critical rare earths neodymium, europium, terbium, dysprosium, and yttrium. This is unusual in carbonatite deposits and especially those of such tonnage and grade. Further, a zone, termed the ‘MHREO Zone’, displays a more intense enrichment in the middle and heavy rare earth oxides, and is located central to the main Ashram body, extending from surface and to depths exceeding 170 m. The origin of the MHREO enrichment at Ashram remains enigmatic with several theories of note. It may represent the non-eroded upper or central portions of the mineralized system, where the heavy rare earths may preferentially concentrate. In addition, the presence of certain mineralogical assemblages (including xenotime) suggests a peralkaline rock affinity and possible source for the heavy rare earth enrichment (Mitchell, 2011). Peralkaline and other granitic rocks are typically enriched in heavy rare earths, thus residual hydrothermal fluids from such sources may have influenced the system. Macro-examination of core reveals that the main MHREO Zone has sharp, crosscutting relationships with the main Ashram Deposit lithologies. It appears to have finer and more massive-like textures and be significantly less deformed. This strongly suggests that the MHREO Zone represents a later event than the main Ashram LREO-MREO mineralizing event. MHREO enrichment, if present, is characteristic of the late stages of evolution of a REE-mineralized carbonatite. The MHREO Zone at Ashram could represent this later heavy enrichment stage, concentrated into a late intrusive event. Additional drilling and thin section analysis is required to adequately determine the correct paragenesis of the Ashram Deposit and further investigate the origins of the pervasive MHREO enrichment throughout, as well as that of the main MHREO Zone.

7.5 Ashram Deposit Mineralization

This section summarizes rare earth mineralization and lithology specific to the Ashram Rare Earth Element Deposit. The primary sources of information include core logs and internal mineralogical reports by Patrik Schmidt, B.Sc. equivalent from the University of Tübingen (Schmidt, 2011), and Dr. Roger H. Mitchell (Mitchell, 2011), in addition to several thin section characterizations completed by Mitchell, subsequent to the internal reports. Personal communications and an internal report on the Ashram Deposit geology by Alex W. Knox, P.Geol, is also utilized (Knox, 2011).


SGS Geostat

The Rare earth element mineralization at Ashram is hosted primarily (essentially 100%) by monazite, rare earth fluorocarbonates (bastnäsite, parisite, and lesser synchysite) and lesser xenotime. Rare earth mineralization at Ashram is consistent throughout the deposit with minimal dilution from unmineralized fragments and clasts. Monazite typically occurs as intergrowths with fluorite or disseminations in dolomite and less commonly as intergrowths with apatite or in association with quartz-rutile assemblages. Bastnäsite typically occurs as fibrous cavity fillings in dolomite, anhedral grains in veins associated with Y-Nb-Ti minerals, or anhedral grains and aggregates in fluorite. The principal heavy rare earth mineral is xenotime-(Dy) present as anhedral to subhedral crystals in association with nioboaeschynite, niobian rutile, ferrocolumbite, monazite, quartz, and mica. Xenotime is present in either pools of quartz, small veins (mm) in fluorite ferro-carbonatites, or scattered throughout the carbonatite as a trace mineral in association with disseminated monazite and/or bastnäsite. At least two generations of monazite are present: one associated with fluorite and/or disseminated in dolomite, and a second associated with the xenotime mineral assemblage. The xenotime mineral assemblage represents a distinct (later) mineralization event from that which formed the first generation of monazite. Grain size of the monazite is typically <10 µm to 25 µm, with bastnäsite slightly coarser at <20 µm to 50 µm. Aggregates of monazite±bastnäsite in the several-hundred micron range are present but not common. Xenotime crystals are relatively coarser grained than monazite, although still commonly less than 50 µm. Parasite-bastnäsite intergrowths, where present (BD-Zone), occur as relatively large crystals and masses ranging typically from 200 µm to 400 µm with some aggregates exceeding a millimetre. Although fine-grained, the rare earth mineralogy of the Ashram Deposit is considered simple because it contains three of the four rare earth minerals that dominate commercially production globally (monazite, bastnäsite, and xenotime). In addition, it has been demonstrated that all three rare earth bearing minerals (monazite, bastnaesite, and xenotime) liberate together and share conventional processing techniques. The Ashram Deposit can be roughly divided into three main mineralized zones termed ‘A-Zone’, ‘B-Zone’, and ‘BD-Zone’. In general the A-Zone is central to the deposit and is rimmed by the B-Zone and BD-Zone respectively. This relationship is more prevalent along the western margin of the deposit, where the BD-Zone is in contact with an unmineralized albite amphibole phlogopitite unit, which interfingers with and transitions to a calcio-carbonatite unit. A simplified illustration of the typical nature of the western contact is presented in Figure 7-5. Along the eastern margin of the deposit, the B and BD zone relationship is more variable, with unmineralized calcio-carbonatite predominantly marking the contact, with the albite amphibole phlogopitite unit noticeably absent.


SGS Geostat

Figure 7-5: Western Contact


SGS Geostat

Figure 7-6 displays a representative sample from each of the different mineralized zones as selected by André Laferrière, Qualified Person for the March, 2011 initial resource estimate (Laferrière 2011), including the non-carbonatite western contact unit (albite amphibole phlogopitite). Other non-mineralized or poorly mineralized zones have been described within the deposit; however, they comprise only a very minor volume and typically occur on the outer fringes of the system.

Figure 7-6: Drill Core from Hole EC10-028 Showing the A, B, BD, and Contact Zone

A-Zone The A-Zone lithology is the largest unit by volume and surface footprint, and also the most highly mineralized of the Ashram Deposit (typically 1.5-3+% TREO). The unit is typically very fine-grained, light to dark olive-grey, and composed of clasts of breunnerite (magnesian siderite) plus fluorite, or fluorite plus monazite, set in a complex matrix of several generations of ferrodolomite. Fluorite is typically abundant and pervasive in the zone, occurring as disseminations, blebs, patches, veins, and fracture fillings. Accessory and trace minerals include apatite, pyrite, sphalerite, magnetite, xenotime, quartz, and niobium phases (niobium rutile, nioboaeschynite, ferrocolumbite, and niobium ilmenite).


SGS Geostat

The A-Zone is texturally complex yet mineralogically simple with monazite and lesser bastnäsite as the dominant rare earth minerals. Monazite is present as disseminations in the ferrodolomite or as fluorite-monazite intergrowths present as clasts and schlieren in a matrix of ferrodolomite. These rocks are heterogeneous on the local scale, with a highly variable fabric consisting of deformed, ‘sheared’, colloform, and brecciated to pseudo-brecciated textures. Several phases of late-stage ferro-carbonatite veins (several cms wide) are common, along with occasional later stage, unmineralized fracture-filled fluorite veining (several mms wide). Geochemically, the A-Zone may be classified as magnesio- to ferro-carbonatite. The A-Zone is commonly in contact with the B-Zone with interfingering characteristics not uncommon. Both units share many similarities and at times appear to grade in and out of each other. An ‘A/B Transition’ zone has been broadly recognised in several drill holes and is defined as material that does not clearly fit into either A or B, yet shares many similarities to both units. The A-Zone is also host to the MHREO Zone, which may be considered a subset of A-Zone type material, and does not appear to contact B-Zone material. MHREO-Zone Extending from surface, within A-Zone material and central to the Ashram Deposit, is the MHREO Zone displaying an intense enrichment in the middle and heavy rare earth elements (Figure 7-3 and Figure 7-4). The zone displays a marked increase in distribution for neodymium as well as the middle and heavy rare earths, including the more critical rare earths europium, terbium, dysprosium, and yttrium. MHREO as a percentage of TREO is almost double that of the overall deposit, while maintaining significant grade. The zone also contains one of the highest distributions of europium in the world. This unique zone of mineralization is dominated by large, fluorine-rich ferro-carbonatite dykes or bodies of near massive texture and dark olive-green to brown colour, and appears concentrated at or near surface. The zone may be difficult to distinguish from surrounding A-Zone material due to similar colour, mineralogical and geochemical similarities, and therefore, often leaves grade and distribution as the main parameters of evaluation. Xenotime-(Dy) is the principal contributor for the heavy rare earths and is present in either pools of quartz or small veins (mm). Nioboaeschynite is typically present with the xenotime assemblage but is an insignificant contributor to the overall heavy rare earth enrichment. The zone’s rare earth distributions and abundances may be reflective of a combination of increased xenotime and/or a decrease in fluorite-monazite phases. Very few carbonatites are host to REE deposits that are significantly enriched in the middle and heavy REEs, such as at Ashram, making the MHREO Zone an enigmatic yet highly favourable attribute. B-Zone The B-Zone unit typically comprises cataclastic ferrodolomites with coarser grain size and fewer fluorite-monazite clasts than the A-Zone. Visually, the B-Zone has a cream to grey colour with a pervasive, yet patchy, yellow-beige hue of mineralization comprising monazite, apatite, and carbonates. Patches of quartz-phlogopite are present with veins of niobian rutile, ferrocolumbite, and xenotime in association with quartz, phlogopite, and bafertisite also observed. Fluorite is


SGS Geostat

present occasionally as locally abundant patches or blebs and may lend a bluish hue to the rock where present; sulphides are rare. Texturally, the B-Zone appears to be much less deformed and chaotic than the A-Zone with fewer variations in fabric present. The grade of rare earth mineralization in the B-Zone is somewhat variable compared to the A-Zone and typically ranges from 1-2+% TREO. Geochemically, the B-Zone may be classified as a magnesio-carbonatite. The B-Zone commonly has a gradational to sharp contact with the BD-Zone and is generally easily recognized by decreasing yellow-beige mineralization and the onset of distinct orange-pink rare earth fluorocarbonate minerals that impart a pinkish tone to the BD-Zone unit. BD-Zone The BD-Zone unit is typically cream to white in colour with orange-pink to red pervasive shades from rare earth fluorocarbonate mineralization (intergrowths of parisite-bastnäsite with lesser synchysite), and is coarser grained than the A-Zone. The BD-Zone is visually and mineralogically distinct from the A and B zones. The unit typically comprises vuggy crystalline dolomite with common to abundant rare earth fluorocarbonates (parisite intergrowths with bastnäsite) and trace to minor phlogopite, quartz, calcite, and microcline; fluorite and monazite are absent to rare. The BD-zone may be highly blocky/fractured in some locales, and is more evident along the western margins of the deposit. Texturally, the BD-Zone is similar to the B-Zone and is much less deformed that the A-Zone, with occasional banding evident. Mineralization of the BD-Zone is less than that of the A and B zones, typically ranging from 0.6 – 1+% TREO, but with a distribution more enriched in Nd (>20%) as well as the middle and heavy rare earths. Geochemically, the BD-Zone may be classified as a magnesio-carbonatite. The BD-Zone is occasionally in gradational contact with a phlogopite carbonatite unit that is very similar is mineralogy and easily recognized by a decrease in orange-pink red fluorocarbonates and corresponding increase in phlogopite. The unit is more typically found at depth and along the eastern edge of the deposit. Along the western margin of the deposit, the BD-Zone unit frequently lies in contact with a poorly understood lithology best described as an albite amphibole phlogopite-rich unit, sometimes interfingering with dolomite/calcite carbonatite. To the east, the BD-Zone is typically contacted by relatively unmineralized dolomite carbonatite or calcio-carbonatite. Contact Lithologies The main unmineralized contact lithologies may be generally grouped as an albite amphibole phlogopitite, ‘glimmerite’ or phlogopite schist, and magnetite amphibole calico-carbonatite. The albite amphibole phlogopitite is the typical outer western contact unit of the BD-Zone and is characterized by common brecciation of albite-rich clasts with partially phlogopitized rims, set in a matrix of cream coloured carbonatite. Large (several mm), blue, arfvedsonite crystals as well as coarse-grained phlogopite are common. The unit is commonly intruded by a cream to white calico-carbonatite unit. The origin of the unit is enigmatic and it is interpreted to be a metasomatised mega-xenolith or a discrete intrusion genetically related to the Eldor Carbonatite Complex. This unit has also been called ‘wallrock’ or ‘country rock’ although this may be a misnomer.


SGS Geostat

A ‘glimmerite’ may be loosely defined as a rock composed of 50% or more biotite. They are present occasionally within the deposit and most common in A-Zone type material. They are often foliated, giving a schistose appearance, contain common calcite/dolomite veining, and occasionally contain albite or quartz porphyroblasts. The unit is typically small, ranging from several centimetres to several metres in width and may represent fragments of altered country rock caught up in the carbonatite intrusion. The magnetite amphibole calcio-carbonatite is most common on the peripheral of the system, surrounding most of the deposit. It is commonly interfingered with the albite amphibole phlogopitite to the west and typically borders the BD-Zone to the east. This unit is very common elsewhere in the complex, with certain variations hosting niobium mineralization.


SGS Geostat

8 Deposit Types The deposit model at the Eldor Property is the carbonatite-hosted REE-Nb-Ta deposit. Carbonatites are by definition igneous rocks, intrusive and extrusive, that contain more than 50% by volume carbonate minerals such as calcite, dolomite, ankerite, and less often siderite and magnesite. Intrusive carbonatites occur commonly within alkalic complexes or as isolated intrusions (sills, dikes, breccias, or small plugs) that may not be genetically related to other alkaline intrusions. Carbonatites can also be volcanic related and occur as flow or pyroclastic rocks like the well-known active Oldoinyo Lengai volcano in Tanzania. Carbonatites are generally related to large-scale, intra-plate fractures, grabens, or rifts that correlate with periods of extension, typically Precambrian to recent in age. Carbonatite-hosted deposits occur almost exclusively in intrusive carbonatite and may be subdivided into magmatic, replacement/veins, and residual sub-type. The Eldor Carbonatite can be classified as a magmatic sub-type, which is the same category as the St-Honore deposit in Quebec, Canada (Niobec niobium mine, Iamgold), the Mountain Pass Deposit in California, U.S.A. (REE), and the Palabora Deposit in South Africa (apatite). The pipe-like carbonatites typically occur as sub-circular or elliptical shapes and can be up to 3-4 km in diameter. Magmatic mineralization within pipe-like carbonatites is commonly found in crescent-shape, steeply dipping zones. As carbonatite magma is typically volatile rich with low viscosity, it may ascend rapidly through the mantle, fracturing the crust on impact, causing a characteristic alternating ring (crescent) structure of carbonatite and wall rock to be formed. Metasomatic mineralization occurs as irregular forms, breccias, or veins. Figure 8-1 illustrates the concentric, steeply dipping features of the pipe-like shapes of the St-Honore carbonatite.


SGS Geostat

Figure 8-1: Schematic Representation of St-Honore Carbonatite1

Carbonatites typically consist of multiple phases of intrusion with different mineralogical and textural characteristics. Early phases tend to consist mainly of calcite with later phases mainly consisting of dolomite, ankerite, or siderite. The later phases are typically more enriched in niobium or tantalum with the latest phases more enriched in rare earth minerals. In general, geochemical zonation of carbonatite phases will have calcio carbonatite intruding first, followed by magnesio carbonatite and finally ferro-carbonatite. Fenitization (alkali metasomatism) is common around many carbonatite intrusions.

1 Image from IAMGOLD website – March 2011


SGS Geostat

The major mineral constituents are calcite, dolomite, siderite, ferroan calcite, ankerite as carbonates, and hematite, biotite, titanite, olivine, and quartz. Economic minerals include fluorite (F), apatite (P), pyrochlore (Nb), anatase (Ti), columbite (Nb-Ta), monazite (REE), bastnaesite (REE), parisite (REE), zircon (Zr), and magnesite (Mg), among others. Mineralization within carbonatites is typically syn- to post-intrusion. The mineralization is controlled primarily by fractional crystallization within the intrusion, with tectonic and local structures influencing the form of metasomatic mineralization (Woolley and Kempe, 1989; Richardson and Birkett, 1996; Birkett and Simandl, 1999). In addition to the carbonatite deposit model mineralized in REE-Nb-Ta, other deposit types with known mineralized occurrences are located in the vicinity of the Property. The other deposit types include magmatic Cu-Ni (Co-PGE) sulfides in mafic and ultramafic intrusive units, and vein-type Au-Cu (Ag) mineralization hosted in fractured mafic intrusive. Known occurrences of magmatic Cu-Ni (Co-PGE) mineralization are located approximately 5 km west of the Property. The most significant occurrences include: Island deposit (historical resources of 1.09 Mt @ 2.02% Cu and 0.45% Ni), Lepage deposit (historical resources of 0.79 Mt @ 2.76% Cu and 0.66% Ni), Redcliff deposit (historical resources of 1.07 Mt @ 2.09% Cu and 0.51% Ni), and the Marymac II deposit (historical resources of 0.93 Mt @ 1.60% Cu and 0.43% Ni). The known occurrences for the vein-type Au-Cu (Ag) mineralization, located between 10 km and 15 km west of the Property, include the Lac Terre Rouge showing (grab sample with 24.75 g/t Au), the Lac Daubancourt showing (grab sample with 14.3 g/t Au), and the Lac Deitrich-Sud showing (grab sample with 1.86 g/t Au) (Clark and Wares, 2006).


SGS Geostat

9 Exploration In 2011 the Company embarked on an aggressive exploration program consisting of prospecting and rock sampling, soil sampling, trenching, ground and airborne geophysics, and diamond drilling. Exploration work focused on delineating the Ashram Rare Earth Deposit as well as outlining new grassroots rare earth targets. The work was spread over two programs: a winter program (Feb – May 2011) and a summer-fall program (June – Dec 2011). The winter program consisted of diamond drilling and two (2) trenches completed late in the season. A ground gravity and magnetic survey was also completed over the Ashram Deposit at a line spacing of 100 m with stations every 25 m. The ground survey was successful in outlining a gravity anomaly coincident with the Ashram Deposit and supports the model of a moderate to steeply dipping sheet-like body. Bathymetry over Centre Pond was also completed and confirmed the shallow nature of the pond, rarely exceeding 2-3 m depth over the deposit. The main focus of the program was to complete step-out drilling over Centre Pond to better delineate the Ashram Deposit. In addition, one hole was drilled at a new target to the north of Ashram termed ‘Triple D’. A total of 3,656.42 m of drilling was completed over eight holes, including seven holes (3,367.16 m) at Ashram and one hole (289.26 m) at Triple D. Some of the best results are as follows:

Ashram Area EC11-048 – 586.06 m grading 2.10% TREO and 2.3% F

Triple D EC11-055 – 10.00 m grading 1.38% TREO and 2.0% F

Details of the 2011 winter and summer/fall drilling program at the Ashram Rare Earth Deposit are presented in Section 10: Drilling. The summer program picked up in late June, with a focus on rare earth element targets, and comprised the bulk of the 2011 exploration work. Prospecting returned several hundred observation points and rock samples, while focusing mainly on the central portions of the property. Three contiguous soil grids were completed, on 200 m spaced lines with stations spaced every 50 m, as infill to the larger regional soil grid completed in 2008 and 2010. A total of 1701 soils were collected. In addition, due to the success of the ground gravity survey over the Ashram Deposit, a 776 line-km airborne gravity gradiometer survey was completed over the complex at a spacing of 200 m. The airborne data is currently being interpreted. The prospecting and soil sampling work was successful in identifying two new rare earth targets termed ‘West Rim’ and ‘Beckling’, while further outlining previously identified prospects. Locations of West Rim, Beckling, and other exploration targets/areas are outlined in Figure 9-1.


SGS Geostat

Figure 9-1: Eldor Exploration Areas


SGS Geostat

The West Rim Target is located approximately 800 m west of the Ashram Deposit on the margin of the complex and is coincident with a radiometric anomaly and regional soil anomaly. Prospecting returned mineralized boulders and large areas of elevated background radioactivity commonly associated with rare earth element mineralization. Three small trenches were completed in the area, although failing to reach bedrock; several samples were collected from boulders within. The best samples from the area were of boulders with one assaying 2.27% TREO and another assaying 16.1% Nb2O5 and 0.754% Ta2O5. This second sample is the highest Nb-Ta mineralized sample ever returned from the Property and, based on local glacial trends, is likely sourced further south in the complex. Several >10% Nb2O5 boulder samples have been collected on the Property historically, however, the source has yet to be identified. One exploration drill hole (241.71 m) targeted the postulated source of the rare earth mineralization at West Rim. It returned 1.96% TREO over 2.85 m within a larger ~175 m halo of intermittently anomalous mineralization up to 1.67% TREO. The drill hole is interpreted to have been collared south of a larger postulated mineralized body. The Beckling Target is a carbonatite discovered in outcrop during soil sampling and is located approximately 500 m outside the main complex as inferred by magnetics. It has very similar mineralogy to Ashram although displays a dominant schistose texture and more localized intense zones of fluorite. Four trenches were completed in the area with samples collected. The best assay returned from the area was from an outcrop at 4.30% TREO and 20.1% F. Five short drill holes totalling 681.22 m were completed at Beckling. The best intersection returned 1.36% TREO and 2.3% F over 10.45 m. Although prospecting and soil sampling indicated a sizable potential target, limited rare earth mineralization was intersected at depth. The area is interpreted to be host to a series of near surface boudinaged lenses of carbonatite, thus, limiting intersection lengths. In addition, the rare earth distribution of Beckling appears similar to Ashram with enrichment in neodymium and europium. Regional soil geochemical results suggest a sizeable rare earth mineralized carbonatite with an elevated MHREO distribution may exist east of the main complex. Beckling may represent a northern boudinaged portion of such a body.


SGS Geostat

10 Drilling Since the Company acquired the Eldor Property in 2007 a total of four diamond drill programs have been completed; 2008, 2010, 2011 (winter), and 2011 (summer-fall). No historic drilling was completed on the property prior to Commerce’s acquisition of the Property. Table-10-1 below summarizes the drilling program attributes.

Table 10-1: Drilling Program Attributes

All non-Ashram drill holes are BTW in size and completed with a Super 300 drill rig. All Ashram drill holes are either BTW in size and completed with a Super 300 or CDI 500 drill rig, or NQ in size and completed with a Zinex A5 drill rig. All drill rigs are heli-portable. The Zinex A5 drill, capable of drilling NQ diametre core to depths in excess of 700 m, was mobilized to the property as most BTW holes at Ashram bottomed in mineralization due to the depth limitations of the Super 300 drill. As with most large vertical to near-vertical pipe-like intrusive bodies, the dip of the body becomes less apparent towards the interior, and thus, vertical drilling intersections may be near to true thickness at this locale, as opposed to the edges of the same pipe-like intrusion where a more apparent thickness may be returned for the same drill hole orientation. This concept is applicable to the Ashram Deposit. The Ashram Deposit is texturally complex and chaotic with no dominant fabric clearly evident within the central A-Zone that comprises the bulk of the deposit. Although the A-Zone is rimmed by the B and BD zones that show a less chaotic fabric with banding occasionally evident, only a minor portion of the deposit is comprised of those units. Therefore, determining the true thickness of most drill holes is not clearly evident and may be highly variable over short distances. In other words, the orientation of mineralization within the deposit is not consistent with the geometry of the deposit, and thus, true thickness of drill intersections cannot yet be reasonably determined. Attributes for individual drill holes completed at the Ashram Deposit, including relevant mineralized intersections, are presented in Table 10-2 to Table 10-5 below. Ashram drill hole locations are presented in Figure 10-1.

Year Area of the Property Number of Holes Total Metres Drilled

Northwest 12 2466.12

Southeast 13 2846.17

Star Trench 1 170.00

Total (2008) 26 5482.29

Ashram 12 3312.67

MC Exposure 2 192.00

Southeast 4 1391.65

Star Trench 3 493.66

Total (2010) 21 5389.98

Ashram 33 12379.07

Beckling 5 681.22

Triple D 2 474.32

West Rim 1 241.71

Total (2011) 41 13776.32

88 24648.59

2008

Grand-Total

2010

2011


SGS Geostat

Figure 10-1: Ashram Drill Hole Locations


SGS Geostat

Table 10-2: Drill Hole Attributes (Ashram Deposit) 1/4

YearDrill Hole

IDEasting Northing Azi (°) Dip (°)

Core

SizeEOH (m)

From

(m)To (m)

Interval

(m)TREO (%)

MHREO

(% of TREO)F (%)

2010 EC10-027 536391 6312024 230.0 -48.6 BTW 293.71 3.74 219.04 215.30 1.72 7.0 3.5

incl. 105.59 135.07 29.48 2.07 6.2 4.0

2010 EC10-028 536351 6312062 232.6 -47.2 BTW 284.16 2.53 246.37 243.84 1.95 7.1 2.5

incl. 38.25 68.24 29.99 2.40 7.0 3.9

incl. 130.58 158.90 28.32 2.41 6.3 3.5

2010 EC10-029 536341 6311978 238.3 -38.8 BTW 220.37 3.18 132.21 129.03 1.50 7.0 3.3

incl. 3.18 24.64 21.46 1.91 7.3 6.9

incl. 38.16 115.00 76.84 1.61 6.2 4.2

2010 EC10-030 536142 6312085 226.5 -46.2 BTW 102.18 7.10 62.61 55.51 1.97 6.2 4.1

incl. 7.10 50.00 42.90 2.15 6.1 4.9

or 28.00 32.10 4.10 3.03 4.4 7.4

2010 EC10-031 536142 6312085 227.7 -63.3 BTW 117.00 6.83 82.96 76.13 1.89 6.0 3.4

incl. 11.00 65.20 54.20 2.09 5.8 4.0

2010 EC10-039 536761 6312089 229.9 -73.2 BTW 348.96 1.00 348.96 347.96 0.86 8.3 1.4

incl. 251.69 348.96 97.27 1.27 7.5 0.5

2010 EC10-042 536498 6311989 230.2 -43.8 BTW 286.78 9.48 286.78 277.30 1.13 9.3 1.7

incl. 32.64 95.18 62.54 1.60 9.3 3.5

incl. 208.92 215.16 6.24 2.09 5.4 2.5

2010 EC10-043 536502 6311992 50.0 -44.0 BTW 378.51 10.68 378.51 367.83 0.88 11.2 1.4

incl. 55.88 105.12 49.24 1.22 8.7 1.8

2010 EC10-044 536304 6312131 240.2 -43.5 BTW 242.85 3.00 242.66 239.66 1.78 8.8 3.5

incl. 158.54 229.65 71.11 2.19 5.6 3.1

26.81 46.61 19.80 1.38 12.0 3.7

87.27 158.54 71.27 1.62 13.6 3.9

incl. 87.27 104.40 17.13 1.39 18.2 2.9

2010 EC10-045 536304 6312131 197.5 -88.7 BTW 314.48 5.30 314.48 309.18 1.99 7.3 2.6

incl. 121.39 294.28 172.89 2.30 6.2 2.7

or 195.61 249.00 53.39 2.51 5.4 2.9

16.95 82.17 65.22 1.43 11.2 2.7

incl. 63.17 82.17 19.00 1.53 13.2 2.5

2010 EC10-046 536163 6312235 227.7 -89.1 BTW 364.97 0.65 364.97 364.32 1.95 6.5 2.8

incl. 55.15 358.57 303.42 2.02 6.3 2.8

or 350.22 358.57 8.35 3.00 3.0 1.4

2010 EC10-047 536193 6312131 7.1 -89.0 BTW 358.70 2.86 358.70 355.84 1.86 8.4 3.2

incl. 69.70 331.81 262.11 2.04 6.7 3.2

or 245.82 331.81 85.99 2.24 4.6 2.6

2.86 122.17 119.31 1.63 14.6 4.2

incl. 6.00 67.19 61.19 1.41 19.1 4.6

2011 EC11-048 536306 6312238 273.5 -89.2 BTW 593.75 7.69 593.75 586.06 2.10 5.7 2.3

incl. 223.39 361.89 138.50 2.37 5.0 1.0

or 223.39 263.09 39.70 2.45 5.0 1.1

or 312.40 336.75 24.35 2.58 4.7 0.8

incl. 491.37 499.22 7.85 3.00 3.2 4.8

incl. 523.67 560.66 36.99 3.00 3.2 2.3

23.96 27.26 3.30 1.74 12.2 4.3

163.39 170.76 7.37 1.89 11.6 4.3

2011 EC11-049 536460 6312362 32.9 -89.3 BTW 323.09 7.06 323.09 316.03 1.06 7.4 0.8

incl. 7.06 243.00 235.94 0.80 8.6 0.6

incl. 243.00 323.09 80.09 1.85 5.9 1.2

or 308.00 323.09 15.09 2.01 4.2 1.7

NAD83, Zone 19


SGS Geostat


YearDrill Hole


Core

SizeEOH (m)

From

(m)To (m)

Interval

(m)TREO (%)

MHREO

(% of TREO)F (%)

2011 EC11-050 536448 6312222 338.0 -89.0 BTW 600.46 15.00 600.46 585.46 1.42 7.7 1.3

incl. 165.54 234.82 69.28 2.04 6.1 3.7

incl. 439.31 478.35 39.04 2.01 4.7 0.8

incl. 590.72 600.46 9.74 2.80 4.8 3.3

238.42 273.11 34.69 1.48 10.7 1.3

292.13 298.00 5.87 1.09 14.0 0.4

305.65 377.78 72.13 1.23 12.5 0.8

incl. 305.65 325.72 20.07 1.57 11.8 0.5

398.56 406.37 7.81 1.23 15.7 0.4

425.09 430.78 5.69 1.04 13.7 0.4

2011 EC11-051 536333 6312373 68.0 -88.8 BTW 563.60 9.14 563.60 554.46 1.86 6.3 2.2

incl. 25.00 479.63 454.63 2.00 5.9 2.5

or 389.00 479.63 90.63 2.37 5.3 1.5

or 425.25 432.50 7.25 3.01 4.2 5.8

133.52 138.75 5.23 1.39 15.2 1.5

224.26 230.96 6.70 1.82 11.7 1.4

290.16 301.44 11.28 0.94 14.9 1.3

500.41 514.94 14.53 0.83 22.7 0.3

2011 EC11-052 536434 6312078 62.3 -87.4 BTW 353.57 6.85 353.57 346.72 1.44 8.1 2.2

incl. 6.85 243.84 236.99 1.67 7.6 3.0

or 126.00 243.84 117.84 2.02 7.0 3.5

or 202.89 227.91 25.02 2.34 6.5 3.4

incl. 243.84 353.57 109.73 0.94 9.7 0.4

109.60 116.05 6.45 1.44 12.3 4.4

2011 EC11-053 536237 6312190 215.3 -89.8 BTW 384.05 6.81 384.05 377.24 2.00 6.8 2.5

incl. 133.24 172.00 38.76 2.35 6.4 3.5

incl. 250.92 273.22 22.30 2.44 5.5 1.1

incl. 361.08 377.47 16.39 2.46 3.9 1.1

or 367.46 372.36 4.90 2.95 3.5 1.5

6.81 39.56 32.75 1.37 12.0 3.2

2011 EC11-054 536330 6312515 243.7 -87.2 BTW 548.64 9.93 548.64 538.71 1.30 5.8 1.3

incl. 9.93 305.10 295.17 0.73 10.0 0.6

incl. 305.10 548.64 243.54 1.99 4.0 1.7

or 468.95 474.62 5.67 2.97 2.6 1.2

or 511.46 548.64 37.18 2.83 3.2 3.6

or 526.37 548.64 22.27 3.00 3.1 4.0

2011 EC11-056 536147 6312142 235.6 -45.0 BTW 274.82 2.14 114.14 112.00 1.89 8.8 3.8

incl. 50.27 78.08 27.81 2.31 5.5 4.3

5.71 50.27 44.56 1.76 13.6 5.0

incl. 5.71 25.05 19.34 1.62 19.2 3.0

or 7.04 19.30 12.26 1.28 25.8 1.9

2011 EC11-057 536148 6312142 164.4 -89.4 BTW 444.93 1.32 344.36 343.04 1.93 6.7 2.5

incl. 1.32 280.54 279.22 2.06 6.6 2.9

or 261.81 280.54 18.73 2.89 3.0 1.6

335.78 344.36 8.58 2.25 3.7 1.4

18.06 25.06 7.00 1.83 13.2 2.5

77.54 116.82 39.28 1.62 11.9 3.8

NAD83, Zone 19


SGS Geostat


YearDrill Hole


Core

SizeEOH (m)

From

(m)To (m)

Interval

(m)TREO (%)

MHREO

(% of TREO)F (%)

2011 EC11-058 536105 6312163 229.0 -44.0 BTW 203.30 2.95 60.10 57.15 1.83 6.3 3.6

incl. 14.22 52.50 38.28 2.10 5.5 4.0

2.95 14.22 11.27 1.31 10.2 3.7

2011 EC11-059 536104 6312163 223.0 -89.0 BTW 447.45 0.68 289.29 288.61 2.03 5.4 2.8

incl. 34.14 157.55 123.41 2.47 4.6 4.6

or 119.76 157.55 37.79 2.69 3.8 5.5

0.68 32.20 31.52 1.61 11.2 3.5

2011 EC11-060 536101 6312215 235.1 -45.2 BTW 142.34 4.57 61.03 56.46 2.05 6.6 3.9

incl. 32.00 61.03 29.03 2.24 5.5 3.6

23.79 32.00 8.21 1.49 11.4 3.4

2011 EC11-061 536102 6312215 233.3 -75.8 BTW 351.75 4.03 166.27 162.24 1.48 7.0 1.9

incl. 4.03 72.85 68.82 1.72 8.0 3.0

incl. 149.04 166.27 17.23 2.37 3.7 1.0

2011 EC11-062 536253 6312050 233.7 -45.1 BTW 221.59 4.20 130.53 126.33 1.49 9.4 3.0

incl. 74.14 103.12 28.98 1.88 6.7 3.1

4.20 47.52 43.32 1.40 13.1 3.7

2011 EC11-063 536253 6312051 231.6 -73.2 BTW 411.18 3.89 219.38 215.49 1.78 7.6 3.2

incl. 76.34 158.32 81.98 2.05 6.4 3.0

incl. 201.00 209.75 8.75 3.03 2.7 1.9

3.89 76.34 72.45 1.41 12.7 4.8

2011 EC11-064 536239 6312316 221.8 -88.7 NQ 657.75 2.87 493.92 491.05 2.04 5.8 2.6

incl. 357.86 389.00 31.14 2.66 4.0 0.8

incl. 442.00 454.64 12.64 3.00 3.4 0.8

92.07 96.21 4.14 1.86 12.6 2.4

2011 EC11-065 536238 6312316 321.8 -45.1 NQ 315.76 3.85 114.77 110.92 1.67 6.8 2.9

incl. 3.85 42.41 38.56 1.89 7.0 3.4

incl. 67.72 92.00 24.28 2.15 3.9 3.9

42.41 52.23 9.82 1.09 16.0 1.4

2011 EC11-066 536414 6312581 246.3 -45.5 NQ 512.98 67.97 494.43 426.46 0.61 10.7 1.1

2011 EC11-068 536415 6312581 240.1 -45.2 NQ 619.96 272.13 562.16 290.03 1.95 5.0 1.8

incl. 277.53 496.27 218.74 2.20 4.7 2.2

or 419.15 460.11 40.96 2.54 4.2 4.1

2011 EC11-073 536219 6312089 241.0 -46.5 BTW 224.64 3.41 135.74 132.33 1.75 8.8 3.4

incl. 71.80 108.95 37.15 2.24 6.0 3.2

3.41 55.43 52.02 1.32 14.9 3.4

2011 EC11-074 536192 6312131 245.5 -44.3 BTW 178.92 4.07 140.19 136.12 1.79 7.4 3.9

incl. 7.55 37.89 30.34 2.06 7.5 5.8

incl. 78.94 120.65 41.71 2.23 5.2 3.9

4.07 8.58 4.51 1.42 15.0 4.2

37.89 77.83 39.94 1.47 10.4 3.5

2011 EC11-075 536246 6312124 235.8 -45.3 BTW 212.45 4.85 191.13 186.28 1.77 9.2 3.9

incl. 129.71 186.10 56.39 2.20 5.6 2.7

4.85 109.04 104.19 1.54 12.7 4.4

incl. 7.68 23.20 15.52 1.15 15.4 3.2

incl. 44.40 66.02 21.62 1.36 14.4 3.2

NAD83, Zone 19


SGS Geostat


YearDrill Hole


Core

SizeEOH (m)

From

(m)To (m)

Interval

(m)TREO (%)

MHREO

(% of TREO)F (%)

2011 EC11-076 536219 6312089 - - NQ 70.16

2011 EC11-076A 536219 6312089 155.2 -89.5 NQ 499.26 2.19 385.22 383.03 1.56 8.9 2.5

incl. 250.00 313.89 63.89 2.08 4.5 1.2

2.19 178.62 176.43 1.56 12.3 3.7

incl. 3.05 51.96 48.91 1.46 14.2 3.6

incl. 53.36 92.07 38.71 2.03 11.7 5.5

2011 EC11-077 536123 6312256 237.5 -45.4 BTW 212.45 3.00 118.23 115.23 1.71 7.4 3.2

incl. 23.74 87.92 64.18 1.96 7.3 4.2

4.71 13.66 8.95 1.06 11.9 1.1

2011 EC11-078 536123 6312256 - - BTW 17.53

2011 EC11-078A 536123 6312256 235.9 -75.5 BTW 306.93 5.17 259.88 254.71 1.92 5.4 2.3

incl. 30.10 166.58 136.48 2.21 5.2 2.4

or 156.94 166.58 9.64 3.06 3.2 1.4

2011 EC11-079 536245 6312124 63.5 -88.6 NQ 587.65 3.40 482.80 479.40 1.86 6.5 2.6

incl. 3.40 395.80 392.40 2.03 6.5 3.1

or 111.77 249.33 137.56 2.24 6.5 2.9

or 356.08 390.45 34.37 2.34 3.6 2.4

16.77 71.21 54.44 1.77 10.6 4.5

incl. 48.59 64.24 15.65 1.58 13.2 3.4

110.15 115.87 5.72 2.14 12.6 5.4

2011 EC11-082 536139 6312197 88.1 -89.3 NQ 426.11 4.19 325.95 321.76 2.05 6.2 2.7

incl. 282.08 325.02 42.94 2.26 4.0 2.3

325.95 426.11 100.16 1.03 7.7 0.7

2011 EC11-083 536138 6312196 223.0 -45.6 NQ 206.04 2.12 154.93 152.81 1.80 7.1 2.1

incl. 2.12 90.80 88.68 2.14 7.1 2.9

24.59 30.89 6.30 1.82 11.7 3.8

45.88 50.81 4.93 1.88 10.5 0.9

51.55 54.61 3.06 1.83 10.4 2.5

56.40 58.90 2.50 1.97 9.5 3.7

139.26 144.18 4.92 1.15 11.9 0.8

2011 EC11-084 536164 6312166 -7.1 -89.7 NQ 520.53 3.10 400.17 397.07 1.83 6.6 2.8

incl. 3.10 328.41 325.31 1.96 6.6 3.2

or 208.42 260.67 52.25 2.26 4.5 2.2

56.30 84.00 27.70 1.77 9.6 2.9

104.93 110.20 5.27 1.96 11.1 2.9

124.61 130.37 5.76 1.40 11.7 4.3

147.75 157.12 9.37 1.33 10.4 2.6

171.60 181.59 9.99 1.66 10.7 3.7

359.05 364.85 5.80 1.07 10.8 0.8

2011 EC11-085 536163 6312165 227.7 -45.3 NQ 187.70 3.66 148.18 144.52 1.94 7.2 3.2

incl. 28.53 118.91 90.38 2.21 7.1 3.6

13.43 16.87 3.44 1.54 11.5 5.4

37.80 56.62 18.82 2.05 10.7 4.4

143.20 146.42 3.22 1.16 11.2 0.7

2011 EC11-086 536669 6312463 233.9 -45.3 NQ 757.73 368.69 757.73 389.04 1.61 6.1 1.1

incl. 582.17 662.73 80.56 2.14 5.4 1.4

Ended Prematurely, Will be Used for Metallurgy

Ended Prematurely, Will be Used for Metallurgy

NAD83, Zone 19


SGS Geostat

Collared in 2010, drill hole EC10-27 is the ‘discovery hole’ of the Ashram Rare Earth Deposit. The drill hole targeted rare earth mineralization in outcrop discovered during prospecting in 2009. In total, 12 holes (3,312.67 m) were completed at Ashram during the 2010 program and formed the basis of the initial resource estimate of 117 MT at 1.74% TREO, in the inferred category, at a 1.25% cut-off grade (Laferrière, 2011). The 2010 program also identified a unique zone of MHREO enrichment centred on drill hole EC10-047 returning 61.19 m of 19.1% MHREO (% of TREO) at 1.41% TREO. An additional seven drill holes were completed at Ashram during the winter of 2011. The focus of the program was to complete step-out drilling over Centre Pond to better delineate the Ashram Deposit. A total of seven holes were completed on Centre Pond, totalling 3,367.16 m. The program was successful in expanding the limits of the Ashram Deposit with EC11-048 returning one of the longest and most consistently mineralized intersections to date; 586.06 m grading 2.10% TREO and 2.3% F. During the summer-fall of 2011, an expanded drilling program was initiated at the deposit with 33 drill holes totalling 12,379.07 m completed. The goal of the program was to further define the extent of the mineralized system, as well as infill drill in order to upgrade part of the resource to the indicated category. The program was successful in further expanding the mineralized extent of the deposit, as well as further delineating the extent of the MHREO Zone. A large portion of the initial inferred resources was also successfully upgraded to indicated status. Most of the drilling competed to date at Ashram has focused along the western flank of the deposit as the remainder is covered by a shallow pond and only accessible during the winter. As such, the geology and geometry of the deposit is less well-constrained outside this area. To date, a total of 45 holes (15,691.74 m) have been completed at Ashram over three drilling programs. Drilling currently outlines a mineralized surface footprint of approximately 700 metres along strike, over 500 metres across, and to depths exceeding 600 metres. Mineralization remains open to the north, south, at depth, and is not fully constrained to the west and east.


SGS Geostat

11 Sample Preparation, Analyses and Security

11.1 Sampling Method and Approach

This section is based on information supplied by Dahrouge, on behalf of Commerce, and observations made during the independent verification program conducted at the Project site by the author Gaston Gagnon, Eng. accompanied by Robert De l’Étoile, Eng. from SGS Geostat between September 18 and 20, 2011. The Company contracted Dahrouge Geological Consulting Ltd. for the management of the exploration work for the Eldor Property. Exploration work at the Property is managed from a field camp which provides the office, core logging, and core storage facilities for the Project. The evaluation of the geological setting and mineralization on the Property includes observations and sampling from surface (through mapping, grab samples, and trenches) but is principally based on information and sampling from diamond drilling. The drill core logging and sampling was conducted at the Property. All samples collected by Dahrouge during the course of the 2010 and 2011 exploration programs were sent to Activation Laboratories Ltd (Actlabs) in Ancaster, Ontario, for preparation and analysis. The remaining drill core is currently stored at the storage facilities located at the Eldor main camp. All drill core handling was done on site with logging and sampling processes conducted by employees and contractors of Commerce or Dahrouge. The observations of lithology, structure, mineralization, sample number, and location were recorded by the geologists and geotechnicians in hard copy then compiled in MS Excel. Copies of the database are stored on external hard drive for security and merged with main Dahrouge office server periodically throughout the program. Drill core of BTW and NQ sizes were placed in wooden core boxes and collected twice a day at the drill site then transported to the core logging facilities. The drill core was first aligned and measured by a technician for core recovery and other geotechnical attributes. After a summary review of the core by the senior geologist, it was logged and sampling intervals were defined by a geologist. In addition, a brief description of each individual sample was completed prior to sampling. Also prior to sampling, the core was photographed using a digital camera in natural light and UV light (black light) to outline the florescent minerals. The core boxes were identified with Box Number, Hole ID, From, and To using aluminum tags. Sampling intervals were determined by the geologist based on observations of the lithology and mineralization. In addition to naked eye examination, the geologists also use a portable XRF analyser, a handheld magnetic susceptibility/conductivity probe, a handheld gamma-ray scintillometer, and a handheld spectrometer to help identify the lithologies and define the mineralized intervals. The typical sampling length is 1 m but can vary according to lithological variation within the mineralized carbonatite. The drill core samples were cut using a core saw into two halves with one half placed in a new plastic bag along with the sample tag; the other half was left in the core box for future reference. SGS noted that Dahrouge was not placing systematically a duplicate sample tag in the core box. It was recommended to make the procedure consistent for future reference. This practice was adopted immediately following the site visit.


SGS Geostat

The remaining duplicate sample tag was archived with the Project documents. The samples were then catalogued and placed in sealed pails for shipping. The sample shipment forms were prepared on site with one copy inserted in one of the shipment pails and one copy kept for reference. The samples were transported on a regular basis by Commerce or Dahrouge employees or contractors using two preferred routes. The first shipping route consisted in sending the samples on chartered float plane to Kuujjuaq, using First Air Cargo to Montreal then ground transportation to Actlabs at Ancaster, Ontario. The second route was through Schefferville using float plane, by train to Sept-Iles then ground transportation to Ancaster. The remaining core samples kept for reference are stored in cross piles at the main camp. SGS Geostat validated the exploration processes and core sampling procedures used by Dahrouge, on Commerce’s behalf, as part of an independent verification program. SGS Geostat concluded that the drill core handling, logging and sampling protocols are at conventional industry or better standards and conform to generally accepted best practices. The author considers that the samples quality is good and that the samples are generally representative. Finally, SGS Geostat is confident that the system is appropriate for the collection of data suitable for the estimation of a NI 43-101 compliant mineral resource estimate.

11.2 Sample Preparation and Analyses

Drill core samples collected during the 2010 and 2011 exploration programs are transported by Commerce representatives and contracted consultants or companies to Actlabs laboratory facilities in Ancaster, Ontario for sample preparation and analysis. All samples received at Actlabs are inventoried and typically weighted. Drying is done to samples having excess humidity. Sample material is crushed in a jaw and/or roll crusher to 70% passing 2 mm then split with a rifle splitter to obtain a sub-sample which is then pulverised to 95% passing 200 mesh using a single component (flying disk) or a two component (ring and puck) ring mill. The pulp material is then analysed using lithium metaborate/tetraborate fusion followed by Inductively Coupled Plasma (ICP) for the major oxides and by Inductively Coupled Plasma Mass Spectrometry (ICP-MS) for a series of 57 elements which include the REEs (Actlabs code 8-REE package by fusion ICP and ICP/MS). In 2011, the Nb2O5 was systematically analysed by fusion X-ray fluorescence (XRF). The element F is analysed using fusion ion selective electrode (ISE) (Actlabs code 4-F-ISE). The Actlabs Ancaster facility is an accredited laboratory under ISO/IEC 17025 standards. In 2010, the re-analysis of the pulp materials was conducted by ALS Group (ALS) in North Vancouver, B.C., with the exception of EC10-028 which was completed by Inspectorate Exploration & Mining Services Ltd. – Analytical Division Facilities (Inspectorate) in Richmond, B.C. In 2011, only ALS Group was used. The pulp samples sent to ALS were analysed by lithium metaborate fusion followed by ICP-MS using packages ME-MS81h. Fluorine was analyzed by package F-ELE81a or F-ELE82 depending on abundance. All ALS samples were first homogenized using package ROL-21 prior to analysis. The ALS Vancouver facility is ISO/IEC 17025 and 9001:2008 accredited.


SGS Geostat

The independent check samples (40 samples plus 5 QA/QC) were analysed at the SGS Canada Inc. – Minerals Services laboratory located in Toronto, Ontario (SGS Minerals). The samples were crushed, riffle split, then pulverised to 200 mesh. The pulps are then analysed using lithium metaborate followed by ICP-MS (SGS Minerals code IMS91B). Also method code ISE07A was employed for the determination of the fluorine (F). SGS Minerals is an accredited laboratory under ISO/IEC 17025 standards. The analytical protocols for Actlabs, SGS Minerals, and ALS are detailed in Appendix C.

11.3 Quality Assurance and Quality Control Procedure

In addition to the laboratory quality assurance quality control protocol (QA/QC) routinely conducted by Actlabs using pulp duplicate analysis, Dahrouge on behalf of Commerce implemented an internal QA/QC protocol consisting of the insertion of certified reference materials as analytical standards, quartz blanks, and core duplicates on a systematic basis with samples shipped to Actlabs. The insertion rate of these QA/QC materials is approximately 4.5% of the total samples collected. The Company also sent pulps from each drill hole covering low, medium, and high mineralised samples to ALS for re-analysis at a rate of approximately 5%. SGS Geostat did not visit the Actlabs facilities, or conduct an audit of the laboratories. However, chief geologist and Project manager, Darren L. Smith, did visit the Ancaster facilities during March of 2012.

11.3.1 Analytical Certified Reference Materials

Three certified reference materials (CRMs): TRM-2, SX18-01, and SX18-05 were used for the 2011 drill program. The certificates for SX18-01 and SX18-05, from Dillinger Hutte Laboratory in Germany, list analytical results for Y, La, Ce, and Nd that can be used to validate assays for the resource. After a thorough examination of the few existing rare earth CRMs, Commerce determined that TRM-2 was the most suitable. Although enriched in the light rare earth elements (La-Nd) TRM-2 reports values for the mid and heavy rare earths similar to that of the deposit as well as having a carbonatite matrix unlike many of the alternative REE CRMs. Material number TRM-2 comes from Central Geological Laboratory of Ulaanbaatar, Mongolia; the TRM-2 CRM, new in 2011, has certified Y, La, Ce, Pr, Nd, Sm, Eu, Gd, Tb, Dy, Ho, Er, Yb and Lu. Only Tm is absent. The CRMs are inserted into the sample series at a rate of one for every 25 samples, or approximately 4.5% of samples collected, not including duplicates. On a side note, a four lab round robin survey for the main REE reference material TRM-2 was completed by Dahrouge, on behalf of Commerce, during 2011 in order to investigate why the analytical values for many of the rare earth elements returned by Actlabs were below their certified values for that CRM. Data from the round robin survey suggests that the certified analytical values for many of the rare earth elements in TRM-2 are too high and that further analytical work should be carried out to confirm and generate industry accepted provisional values for primary use. Similiar results were found for SX18-01 and SX18-05; however, they are expected to be discontinued as rare earth CRMs as they are primarily recognised as a niobium CRM. Despite the results of the round robin survey it is recognized that the certified values take precedence and are therefore used in this report.


SGS Geostat

Since the standard deviations, used to outline the warning and failure fields, are not listed on the original analytical certificates for the three CRMs, percentile ranges were used. As suggested by the Projects former QP, Andre Laferrière of SGS Geostat, a ±10% deviation from the certified value signified a warning and a ±15% signified a failure. Table 11-1 shows the expected values and QA/QC failure and warning thresholds, and Table 11-2 summarises the reported results for each analytical CRM. Figure 11-1 to Figure 11-5 are graphs showing the variation of the reported analytical results with time for analytical CRMs TRM-2, SX18-01, and SX18-05.

Table 11-1: Expected Values and QA/QC Ranges of SX18-01, SX18-05, and TRM-2 Analytical CRMs for Y and REEs

Failure

(-15%)

Warning

(-10%)

Expected

Value

Warning

(+10%)

Failure

(+15%)

Y (ppm) 815 863 959 1055 1103

La (ppm) 16405 17370 19300 21230 22195

Ce (ppm) 24650 26100 29000 31900 33350

Pr (ppm) 2380 2520 2800 3080 3220

Nd (ppm) 7480 7920 8800 9680 10120

Sm (ppm) 765 810 900 990 1035

Eu (ppm) 179 190 211 232 243

Gd (ppm) 470 498 553 608 636

Tb (ppm) 46 49 55 60 63

Dy (ppm) 175 185 206 227 237

Ho (ppm) 31.1 32.9 37 40.3 42.1

Er (ppm) 68 72 80 87 91

Tm (ppm) NA NA NA NA NA

Yb (ppm) 46 49 55 60 63

Lu (ppm) 6.5 6.9 8 8.4 8.8

Standard Element

Expected Values and QAQC Ranges

TRM-2

Failure

(-15%)

Warning

(-10%)

Expected

Value

Warning

(+10%)

Failure

(+15%)

Y (ppm) 114 121 134 147 154

La (ppm) 304 322 358 394 412

Ce (ppm) 657 696 773 850 889

Pr (ppm) NA NA NA NA NA

Nd (ppm) 371 393 437 481 503

Sm to Lu NA NA NA NA NA

Standard Element


SX18-01

Failure

(-15%)

Warning

(-10%)

Expected

Value

Warning

(+10%)

Failure

(+15%)

Y (ppm) 197 209 232 255 267

La (ppm) 426 451 501 551 576

Ce (ppm) 886 938 1042 1146 1198

Pr (ppm) NA NA NA NA NA

Nd (ppm) 434 460 511 562 588

Sm to Lu NA NA NA NA NA

Standard Element


SX18-05


SGS Geostat

Table 11-2: Statistics of SX18-01, SX18-05, and TRM-2 Analytical CRMs for Y and REEs

From To Mean Std dev. Min Max Count Rate Count Rate

Y (ppm) 282 913.362 50.6472 242 1055 -5% 7 2% 2 1%

La (ppm) 282 17916.5 1150.49 466 19700 -7% 20 7% 2 1%

Ce (ppm) 282 28122.6 1880.89 981 31000 -3% 4 1% 1 0%

Pr (ppm) 282 2588.26 172.909 110 2970 -8% 46 16% 3 1%

Nd (ppm) 282 8041.38 526.034 429 9060 -9% 66 23% 6 2%

Sm (ppm) 282 851.477 53.1877 82.5 915 -5% 17 6% 2 1%

Eu (ppm) 282 196.049 12.1292 23.9 216 -7% 30 11% 3 1%

Gd (ppm) 282 465.14 40.9606 60.5 692 -16% 104 37% 148 52%

Tb (ppm) 282 40.1376 3.17982 8.6 49.4 -26% 5 2% 276 98%

Dy (ppm) 282 167.35 9.51722 44.6 185 -19% 28 10% 254 90%

Ho (ppm) 282 26.517 1.56439 8.1 29.9 -28% 0 0% 282 100%

Er (ppm) 282 65.9599 4.44063 22.3 76.3 -17% 69 24% 197 70%

Yb (ppm) 282 49.9929 2.93065 17.6 58.7 -8% 71 25% 6 2%

Lu (ppm) 282 7.24816 0.41639 2.4 8.77 -5% 18 6% 2 1%

Relative

Difference

Warnings FailuresStandard

Period Element

(unit)Count

Observed

18-Apr-1118-Apr-11TRM-2


Y (ppm) 49 121.082 5.2434 112 149 -10% 21 43% 2 4%

La (ppm) 49 363.571 12.4281 336 398 2% 2 4% 0 0%

Ce (ppm) 49 801.673 24.1285 730 862 4% 1 2% 0 0%

Nd (ppm) 49 378.837 11.2442 356 401 -13% 31 63% 13 27%

CountObserved Relative

Difference

Warnings FailuresStandard

Period Element

(unit)

14-Dec-1118-Apr-11SX18-01


Y (ppm) 189 226.138 5.86571 210 245 -3% 0 0% 0 0%

La (ppm) 189 464.392 20.6831 342 522 -7% 45 24% 1 1%

Ce (ppm) 189 985.81 41.9434 721 1110 -5% 14 7% 1 1%

Nd (ppm) 189 441.952 18.1996 333 486 -14% 106 56% 57 30%

Standard

SX18-05 18-Apr-11 09-Dec-11

Warnings FailuresRelative

Difference

ObservedCount

Element

(unit)

Period


SGS Geostat

Figure 11-1: Variation of Reported Values with Time for Analytical CRM TRM-2 (Y, La, Ce, Pr, Nd, and Sm)

720

770

820

870

920

970

1020

1070

1120

1170

1220

Apr May Jun Jul Aug Sep Oct Nov Dec

Y (

pp

m)

Sample Batch Date

Assays of Standard Certified TRM-2 (Y)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value

14000

15000

16000

17000

18000

19000

20000

21000

22000

23000


La

(p

pm

)

Sample Batch Date

Assays of Standard Certified TRM-2 (La)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value

21750

23200

24650

26100

27550

29000

30450

31900

33350

34800

36250


Ce

(p

pm

)

Sample Batch Date

Assays of Standard Certified TRM-2 (Ce)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value

2000

2100

2200

2300

2400

2500

2600

2700

2800

2900

3000

3100

3200

3300


Pr

(pp

m)

Sample Batch Date

Assays of Standard Certified TRM-2 (Pr)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value

6000

6450

6900

7350

7800

8250

8700

9150

9600

10050

10500


Nd

(p

pm

)

Sample Batch Date

Assays of Standard Certified TRM-2 (Nd)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value

600

650

700

750

800

850

900

950

1000

1050

1100


Sm

(p

pm

)

Sample Batch Date

Assays of Standard Certified TRM-2 (Sm)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value


SGS Geostat

Figure 11-2: Variation of Reported Values with Time for Analytical CRM TRM-2 (Eu, Gd, Tb, Dy, Ho, and Er)

140

150

160

170

180

190

200

210

220

230

240

250


Eu

(p

pm

)

Sample Batch Date

Assays of Standard Certified TRM-2 (Eu)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value

0

100

200

300

400

500

600

700

800


Gd

(p

pm

)

Sample Batch Date

Assays of Standard Certified TRM-2 (Gd)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value

28

32

36

40

44

48

52

56

60

64

68


Tb

(p

pm

)

Sample Batch Date

Assays of Standard Certified TRM-2 (Tb)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value

130

150

170

190

210

230

250


Dy

(p

pm

)

Sample Batch Date

Assays of Standard Certified TRM-2 (Dy)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value

16

20

24

28

32

36

40

44


Ho

(p

pm

)

Sample Batch Date

Assays of Standard Certified TRM-2 (Ho)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value

38

46

54

62

70

78

86

94

102


Er

(pp

m)

Sample Batch Date

Assays of Standard Certified TRM-2 (Er)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value


SGS Geostat

Figure 11-3: Variation of Reported Values with Time for Analytical CRM TRM-2 (Yb and Lu)

38

40

42

44

46

48

50

52

54

56

58

60

62

64

66


Yb

(pp

m)

Sample Batch Date

Assays of Standard Certified TRM-2 (Yb)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value

5

5.5

6

6.5

7

7.5

8

8.5

9

9.5


Lu (p

pm

)Sample Batch Date

Assays of Standard Certified TRM-2 (Lu)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value


SGS Geostat

Figure 11-4: Variation of Reported Values with Time for Analytical CRM SX18-01 (Y, La, Ce, and Nd)

105

110

115

120

125

130

135

140

145

150

155

160


Y (p

pm

)

Sample Batch Date

Assays of Standard Certified SX18-01 (Y)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value

280

300

320

340

360

380

400

420

440


La (p

pm

)Sample Batch Date

Assays of Standard Certified SX18-01 (La)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value

600

650

700

750

800

850

900

950


Ce

(pp

m)

Sample Batch Date

Assays of Standard Certified SX18-01 (Ce)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value

280

320

360

400

440

480

520

560

600


Nd

(pp

m)

Sample Batch Date

Assays of Standard Certified SX18-01 (Nd)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value


SGS Geostat

Figure 11-5: Variation of Reported Values with Time for Analytical CRM SX18-05 (Y, La, Ce, and Nd)

As seen from the relative difference column in the Table 11.2, with the exception of La and Ce for the CRM SX18-01, all means for observed values are below the certified material grade. Figure 11-1 to Figure 11-5 also draw to the same conclusion. Also, statistical tests (sign tests) on every element for all 3 CRMs show that the average of the observations is different from the expected certified material grade. As all observed values are below the certified values, using the 2011 database will keep estimates on the conservative side. If we analyse the warnings and failure rates for analytical CRMs:

• Y, La, Ce, Pr, Sm, Eu, and Lu for TRM-2, La and Ce for SX18-01 and Y and Ce for SX18-05 find good correspondence with less than 16% Warnings and less than 1% Failures.

190

200

210

220

230

240

250

260

270

280


Y (p

pm

)

Sample Batch Date

Assays of Standard Certified SX18-05 (Y)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value

350

400

450

500

550

600


La (p

pm

)Sample Batch Date

Assays of Standard Certified SX18-05 (La)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value

800

850

900

950

1000

1050

1100

1150

1200

1250


Ce

(pp

m)

Sample Batch Date

Assays of Standard Certified SX18-05 (Ce)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value

250

300

350

400

450

500

550

600

650


Nd

(pp

m)

Sample Batch Date

Assays of Standard Certified SX18-05 (Nd)

Failure +15 %

Warning +10 %

Failure -15 %

Warning -10 %

Expected Value


SGS Geostat

• Nd and Yb for TRM-2, Y for SX18-01 and La for SX18-05 find concerning correspondence with between 23% and 43% Warnings and between 1% and 4% Failures.

• Gd, Tb, Dy, Ho, and Er for TRM-2, Nd for SX18-01 and Nd for SX18-05 find bad correspondence with more than 86% Warning and Failures and up to 100% Failures.

Due to this high failure rate, it is very important to verify if any bias would be upward or downward. Fortunately, all concerning biases are on the conservative side and this is further supported by the independent round robin analytical check of the certified reference materials by the Company. After a review of the QA/QC failures for the CRMs, the differences observed are considered acceptable based on the conservativeness of the results. Such variability in analytical CRMs is typical of many rare earth projects and it is an aspect that must be monitored. Data from the round robin survey demonstrates such variance; for example, for the Tb of TRM-2, the 3 analyses from each 4 laboratories (12 measurements) show a minimum of 38.9 ppm and a maximum of 42.4 ppm. The certified value of Tb, as listed on the original analytical certificate, is 54.6 ppm with a 95% confidence interval of 14.2 ppm. If possible, the original assay data used to certify the reference material or the standard deviations should be obtained from the analytical CRM providers as a means of comparison for the data obtained from the round robin survey. Additionally, Commerce should consider preparing its own analytical standard from materials collected at the Ashram Rare Earth Deposit and potentially move to have it certified.

11.3.2 Analytical Blanks

During the 2010 drill program quartz material (termed ‘Qtz’ in the database) was sourced, for use as blank material, from a near-by vein located several kilometres from the deposit. After the completion of the 2010 program, when the final assay certificates were issued, it was recognized that the ‘Qtz’ blank recurrently assayed several hundred ppm total rare earth elements (TREEs). At the time, the TREE content in ‘Qtz’ was attributed to its source being in neighboring proximity to the Ashram Rare Earth Deposit and thus potentially related to the mineralized system. At the request of the Project’s former qualified professional, André Laferrière, another blank material, ‘Qtz-A’, was located. For 2011, the blank Qtz was used 91 times (Figure 11-6) and Qtz-A was used 428 times (Figure 11-7). Qtz-A is an un-certified crushed quartz (~1-4 cm pieces) prepared by Jim Coleman Crystal Mines Inc. in Arkansas, US. Blanks were inserted at a rate of one blank for every 25 samples in the sample series, or approximately 4.5% of samples collected, not including duplicates. Analyses from four labs: SRC Environmental Analytical Laboratories of Saskatoon, Activation Laboratories Ltd. of Ancaster, Acme Analytical Laboratories Ltd. of Vancouver, and ALS Group of Vancouver validated that REEs existed only as nil to trace impurities in Qtz-A. After verification that Qtz-A contained no significant rare earth content, via the round robin survey, it was exchanged with the previously used ‘Qtz’ blank in the spring of 2011. Despite the substitution of Qtz-A into QA/QC protocols the elevated REE levels observed in ‘Qtz’ persisted, suggesting an external source. The primary lab for the Project, Activation Laboratories Ltd. of Ancaster (Actlabs),


SGS Geostat

was contacted and notified of the problem. Actlabs suggested that the REEs may have been introduced during the pulverization of the blanks and stated that they would ensure all equipment was being properly cleaned. Actlabs also commented that the contamination effect could appear slightly amplified due to the fact that the relatively small volume of the blanks would limit its dilution effect on any high grade residues in the pulveriser bowl or on the rings. Approximately 200 g of Qtz-A material was used for each blank. After review and discussion, SGS-Geostat (pers comm., former PEA QP Robert De l’Étoile, Eng.) recommended that the TREE levels in the blanks be tracked to monitor for any emerging trends and take appropriate actions as necessary. After consideration, during the fall of 2011 a failure threshold of 500 ppm TREE content in any blank was selected corresponding to approximately 3.4% of the initial resource estimate’s average grade (1.74% TREO). If a developing trend is observed, the lab is to be notified and the insertion site at camp is to be inspected to confirm proper protocols are being maintained. Further, after a review of adjacent CRMs, and if the trend lies above or below the threshold, the need for a re-analysis of the entire batch is to be evaluated. Results of tracking to date are presented in the figures below; elevated levels of REE can be correlated to zones of higher grade mineralization in drill core. Commerce, and Dahrouge, has stated it will ensure that all future blanks will be continually monitored to ensure internal and external QA/QC. In 2011, a total of 519 blanks (Qtz + Qtz-A) were inserted in the sample series. A review of the analytical data for the blanks shows that all the blanks analysed returned a variable but low amount of REEs although sometimes orders of magnitude above the detection limit of the analytical method. As part of the laboratory QA/QC protocol, Actlabs is inserting analytical blanks in the samples series. A review of the results from the laboratory blanks inserted by Actlabs shows that all blanks returned values below detection limit suggesting that there is no systematic contamination of the samples. The author recommends continuing with the QA/QC protocol presently used with the failure threshold of 500 ppm TREE.

Figure 11-6: TREE in the Original ‘Qtz’ Blank


SGS Geostat

Figure 11-7: TREE in the ‘Qtz-A’ Blank

11.3.3 Drill Core Duplicates

As part of the Company QA/QC protocol, quarter core duplicates from 522 core samples were included in the Project sample series sent to Actlabs. The drill core duplicates are inserted in the sample series at an average rate of one duplicate for every 25 samples (rate of 4.5%). The relative percent difference (RPD) between the original and duplicate analytical values averages 6.7% for TREE with a range between 0% and 46%. The RPD average for F is 15.2% with a range between 0% and 150%. In general, the drill core duplicate samples show a fair to good correlation with the original samples. Some improvement is noted from the 2010 results. The variability between the original and duplicate samples can be considered acceptable for the REEs with the average RPD for all individual elements bellow or equal to 10%, although some individual elements present a greater variability than others. The variability is significantly higher for F with the average RPD of 15.2%, but can still be considered in the acceptable range for drill core duplicate. Table 11-3 summarises the comparatives statistics of the drill core duplicates for the individual REE including TREE and F. Figure 11-8 show correlation plots of the drill core duplicates for TREE and F.


SGS Geostat

Table 11-3: Comparative Statistics for the Drill Core Duplicates

Count % Count % Count % Mean Min Max

Y 522 270 52% 17 3% 235 45% 7.7% 0% 56%

La 522 264 51% 14 3% 244 47% 7.9% 0% 63%

Ce 522 261 50% 3 1% 258 49% 7.0% 0% 52%

Pr 522 256 49% 4 1% 262 50% 6.7% 0% 66%

Nd 522 255 49% 14 3% 253 48% 6.5% 0% 76%

Sm 522 262 50% 14 3% 246 47% 6.4% 0% 59%

Eu 522 256 49% 9 2% 257 49% 6.4% 0% 44%

Gd 522 257 49% 13 2% 252 48% 6.8% 0% 40%

Tb 522 252 48% 26 5% 244 47% 7.8% 0% 48%

Dy 522 264 51% 10 2% 248 48% 8.1% 0% 58%

Ho 522 258 49% 32 6% 232 44% 9.0% 0% 61%

Er 522 277 53% 7 1% 238 46% 10.0% 0% 57%

Tm 522 268 51% 11 2% 243 47% 9.7% 0% 68%

Yb 522 263 50% 28 5% 231 44% 9.4% 0% 69%

Lu 522 268 51% 18 3% 236 45% 9.4% 0% 79%

F 522 276 53% 24 5% 222 43% 15.2% 0% 150%

TREE 522 253 48% 0 0% 269 52% 6.7% 0% 46%

Original = Duplicates Original > DuplicateTotal

Samples

Relative Percentage DifferenceOriginal < Duplicate

Figure 11-8: Correlation Plot of the Drill Core Duplicates for TREE and F


SGS Geostat

11.3.4 Pulp Duplicates

Dahrouge conducted systematic re-analyses of pulp material of low, moderate, and high mineralized samples selected from each 2011 drill hole equating to a sample check rate of approximately 5%. The re-analyses were completed by ALS with samples shipped directly from Actlabs. A total of 644 pulps were sent to ALS (in 2011) for a duplicate analysis using a similar analytical protocol with samples homogenized prior to analysis. Table 11-4 summarises the comparative statistics of the pulp duplicates for the individual REE including TREE. Figure 11-9 to Figure 11-12 shows correlation plots of TREE, Y, and the individual REE.

Table 11-4: Statistics for the Pulp Duplicates (Actlabs vs. ALS)

Original <

Duplicate

Original =

Duplicates

Original >

Duplicate

Count Count Count

La 644 315 10 319 Pass 1%

Ce 644 233 7 404 Fail -1% ACT<ALS

Pr 644 210 4 430 Fail -3% ACT<ALS

Nd 644 296 12 336 Pass 0%

Sm 644 284 17 343 Fail -0,3% ACT<ALS

Eu 644 277 10 357 Fail 0,2% ACT>ALS

Gd 644 502 9 133 Fail 11% ACT>ALS

Tb 644 446 10 188 Fail 5% ACT>ALS

Dy 644 90 12 542 Fail -7% ACT<ALS

Ho 644 60 9 575 Fail -11% ACT<ALS

Er 644 56 18 570 Fail -10% ACT<ALS

Tm 644 134 27 483 Fail -5% ACT<ALS

Yb 644 220 33 391 Fail -2% ACT<ALS

Lu 644 461 23 160 Fail 6% ACT>ALS

Y 644 38 9 597 Fail -10% ACT<ALS

TREE 644 254 0 390 Fail -0,4% ACT<ALS

Sign

test

Overall

DifferenceConclusionCount


SGS Geostat

Figure 11-9: Correlation Plot of the Pulp Duplicates for TREE, Y, La, and Ce (Actlabs vs. ALS)

y = 0.9168x + 973.96

R² = 0.9674

y = x

0

20000

40000

60000

80000

100000

0 20000 40000 60000 80000 100000

TR

EE

(p

pm

) -

ALS

TREE (ppm) - ActLabs

TREE

y = 1.0407x + 8.4612

R² = 0.9822

y = x

0

200

400

600

800

1000

1200

1400

1600

0 200 400 600 800 1000 1200 1400 1600

Ytt

riu

m (

pp

m)

-A

LS

Yttrium (ppm) - ActLabs

Yttrium

y = 0.9199x + 207.3

R² = 0.9764

y = x

0

5000

10000

15000

20000

25000

0 5000 10000 15000 20000 25000

Lan

than

um

(p

pm

) -

ALS

Lanthanum (ppm) - ActLabs

Lanthanum

y = 0.9196x + 448.15

R² = 0.9657

y = x

0

10000

20000

30000

40000

50000

0 10000 20000 30000 40000 50000

Ce

riu

m (

pp

m)

-A

LS

Cerium (ppm) - ActLabs

Cerium


SGS Geostat

Figure 11-10: Correlation Plot of the Pulp Duplicates for Pr, Nd, Sm, and Eu (Actlabs vs. ALS)

y = 0.9284x + 59.272

R² = 0.9486

y = x

0

1000

2000

3000

4000

5000

0 1000 2000 3000 4000 5000

Pra

seo

dy

miu

m (

pp

m)

-A

LS

Praseodymium (ppm) - ActLabs

Praseodymium

y = 0.8907x + 205.27

R² = 0.9487

y = x

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

0 2000 4000 6000 8000 10000 12000 14000 16000 18000

Ne

od

ym

ium

(pp

m)

-A

LS

Neodymium (ppm) - ActLabs

Neodymium

y = 0.907x + 23.462

R² = 0.948

y = x

0

200

400

600

800

1000

1200

1400

0 200 400 600 800 1000 1200 1400

Sam

ari

um

(p

pm

) -

AL

S

Samarium (ppm) - ActLabs

Samarium

y = 0.9277x + 5.7227

R² = 0.9395

y = x

0

50

100

150

200

250

300

0 50 100 150 200 250 300

Eu

rop

ium

(p

pm

) -

AL

S

Europium (ppm) - ActLabs

Europium


SGS Geostat

Figure 11-11: Correlation Plot of the Pulp Duplicates for Gd, Tb, Dy, and Ho (Actlabs vs. ALS)

y = 0.8203x + 10.653

R² = 0.8828

y = x

0

100

200

300

400

500

0 100 200 300 400 500

Ga

do

liniu

m (

pp

m)

-A

LS

Gadolinium (ppm) - ActLabs

Gadolinium

y = 0.9379x + 0.2706

R² = 0.9498

y = x

0

10

20

30

40

50

60

0 10 20 30 40 50 60

Terb

ium

(p

pm

) -

ALS

Terbium (ppm) - ActLabs

Terbium

y = 1.0493x + 2.1396

R² = 0.9774

y = x

0

50

100

150

200

250

300

0 50 100 150 200 250 300

Dy

spro

siu

m (

pp

m)

-A

LS

Dysprosium (ppm) - ActLabs

Dysprosium

y = 1.0566x + 0.6137

R² = 0.9779

y = x

0

10

20

30

40

50

60

0 10 20 30 40 50 60

Ho

lmiu

m (

pp

m)

-A

LS

Holmium (ppm) - ActLabs

Holmium


SGS Geostat

Figure 11-12: Correlation Plot of the Pulp Duplicates for Er, Tm, Yb, and Lu (Actlabs vs. ALS)

A review of the results for the pulp duplicates analysed by ALS shows a correlation between the two laboratories but outlined some issues with the pulp duplicates results. A potential analytical bias can be observed for some elements. The sign test conducted on the Actlabs vs. the ALS analytical dataset suggests a potential positive bias toward Actlabs for Ce, Gd, and Tb but shows a potential negative bias for Pr, Eu, Dy, Ho, Er, Tm, Yb, Lu, and Y. Elements La, Nd and Sm do not show significant analytical bias. The variability in the data is significant with average RPD between Actlabs and ALS ranging from 5.8% up to 16.7% for the different REEs. This variation in the analytical data is also observed in the results of the core duplicates and the independent check samples.

y = 1.0569x + 1.1286

R² = 0.9769

y = x

0

20

40

60

80

100

120

140

0 20 40 60 80 100 120 140

Erb

ium

(p

pm

) -

AL

S

Erbium (ppm) - ActLabs

Erbium

y = 1.0202x + 0.1198

R² = 0.975

y = x

0

2

4

6

8

10

12

14

16

18

0 2 4 6 8 10 12 14 16 18

Th

uliu

m (

pp

m)

-A

LS

Thulium (ppm) - ActLabs

Thulium

y = 1.0143x + 0.2083

R² = 0.9773

y = x

0

10

20

30

40

50

60

70

80

90

100

0 10 20 30 40 50 60 70 80 90 100

Ytt

erb

ium

(p

pm

) -

AL

S

Ytterbium (ppm) - ActLabs

Ytterbium

y = 0.9518x + 0.0085

R² = 0.973

y = x

0

2

4

6

8

10

12

0 2 4 6 8 10 12

Lute

tiu

m (

pp

m)

-A

LS

Lutetium (ppm) - ActLabs

Lutetium


SGS Geostat

The results of the pulp duplicates outline potential analytical bias between Actlabs and ALS. Potential analytical biases are also observed in the results of the independent check samples. However, as with the data returned from SGS Minerals and ALS, some elements show contradictory results. It is typical of REE analysis to show some elements higher and other elements lower for different laboratories. Based on the pulp duplicates results and the general consistency of the correlation plots of the check sampling program, we can conclude that the results are satisfactory. The author recommends continuing systematic re-analysis of pulp materials for mineralized samples in the internal QA/QC protocol in order to help monitor the quality of the analytical data of the Project.

11.3.5 QA/QC Conclusion

As part of the 2011 work program at Ashram, Dahrouge implemented an internal QA/QC protocol consisting in the insertion of reference materials in the samples series (CRMs and blanks). The QA/QC program also included analysis of core duplicates on a systematic basis and the re-analysis of selected sample pulp duplicates at a second analytical laboratory for verification. Reported results for the CRMs for the 2011 drill program show a good correlation with expected mean values, except for some elements where lower average values compared to the expected values of the CRM which include some QA/QC failures. After a review of the QA/QC failures, the differences in value observed are in the range of variance typically returned for REE analytical data and are considered acceptable. Further, it is noted that in general Actlab values are typically lower than that of the CRM and thus considered conservative. A review of the analytical data for the blanks showed that all the blanks analysed returned a low and variable amount of mineralization. After reviewing the laboratory blanks Actlabs inserted in the samples series, the author believes there could be some small amounts of contamination but considers this negligible (about 1%) compared to the overall resource. The results for the drill core duplicates show a good correlation with the original analytical values and acceptable data variance. The re-analysis of pulp duplicate from selected mineralized samples outlined potential analytical bias for some elements. The observed potential biases, which are also observed in the independent check sample results (core duplicates), are positive for some elements and negative for others. The author suggests that the observed potential analytical biases could be due principally to the imprecision of the analytical methods. It is the author’s and SGS Geostat’s opinion that Dahrouge, on behalf of Commerce, is operating according to industry standard QA/QC protocol for the insertion of control certified reference materials into the stream of samples for the Project. The data is considered of sufficient quality to be used for mineral resource estimation.


SGS Geostat

11.4 Specific Gravity

In 2010, as part of the independent data verification program, SGS Geostat conducted specific gravity (SG) measurements on 40 mineralized core samples collected from drill holes EC10-027 and EC10-028. The measurements were performed using the water displacement method (weight in air / volume of water displaced) on representative half core pieces weighing between 0.57 kg and 1.32 kg with an average of 0.97 kg. The results from the measurements reported an average SG value of 3.02 t/m3 (Table 11-5)

Table 11-5: Specific Gravity Statistics from 2010 Independent Check Sampling Program

In 2011, a fixed SG was used for the resource estimation based on a total of 449 SG measurements. For the preparation of this report, a total of 432 of the 2010 measurements were retained and 1,840 were added, from those collected in 2011, for a total of 2,272. They were separated in the 3 different mineralized bodies identified for the resource estimates: Central (260), Inner (1339) and Outer (673). The SG measurements were conducted at the Project’s core logging facilities using the weight air/water method (weight in air / (weight in air - weight in water)) on representative core pieces before the sampling procedure. Table 11-6 summarises the statistics of the SG measurements collected by Dahrouge, on behalf of Commerce, at Ashram in 2010 and 2011.

Count 40

Mean 3.02

Std Dev 0.09

Relative Std Dev 3.1%

Minimum 2.87

Median 3.00

Maximum 3.25

Eldor Project - Ashram Carbonatite S.G. (t/m3)


SGS Geostat

Table 11-6: Specific Gravity Statistics from the 2010 and 2011 Exploration Programs

The SG values returned by Dahrouge, on behalf of Commerce, from the 2010 and 2011 exploration program at Ashram are consistent with the independent SG measurements completed by SGS Geostat as part of the data verification program from 2010. Based on the SG value dataset, a value of 3.1, 3.0 and 2.9 t/m3 was set as the average SG value for the Ashram carbonatite respectively for the Central, Inner and Outer mineralized zones. These average SG values are used to estimate the mineral resource tonnage from the volumetric estimates of the resource block model.

11.5 Conclusions

SGS Geostat completed a review of the sample preparation and analysis including the QA/QC analytical protocol implemented by Dahrouge, on behalf of Commerce, for the Project. The author M. Gaston Gagnon, Eng. visited the Property accompanied by Robert De l’Étoile, Eng. from SGS Geostat between September 18 and 21, 2011 to review the Project sample preparation procedures. A statistical analysis of the QA/QC data for the Project outlined only minor issues.

Count 260

Mean 3.12

Std Dev 0.15


Minimum 2.46

Median 3.10

Maximum 3.99

Central Zone - Ashram Carbonatite S.G. (t/m3)

Count 1339

Mean 3.02

Std Dev 0.13


Minimum 2.06

Median 3.01

Maximum 3.98

Inner Zone - Ashram Carbonatite S.G. (t/m3)

Count 934

Mean 2.92

Std Dev 0.11


Minimum 2.23

Median 2.92

Maximum 3.88

Outer Zone - Ashram Carbonatite S.G. (t/m3)


SGS Geostat

The author and SGS Geostat are of the opinion that the sample preparation, analysis and QA/QC protocol used by Dahrouge, on behalf of Commerce, for the Eldor Project follow generally accepted industry standards and that the Project data is of quality sufficient to be used for mineral resource estimation.


SGS Geostat

12 Data Verification As part of the data verification program, SGS Geostat completed independent analytical checks of drill core duplicate samples taken from Commerce’s 2011 diamond drilling program. SGS Geostat also completed a verification of the laboratory analytical certificates with validation of the Project digital database, supplied by Dahrouge, verified for errors or discrepancies. During a site visit conducted between September 18 and 21, 2011, a total of 40 mineralized drill core duplicates were collected from holes EC11-048, EC11-053, EC11-056 and EC11-061 by Gaston Gagnon and Robert de l’Étoile from SGS, and submitted for analysis at the SGS Minerals laboratory in Toronto. Certified reference materials and blanks were added to the sample series. The core duplicates were processed using the 31 elements lithium metaborate fusion with ICP-MS finish analytical protocol. Table 12-1 summarises the comparatives statistics of the independent check samples for the individual REE. Table 12-2 shows the sign test results. Figure 12-1to Figure 12-4 shows correlation plots of the TREE, Y and the individual REE.

Table 12-1: Statistics for the Independent Check Samples (Actlabs vs. SGS Minerals)

Mean Min Max

Y 40 8% 0% 25%

La 40 9% 0% 23%

Ce 40 9% 1% 27%

Pr 40 7% 0% 22%

Nd 40 6% 0% 17%

Sm 40 5% 0% 13%

Eu 40 6% 0% 20%

Gd 40 6% 1% 15%

Tb 40 12% 1% 27%

Dy 40 8% 0% 22%

Ho 40 10% 0% 33%

Er 40 9% 0% 29%

Tm 40 10% 1% 35%

Yb 40 7% 0% 24%

Lu 40 7% 0% 21%

Relative Percentage DifferenceCount


SGS Geostat

Table 12-2: Sign Test for the Independent Check Samples (Actlabs vs. SGS Minerals)

Original <

Duplicate

Original =

Duplicates

Original >

Duplicate

Count Count Count

Y 31 0 9 Fail 4% SGS>ACT

La 25 0 15 Pass 5%

Ce 28 0 12 Fail 5% SGS>ACT

Pr 32 1 7 Fail 5% SGS>ACT

Nd 20 0 20 Pass 0%

Sm 19 0 21 Pass 0%

Eu 13 1 26 Pass -3%

Gd 23 0 17 Pass 1%

Tb 39 0 1 Fail 10% SGS>ACT

Dy 34 1 5 Fail 6% SGS>ACT

Ho 32 2 6 Fail 5% SGS>ACT

Er 19 1 20 Pass -1%

Tm 35 0 5 Fail 6% SGS>ACT

Yb 25 1 14 Pass 1%

Lu 24 1 15 Pass 1%

Sign

test

Average

DifferenceConclusion


SGS Geostat

Figure 12-1: Correlation Plot of the Independent Checks Samples for TREE, Y, La, and Ce (Actlabs vs. SGS Minerals)

0

5000

10000

15000

20000

25000

30000

0 5000 10000 15000 20000 25000 30000

TREE

+Y

(pp

m) -

Act

Lab

s

TREE+Y (ppm) - SGS Minerals

Pulp Duplicates (TREE+Y) - Ashram Project

+20%

-20%

0

100

200

300

400

500

600

0 100 200 300 400 500 600Y

(pp

m) -

Act

Lab

sY (ppm) - SGS Minerals

Pulp Duplicates (Y) - Ashram Project

+20%

-20%

0

1000

2000

3000

4000

5000

6000

7000

8000

0 1000 2000 3000 4000 5000 6000 7000 8000

La (

pp

m)

-A

ctLa

bs

La (ppm) - SGS Minerals

Pulp Duplicates (La) - Ashram Project

+20%

-20%

0

2000

4000

6000

8000

10000

12000

14000

0 2000 4000 6000 8000 10000 12000 14000

Ce

(p

pm

) -A

ctLa

bs

Ce (ppm) - SGS Minerals

Pulp Duplicates (Ce) - Ashram Project

+20%

-20%


SGS Geostat

Figure 12-2: Correlation Plot of the Independent Checks Samples for Pr, Nd, Sm, and Eu (Actlabs vs. SGS Minerals)

0

200

400

600

800

1000

1200

0 200 400 600 800 1000 1200

Pr

(pp

m) -

Act

Lab

s

Pr (ppm) - SGS Minerals

Pulp Duplicates (Pr) - Ashram Project

+20%

-20%

0

500

1000

1500

2000

2500

3000

3500

4000

0 500 1000 1500 2000 2500 3000 3500 4000

Nd

(p

pm

) -

Act

Lab

sNd (ppm) - SGS Minerals

Pulp Duplicates (Nd) - Ashram Project

+20%

-20%

0

200

400

600

800

1000

0 200 400 600 800 1000

Sm

(pp

m) -

Act

Lab

s

Sm (ppm) - SGS Minerals

Pulp Duplicates (Sm) - Ashram Project

+20%

-20%

0

50

100

150

200

250

0 50 100 150 200 250

Eu

(p

pm

) -

Act

Lab

s

Eu (ppm) - SGS Minerals

Pulp Duplicates (Eu) - Ashram Project

+20%

-20%


SGS Geostat

Figure 12-3: Correlation Plot of the Independent Checks Samples for Gd, Tb, Dy, and Ho (Actlabs vs. SGS Minerals)

0

200

400

600

800

0 200 400 600 800

Gd

(p

pm

) -

Act

Lab

s

Gd (ppm) - SGS Minerals

Pulp Duplicates (Gd) - Ashram Project

+20%

-20%

0

20

40

60

80

100

0 20 40 60 80 100

Tb (p

pm

) -A

ctLa

bs

Tb (ppm) - SGS Minerals

Pulp Duplicates (Tb) - Ashram Project

+20%

-20%

0

50

100

150

200

250

300

350

400

0 50 100 150 200 250 300 350 400

Dy

(p

pm

) -

Act

Lab

s

Dy (ppm) - SGS Minerals

Pulp Duplicates (Dy) - Ashram Project

+20%

-20%

0

10

20

30

40

50

60

0 10 20 30 40 50 60

Ho

(pp

m) -

Act

Lab

s

Ho (ppm) - SGS Minerals

Pulp Duplicates (Ho) - Ashram Project

+20%

-20%


SGS Geostat

Figure 12-4: Correlation Plot of the Independent Checks Samples for Er, Tm, Yb, and Lu (Actlabs vs. SGS Minerals)

A review of the independent core duplicate check sample results confirmed a correlation between Actlabs and SGS Minerals data but outlined some issues. In particular, potential analytical bias and significant variability in the data was observed. The sign test (presented in Table 12-2) conducted on the Actlabs vs. the SGS Minerals analytical dataset suggests a potential negative bias toward Actlabs for Y, Ce, Pr, Tb, Dy, Ho, and Tm. Biases found always show SGS superior to Actlabs so this resource update is considered conservative in this respect. The most problematic elements are Tb, Dy, and Tm where the average difference is higher than 5%. Comparatively to 2010, the independent check samples are much improved.

0

20

40

60

80

100

120

0 20 40 60 80 100 120

Er

(pp

m)

-A

ctLa

bs

Er (ppm) - SGS Minerals

Pulp Duplicates (Er) - Ashram Project

+20%

-20%

0

2

4

6

8

10

12

0 2 4 6 8 10 12

Tm (p

pm

) -A

ctLa

bs

Tm (ppm) - SGS Minerals

Pulp Duplicates (Tm) - Ashram Project

+20%

-20%

0

10

20

30

40

50

60

0 10 20 30 40 50 60

Yb

(p

pm

) -

Act

Lab

s

Yb (ppm) - SGS Minerals

Pulp Duplicates (Yb) - Ashram Project

+20%

-20%

0

1

2

3

4

5

6

7

8

0 1 2 3 4 5 6 7 8

Lu (p

pm

) -A

ctLa

bs

Lu (ppm) - SGS Minerals

Pulp Duplicates (Lu) - Ashram Project

+20%

-20%


SGS Geostat

The results of the independent check sampling program in 2011 highlight the difficulty of analysing REEs. Results show amelioration compared to 2010. Based on the results of the data verification program, SGS Geostat considers the analytical data to be of sufficient quality to support a mineral resource estimate. The digital drill hole database supplied by Dahrouge, on behalf of Commerce, has been validated for the following data fields: collar location, azimuth, dip, hole length, survey data, lithology, and analytical values. The validation of the database did not return any significant issues. As part of the data verification of the Project, selected analytical data from the database has been validated with the values from the laboratories analytical certificates. No errors were noted during the validation. The final database includes the recent drilling data completed in 2011. Table 12-3 lists the data contained in the final drill hole database. SGS Geostat is in the opinion that the final drill hole database is adequate to support mineral resource estimation.

Table 12-3: Final Drill Hole Database

45 15,692 777 430 15,051 98%

Number of

Holes

% Assayed

Metres

Number of

Assays

Records

Number of

Lithological

Records

Number of

Survey

Records

Metres

Drilled


SGS Geostat

13 Mineral Processing and Metallurgical Testing The rare earth mineralization at Ashram consists primarily of monazite and lesser bastnäsite and xenotime in a matrix of ferro-dolomite, fluorite, and lesser apatite. Particle size of the rare earth minerals is very fine, typically less than 30 µm down to <5µm with an average of 15-20 µm. Larger aggregates in the several hundred micron range are present but not common. A liberation study completed by SGS Minerals Services indicates that the bastnäsite liberates with the monazite reflecting their similar grain size and distribution throughout the carbonate matrix. The liberation of xenotime was not evaluated in this study, however, indications from metallurgical testwork supports a joint liberation with the monazite and the bastnäsite. In addition, the relatively soft nature of the carbonate matrix coupled with the simple rare earth mineralogy makes the rare earth minerals amenable to conventional separation techniques for mineral concentrating prior to cracking (e.g. grinding and flotation). Metallurgical testwork on a representative sample of the Ashram Deposit is currently being completed at Hazen Research Inc. in Colorado and UVR-FIA GmbH in Germany. Due to the low sulphide content of the ore, coarse analytical reject material could be utilized for all metallurgical testing and was sourced from multiple holes within the deposit. Several batches of material have been received by Hazen totalling approximately 420 kg. Of the first material received, 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 most promising and has thus been the chief upgrading process utilized so far. In almost all of the tests, direct rare earth mineral flotation has been addressed. However, some reverse flotation tests were also completed. Numerous potential collectors for the direct flotation have been tested under a variety of operational parameters. Initial bench testwork at Hazen confirm that the rare earth material is amenable to conventional flotation. No optimization has been attempted thus far as efforts have focused on initial grinding and determination of the best rare earth collectors and carbonate depressants for this particular set of mineralogy. A listing of the most promising test results is presented in Table 13-1.


SGS Geostat

Table 13-1: Metallurgical Testwork Results

TEST # % of Original Weight

CONCENTRATE GRADE %

DISTRIBUTION %

Ce La TREO (EST)2

Ce La TREO (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 73.4

According to Mr. Roland Schmidt, Director of Mineralogical Laboratories and of the Ashram testwork at Hazen Research Inc., “there is no technical obstacle that would prevent from reaching the current target of 20% TREO 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 type of minerals present from a carbonate matrix, is an established and commercially proven

technology”. Current mineral concentrates also display strong upgrading in fluorine (via fluorite) ranging typically from 10-30% F. No secondary stage of evaluation for the separation of the rare earth minerals from fluorite has yet been completed. However, this is expected to become the focus of work at UVR-FIA GmbH in the near term as a substantial increase in concentrate TREO grade is expected. Increasing the concentrate TREO grade is a priority as acid consumption and cracking costs may be significantly reduced. No determination of fluorine as a potential by-product (via acid grade fluorspar) has yet been evaluated. A mineral concentrate with a grade of 10% TREO at 70% recovery (12.7% of the original feed weight) is used as a base case result of physical upgrading at the mine site via conventional grinding and flotation techniques. This concentrate grade and recovery corresponds to the best Hazen test results so far and complies with the standard policy for SGS Geostat to not extrapolate beyond what has been demonstrated. Because the radioactivity3 of the mill concentrate is not well quantified (testwork pending) at this time, for the purpose of this report, thermal cracking will be done directly at the mine site4. Cracking of the mineral concentrates generated by Hazen is currently underway. Only preliminary results are available, however, they are positive with the rare earths entering solution readily as anticipated. Given the historically known and proven cracking techniques for monazite, bastnäsite, and xenotime, it is not anticipated to be problematic; thus, a TREO recovery of 95% is foreseen at the cracking plant. According to Commerce, the process will be tested as the preliminary concentrate is refined.

2 Concentrate grade estimation for total REO is given by the following formula:1.16*(Ce + La)/.705 3 Due to the presence of thorium 4 If concentrate radioactivity is low enough, a thermal cracking plant could be built somewhere on the Saint Lawrence

Seaway where a marketable rare earth mixed carbonate/oxide concentrate would be produced.


SGS Geostat

In addition, the ore and the mine tailings are not considered acid generating (or metal leaching) due to the high amount of carbonates and corresponding low sulphide content. This conclusion is currently being confirmed by Hazen; however, initial testwork is supportive. 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 the mill feed. No metallurgical test work was carried out by SGS, nor was it supervised by the QP responsible for the Mineral Processing and Metallurgical Testwork section of this report. As such, the results were not independently verified, but are believed to be of sound quality.


SGS Geostat

14 Mineral Resource Estimates

14.1 Introduction

A previous mineral resource estimate was reported in March 2011 for the Eldor Property (Laferrière, 2011). Both mineral resource estimates were completed by SGS Geostat. This current update uses drilling data completed by the Company in 2011. The final database used to produce the mineral resource estimate totals 43 diamond drill holes and contains information for collar, survey, lithology and analytical results. Two more holes (EC11-076 and EC11-078) were not sampled and will be used for advanced metallurgical work. Please refer to Table 12-3 for a summary of the records in the database used for the mineral resource estimate. The mineral resource has been estimated by the co-author, Yann Camus, Eng., Geological Engineer for SGS Geostat. Mr. Camus is a professional engineer registered with the Ordre des Ingénieurs du Québec. He has been involved in mineral resource estimation work on a continuous basis since joining Geostat (now a member of SGS Canada Inc.) in 2000, which includes the mineral resource estimation of the Kipawa Rare Earth Deposit located near the community of Témiscaming, Québec. Mr. Camus is an independent Qualified Person as per section 1.4 of the NI 43-101 Standards of Disclosure for Mineral Projects. The mineral resource estimates are derived from a computerized resource block model. The construction of the block model starts with the modeling of 3D wireframe envelopes or solids of the mineralization using drill hole REE analytical data and lithological information. Once the modeling is complete, the analytical data contained within the wireframe solids is normalised to generate fixed length composites. The composites are used to interpolate the grade of blocks regularly spaced on a defined grid that fills the 3D wireframe solids. The interpolated blocks located below the bedrock/overburden interface comprise the mineral resource. The blocks are then classified based on confidence level using the grid size of the composites. The 3D wireframe modeling was interpreted by Dahrouge, on behalf of Commerce, and verified by SGS Geostat. The block model and mineral resource estimates were conducted by SGS Geostat based on information provided by Dahrouge, on behalf of Commerce.

14.2 Exploratory Data Analysis

Exploratory data analysis for each REE was completed on original analytical data and composite data contained within the 3D mineralized envelopes.


SGS Geostat

14.2.1 Analytical Data

Out of the total 15,051 assays inside the drill hole database, 13,513 fall inside the mineralization. These are the assay intervals from the database that were used for the current mineral resource estimate. The drill hole intervals defining the mineralized envelopes have been sampled continuously. Sample length averages 1.02 m and ranges between 0.18 m and 2.49 m. Table 14-1 summarizes the statistics of the analytical data used for the resource estimate. Figure 14-1 shows the histogram of the samples length. Two holes (EC11-076 and EC11-078) totalling 87.69 m were not sampled and will be used for advanced metallurgical work.

Table 14-1: Summary Statistics of Analytical Data Used in the Mineral Resource Estimate

Mean Std dev. Min Median Max

Y (ppm) 261 168 14 220 2630

La (ppm) 3346 2053 28 3100 21700

Ce (ppm) 6180 2981 56 6190 40400

Pr (ppm) 659 263 6 685 4480

Nd (ppm) 2342 806 26 2460 15600

Sm (ppm) 308 104 5 311 1350

Eu (ppm) 72.4 27.0 1.4 70.9 314

Gd (ppm) 173.8 70.8 4 168 818

Tb (ppm) 17.6 9.3 0.7 15.7 125

Dy (ppm) 71.5 42.8 3.6 61.9 689

Ho (ppm) 10.0 6.5 0.6 8.5 103

Er (ppm) 21.5 13.9 1.4 18.3 213

Tm (ppm) 2.42 1.54 0.17 2.07 20.7

Yb (ppm) 13.2 7.7 1 11.5 94.2

Lu (ppm) 1.76 0.98 0.16 1.56 11.2

F (%) 2.20 2.25 0.01 1.29 26


SGS Geostat

Figure 14-1: Histogram of Samples Length from Ashram Database

The drill pattern at Ashram is fairly irregular, due to the size and still unknown extent of the body, with 18 holes near vertical, 24 holes oriented between N226° and N245° azimuth and dipping between 39° and 76°, one hole oriented N050° azimuth an dipping 44° and one hole oriented N322° azimuth and dipping 45°. Figure 14-2 and Figure 14-3 show a plan view and a longitudinal view looking north of the drill holes at Ashram.

0

500

1000

1500

2000

2500

3000

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9 1

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

1.9 2

2.1

2.2

2.3

2.4

2.5

Fre

qu

en

cy

Sample Length (m)

Samples Lengths from Ashram Database


SGS Geostat

Figure 14-2: Plan View of the Drill Holes at Ashram

Figure 14-3: Longitudinal View of the Drill Holes at Ashram (looking north)


SGS Geostat

14.2.2 Composite Data

Block model grade interpolation is conducted on composited analytical data. A composite length of 3 m has been selected based on the length of the samples and the thickness of the 10 m by 10 m by 10 m block size defined for the resource block model. Composites were filtered from the 3D solids. No capping was applied to the assays before compositing. Table 14-2 shows summary statistics of the composites used for the interpolation of the resource block model. Figure 14-4 and Figure 14-5 displays the spatial distribution of the composites along drill holes axis in plan and longitudinal view looking north respectively.

Table 14-2: Summary Statistics for the 3 metres Composites

Mean Std dev. Min Median Max

Y (ppm) 255 146 0 218 1207

La (ppm) 3269 1843 0 3208 11799

Ce (ppm) 6044 2736 0 6304 16500

Pr (ppm) 646 245 0 689 1850

Nd (ppm) 2298 756 0 2468 6560

Sm (ppm) 303 96 0 309 814

Eu (ppm) 71.2 24.8 0 69.9 216.5

Gd (ppm) 170.7 64.8 0 165.8 543.9

Tb (ppm) 17.2 8.2 0 15.5 74.8

Dy (ppm) 70.0 37.2 0 61.9 312.4

Ho (ppm) 9.8 5.6 0 8.6 45.7

Er (ppm) 21.0 11.9 0 18.3 99.6

Tm (ppm) 2.37 1.31 0 2.08 11.81

Yb (ppm) 12.9 6.6 0 11.7 52.7

Lu (ppm) 1.72 0.84 0 1.59 6.35

F (%) 2.12 1.86 0 1.49 15.96


SGS Geostat

Figure 14-4: Plan View Showing the Spatial Distribution of the Composites

Figure 14-5: Longitudinal View Showing the Distribution of the Composites (looking north)

14.2.3 Specific Gravity

Section 11.3 explains the SG determination in detail. Values of 3.1, 3.0 and 2.9 t/m3 were set as the fixed SG value for the Central, Inner and Outer mineralized zones respectively. These SG values are used for the estimation of the tonnages from the volumetric estimates of the resource block model.


SGS Geostat

14.3 Geological Interpretation

Dahrouge (on behalf of Commerce), under the supervision of SGS Geostat, completed the interpretation and modeling of the 3D wireframe envelopes for the mineralization based on drilling data. The 3D wireframe envelop was defined with respect to the levels of REE mineralization and the topography was used to constrain the top of the wireframe envelope.

Figure 14-6: Modeled 3D Wireframe Envelope in Longitudinal View (looking south)

14.4 Spatial Analysis

The spatial continuity of the TREO grade of the composites was assessed by variography. Variograms were computed and modeled for the 3 m composite for each mineralized zone. Variograms in a series of directions were analysed in order to identify potential anisotropies in the grade continuity within the modeled mineralized envelop. Figure 14-7, Figure 14-8 and Figure 14-9 show the variograms of TREO for zones Central, Inner, and Outer respectively. The variogram models used for the kriging are: Central Zone Variogram Model:

• Nugget of 0.1


SGS Geostat

• Spherical of 0.4 with ranges of 10m, 8m and 8m at orientations of 50° azimuth, -73° dip and

0° spin

• Spherical of 0.5 with ranges of 90m, 50m and 50m at orientations of 50° azimuth, -73° dip

and 0° spin

Inner Zone Variogram Model:

• Nugget of 0.1

• Spherical of 0.4 with ranges of 8m, 8m and 8m at orientations of 70° azimuth, -73° dip and

0° spin

• Spherical of 0.33 with ranges of 50m, 50m and 50m at orientations of 70° azimuth, -73° dip

and 0° spin

• Spherical of 0.17 with ranges of 220m, 220m and 220m at orientations of 70° azimuth, -73°

dip and 0° spin

Outer Zone Variogram Model:

• Nugget of 0.1

• Spherical of 0.35 with ranges of 10m, 10m and 10m at orientations of 70° azimuth, 17° dip

and 0° spin

• Spherical of 0.275 with ranges of 160m, 120m and 120m at orientations of 70° azimuth, 17°

dip and 0° spin

• Spherical of 0.275 with ranges of 400m, 250m and 120m at orientations of 70° azimuth, 17°

dip and 0° spin

Figure 14-7: Variograms of TREO Grade of 3 Metre Composite for Central Zone


SGS Geostat

Figure 14-8: Variograms of TREO Grade of 3 Metre Composite for Inner Zone

Figure 14-9: Variograms of TREO Grade of 3 Metre Composite for Outer Zone

Generally, the variography does not suggest a strong anisotropy, especially in the isotropic Inner Zone. There is continuity at longer distances (up to 200-400 m). In the Central Zone, the best continuity in the analytical data is observed downdip: 70° azimuth at 73° dip. The worse continuity is horizontally at a 160° azimuth direction. In the Outer Zone, the best continuity in the analytical data is observed almost flat: 70° azimuth at 17° up dip. The worse continuity is horizontally at a 160° azimuth direction. The nugget effect is relatively low (10%).


SGS Geostat

14.5 Resource Block Modeling

A block size of 10 m (E-W) by 10 m (N-S) by 10 m (vertical) was selected for the mineral resource block model of the Project based on drill hole spacing, width and general geometry of mineralization. The 10 m vertical dimension corresponds to an approximation for the bench height of a potential medium-size open pit mining operation. The resource block model contains 143,036 blocks located below the overburden/bedrock surface for a total of 143,036,000 m3. Table 14-3 summarizes the parameters of the block model limits.

Table 14-3: Resource Block Model Parameters

14.6 Grade Interpolation Methodology

The grade interpolation for the Ashram mineral resource block model was estimated using the Ordinary Kriging (OK) methodology. Anisotropic search ellipsoids were selected for the grade interpolation process based on the analysis of the spatial continuity of TREO grade using variography and on the general geometry of the modeled mineralized envelop. Limits are set for the minimum and maximum number of composites used per interpolation pass and restriction are applied on the maximum number of composites used from each hole. The interpolation process was conducted using 3 successive passes with relaxed search conditions from one pass to the next until all blocks are interpolated. The orientation of the search ellipsoids, which is identical for each interpolation pass, is 340° azimuth, -73° dip and 0° spin for Inner and Outer and 320° azimuth, -73° dip and 0° spin for Central. In the first pass, the search ellipsoid distance was 100 m (long axis) by 100 m (intermediate axis) by 50 m (short axis). Search conditions were defined with a minimum of 25 composites and a maximum of 25 composites with a maximum of 5 composites selected from each hole. For the second pass, the search distance was increased to 200 m (long axis) by 200 m (intermediate axis) by 100 m (short axis) and composites selection criteria were kept the same as the first pass. Finally, the search distance of the third pass was increased to 400 m (long axis) by 400 m (intermediate axis) by 200 m (short axis). Search conditions for the third pass were defined with a minimum of 7 composites and a maximum of 25 composites with a maximum of 5 composites selected from each hole. Figure 14-10 shows the biggest search ellipsoids used for the third interpolation passes.

Minimum Maximum

East-West 10 m 91 535 900 mE 536 800 mE

North-South 10 m 81 6 311 800 mN 6 312 600 mN

Direction Block SizeNumber of

Blocks

Coordinates (m)

10 m 71 -400 mZ (a.s.l.) 300 mZ (a.s.l.)Vertical

(Elevation)


SGS Geostat

Figure 14-11 and Figure 14-12 present the interpolation results on representative sections and plan levels respectively.

Figure 14-10: Different Search Ellipsoids Used for the Interpolation Process in Plan View

Figure 14-11: Plan View Showing Block Model Interpolation Results


SGS Geostat

Figure 14-12: Longitudinal View Showing Block Model Interpolation Results (looking south)

14.7 Mineral Resource Classification

The mineral resources at Ashram have all been categorically classified as measured, indicated, and inferred as defined by NI 43-101 standards. The parameters used to determine the mineral resource classification are the composites and drilling density. A drill grid of about 25 m is considered as measured and a grid of about 50 m is considered indicated. Some areas contain inferred resource approximately 150 m from drill hole data.

14.8 Mineral Resource Estimation

The base case cut-off TREO grade for the reporting of the 2012 mineral resource estimate of the Ashram Project was retained from 2011 and a base case 1.25% TREO cut-off grade was selected. The current resource update was disclosed on March 6, 2012 with the full report filed on SEDAR a short time later. As SGS Geostat was working on a Preliminary Economic Assessment study coincident with the updated resource estimate, the base case CoG of 1.25% was selected to optimize pit parameters in the resource update. However, a CoG of 0.51% was calculated as the break even for the deposit economics. The final mineral resource estimate for the Ashram Deposit at a CoG grade of 1.25% TREO totals 29.3 million tonnes averaging 1.90% TREO in the measured and indicated categories and 219.8 million tonnes averaging 1.88% TREO in the inferred category.


SGS Geostat

Within the overall defined resource, there exists a zone of more intense Middle and Heavy Rare Earth Oxide enrichment that extends from surface (Figure 7-3 and Figure 7-4). This mineralized zone has been included in the overall mineral resource calculation at a CoG of 1.25% and its details are presented in Table 14-7 and Table 14-8 below. The MHREO Zone corresponds to the Central wireframe shell. The mineral resource scenarios for the Ashram Deposit, including the MHREO Zone, are presented in Table 14-4, Table 14-5, Table 14-6, Table 14-7 and Table 14-8 using 0.50%, 0.75%, 1.00%, 1.25% (base case) and 1.50% TREO cut-off grades.

Table 14-4: Ashram Deposit Mineral Resource Estimate

Note: Totals may differ from sum or weighted sum of numbers due to rounding

ClassificationTonnage

(t)

Density

(t/m3)

TREO*

(%)

LREO*

(%)

MREO*

(%)

HREO*

(%)

MHREO

*(%)

F

(%)

MH/T*

Ratio

Measured 1,980,000 3.04 1.55 1.40 0.079 0.074 0.15 3.18 9.9%

Indicated 37,200,000 2.99 1.61 1.49 0.065 0.050 0.11 2.35 7.1%

Measured + Indicated 39,180,000 2.99 1.60 1.49 0.065 0.051 0.12 2.39 7.3%

Inferred 383,560,000 2.96 1.45 1.35 0.058 0.042 0.10 1.64 6.9%

COG 0.50% TREO


(t)

Density

(t/m3)

TREO*

(%)

LREO*

(%)

MREO*

(%)

HREO*

(%)

MHREO

*(%)

F

(%)

MH/T*

Ratio

Measured 1,600,000 3.07 1.77 1.60 0.089 0.084 0.17 3.75 9.8%

Indicated 30,130,000 3.01 1.83 1.70 0.071 0.054 0.12 2.72 6.8%


Inferred 336,610,000 2.97 1.56 1.46 0.061 0.043 0.10 1.75 6.6%

COG 0.75% TREO


(t)

Density

(t/m3)

TREO*

(%)

LREO*

(%)

MREO*

(%)

HREO*

(%)

MHREO

*(%)

F

(%)

MH/T*

Ratio

Measured 1,600,000 3.07 1.77 1.60 0.089 0.084 0.17 3.75 9.8%

Indicated 28,680,000 3.01 1.88 1.75 0.072 0.055 0.13 2.81 6.7%


Inferred 259,400,000 2.99 1.76 1.65 0.065 0.044 0.11 2.02 6.2%

COG 1.00% TREO


(t)

Density

(t/m3)

TREO*

(%)

LREO*

(%)

MREO*

(%)

HREO*

(%)

MHREO

*(%)

F

(%)

MH/T*

Ratio

Measured 1,590,000 3.07 1.77 1.60 0.089 0.085 0.17 3.76 9.8%

Indicated 27,670,000 3.02 1.90 1.77 0.073 0.056 0.13 2.89 6.7%


Inferred 219,800,000 3.00 1.88 1.77 0.068 0.045 0.11 2.21 6.0%

COG 1.25% TREO - BASE CASE


(t)

Density

(t/m3)

TREO*

(%)

LREO*

(%)

MREO*

(%)

HREO*

(%)

MHREO

*(%)

F

(%)

MH/T*

Ratio

Measured 1,320,000 3.07 1.85 1.68 0.088 0.084 0.17 3.88 9.3%

Indicated 25,420,000 3.01 1.95 1.82 0.072 0.054 0.13 2.88 6.5%


Inferred 210,590,000 3.00 1.91 1.79 0.069 0.045 0.11 2.22 5.9%

COG 1.50% TREO


SGS Geostat


*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

*TREO = LREO + MREO + HREO

*MH / T = MHREO / TREO, expressed as a percent

CoG = Cut-off Grade

Effective March 6th 2012

Table 14-5: Ashram Deposit Mineral Resource Estimate with Individual REO Values



(t)

Density

(t/m3)

TREO*

(%)

LREO*

(%)

MREO*

(%)

HREO*

(%)

MHREO

*(%)

F

(%)

MH/T*

Ratio

Measured 820,000 3.05 1.99 1.83 0.083 0.076 0.16 3.77 8.0%

Indicated 20,940,000 3.01 2.01 1.89 0.071 0.051 0.12 2.80 6.0%


Inferred 164,110,000 3.00 1.98 1.86 0.070 0.044 0.11 2.26 5.8%

COG 1.75% TREO

Classification

Tonnage

(t)

Density

(t/m3)

La2O3

(%)

Ce2O3

(%)

Pr2O3

(%)

Nd2O3

(%)

Sm2O3

(%)

Eu2O3

(%)

Gd2O3

(%)

Tb2O3

(%)

Dy2O3

(%)

Ho2O3

(%)

Er2O3

(%)

Tm2O3

(%)

Yb2O3

(%)

Lu2O3

(%)

Y2O3

(%)

F

(%)

MEASURED 1,980,000 3.04 0.3588 0.6888 0.0761 0.2770 0.0422 0.0107 0.0261 0.0029 0.0122 0.0017 0.0036 0.0004 0.0021 0.0003 0.0510 3.18

INDICATED 37,200,000 2.99 0.4059 0.7337 0.0779 0.2734 0.0359 0.0084 0.0203 0.0021 0.0084 0.0012 0.0025 0.0003 0.0015 0.0002 0.0340 2.35

MEAS+IND 39,180,000 2.99 0.4035 0.7314 0.0778 0.2736 0.0362 0.0086 0.0206 0.0021 0.0085 0.0012 0.0026 0.0003 0.0016 0.0002 0.0348 2.39

INFERRED 383,560,000 2.96 0.3565 0.6671 0.0718 0.2559 0.0326 0.0076 0.0178 0.0018 0.0071 0.0010 0.0021 0.0002 0.0013 0.0002 0.0282 1.64

COG 0.50% TREO

Classification

Tonnage

(t)

Density

(t/m3)

La2O3

(%)

Ce2O3

(%)

Pr2O3

(%)

Nd2O3

(%)

Sm2O3

(%)

Eu2O3

(%)

Gd2O3

(%)

Tb2O3

(%)

Dy2O3

(%)

Ho2O3

(%)

Er2O3

(%)

Tm2O3

(%)

Yb2O3

(%)

Lu2O3

(%)

Y2O3

(%)

F

(%)

MEASURED 1,600,000 3.07 0.4148 0.7851 0.0858 0.3099 0.0475 0.0120 0.0296 0.0033 0.0138 0.0020 0.0041 0.0004 0.0024 0.0003 0.0582 3.75

INDICATED 30,130,000 3.01 0.4717 0.8380 0.0877 0.3037 0.0393 0.0092 0.0222 0.0022 0.0090 0.0012 0.0027 0.0003 0.0016 0.0002 0.0364 2.72

MEAS+IND 31,740,000 3.01 0.4688 0.8353 0.0876 0.3040 0.0397 0.0093 0.0226 0.0023 0.0092 0.0013 0.0027 0.0003 0.0016 0.0002 0.0375 2.77

INFERRED 336,610,000 2.97 0.3884 0.7195 0.0767 0.2714 0.0342 0.0079 0.0186 0.0018 0.0073 0.0010 0.0022 0.0002 0.0014 0.0002 0.0289 1.75

COG 0.75% TREO

Classification

Tonnage

(t)

Density

(t/m3)

La2O3

(%)

Ce2O3

(%)

Pr2O3

(%)

Nd2O3

(%)

Sm2O3

(%)

Eu2O3

(%)

Gd2O3

(%)

Tb2O3

(%)

Dy2O3

(%)

Ho2O3

(%)

Er2O3

(%)

Tm2O3

(%)

Yb2O3

(%)

Lu2O3

(%)

Y2O3

(%)

F

(%)

MEASURED 1,600,000 3.07 0.4148 0.7851 0.0858 0.3099 0.0475 0.0120 0.0296 0.0033 0.0138 0.0020 0.0041 0.0004 0.0024 0.0003 0.0582 3.75

INDICATED 28,680,000 3.01 0.4874 0.8622 0.0898 0.3101 0.0399 0.0093 0.0226 0.0023 0.0091 0.0013 0.0027 0.0003 0.0016 0.0002 0.0371 2.81

MEAS+IND 30,280,000 3.02 0.4836 0.8581 0.0896 0.3101 0.0403 0.0095 0.0230 0.0023 0.0094 0.0013 0.0028 0.0003 0.0017 0.0002 0.0382 2.86

INFERRED 259,400,000 2.99 0.4509 0.8183 0.0857 0.2984 0.0369 0.0084 0.0200 0.0019 0.0075 0.0010 0.0022 0.0002 0.0014 0.0002 0.0298 2.02

COG 1.00% TREO

Classification

Tonnage

(t)

Density

(t/m3)

La2O3

(%)

Ce2O3

(%)

Pr2O3

(%)

Nd2O3

(%)

Sm2O3

(%)

Eu2O3

(%)

Gd2O3

(%)

Tb2O3

(%)

Dy2O3

(%)

Ho2O3

(%)

Er2O3

(%)

Tm2O3

(%)

Yb2O3

(%)

Lu2O3

(%)

Y2O3

(%)

F

(%)

MEASURED 1,590,000 3.07 0.4158 0.7865 0.0859 0.3102 0.0475 0.0121 0.0297 0.0033 0.0139 0.0020 0.0041 0.0005 0.0024 0.0003 0.0583 3.76

INDICATED 27,670,000 3.02 0.4960 0.8747 0.0909 0.3131 0.0403 0.0094 0.0229 0.0023 0.0093 0.0013 0.0028 0.0003 0.0016 0.0002 0.0378 2.89

MEAS+IND 29,270,000 3.02 0.4916 0.8699 0.0906 0.3129 0.0407 0.0096 0.0232 0.0024 0.0095 0.0013 0.0028 0.0003 0.0017 0.0002 0.0389 2.94

INFERRED 219,800,000 3.00 0.4895 0.8775 0.0911 0.3137 0.0386 0.0088 0.0209 0.0020 0.0077 0.0010 0.0022 0.0002 0.0013 0.0002 0.0302 2.21


Classification

Tonnage

(t)

Density

(t/m3)

La2O3

(%)

Ce2O3

(%)

Pr2O3

(%)

Nd2O3

(%)

Sm2O3

(%)

Eu2O3

(%)

Gd2O3

(%)

Tb2O3

(%)

Dy2O3

(%)

Ho2O3

(%)

Er2O3

(%)

Tm2O3

(%)

Yb2O3

(%)

Lu2O3

(%)

Y2O3

(%)

F

(%)

MEASURED 1,320,000 3.07 0.4465 0.8287 0.0887 0.3149 0.0469 0.0118 0.0293 0.0032 0.0137 0.0019 0.0041 0.0005 0.0024 0.0003 0.0582 3.88

INDICATED 25,420,000 3.01 0.5131 0.8976 0.0926 0.3168 0.0401 0.0093 0.0226 0.0022 0.0091 0.0013 0.0027 0.0003 0.0016 0.0002 0.0370 2.88

MEAS+IND 26,730,000 3.02 0.5098 0.8942 0.0924 0.3167 0.0405 0.0094 0.0230 0.0023 0.0093 0.0013 0.0028 0.0003 0.0017 0.0002 0.0381 2.93

INFERRED 210,590,000 3.00 0.4965 0.8882 0.0920 0.3164 0.0388 0.0088 0.0210 0.0020 0.0077 0.0010 0.0022 0.0002 0.0013 0.0002 0.0301 2.22

COG 1.50% TREO

Classification

Tonnage

(t)

Density

(t/m3)

La2O3

(%)

Ce2O3

(%)

Pr2O3

(%)

Nd2O3

(%)

Sm2O3

(%)

Eu2O3

(%)

Gd2O3

(%)

Tb2O3

(%)

Dy2O3

(%)

Ho2O3

(%)

Er2O3

(%)

Tm2O3

(%)

Yb2O3

(%)

Lu2O3

(%)

Y2O3

(%)

F

(%)

MEASURED 820,000 3.05 0.5074 0.9072 0.0939 0.3230 0.0450 0.0110 0.0273 0.0029 0.0121 0.0018 0.0038 0.0004 0.0023 0.0003 0.0528 3.77

INDICATED 20,940,000 3.01 0.5419 0.9343 0.0952 0.3219 0.0396 0.0090 0.0219 0.0021 0.0085 0.0012 0.0025 0.0003 0.0015 0.0002 0.0346 2.80

MEAS+IND 21,750,000 3.01 0.5406 0.9333 0.0951 0.3219 0.0398 0.0091 0.0221 0.0021 0.0086 0.0012 0.0026 0.0003 0.0016 0.0002 0.0352 2.83

INFERRED 164,110,000 3.00 0.5211 0.9237 0.0950 0.3246 0.0395 0.0089 0.0214 0.0020 0.0077 0.0010 0.0022 0.0002 0.0013 0.0002 0.0298 2.26

COG 1.75% TREO


SGS Geostat

Table 14-6: MHREO Zone Mineral Resource Estimate

Table 14-7: MHREO Zone Mineral Resource Estimate with Individual REO Values

Table 14-8: Ashram Deposit Mineral Resource Estimate per Zone

Note: Totals of the above three tables may differ from sum or weighted sum of numbers due to rounding

14.9 Mineral Resource Validation

A validation of the mineral resource TREO grade was conducted as part of the verification process. The validation includes: 1) a visual comparison of the color-coded block values versus the composites data in the vicinity of the interpolated blocks, and 2) a comparison of the grade average and standard deviation parameters for the composite data and the block model data. Table 14-9 summarizes the comparative statistics of the composite and block model datasets without any cut-off grade. Figure 14-13 shows the verification histograms.

Table 14-9: Comparative Statistics of the Assays, Composites, and Blocks Datasets

Classification Zone

Tonnage

(t)

Density

(t/m3)

TREO

(%)

LREO

(%)

MREO

(%)

HREO

(%)

MHREO

(%)

F

(%)

MH/T

Ratio

MEASURED Central 1,140,000 3.10 1.69 1.50 0.098 0.099 0.20 4.18 12%

INDICATED Central 5,420,000 3.10 1.62 1.44 0.091 0.091 0.18 3.90 11%

MEAS+IND Central 6,550,000 3.10 1.63 1.45 0.093 0.093 0.19 3.95 11%

INFERRED Central 2,790,000 3.10 1.57 1.39 0.085 0.088 0.17 3.43 11%

COG 1.25 TREO

Classification Zone

Tonnage

(t)

Density

(t/m3)

La2O3

(%)

Ce2O3

(%)

Pr2O3

(%)

Nd2O3

(%)

Sm2O3

(%)

Eu2O3

(%)

Gd2O3

(%)

Tb2O3

(%)

Dy2O3

(%)

Ho2O3

(%)

Er2O3

(%)

Tm2O3

(%)

Yb2O3

(%)

Lu2O3

(%)

Y2O3

(%)

F

(%)

MH/T

Ratio

MEASURED Central 1,140,000 3.10 0.3690 0.7336 0.0831 0.3100 0.0513 0.0134 0.0330 0.0038 0.0163 0.0023 0.0048 0.0005 0.0027 0.0003 0.0685 4.18 12%

INDICATED Central 5,420,000 3.10 0.3512 0.7047 0.0804 0.3015 0.0480 0.0125 0.0310 0.0036 0.0153 0.0021 0.0044 0.0005 0.0025 0.0003 0.0624 3.90 11%

MEAS+IND Central 6,560,000 3.10 0.3543 0.7098 0.0809 0.3029 0.0486 0.0126 0.0313 0.0037 0.0155 0.0022 0.0045 0.0005 0.0025 0.0003 0.0635 3.95 11%

INFERRED Central 2,790,000 3.10 0.3423 0.6823 0.0783 0.2910 0.0448 0.0115 0.0289 0.0034 0.0145 0.0021 0.0043 0.0005 0.0025 0.0003 0.0605 3.43 11%

COG 1.25 TREO - BASE CASE

Classification Zone

Tonnage

(t)

Density

(t/m3)

La2O3

(%)

Ce2O3

(%)

Pr2O3

(%)

Nd2O3

(%)

Sm2O3

(%)

Eu2O3

(%)

Gd2O3

(%)

Tb2O3

(%)

Dy2O3

(%)

Ho2O3

(%)

Er2O3

(%)

Tm2O3

(%)

Yb2O3

(%)

Lu2O3

(%)

Y2O3

(%)

F

(%)

MH/T

Ratio

Measured Central 1,140,000 3.10 0.369 0.734 0.083 0.310 0.051 0.013 0.033 0.0038 0.0163 0.0023 0.0048 0.0005 0.0027 0.0003 0.068 4.18 12%

Measured Inner 460,000 3.00 0.533 0.918 0.093 0.311 0.038 0.009 0.021 0.0020 0.0079 0.0011 0.0025 0.0003 0.0015 0.0002 0.033 2.71 6%

Indicated Central 5,420,000 3.10 0.351 0.705 0.080 0.301 0.048 0.012 0.031 0.0036 0.0153 0.0021 0.0044 0.0005 0.0025 0.0003 0.062 3.90 11%

Indicated Inner 21,960,000 3.00 0.534 0.920 0.094 0.317 0.038 0.009 0.021 0.0020 0.0079 0.0011 0.0024 0.0003 0.0015 0.0002 0.032 2.67 6%

Indicated Outer 300,000 2.90 0.314 0.608 0.069 0.252 0.032 0.007 0.015 0.0013 0.0046 0.0006 0.0012 0.0001 0.0009 0.0001 0.017 0.74 6%

Inferred Central 2,790,000 3.10 0.342 0.682 0.078 0.291 0.045 0.012 0.029 0.0034 0.0145 0.0021 0.0043 0.0005 0.0025 0.0003 0.060 3.43 11%

Inferred Inner 215,770,000 3.00 0.492 0.882 0.091 0.314 0.039 0.009 0.021 0.0019 0.0076 0.0010 0.0022 0.0002 0.0013 0.0002 0.030 2.20 6%

Inferred Outer 1,240,000 2.90 0.307 0.598 0.066 0.244 0.030 0.007 0.015 0.0015 0.0059 0.0008 0.0018 0.0002 0.0013 0.0002 0.024 1.10 7%

MEASURED All 1,590,000 3.07 0.416 0.787 0.086 0.310 0.048 0.012 0.030 0.0033 0.0139 0.0020 0.0041 0.0005 0.0024 0.0003 0.058 3.76 10%

INDICATED All 27,670,000 3.02 0.496 0.875 0.091 0.313 0.040 0.009 0.023 0.0023 0.0093 0.0013 0.0028 0.0003 0.0016 0.0002 0.038 2.89 7%

MEAS+IND All 29,270,000 3.02 0.492 0.870 0.091 0.313 0.041 0.010 0.023 0.0024 0.0095 0.0013 0.0028 0.0003 0.0017 0.0002 0.039 2.94 7%

INFERRED All 219,800,000 3.00 0.490 0.878 0.091 0.314 0.039 0.009 0.021 0.0020 0.0077 0.0010 0.0022 0.0002 0.0013 0.0002 0.030 2.21 6%

Dataset Count TREE (ppm) Std dev.

Assays 13,513 13,481 6120

Composites 4,573 13,186 5650

Blocks 143,036 12,418 4650


SGS Geostat

Figure 14-13: Comparative Histograms of the Assays, Composites, and Blocks Datasets

In addition to the grade validation, a verification of the mineral resource tonnage was conducted. The tonnage validation consists of the comparison of the tonnage calculated from the volume of the 3D wireframe envelop of the mineralization compared to the tonnage calculated from the volumetric estimate of the block model using identical average bulk density value.

14.10 Comments about the Mineral Resource Estimate

There are no known factors or issues related to permitting, legal, mineral title, taxation, socio-economic or political relationships that could materially affect the mineral resource estimate. Although there is some significant extrapolation of the analytical data (up to about 150 m), it has been decided to model the Ashram Deposit that way to keep it fairly regular and consistent. In order to decrease the uncertainties related to the grade interpolation in the areas located away from analytical data, additional in-fill drilling will be necessary to confirm the presence of mineralization.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

0 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000

Fre

qu

en

cy

% TREE

Verification Histograms

Assays

Composites

Blocks


SGS Geostat

15 Mineral Reserve Estimates No mineral reserves have been calculated on the Property.


SGS Geostat

16 Mining Methods

16.1 Mining Method

Taking into account the proximity of the mineralized zone with the surface topography and the presence of high grades of REEs at shallow depth, the mining method selected to mine the Ashram Deposit is open-pit mining. Conventional mining equipment, such as trucks, loaders, and hydraulic shovels will be used on 5 metre benches. This PEA was restricted to the evaluation of the open-pit potential of the Ashram Deposit. Therefore the possibility of underground mining was not considered since SGS Geostat did not see the advantage of using such a method considering the higher operating costs and the deposit particularities.

16.2 Overall Pit Slope Angle

Since the required geotechnical data is not available for determining the pit slope angle, SGS Geostat utilized an overall slope angle of 45°. This value is based on the results of a study performed by Hoek and Bray (1974) which has the purpose of reasonably predicting the angle at which a slope is considered stable by analysing various mining projects. The next figure shows that for an average depth of 200 m and with a factor of safety of 1.3, a slope can be considered stable at 45°.


SGS Geostat

Figure 16-1: Cases of Rock Slope With Stable and Failed Conditions Distinguished5

16.3 Pit Optimization

16.3.1 Pit Optimization Procedure

At a rate of 4,000 tonnes of ore per day processed, at the 1.25% TREO CoG, the Ashram Deposit contains enough resource to support an operation of more than 177 years6 (open pit and underground mining). Therefore, the main purpose of the optimization process was to highlight a section of the deposit 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 resources for 25 years of production at a mining CoG of 1.25% TREO was selected as the base case. Considering that this study is a PEA, no grade optimization scenarios were made in this report. Future studies should analyse several scenarios to quantify the variation of the Project’s NPV when raising the mining CoG; and thus indirectly raising the stripping ratio and the daily mining rate.

5 Steffen, O. K. H., Contreras, L. F., Terbrugge, P. J., Venter, J., A Risk Evaluation Approach for Pit Slope Design, 2008

6 SGS Geostat, Technical Report, Mineral Resource Estimation Update, Eldor Property – Ashram Deposit, Nunavik, Quebec, Commerce Resources Corporation, April 20th 2012, Table 17.1, p.94


SGS Geostat

16.3.2 Pit Optimization Parameters

For the initial optimization, the required parameters were selected by SGS to evaluate the most economic open-pit profile. Although these parameters are not necessarily final, a reasonable degree of accuracy is required, since the analysis is an iterative process. The economic and operating parameters used in the initial optimization are given in Table 16-1:

Table 16-1: Economic Parameters of Pit Optimization

Using the Ashram basket price, the marginal (mill) cut-off grade was calculated at 0.51% TREO. Although all material above 0.51% TREO is economical, a mining cut-off grade of 1.25% TREO was selected in order to maximise the mill feed grade. Note: The economic parameters used at the time of the pit optimization do not necessarily confirm those stated in the economic model. The impact is negligible considering the size of the resource and the quality of initial estimates.

Exchange rate 1.00 CAN$:US$

Discount rate 10.00 %

Oxides Prices

Lanthanum 15.00 CAN$/kg

Cerium 10.00 CAN$/kg

Praseodymium 76.00 CAN$/kg

Neodymium 77.00 CAN$/kg

Samarium 12.00 CAN$/kg

Europium 905.00 CAN$/kg

Gadolinium 45.00 CAN$/kg

Terbium 980.00 CAN$/kg

Dysprosium 800.00 CAN$/kg

Yttrium 28.00 CAN$/kg

Ashram Basket Price: 35.03 CAN$/kg

Slope angle 45 deg

Mining cost 5.58 C$/tonne

Mining recovery 100 %

Mining dilution - %

Processing (Concentration) 41.27 C$/t treated

G&A 47.70 C$/t treated

Total ore based cost 88.97 C$/t treated

Mill recovery 70.00 %

Cracking recovery 95.00 %

Overall mine site recovery (70% x 95%) 66.50 %

Oxide Prices Discount * 25.00 %

4,000 tpd

1,400,000 tpy

*Account for final hydrometallurgy

Mill throughput


SGS Geostat

16.3.3 Pit Optimization Results

As described in the pit optimization procedure, from all the nested pit shells, the smallest of them containing sufficient resources for 25 years of production at a mining CoG of 1.25% TREO was thus selected as the base case. The tonnage contained in the selected shell is presented in Table 16-2 and shown by Figure 16-2 and Figure 16-3.

Table 16-2: Resources Contained Into Base Case Pit Shell

* With a reasonable tonnage increase of 5-10% when designing the optimal pit, this tonnage of 32.8 M tonnes will

easily be increased to 35,000,000 tonnes and then support a 25 years mine life operation.

Figure 16-2: Plan View of the Base Case Pit Shell

Grade Density Tonnage TREO

% TREO t/m3 t %

< 1.25 2.91 1,400,000 0.86

≥1.25 3.03 32,800,000* 1.82

Total 3.02 34,200,000 1.78

Waste material ALL 2.90 2,900,000 0.00

Total ALL 3.01 37,100,000

Note: Resulting stripping ratio = 0.13

Mineralized

material

Rocktype

LAKE

TOPO

BASE CASE SHELL


SGS Geostat

Figure 16-3: Section View (6,312,175N) of the Base Case Pit Shell

0 to 1.25

1.25 to 1.50

1.50 to 1.75

1.75 to 2.00

2.00 to Ceiling

%TREO OF MINERALIZED MATERIAL

Base case pit shell

450m

200m


SGS Geostat

16.4 Ultimate Pit

16.4.1 Pit Design Parameters

Using the base case shell as reference, an open-pit including a ramp and safety berms was designed to develop a more realistic mining scenario. The new designed pit will account for the additional waste material coming from the addition of a ramp to the base case shell. The design parameters used are defined as:

- Overall slope angle: 45° - Face angle: 85° - Bench height: 5 m - Double benching: 1 safety berm at each 4 benches - Safety berm: 18 m width - Ramp grade: 10% - Ramp width: 16.3 m (single lane) and 21.7 m (double lane) *See figure below

Figure 16-4: Ramp Width, Single and Double Lanes (annotations in metres)

16.4.2 Ultimate Pit Design

The next figure shows a plan view of the pit with his dimensions and the surrounding elements.


SGS Geostat

Figure 16-5: Plan View of Designed Pit and Dimensions

16.4.3 Mineralization Contained Within Pit Design

The ultimate pit design results are presented in Table 16-3.

Table 16-3: Mineralization Contained Within Pit Design

Grade Density Tonnage TREO

% TREO t/m3 t %

< 1.25 2.91 2,500,000 0.86

≥1.25 3.02 35,000,000 1.81

Total 3.02 37,400,000 1.74

Waste material ALL 2.90 4,200,000 0.00

Total ALL 3.00 41,600,000

Note: Resulting stripping ratio = 0.19

Rocktype

Mineralized material

LAKE BED

500 m

Maximum depth = 175m from surface


SGS Geostat

16.5 Mine Development and Production Schedule

The mine development used a number of push-backs, or phases, designed 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.

16.5.1 Pushback Width

In order to have a safe operation, a minimum mining width has to be respected when introducing a pushback into an operating pit. An appropriate mining width was determined based on:

- a CAT 988H loading a CAT 773 mining truck; - a 23.3 m allowance for loader movement; - a 21.7 m haul road width.

The other loading unit, a hydraulic shovel CAT 385C, will require less width due to the backhoe’s configuration. Figure 16-6 illustrates the proposed pushback width to be used in the design of the phase development:

Figure 16-6: Minimum Push-back Width

16.5.2 Pit Dewatering

The progressive deepening of the open pit will result in increasing water infiltration from precipitation (rain and snow) and groundwater inflow. The maximum depth of the pit will be reached in year 25 and will be around 170 m under topography. As the pit deepens and increases in footprint, it will be necessary to control water inflow through the construction of an in-pit dewatering systems such as drainage ditches, sumps, water pipes and pumps.


SGS Geostat

16.5.3 Mine Development

Three minable phases are proposed to develop the ultimate pit, as designed and shown in Fig 16-7 and Fig 16-8. Each phase or pushback is designed with at least a minimum mining width of about 45 m to accommodate the mining equipment that will operate on each working bench. Phase/Pushback #1 At the beginning of the Project, the mining activities will be concentrated around phase #1 since the shell defined by this phase gives the higher grade achievable near surface and a low waste-to-ore stripping ratio. Prioritizing the mining in this section of the deposit will maximize revenue at the beginning of the Project, thus maximizing the net present value (NPV).7 Phase/Pushback #2 Phase #2 generally expands to the Northeast of Phase #1. A constant difference of 10 metres (2 benches) has been kept during development of the mining plan (LoM) to limit the number of benches mined simultaneously. This constraint has also the effect to limit the variation of stripping ratios from years to years.8 Phase/Pushback #3 (Optimal Pit Design) Phase #3 includes the mining of the rest of the mineralized material. Table 16-4 presents the tonnage for the 3 phases. Figure 16-7 and Figure 16-8 schematize the 3 phases.

Table 16-4: Tonnage by Phase

7 Considering that this study is at a PEA level and has for main purpose to evaluate the economic potential of the

deposit, no final pit design was completed for phase #1 8 Same as above

Phase Material Tonnage %TREO Stripping

Ore ≥1.25 %TREO 7,850,000 1.75

Waste 840,000 -

Ore ≥1.25 %TREO 12,040,000 1.83

Waste 910,000 -

Ore ≥1.25 %TREO 15,110,000 1.82

Waste 4,850,000 -

Ore ≥1.25 %TREO 35,000,000 1.81

Waste 6,600,000 -

0.32

TOTAL 0.19

0.11 1

2 0.08

3


SGS Geostat

Figure 16-7: Plan View - Pushback’s 1, 2 and 3 (Optimal Pit Design)

Figure 16-8: Pushback’s 1, 2 and 3 (Optimal Pit Design)

Pushback #1

Pushback #2

Pushback #3 OPTIMAL

PIT DESIGN

Pushback #1

Pushback #2

Pushback #3 OPTIMAL

PIT DESIGN


SGS Geostat

16.5.4 Production Schedule

At a mill throughput of 4,000 tonnes per day, the Ashram Deposit has sufficient mineral resources to support an operation of more than 177 years9 (considering the current measured, indicated and inferred resources). SGS and Commerce Resources agreed to limit this PEA to the 25 first years. The evaluation beyond these years is pure speculation considering the impossibility of predicting the demand for the lanthanides for such a period plus the changes in the overall economy. SGS developed a life-of-mine scenario (LoM) based on a 1,400,000 tonnes mill throughput (4,000 tonnes per day over 350 days per year). Stripping will begin during construction phase (year 0) in order to use waste material to build roads and infrastructure foundations. Table 16-6 and Figure 16-9 show the LoM scenario proposed by SGS. In addition to the LoM scenario, Table 16-5 shows the amount of oxides contained into the final concentrate on a 5 year basis and after a 66.5% mill-cracking recovery to a REC end product.

Table 16-5: Oxides Contained in Mine Concentrate (using 66.5% Mill-Cracking Recovery)

The overall 66.5 % processing recovery is explained in Section 17. No tonnages for Holium (Ho), Erbium (Er), Thulium (Th), Ytterbium (Yb), and Lutetium (Lu) are included and have been assigned no value in the economic evaluation of the Project. However, they will be present in the mixed REC end product but account for less than 90 tonnes combined of REO production annually. *Disclaimer: Commerce will not produce these quantities of oxides separately. Commerce is

expected to produce a mixed REC product only for the market.

9 SGS Geostat, Technical Report, Mineral Resource Estimation Update, Eldor Property – Ashram Deposit, Nunavik,

Quebec, Commerce Resources Corporation, April 20th 2012, Table 17.1, p.94

0-5 6-10 11-15 16-20 21-25 Total

Mill input tonnes 7,000,000 7,000,000 7,000,000 7,000,000 7,000,000 35,000,000

Grade input %TREO 1.72 1.73 1.77 1.86 1.94 1.81

La tonnes 19,200 19,700 20,300 21,400 23,000 103,600

Ce tonnes 36,400 36,800 37,700 39,500 42,530 192,930

Pr tonnes 3,900 3,900 4,000 4,200 4,500 20,500

Nd tonnes 13,900 13,800 14,000 14,500 15,600 71,800

Sm tonnes 1,900 1,900 1,900 2,000 2,180 9,880

Eu tonnes 470 460 460 480 520 2,390

Gd tonnes 1,200 1,100 1,100 1,200 1,300 5,900

Tb tonnes 130 120 120 130 140 640

Dy tonnes 530 500 500 540 590 2,660

Y tonnes 2,200 2,100 2,100 2,200 2,400 11,000

Total tonnes 79,830 80,380 82,180 86,150 92,760 421,300

All tonnages are rounded

Year

Commerce Resources Corp. – Ashram project – Preliminary Economic Assessment 124

SGS Geostat

Table 16-6: Production Schedule Proposed by SGS

Figure 16-9: Production Schedule Proposed by SGS

Year 0 1 2 3 4 5 6 7 8 9 10 11 12Tonnes ore 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000

%TREO 1.77 1.71 1.71 1.71 1.72 1.72 1.73 1.73 1.74 1.74 1.75 1.76

Tonnes waste 750,000 865,143 785,673 640,040 632,175 526,288 526,288 370,789 350,654 287,981 244,825 190,199 110,468

Stripping ratio 0.62 0.56 0.46 0.45 0.38 0.38 0.26 0.25 0.21 0.17 0.14 0.08

Pushback 1 mined

Pushback 2 mined

Pushback 3 mined

Year 13 14 15 16 17 18 19 20 21 22 23 24 25

Tonnes ore 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000

%TREO 1.77 1.79 1.80 1.83 1.84 1.86 1.87 1.88 1.89 1.90 1.92 1.96 2.05

Tonnes waste 99,081 64,974 52,981 3,178 4,081 5,625 1,299

Stripping ratio 0.07 0.05 0.04 0.00

Pushback 1 mined

Pushback 2 mined

Pushback 3 mined

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

%T

REO

TO

NN

ES

YEAR

Waste

Ore

%TREO

Commerce Resources Corp. – Ashram project – Preliminary Economic Assessment 125

SGS Geostat

16.6 Mine equipment selection

16.6.1 Drilling

Table 16-7 presents a summary of the drilling parameters selected to mine the Ashram Deposit:

Table 16-7: Drilling Parameters

Although only one drill would be sufficient (based on the required production per hour), two units are budgeted in order to not compromise the normal production activities in case of a major breakdown. Also, this will provide flexibility when pre-shear drilling will be done simultaneously with the production drilling. The selected drilling units are defined as:

Quantity 2 Supplier Atlas Copco Model FlexiROC D55 Hole diameter 3.625” – 6” Hammer type Down-the-hole

A pre-shearing procedure will be implemented adjacent to the outer limits in order to minimize damage to the final walls. The primary drilling unit will be able to drill those holes due to the flexibility of his boom and the possibility to drill with a smaller diameter. Pre-shearing will consist of a continuous row, blasted in section along the final wall. Pre-shearing holes are 4” diameter, spaced at 1.2 m and to a depth of 20 m (4 benches together).

Daily tonnage (ore + waste) 5,000 tonnes

Burden 4.0 m

Spacing 4.0 m

Depth (Bench height) 5.0 m

Sub-driling 1.0 m

Rock density (average) 3.0 t/m3

Tonnes per holes 240.0 t/hole

Tonnes per drilled meters 40.0 t/m

Tonnes per days 5,000 tpd

Required meters per day 125.0 mpd

Required holes per day 21 holes

Operated hours per day (theo) 12 hpd

Efficiency 60% %

Average availability 75% %

Operated hours per day (real) 5.4 hpd

Required production per hour 23.1 mph

Drilling unit required 1 unit


SGS Geostat

16.6.2 Blasting

Table 16-8 presents a summary of the assumed blasting parameters to mine the Ashram Deposit.

Table 16-8: Blasting Parameters

Given the long mine life (more than 25 years), an emulsion plant will be built on the mine site in order to limit the costs of consumables. Also, emulsion was preferred to ANFO considering its resistance to water. The emulsion plant should be able to produce 500,000 kg of emulsion per year. A blasting contractor will take care of producing the right mix, to ensure the product quality and to deliver the final product directly to drilled holes. The contractor will provide his own truck and his own employees for operation. The contractor will be under the direct supervision of the mine operator (e.g. Commerce Resources). The operator of the Project (e.g. Commerce Resources) will have its own blasting crew who will take care of the priming, stemming, tie-in and firing the blast patterns. Pre-shear holes will be loaded and blasted by the operator’s blasting crew due to the use of packages explosives in this kind of holes.

16.6.3 Major Equipment Selection

The mining equipment, presented in Table 16-9, was selected in order to match the targeted production rate and also the mining parameters, such as bench height, shift length, etc. The major mining operations (mucking and hauling) will take place 350 days per year, 24 hours per day, with two crews working 12 hours per day. The following parameters were taken in consideration in order to come up with the required ongoing production fleet (mainly loading units and trucks).

Daily tonnage (ore + waste) 5,000 tonnes

Tonnes per hole 240.0 tonnes

Hole depth 6.0 m

Collar 2.00 m

Active column 4.00 m

Hole diameter 5.0 "

Hole diameter 12.7 cm

Emulsion density 1.28 g/cc

Qty emulsion per hole 65 kg

Qty emulsion per day 1,351 kg

Powder factor 0.27 kg/tonne


SGS Geostat

- Specific tonnage mined per year; - Equipment efficiency and availability; - Effective hours worked per day; - Equipment tonnage and filling capacity; - Haulers speed by location; - Haulers cycle time (starting at 6.9 min at year 0 and finishing at 22.3 min at year 25), etc.

Table 16-9: Proposed Mining and Service Fleet

The minimum number of trucks needed is 1 unit for years 1-4 and 2 units for years 5-25. Due to the Project location, the operator (e.g. Commerce Resources) will need backup units in case of major breakdown; so a constant number of haulers (4) have to be available during the entire mine life. Those haulers will already be on site due to their use for the all-weather road construction. For the entire Project period, a single loading unit, such as the proposed wheel loader, will be sufficient to achieve the mining targets. A back-up loading unit, such as a CAT 385 shovel, will however be necessary during major maintenances or breakdown. The estimated life of main units is 70,000 operating hours, i.e. an approximate 10-12 years usage for highly utilized equipment such as trucks and loading units. Therefore, new equipment will be purchased around mid-project. A special allocation has been planned and is presented in the section on operating costs.

Drilling Drill 3.625”- 6” 2

Loader 14 t 1

Shovel 8 t 1

Hauling Truck 50 t 4

Dozer 305 hp 1

Grader 297 hp 1

Shovel 345 hp 1

Water/Fire truck 7 kgal 1

Loader 270 hp 1

Skid steer 50 hp 1

Pick-up - 10

Bus - 2

Tire truck - 1

Service truck - 1

Forklift 10 klbs 1

Flat bed truck - 1

Tanker truck 2,5 kgal 1

Crane 75 t 1

Concentrate truck 35 t 6

Fuel tanker 45 kL 2

Tower light - 5Truck scale 100 t 1

Dozer 305 hp 1

Grader 297 hp 2

Shovel 345 hp 1

Loader 270 hp 1

Tractor - 1

Low bed trailer 50 t 1

QuantityUnit SizePurpose

AC FlexiROC D55

-

Model

CAT 988HMucking

CAT 385

CAT 773

CAT D8R

CAT 16M

CAT 345

Auxiliary

-

-

-

-

-

-

All Weather

Road (AWR)

Services &

Support &

Others

CAT 966H

CAT D8R

CAT 16M

CAT 345

-

CAT 966H

-

-

--

-

-

-

-


SGS Geostat

17 Recovery Methods

17.1 Historical Background

Since Ashram is a new project, there is no historical milling background.

17.2 Milling

Upon review of available rare earth market studies, as well as discussion with Commerce, a 4,000 tpd mill is proposed in this study. The mill process will be conventional with operation relying on operators’ experience and skill supported by electronic monitoring and instrumentation. Mill design criteria follow those used in several mines in Canada where apart for the run of mine grizzly, hopper, jaw crusher and water tanks, the entire mill services and operations are under the same roof. Whenever possible, mill equipment will be chosen on the basis of the optimization of the concentrate grade and the overall recovery. This preliminary assessment is based on the following assumptions:

• A good mill design will have a good overall TREO grade and recovery

• Unless in extremely good working condition, Commerce will buy new milling equipment

• The mine will be able to feed the mill at a rate of 4,000 tpd, 7 days per week • No major setbacks will be encountered with the federal and provincial environmental

agencies, trade unions and/or indigenous people

• 3-Phases diesel power generators delivering about 10MW will be available on site

• Approximately 5 hectares of a more or less flat site will have to be prepared for the mill and its ancillary infrastructure

• It will be possible to dispose of the tailings without jeopardizing the surrounding

environment

• It is anticipated that the mineral concentrate grade will be a minimum of 10% TREO, while recovery will be in the 70% range

• The ore liberation size is typically less than 30 µm, down to <5 µm

• No provision was made for the recovery of other minerals (fluorite, apatite)


SGS Geostat

17.2.1 Processing Description

The process plant is designed to produce a rare earth mineral concentrate by froth flotation. It will incorporate the following sections: run-of-mine ore storage, a one-stage crushing plant, crushed ore storage, SAG milling with screens classification followed by a single-stage ball milling with cyclone classification, flotation of the rare earth minerals, concentrate thickening and filtering, tailings handling and placement, water and reagents distribution. For the ease of reading, only major milling pieces of equipment are enumerated and described. (Refer to the process flowsheets for a more complete listing of mill main machinery).

17.2.1.1 Run of Mine Ore

Run of mine (RoM) ore is delivered from the mine by haul trucks. Whenever possible the ore will be dumped directly in the jaw crusher feed hopper. However, because the mining and the crushing operations will not always be on the same time schedule, it is assumed that 25% of the time the haul trucks will proceed to the RoM stock pile and the rest of the time the haul trucks will dump directly onto the grizzly above the crusher feed hopper. The RoM stockpile area is sized to hold approximately 30,000 tonnes of ore. Secondary handling of the ore will be by a Caterpillar 938 front end loader that will, among other things, be used to feed the crusher feed hopper with stockpiled RoM ore as necessary.

17.2.1.2 Crushing

A grizzly (10) having 15” x 20” openings scalps the oversize rock from the run of mine ore. The oversize will be broken in place with a pneumatic rock breaker (05). Grizzly undersize falls into a 100 tonne capacity hopper (15) which in turn feeds a 17’ x 5’ apron feeder (20) discharging on an incline fix bar scalper (25). Bar scalper oversize falls by gravity into the 48” x 60” jaw crusher (30) while the undersize, the crushed ore and the fines from the apron feeder reports to a 60” wide sacrificial belt conveyor (35). A sacrificial belt conveyor in turn reports to a 36” wide belt conveyor (40) which discharges on a buffer stockpile (50). The stockpile which is above ground has a live load of 4,000 tonnes. It feeds through longitudinal slots two apron feeders (55, 60) located in an 8’ x 8’ underground concrete tunnel.

17.2.1.3 Grinding and Classification

Apron feeders (55, 60) discharging on a second 36” belt conveyor (65) feed a 10’ x 20’, 1200 kW SAG mill (75). The SAG mill discharges on a set of three 60” x 120”, 16 mesh Derrick screens (80). Derrick screen oversize is conveyed back to the SAG mill feed via three, 24” belt conveyors (100, 105, and 110) in series while the undersize is pumped (95) to a set of two 20” cyclones (115). Cyclones underflow flow by gravity to a 4-way splitter box feeding four 13.5’ x 13’, 900 kW ball mills


SGS Geostat

in parallel10 (125, 130, 135 and 140). Cyclone overflow reports to the first conditioner (145) of the flotation circuit.

17.2.1.4 Flotation

The larger conditioner (145) with dimensions 3 m in diameter (D) x 4 m in height (H) overflows to a second 2.5 m D x 3 m H conditioner (150) that in turn reports to a bank of Denver DR type 300 x 4 cells rougher (155). Rougher tailings are pumped (165) to a third 2 m D x 2 m H conditioner (170), overflowing in a primary Denver DR type 100 x 6 cells scavenger (175). Tailings from the primary scavenger are pumped (185) to a fourth 2 m D x 2 m H conditioner (190) which overflows into a second Denver DR type 100 x 6 cells scavenger (195). Tailings from the second scavenger are pumped (205) to a fifth 2 m D x 2 m H conditioner (210) overflowing into a third Denver DR type 100 x 6 cells. Tailings from this bank of cell are the final tailings. After being sampled (220) they are pumped (230) to the tailings pond. Rougher (155) concentrate is pumped (235) to a bank of Denver DR type 24 x 4 cells primary cleaner. Concentrate from this cleaner is the final concentrate and is pumped (270) to the mill thickener (275)11.

17.2.1.5 Thickening – Filtration

Concentrate from the primary cleaner is pumped to a high capacity thickener (275). Thickener underflow is pumped via a diaphragm pump (280) to a stock tank (285) having a 2-hour retention time. From the stock tank, the thickener underflow concentrate is pumped via a second diaphragm pump (290) to a Larox type pressure filter (295). From the pressure filter the concentrate at approximately 8% moisture is conveyed (300) to the concentrate shed12 or to the acid cracking plant.

17.2.2 Milling Operation Costs

The mill operating costs for the Ashram Project presented in this section are strictly for the mineral processing for the production of a 10% TREO mineral concentrate. The limits for the cost estimation start at the RoM stockpile and end at the concentrate shed. No cracking and/or hydrometallurgy are included in this section as they are detailed in section 17.3.3. General and administrative costs (G&A) are included but are limited to the mill operation and do not consider any costs related to either the mine or Commerce Resources Corporation head office. Milling cost is mainly based on salaries, consumption of reagents, supplies and power. The costs presented include the fringe benefits but exclude employee transportation, lodging and contingency allowances. The mill operation costs are considered to have an accuracy range of +/-30%.

10

SAG and ball mills are sized for an ore having an average Work Index of 14.0 kW-h/t 11

Conditioner and flotation cells are roughly sized from Hazen’s met tests 12

No tests were done to size the filter and the thickener


SGS Geostat

The breakdown of the mill operation costs per tonne milled is as follows: Consumables: $ 4.00 Spare parts: $ 2.00 Electric power : $10.00 Salaries: $ 5.87 G&A 10%: $ 2.00 TOTAL $23.87

17.2.2.1 Consumables (wear parts, grinding media, lubricants and chemical reagents)

Crushing and grinding wear parts as well as grinding media consumption will be limited to the jaw crusher wear plates, the SAG and ball mills liners plus the different size steel balls. Mill reagents and other chemicals consumption will be for all practical purpose limited to a depressant for the carbonate and the fluorite (sodium lignin sulfonate), a frother (MIBC), a collector (linoleic acid), two modifiers (sodium carbonate and sodium fluorosilicate), a flocculent for the thickener and some chemicals for the assay office. The cost for the consumables is expected to be around $4.00/tonne.

17.2.2.2 Spare Parts

Spare parts are all pieces of mechanical or electrical equipment that are subject to the wearing of time and are normally kept in the warehouse. This cost is evaluated at $2.00/tonne

17.2.2.3 Electrical Power

Because the rare earth mineral liberation size is very fine, in the order of minus -35µm, the power cost will be much higher than it would normally be for a standard base metal mill. SGS Geostat is therefore of the opinion that the mill power cost will be around $ 10.00 per tonne based on the following assumptions: Total mill power demand ≈ 7,000 kW For 167 t/h → 7,000 kW/167t/h = 41.9 kW-h/t At $0.24/kW-h → 41.9 kW-h/t x $0.24/kW-h = $10.00/tonne


SGS Geostat

17.2.2.4 Manpower

After the break in period, for an efficient operation of the mill, a work force of 61 employees will be required. The operation schedule will be 14 days in, 14 days out. As the mill will operate on two 12-hour shifts per day and seven days per week, manpower repartition should be as follow: Mill superintendent 1 Mill metallurgist 1 Metallurgical technician 1 + 1 Mill general foreman 1

Mill shift technicians (leaders) 2 + 2 Crusher operators 1 + 1

Grinding operators 2 + 2 Flotation operators 2 + 2 Thickening, filtration, operators 2 + 2 Maintenance foreman 1 + 1 Millwrights 4 + 4 Electricians - electronicians 3 + 3 Chief analyst 1 + 1 Samplers 2 + 2 Assayers 2 + 2 Mill clerk 1 + 1

Mill general laborers/helpers 4 + 4 Janitor 1 + 1

Total 61 The mill metallurgist and general foreman will not work on the same time schedule as the mill superintendent and will replace him during his days off.


SGS Geostat

17.2.2.5 Salaries

Because of the remote area, the salaries may be as much as 50% higher than what is normally paid for the same type of work in similar, but less remote Canadian milling operations. The fringe benefits have been set at 35% of the base salary.

DESCRIPTION

ANNUAL COST

COST per TONNE

Mill superintendent 202,500 0.14 Mill metallurgist 175,500 0.13 Mill general foreman 162,500 0.12 Mill laboratory technician 298,839 0.21 Mill technician (leader) 589,680 0.42 Crusher operator 221,130 0.16 Grinding operators 442,260 0.32 Flotation operators 442,260 0.32 Thickening, filtration – operators 442,260 0.32 Maintenance foreman 324,270 0.23 Millwrights 972,000 0.69 Electricians – electronicians 753,300 0.54 Chief assayers 324,324 0.23 Samplers 447,201 0.32 Assayers 486,000 0.35 Mill clerk 229,500 0.16 General laborers/helpers 810,000 0.58 Office janitor

135,000 0.10

SUB TOTAL ANNUAL SALARIES

7,458,525 5.34

Overtime, 10%

746,000 0.53

TOTAL ANNUAL SALARIES $ 8,204,525 $ 5.87

17.2.3 Mill Cost Control and Instrumentation

SGS Geostat is of the opinion that the Ashram mill should rely as much on electronic control and instrumentation as on the skill and knowhow of the mill operators. At the very minimum a good and versatile PLC (Programmable Logic Controller) interface should be bought and installed to monitor most of the mill equipment and operation.


SGS Geostat

17.2.4 Mill Services and Other Mill Common Spaces

The mill service spaces are the assay office, the metallurgical laboratory, the millwright shop, the electrical shop, the mill stationary, the tool crib, the mill superintendent office, the shift bosses office, the MCC room, the computer-PLC room, the maintenance foreman office and the mill clerk office. Mill common spaces are the rest rooms and change rooms for men and women, the lunchroom, and the conference room.

17.2.5 Mill Capital Cost Estimate

Today, the rule of thumb for the construction cost of a new mill including its service area is approximately $25,000 to $30,000 per tonne of mill feed per day. In the case of Ashram, for a mill to be built in such a remote area, the construction cost will probably be more in the $40,000 per tonne per day bracket. This cost is for a conventional mill with new milling equipment. SGS Geostat is therefore of the opinion that the mill construction cost will be in the order $160.0M. The capital cost includes the engineering, the preparation of the land and local site roads around the mill, the delivery of all the mill components to the site, the construction of the mill itself, the construction of the crusher plant, the purchase and installation of the mill and crusher machinery, the assay office, the mill laboratory, the office furniture, the mill sub-station, the mobile equipment (mill superintendent function vehicle, two service pickup trucks and one front end loader), the startup, the consumables and spare parts inventory.

17.2.6 Construction Schedule

SGS Geostat is of the opinion that it will take up to one year for Commerce Resources to obtain all the necessary permits before proceeding to the construction of the road from Kuujjuaq to the mine site. In the case the company prefers to wait for all the permits to come and the road construction completed before buying and shipping a first piece of equipment and/or construction material, another period ranging from one to 1.5 year will be required before the mill start up. During this time Commerce will be able to rapidly advance its metallurgical studies and identify the optimal flotation reagents while resolving any remaining unknowns. This includes pilot plant level testwork in order to validate and optimize the presented flowsheet.


SGS Geostat

17.3 Thermal Cracking

Since thermal cracking of the mill concentrate to produce high grade TREO product is ongoing, it is not possible to give an exact description of the process. However, review of the literature, leads to a broad but reasonable description of the cracking technique for the Ashram rare earth flotation concentrate due to its simple and well-known rare earth mineralogy (monazite, bastnäsite, and xenotime). Multiple shared and conventional cracking techniques exist for these minerals and are detailed in Gupta and Krishnamurthy (2004). For the economic evaluation of the PEA, a sulphuric acid cracking technique, resulting in the production of a rare earth carbonate (REC) product, is selected. Whether the acid cracking plant is situated at the mine site or somewhere further south near the St Lawrence River, the process will be the same. The cracking plant will be supplied with 98% concentrated sulphuric acid, probably bought from Xstrata. Acid consumption to the cracking section is based on the “Sulphuric-Cracking” option and is estimated at 178,000 tpa, equal to approximately 1 tonne of acid per 1 tonne of flotation concentrate as a base case scenario. In order of decreasing abundance, a 10% TREO mineral concentrate will contain fluorite, carbonate (mainly dolomite) / rare earth minerals (monazite, bastnäsite, and xenotime), and minor to trace apatite.

17.3.1 Process Description

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 carbonate precipitation, centrifuging and drying of the REE carbonate. The chemical upgrading and cracking begins with the mill flotation concentrate being soaked in concentrated sulphuric acid (98% pure). The acidified concentrate from this curing is roasted at a temperature of ±250ºC in a rotary kiln in order to decompose the rare earth minerals (monazite, bastnäsite, and xenotime) as well as the gangue. The roasted concentrate is water leached, thickened and filtered. At this time, the rare earth’s and other elements are in solution, with the calcium being removed as gypsum (CaSO4) to the residue. The hydrogen fluoride (HF) created is scrubbed and disposed of. The solid residue (gypsum) is disposed to the mill tailings pond while the rare earth element enriched solution undergoes clarification. Leached radioactive elements (thorium only as uranium is not present) and other impurities are selectively removed via pH control and by the neutralization with caustic soda of the leach solution, precipitated, and allowed to report to the mill tailings. Whence the impurities are removed, the REE enriched solution is precipitated with sodium carbonate into an REE carbonate form. The precipitate is then filtered, dried and bagged ready for dispatch13.

13

For the purposes of the PEA, the cracking process will end at the production of a REC product. During a PFS, Commerce will evaluate the economics and practicality of producing a 99.9% pure mixed REO product as an alternative to a REC product


SGS Geostat

17.3.2 Recovery

It is anticipated that 95% of the REE will be recovered at the cracking plant resulting in a final product weighing approximately 20% of the concentrate feed weight (i.e. 36,000 tonnes of pure REC)

17.3.3 OPEX and CAPEX

Because of the many unknowns regarding the acid cracking plant for the Ashram Project, the OPEX and CAPEX were estimated from available studies realized for ore deposits similar to Ashram. SGS came to the conclusion to use the following parameters:

Tonnes of mill feed per year: 1,400,000 Tonnes of mineral concentrate per year: 178,000 Mineral Concentrate grade: 10.0 % (demonstrated by Hazen) $ per tonne of RoM: $17.40 Opex cost per year: $24,360,000 Cost of acid cracking plant: $35,000,000

17.3.4 Construction schedule

Even if the construction of the cracking plant will be by the same company and in parallel with the construction of the mill, it is expected that a period of six months will be added to the one to 1.5 year before the mill start up (see paragraph 17.2.6 above).


SGS Geostat

Figure 17-1: Mill Plan Drawing


SGS Geostat

Figure 17-2: Crushing – Grinding Process Diagram


SGS Geostat

Figure 17-3: Flotation – Thickening – Filtering Process Diagram


SGS Geostat

Figure 17-4: Cracking Process Diagram


SGS Geostat

18 Project Infrastructure The Ashram Project will require the construction of several infrastructure components and facilities. These will be located mainly on the mine site, but some of them will be built around Kuujjuaq and Mackay's Island. The following section describes the major components of the required construction by location.

18.1 Mackay’s Island

� Docking Facilities

Sea transportation is open annually for 3 to 4 months depending on weather conditions. The closest accessible site allowing high capacity cargo, around 30-35 ktonnes, is an area known as Mackay’s Island, around 25 kilometres north-east of Kuujjuaq. Maritime transport will depart from a port located around Montreal and will travel to the outskirts of Mackay's Island. The transport will anchor in the middle of the watercourse and offload their cargo onto barges which will complete the transfer from the main ship to the shore. SGS propose docking facilities at the harbour location which would allow the barges to unload/load and which would be connected to the all-weather road in order to have a direct access to the mine site. Figure 18-1 presents the proposed scenario:

Figure 18-1: Docking Location (Mackay's Island)


SGS Geostat

� Warehouse

A secure site warehouse is planned at the unloading facilities to stock consumables and products delivered by cargo ships.

� Fuel Farm

All the required fuel has to be delivered by tanker boats during the 3 or 4 navigating months. This means that storage facilities for 9 months have to be provided at the area near Mackay’s Island. The annual fuel consumption at full capacity will be in the range of 21,000,000 litres, so storage has to be 20,000,000 litres (2 x 10 M litres tanks) at the tanker unloading facilities. These tanks will be field-erected steel tanks built to API-650 standards (Welded Steel Tanks for Oil Storage) and within lined and bermed containment areas. From the shore storage tanks, regular tanker trucks will assume fuel transportation to the mine site.

� Acid Farm

All the required acid has to be delivered by tanker boats during the 3 or 4 navigating months. This means that storage facilities for 9 months have to be provided at the area near Mackay’s Island. The annual acid consumption will be in the range of 88,000,000 litres (1 tonne of acid per tonne of concentrate coming from flotation), so storage has to be 80,000,000 litres (8 x 10 M litres tanks) at the tanker unloading facilities. The acid tanks will be vertical carbon steel tanks14 built in accordance with API-650 standards (Welded Steel Tanks for Oil Storage). They will be field-erected and within lined and bermed containment areas. From the shore storage tanks, tanker trucks will assume acid transportation to the mine site.

� Concentrate Dome and Stacker

The resulting product coming from the concentrator will be a mixed rare earth carbonate product that will have to be stockpiled in a building during a minimum of 9 months, the time during which the cargo boats cannot dock or anchor at Mackay’s Island. The proposed scenario, based on a 10% mineral concentrate, is to have a heated dome or dome-silo construction of ~40,000 tonnes capacity located next to the docking facilities. To handle all this transit and look after the warehousing, a local office with communications will be built or rented.

18.2 Kuujjuaq

� Town Office

An office will be built in Kuujjuaq to have a foothold in the closest populated community and to maintain a constant link with the Inuit peoples.

� Ferry In order to connect the all-weather road to Kuujjuaq, a ship/barge will be used as ferry. The ferry, capable of transporting pick-ups trucks, will cross the Koksoak River. Small harbours with communications will be required on both sides of the river.

14

http://www.tankteam.com/sulfuric_acid.htm


SGS Geostat

18.3 All-weather Road (AWR)

A road connecting Mackay’s Island to the mine site, passing by Kuujjuaq will need to be built. Its main purposes will be to:

- Provide a constant land access to the mine site; - Facilitate the transport of goods for the construction phase; - Allow the transport of goods during the life of the mine; - Allow the shipping of acid cracked concentrate (mixed REC product) to docking facilities;

The proposed road location is on the south shore of the Koksoak River to avoid crossing the Mélèzes and Caniapiscau Rivers. These rivers are large and would require important and costly bridges. The distance from the Mackay’s Island site to the mine site is estimated to be 185 km. There is no major waterway along the proposed road location, except three bridges of 40, 50 and 60 metres to be built (Figure 18-4). The road elevation profile is presented by Figure 18-2. The road will be double lane type of 15 m width. A typical cross-section of the road is presented in Figure 18-3. The rock to be used to build the road will come from quarries near the road path. These quarries will be exploited following conventional mining methods, i.e.: drilling, blasting, crushing and hauling. Safety shelters will be installed every 10 km to provide a refuge in case of stormy weather.

Figure 18-2: All-weather Road Elevation Profile

Figure 18-3: Typical Road Section


SGS Geostat

Figure 18-4: 185 km All-Weather Road15

15

Google Earth


SGS Geostat

18.4 Mine Site

Many buildings and facilities will be built directly at the mine site. This section lists the principal ones and Figure 18-5 presents a preliminary sketch of a proposed arrangement at the mine site:

Figure 18-5: Preliminary Infrastructure Arrangement

� Main Camp An accommodation complex is planned to be built out of pre-fabricated modules. The proposed complex has a basic capacity of 147 beds. Tents and/or the actual Eldor camp will be used during construction, allowing an additional ~40 beds. The proposed rooms are single occupancy. A washroom with a shower is shared between two rooms; all rooms are equipped with a TV set and internet. The accommodation complex has three dormitory wings and a combination of an office, kitchen, dining room and laundry. These different facilities are all linked together by heated corridors. The complex is located approximately 1.0 km from the pit and 0.8 km from the major infrastructure in order to reduce noise pollution. The complex also includes a potable water treatment system and a sewage treatment system that is large enough for 300 persons.


SGS Geostat

Figure 18-6: Proposed Accommodation Complex16

The number of employees who will be working on the Project (on both working rotations) is estimated below:

Table 18-1: Number of Employees per Department

Department # of employees

Mine 36

Garage 20

Staff 78

Camp 18

Processing (Mill + Cracking) 61+18

Total 231

From the 231 employees, a constant number of approximately 115 will be on site while the other

half will be off-site on their time off.

� Main Building (Offices and Mechanical Shop) The proposed main building will be located northeast of the open pit and will be a pre-engineered building with steel cladding and roofing. It will be adjacent to the process building, power house, warehouse, etc. It will be a large structure that will house:

16

Provided by Forêt de Demain Cie.


SGS Geostat

- office for each department (administration, engineering, geology, etc.); - a first aid facility; - a shop; - a secondary warehouse; - a vehicle repair shop for heavy mobile equipment and light vehicles, including a wash-bay

and a 20 t overhead crane; - an electrical shop; and - a dry

With the exception of the vehicle repair shop, the other services will be located at one end of the building and constructed over 2 stories. The service complex will have a footprint of 2,000 m2. � Power Plant The site power station will be a diesel generator group of multiple medium speed reciprocating engines (5 x 3640 kW), located in a powerhouse (1,100 m2), complete with heat recovery and all auxiliary equipment. The power output is rated to meet the process plant, ancillary support loads and the camp requirements. One of the 5 power generating units will be on standby to allow any one unit to be on standby or out of service for maintenance or repair. The power station will be located adjacent to the largest loads, which are located in the grinding area of the processing plant, to minimize both losses and capital cost. The fuel specified is arctic grade light fuel oil (LFO). The fuel will be delivered to the powerhouse from the mine site fuel tank farm area via small pipelines. � Process Facilities Described in section 17 � Fuel Farm From the tanks located at Mackay’s Island, fuel will be transported to mine site fuel tank via 40,000 litre tanker trucks. The storage capacity at the mine site will be 2,500,000 litres (one tank). The fuel tank will have facilities to fuel the mine and support mobile equipment while facilitating the supply of fuel to the main power plant. This tank is also a field-erected steel tank within proper containment. The fuel tank capacity at the mine site has to be sized to hold approximately 40 days of fuel requirement during operation, in case of major problems on the all-weather road or major snow storms. � Acid Farm From the tanks located at Mackay’s Island, acid will be transported to mine site fuel tank via 40,000 litre tanker trucks. The storage capacity at the mine site will be 10,000,000 litres (one tank). The acid tank will have facilities to directly feed the acid cracking plant. This tank is also a field-erected steel tank within proper containment. The acid tank capacity at the mine site has to be sized to hold approximately 40 days of acid requirement during operation, in case of major problems on the all-weather road or severe snow storms. � Emulsion Plant The emulsion plant building will be designed to house the emulsion mixing equipment provided by the explosives contractor. In order to meet provincial and federal explosive regulations, the facility will be located approximately 3 km away of the plant site. The building is a pre-engineered steel


SGS Geostat

frame building covered by cladding and roofing panel. The building will be assembled on site. Beside the emulsion plant building there will be 2 explosives cold storages. � Explosives Magazines Next to the emulsion plant, two explosives magazines will be installed. One of these magazines will house priming explosives products such as caps and detonating cord while the second will house all packages explosives and boosters. The magazines will be bermed and strategically disposed to meet provincial and federal explosive regulations. � Warehouse A 2,000 m2 building will be used as main warehouse. The building will be a pre-engineered steel frame building covered by cladding and roofing panel. The building will be assembled on site. An outside area, adjacent to the warehouse building will be reserved to store bigger goods, such as drill rods, rebar, etc.

� Dewatering Dikes Since the Ashram ore deposit is partly submerged by a shallow lake (termed ‘Centre Pond’), two dewatering dykes will be required to allow open-pit mining below the lake. These dikes will be built with waste rock material during the construction period. Once constructed, the lake can be pumped, thus the beginning of the stripping operation. The lake itself is relatively shallow ranging in depth from ~1 to 4.8 m with an average of ~2.4 m north of Dike #1.

Figure 18-7: Proposed Dewatering Dikes17

17

Environnement Illimité Inc., Preliminary environmental baseline study, Eldor rare earth project, March 2012


SGS Geostat

The dikes will be made mostly of quarried rock and crushed stone. Depending on the results of future testwork, the dikes will be made watertight either by using a geomembrane liner inserted into a stack of layers of aggregate or by means of a slurry trench excavated through the pervious fill with a grout curtain in the upper rock foundation. The dikes will include a road on the top.

� Waste Dump Mining the Ashram Deposit will result of 3.25 Mm3 of waste rock material (with a %TREO lower than 1.25) that need to be disposed over the 20 first years of operation, the last five years being without waste to remove. SGS assumes that 50% of this material will be used to build pads, footings, roads, dikes, airstrip, etc. Therefore, an area capable of containing a waste dump of 1.625 Mm3 needs to be planned. The proposed waste dump has an overall height of 20 metres and a footprint of 81,250 m2.

� Airstrip The airstrip will be located west of the mill site facilities and is aligned roughly parallel to the prevailing wind direction. The proposed airstrip will be 1,300 m long with a 50 m security on each end; the total length will be 1,400 m. The future airstrip will have a width of 45 m including 37 m of runway. The footing will be built using the waste material coming from the mining operation. The surface of the airstrip will be covered by 0.45 m of 152 mm-sized rock and 0.15 m of 19 mm-sized rock compacted at a minimum of 94% of California Bearing Ratio. This airstrip will accommodate propeller aircraft. The strip will be a visual flight rules operation and a private airfield. The charter operators will rely on a designated site employee to provide reports on site weather conditions and the condition of the strip itself. Lighting (together with air beacons) will be provided around the strip to aid flights in marginal weather or light conditions. Figure 18-8 shows a drawing of the airstrip. Next to the airstrip, a communication tower building and a terminal pad will be built. The terminal pad will be used for plane loading / unloading.


SGS Geostat

Figure 18-8: Airport Location vs. Site Infrastructure

900m

1400 m


SGS Geostat

� Tailings Disposal From the 1,400,000 tonnes of ore that will be treated per year, 1,364,000 tonnes (97.5%) will be stored and confined into a dry natural valley or depression nearby the mining area. This valley or depression will be dammed and strategically located to take into account the environmental constraints. The tailings area is preliminary designed to store a volume of 15.5 Mm3 of tailings over 25 years of operation. The mill and cracking plant tailings are not considered acid generating due to the high amount of carbonates and corresponding low sulphides content. Finally 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 the mill feed. � Site roads Approximately 4.5 km of road will need to be built on site. These roads will be used for materials handling but also to connect all areas of the mine site. They will be built with waste material coming from the mine and will be 1.0 to 1.5 metres thick with various widths. � Incinerator building An incinerator building will be built on site. The building will be 200 m2 and will house an industrial incinerator, which will handle all waste from the site that requires incineration. The building is a pre-engineered steel frame building covered by cladding and roofing panel. The building will be assembled on site.

18.5 Quebec Northern Infrastructure & Sustainable Development (Plan Nord)

The Quebec Government announced in May of 2011, an ambitious infrastructure and sustainable development plan for the north called ‘Plan Nord’. The plan involves substantial investment in various sectors including transportation, lodging, tourism, mining, energy, protection of the territory, etc. north of the 55th parallel in Quebec totalling $80 billion dollars over 25 years. One focus of this plan is to complete a land link (road or rail) and hydroelectric power line connecting Kuujjuaq to the south via the Labrador Trough. A pre-feasibility study has already been completed with additional funds committed over the next several years to further assess the project. Such a route, as currently proposed, would run within 35 km of the Ashram Deposit. The Quebec Government has stressed the flexible and dynamic nature of the plan and its need for industry involvement to help finance and develop its final route. As such, Commerce sits in a fortuitous position and intends to work with the government to integrate its planned shipping route with advancing government infrastructure. Such efforts may help offset the cost of the road construction and associated maintenance via integration with the Government’s Plan Nord.


SGS Geostat

The timeframe for construction of such a landlink roughly correlates with the production timeline for the Ashram Deposit or at least would potentially be completed within the first few years of production. However, as two adjacent routes would not be practical, the completion of any Commerce road for ore shipment would likely tie into any Plan Nord landlink in the Labrador Trough area. The 185 km road as proposed by Commerce is anticipated to cost approximately $203,500,000 using a conservative estimate of $1,100,000 per km. For the purposes of this PEA, Commerce is covering 100% of the cost for the road project with no financial assistance from the government. However, considering both the stated dynamic nature of the Plan, the government’s willingness to work with mining and exploration companies who would benefit from such a landlink, and the fact that this route is very close to that currently proposed in Plan Nord, it is reasonable and practical to assume that some financial assistance for the construction and maintenance of Commerce’s proposed route will be provided by the government. This notion is expected to be explored in a pre-feasibility level study.


SGS Geostat

19 Market Studies and Contracts

19.1 Oxides Price Forecasts

The economic potential of the Ashram Project is directly related to present and future values of the rare earth oxides. Commerce Resources Corp. commissioned Deloitte to produce a study on the long-term price of rare earth oxides (Deloitte, 2012). The report produced by Deloitte uses multiple information sources, such as technical reports, studies, memo, publically available market information etc. In addition to Deloitte, SGS specifically reviewed a market outlook report released by Roskill in November of 2011 (Roskill, 2011), as well as a detailed review of price decks used by company peers. Deloitte states: “While price forecasting varies significantly in the marketplace, more current reports from analysts,

such as Cormark Securities’ Rare Earth Report in September 2011, appear to show a reasonable trajectory of both the current short-term high prices and the expectation of long-term prices. These clearly indicate the impact of supply issues such as Chinese quotas on short-term pricing, while indicating that long-term pricing is expected to decline as more rare earth projects reach production and address the shortages issue.”18

Analysts predict significant differences in forecasted demand levels of REEs (both HREEs and LREEs). However most believe a range of 200,000 to 300,000 tonnes is reasonable by 2020 as illustrated in Figure 19-1. This increased forecast in demand is due to the expectation of growth in the clean energy sector, which will require rare earth elements in production

Figure 19-1: REEs Demand Forecast19

18 Deloitte, Rare Earth Elements, Summary of analyst and data and peer review report, March 2012 19 Deloitte, Rare Earth Elements, Summary of analyst and data and peer review report, March 2012


SGS Geostat

Supply forecasts also range considerably showing, between 240,000 to 325,000 tonnes of supply by 2020. These forecasts share several key assumptions, including projects in the supply pipeline expected to come online and the continued supply of product out of China. Due to China creating a quota system which restricts export, these supply estimates, which are higher than demand estimates by 2020, do not automatically result in a softer rare earth sector; rather, projects coming online outside of China are expected to be used by the rest of the world to ensure they have adequate supply for uninterrupted production growth. The chart below illustrates the analyst consensus average of forecast total REE supply and demand in tonnes, as well as the implied surplus or deficit. The consensus view is that a supply deficit will persist in all forecast years except for 2017.

Figure 19-2: Analyst Consensus Average REE Supply Demand20

The following section provides a summary of industry analyst and peer company views on individual REO prices. These prices forecasts are summarized and presented by the following graphs:

20 Deloitte, Rare Earth Elements, Summary of analyst and data and peer review report, March 2012


SGS Geostat

Figure 19-3: Lanthanum Price History and Forecasts

Figure 19-4: Cerium Price History and Forecasts

Figure 19-5: Praseodymium Price History and Forecasts


SGS Geostat

Figure 19-6: Neodymium Price History and Forecasts

Figure 19-7: Samarium Price History and Forecasts

Figure 19-8: Europium Price History and Forecasts


SGS Geostat

Figure 19-9: Gadolinium Price History and Forecasts

Figure 19-10: Terbium Price History and Forecasts

Figure 19-11: Dysprosium Price History and Forecasts


SGS Geostat

Figure 19-12: Yttrium Price History and Forecasts

It should be noted that much uncertainty remains with respect to the future rare earth pricing and forecasting more than five years ahead must be taken with caution. It is unclear if China will continue to reduce exports as it strives to consolidate the industry and conserve the mine lives of several of its operations, moreover its HREE operations, by restricting production. The excess processing capacity of many of these rare earth producers is currently set to come from the rest of the world as China finds sources to fill its excess REO separation capacity. Further, many forecasts assume proposed rare earth deposits will enter production on their proposed timelines when, in practicality, many may face significant delays or even not make it to production in the short term or medium term due to metallurgical and/or permitting issues. The selected oxides values to estimate the economic potential of the Ashram Project are a combination of analyst consensus forecast (green lines on the previous figures) at year 2017 and agreement between SGS and Commerce Resources Corp. The year 2017 was used as reference as the Ashram Project is anticipated to start production around 2016-17. The determined price deck is considered reasonable, practical, and conservative given the supply-demand dynamics of the rare earth industry as it currently stands. The selected oxides price deck is defined as follows:

Table 19-1: Selected Oxide Prices

Lanthanum 15.00$ CAN$/kg

Cerium 10.00$ CAN$/kg

Praseodymium 76.00$ CAN$/kg

Neodymium 77.00$ CAN$/kg

Samarium 12.00$ CAN$/kg

Europium 905.00$ CAN$/kg

Gadolinium 45.00$ CAN$/kg

Terbium 980.00$ CAN$/kg

Dysprosium 800.00$ CAN$/kg

Yttrium 28.00$ CAN$/kg

Ashram Basket Price: 35.03$ CAN$/kg


SGS Geostat

19.2 Oxide Value Discount

The product to be sold by Commerce will be a concentrate having undergone flotation followed by an acid attack to produce a mixed rare earth carbonate concentrate. Commerce will not proceed to the final separation of the oxides by a hydrometallurgical process. Not proceeding to the separated oxide stage results in the producer not being able to profit from the full market prices of the oxides. To account for the lack of a separation stage, a discount needs to be applied on the oxide values when evaluating the economic potential of the Project. To evaluate an appropriate discount, SGS reviewed some of the most advanced studies of rare earth projects presenting similar mineralization. Based on the presented values and on SGS experts, a hydrometallurgy cost per tonne of concentrate was selected and applied for the Ashram Project. The calculation of the discount is defined by the following steps:

1. Flotation, acid attack and hydrometallurgical process cost were reduced and converted into run-of-mine cost (RoM) and then combined as one processing cost. See Figure 19-13:

Figure 19-13: Processing Costs and Recovery Converted into RoM

*Note that the hydromet separation process cost was increased by 30% to account for the processing operator’s profit margin.

2. Using this simplified approach and a general processing cost of $138.37 per tonne, the Project's net present value (NPV) was calculated. This NPV represents the economical benefit to Commerce Resources if the hydrometallurgical process is sub-contracted and that the final products (separated oxides) are sold by Commerce.


SGS Geostat

3. To be able to apply an adequate discount to the prices of the oxides, since the

hydrometallurgical process will not be done by the operator, SGS first removed $97.09 to the total processing price, which is the RoM hydromet cost. The new and real treatment cost was now $41.27 per tonne (concentration + acid attack). Subsequently, the values of the oxides were decreased until the resulting net present value (NPV) matches the one found in Point #2.

4. Based on NPV’s, two similar economic scenarios were created: one where the cost of hydromet separation (increased to reflect contractor’s profit margin) is included in the project operating cost and a second scenario where the hydromet cost is not taken into consideration, but a 20% discount is applied on the oxides values.

5. Considering that this study is at the PEA level and that the references numbers used into the calculation process are general costs coming from similar studies, the value of the discounting was increased by 5% to account for a certain contingency and to be conservative into the evaluation, resulting in a final discounting of 25%.

Table 19-2: Selected Oxides Prices (after 25% discount)

Original Discounted

Lanthanum 15.00$ 11.25$ CAN$/kg

Cerium 10.00$ 7.50$ CAN$/kg

Praseodymium 76.00$ 57.00$ CAN$/kg

Neodymium 77.00$ 57.75$ CAN$/kg

Samarium 12.00$ 9.00$ CAN$/kg

Europium 905.00$ 678.75$ CAN$/kg

Gadolinium 45.00$ 33.75$ CAN$/kg

Terbium 980.00$ 735.00$ CAN$/kg

Dysprosium 800.00$ 600.00$ CAN$/kg

Yttrium 28.00$ 21.00$ CAN$/kg

Ashram Basket Price: 35.03$ 26.27$ CAN$/kg


SGS Geostat

20 Environmental Studies, Permitting and Social or Community Impact

This environmental summary was provided by Dahrouge on behalf of Commerce to SGS Blainville to be included in the PEA study that is being completed in 2012 for the Ashram Project. A preliminary environmental baseline study was completed by Environnement Illimité inc. (EI) and its collaborators, Roche Ltd., and G.R.E.B.E. inc., all located in Quebec, Canada, in the surrounding area of the Eldor Project where the Ashram Rare Earth Deposit is located (Lafrance, 2012). The content of this study is an environmental characterization of this sector completed in the period of the late summer of 2011: all on-site surveys were conducted from September 2 and September 11. The highlights of this report are summarized below. � Area of the Study The Eldor Property is located in the Nunavik Territory, in the Province of Quebec, approximately 130 km south of Kuujjuaq. Its centre is situated at about 68°24'0" west longitude by 56°56'0" north latitude. The site is only accessible by float or ski plane, or helicopter. A local study area was determined for the field inventory near the deposit and comprises Fox Lake, Centre Pond and J Lake. A broader study area was also determined to establish a regional characterization of the components likely to be affected by advanced exploration work or the development of the Project. This regional study area extends from Kuujjuaq to the Project site. See Figure 20-1 for the Eldor Project location and study references. � Scope of Work The overall goal of the environmental study carried out on the Eldor Property is to establish a preliminary baseline for the different environmental components likely to be affected by advanced exploration work (and eventually mining production) and which will require further evaluation as the Project progresses. The specific objectives of this study are the following three components:

1. Physical Environment 2. Biological Environment 3. Human Environment


SGS Geostat

Figure 20-1: Study Areas of the Ashram Rare Earth Project


SGS Geostat

20.1 Methodology

A review of the available information was conducted and the September on-site survey was prepared taking this information into consideration.


� Climate All data for temperature and precipitation were obtained from the Environment Canada weather office.

Figure 20-2: Precipitations and Temperatures Averages

� Geology The regional, local and Property geology are all described in the Section #7 entitled Geological Setting and Mineralization of this report. The mineralization of the Ashram Deposit is also discussed in the same section. The regional geology of the Eldor Property is the Paleoproterozoic New Quebec Orogen, better known as the ‘Labrador Trough’ or ‘Fosse du Labrador’ in French. The Ashram Rare Earth Deposit is central to the Eldor Carbonatite Complex that has been previously explored for niobium (Nb) and tantalum (Ta) elements. The rare earth elements at the Ashram Deposit are hosted primarily in monazite, but also in lesser bastnäsite and xenotime. � Geomorphology A soil quality survey was performed during the September 2011 on-site survey and 18 metals and metalloids were analyzed to be compared to the average geochemical background values of the Labrador Through as listed by the Ministère du Développement durable, de l’Environnement et des Parcs (MDDEP)’s, Soil Protection and Contaminated Sites Rehabilitation Policy, when available. The samples were collected by shovel to a maximum depth of 1 m beneath the topsoil.


SGS Geostat

Information is available for the following items: • Deglaciation history of the regional study area • Glacial and post-glacial geomorphology of the Ungava and the Eldor Property • Till lineation • Ribbed moraines • Rocky outcrops with till veneers • Glaciofluvial and glaciolacustrine sediments • Organic deposits

Field Survey 2011 – Soil quality

Three soil samples were collected on the Eldor Property. The first two were taken on the western shore of the northern Centre Pond - where the open-pit is proposed - and the third one taken just east of J Lake. While the majority of analyzed elements are below the known background values for the Labrador Trough, there are a few exceptions, especially for samples S2 and S3. Barium, manganese, lead and zinc concentrations are notably higher for sample S3, while chromium, manganese, molybdenum and lead are above the background values for sample S2. Those higher concentrations are all naturally present in the soils of the study area and are not related to human activity. � Hydrogeology The information presented in the report was mainly gathered from the existing literature. Limited fieldwork was conducted in order to collect preliminary data on the regional and local hydrogeological setting and properties. Groundwater levels were measured in three mineral exploration drill holes and a groundwater sample was collected in EC11-064 drill hole and sent for analysis of the selected parameters. The sampling was carried out following the MDDEP’s sampling procedure. The geological formations in the area of the Eldor Property generally display poor hydraulic properties. Hard rocks, such as metamorphic rocks of igneous and sedimentary origin, usually present low matrix porosity. Water-bearing zones are mainly associated with fracture zones, and local joint systems. Therefore, with the exception of much-fractured areas, the rocks have a low storage capacity and limited groundwater management will be required. The groundwater sample shows a very low mineral content. The conductivity of the groundwater was 0.45 ms/cm. None of the measured parameters exceeded any applicable criteria. � Bathymetry Depth profiles of Fox and J lakes were determined by sonar and GPS instruments. No survey was performed on the Centre Pond as a bathymetric map was already available. A bathymetric survey was performed in April-May of 2011 by JVX Ltd. over the middle and northern parts of Centre Pond, where the open pit operations will start. Augered holes followed by a weighted string measurement method were used for the survey. The northern end, where open-pit operations will be focused is shallower with depths ranging from 1 to 4.8 m with an average depth of approximately 2.4 m. Depths up to 9 m are found in the middle part (east and west) of Centre Pond.


SGS Geostat

� Sediment Quality Sediments were collected in Fox Lake, Centre Pond and J Lake. Two to four composite samples were collected in each lake and analyzed for total organic carbon, trace metal and granulometric analysis. Field Survey 2011 – Sediment Sediments collected in the different lakes were a mixture of sand (80 µm to 2.5 mm) and silt (<80 µm). In Fox Lake, there was more silt (36% to 99%) than sand. In Centre Pond and J Lake, sand was generally predominant and combined with silt (5% to 78%). Total organic carbon content varied from 4% to 18% of the sediment weight, Fox Lake having the lowest content and Centre Pond having the highest. Sediment samples exceed sediment quality criteria for rare effect level, threshold effect level and occasional effect level on aquatic life for a few metals. � Water Quality In Fox Lake, Centre Pond and J Lake, temperature, pH, dissolved oxygen and conductivity readings were taken every metre along water columns. Water clarity was also evaluated with a Secchi disk. Samples were collected at one station in each lake and sent to be analyzed to Maxxam Analytics in Montreal. Field Survey 2011 – Surface Water Most metal and anion concentrations are below or near the detection limit, and below the water quality criteria for the protection of aquatic life. There are two exceptions: for Centre Pond, copper exceeded both the Canadian Council of Ministers of the Environment (CCME) criterion and MDDEP acute effect criterion, and zinc exceeded the CCME criterion only. These values may represent natural elevated levels in the environment.

20.1.2 20.1.2- Biological Environment

� Aquatic Fauna The fish community study has the objective of characterizing fish species encountered in the selected lakes. Inventories were made in Fox Lake, Centre Pond and J Lake with experimental gill nets (48 m long, 2 m high, equipped with 6 stretched mesh panels measuring 2.5, 3.8, 5.1, 6.4, 7.6, and 10.2 cm). A total of six nets were installed in Fox Lake, six in Center Pond and four in J Lake. Four bait traps were also used in the three lakes. All fishing gear was left for one entire day in the lake. All fish captured were identified and measured. The date, time, effort (fishing time) and GPS coordinates were recorded using a standardized field sheet. Live fish were returned to the lake. Field Survey 2011 – Aquatic Fauna A total of 1,042 fish were caught in the gill nets and bait traps installed in the three lakes. Gill net was the most efficient fishing engine with a mean capture per 24 hours of 24.6, 98.5 and 61.5 for Fox Lake, Centre Pond, and J Lake respectively. Ten species of fish for a total of 182 specimens were caught in Fox Lake. Lake chub, lake whitefish, white sucker, longnose sucker and threespine stickleback were the predominant species caught in Fox Lake, representing 29%, 15%, 15%, 10% and 10% of the species caught respectively. Brook trout (Speckle trout) was the only species caught in Centre Pond and J Lake. Specimens from Centre Pond weighed between 15 and 510 g and their


SGS Geostat

length ranged from 210 to 465 mm. Specimens from J Lake ranged from 15 to 360 g in weight and from 110 to 435 mm in length. The absence of prey species, higher proportion of adults and observation of a male brook trout with fecundated eggs in the belly are signs that cannibalism occurs due to the scarcity of food in Centre Pond and J Lake. Sampled habitats were all lentic with depths varying between 2 and 15 m. No aquatic vegetation was observed. The substrate was usually coarse (stones and gravel) near the edge of the lakes. � Vegetation The transect method was used to survey the vegetation in the study area. Transects were positioned based on the presence of potential sensitive areas identified through photo interpretation. All plants within 2 m to either side of the transect were identified. Plants not identified and potentially having a special status were photographed and/or collected for later identification. Each transect was associated with a GPS point. As the study was also aimed at highlighting the presence of species designated as threatened or vulnerable, or species that are likely to be designated as such in Quebec, a request was made to the Centre de données sur le patrimoine naturel du Québec (CDPNQ) prior to the field survey for information on these species in the regional study area.

Field Survey 2011 – Vegetation The sampling conducted was intended as primarily exploratory. The list of 43 plants observed in the local study area does not represent the flora of the site but provides a very partial picture of the location. A total of eight sampling sites were surveyed in the local study area. In addition to the species observed during this survey, matching herbarium specimens to photos has made it possible to identify species not reported in the field. No species at risk was found on the sites surveyed in the local study area.

� Wild Life and Birds Based on species distribution, the local study area may be home to amphibians, birds and mammals. No terrestrial reptiles are found north of the 54th

parallel (Desroches and Rodrigue, 2004). The terrestrial fauna survey’s main objective was to make a preliminary list of easily observed vertebrate species found in the local study area and to try to observe any federally and provincially listed species at risk. Since the field work was exploratory and took place in September after the reproduction period of most species, the survey was done following an opportunistic approach. Field Survey 2011 – Wildlife and Birds Signs or sightings of 10 bird species and three mammal species were recorded during the field work. No amphibians were observed. Areas surrounding Eldor Camp and Centre Pond showed the highest species richness. These results most likely correlate to the limited extent of survey effort or time spent in these areas rather than the actual terrestrial fauna richness. Four aquatic bird species (Canada goose, white-winged scoter, common loon and herring gull) and six upland birds (spruce grouse, raptor sp., gray jay, three-toed woodpecker, yellow-rumped warbler and dark-eyed junco) were seen. Besides the Canada goose and herring gull, none of the most common species in the regional study area were observed. Nonetheless, the results suggest that the birdlife of the local study area is more influenced by forest habitats than by open habitats.


SGS Geostat

� Ecotoxicological Characterization Parameters of interest in surface water and terrestrial environments near a deposit of rare earths are expected to be similar to those usually found near other rare earth deposits. A review of existing studies was conducted and parameters were selected for chemical analysis. Two organisms were targeted: fish, because they are potentially consumed by local residents, and lichens, because of their ability to bioaccumulate metals. Inventories for the ecotoxicological characterization were limited to the local study area, which is the sector most likely to be affected by advanced exploration. � Fish The main predatory fish species, brook trout and Lake Whitefish, were collected in Fox Lake, Centre Pond and J Lake. A total of 15 fish were collected in each lake. The assays were conducted on fish flesh, each sample consisting of a homogenate of five fish of similar size. The samples were preserved following standard procedures for the analysis of selected elements. A total of nine samples were collected in the study area. Metal concentration in fish was usually low (near the detection limit) except for mercury where the concentration was slightly above the level recommended by the Canadian Food Inspection Agency (0.5 mg/kg edible weight). Mercury concentration was higher in lake trout sampled in Fox Lake than in brook trout sampled in Centre Pond and J Lake. � Lichen Lichen is one of the best terrestrial bio-indicators of potential uptake by radioactive elements and/or toxic metals. In fact, lichens can accumulate more elements dispersed by air than other plants because of their longevity, the area they cover, and the fact that they obtain more nutrients via atmospheric deposition than through the soil. Lichens are also an important food source for caribou, which constitutes a substantial part of the Inuit’s diet. Entire specimens were collected on a plot of about 1.0 m2. The analysis of metals was made from a homogenate of lichens collected in one plot. A total of 10 samples (three sites and three or four homogenates) were collected in the area most likely to be affected by advanced exploration work (near Centre Pond). Metal concentrations were below or near the detection limit in Cladonia rangiferina specimens collected around Centre Pond. Arsenic, chromium and zinc were above 2 mg/kg.

20.1.3 20.1.3- Human Environment

A brief literature review was conducted in the fall 2011 to gather relevant information on land use and other socio-economic components in the study area. Most of the information came from the following documents:

• Parc national des Monts-Pyramides Project Status Report (KRG, 2011); • Master Plan for Land Use in the Kativik Region (KRG, 1998).

Additionally, three local organizations were met in Kuujjuaq during the field campaign of September 2011: the Board of Directors of the Nayumivik Landholding Corporation of Kuujjuaq, the Mayor and Secretary-Treasurer of Kuujjuaq, and the Kativik Regional Government.


SGS Geostat

The objective of these meetings was to gather knowledge of traditional and current land and resource use of the regional study area. The main source of information was elder Johnny Gordon from the Nayumivik Landholding Corporation Board. During this meeting, a map of the regional study area was presented to the participants, who were invited to indicate information such as hunting, trapping and fishing territory, presence of camp, and location of cult and burial sites. Administration and land regime in Nunavik The Eldor Property is located in Nunavik in the province of Quebec. Nunavik is the territory north of the 55th

parallel that is inhabited largely by Inuit. The Kativik region, created pursuant to the James Bay and Northern Quebec Agreement (JBNQA) in 1975, covers most of the Nunavik Territory, except for the Cree reserved land of Whapmagoostui. Nunavik is part of the Nord-du-Québec administrative region (No. 10). The territorial organization of Nunavik is established under the JBNQA and the North-eastern Quebec Agreement (NEQA), as well as their attendant laws and agreements. These agreements were signed respectively in 1975 and 1978 by the Quebec government, the Government of Canada, the Société d’énergie de la Baie James (energy corporation), the Société de développement de la Baie James (development corporation), Hydro-Québec, as well as the Cree and the Inuit (in the case of the JBNQA) and the Naskapi of Kawawachikamach (in the case of the NEQA). The JBNQA and NEQA provide a relative political and administrative autonomy for the concerned Aboriginal communities, as well as exclusive hunting, fishing and trapping rights in designated zones and financial compensation. In addition to the federal and provincial governments, other organizations and stakeholders are involved in land management and administration in Nunavik. Of these, the main ones are the:

• Makivik Corporation; • Kativik Regional Government (KRG); • 14 northern villages, including Kuujjuaq; • Landholding Corporations.

Under the JBNQA, the NEQA and the Act respecting the Land Regime in the James Bay and New Quebec Territories, a land regime comprising three categories (designated I, II and III) that govern use as well as management conditions and responsibilities is applicable in Nunavik and the James Bay region. The Eldor Property is located entirely on Category III lands. These are public lands where Aboriginals may exercise their harvesting right; however, this right is not exclusive. The Category II lands for Kuujjuaq lie, at their closest point, roughly 60 km north from the local study area. About 45 km separate the southern boundary of the local study area and the northeast boundary of the Category II-N lands for Kawawachikamach. Commerce Resources has actively hired from the local community of Kuujjuaq since acquiring the Eldor Property in 2007. Further, Commerce representatives have met on several occasions with the various local government and Inuit bodies in Kuujjuaq and have a positive relationship with the local community. Commerce will continue to engage the local community and has since retained NATIONAL Public Relations Inc. in order to assist in taking engagement to a more formal level.


SGS Geostat

20.2 Environmental permitting framework

20.2.1 Provincial Jurisdiction

� Environment Quality Act Quebec’s Environment Quality Act (EQA) comprises two chapters. Chapter I set out general provisions including protection of living species, protection of the environment, environmental impact assessments, depollution attestation, land and water resource protection, residual material management, etc. The act says that no one shall alter the quality of the environment (Section 20), and it provides a framework for activities likely to alter it, when unavoidable. Chapter II sets out specific provisions applicable to the James Bay and Northern Quebec Region. The environmental assessment procedures established for northern projects vary according to whether the project is located south or north of the 55th parallel. Section 168 of the EQA defines the territory north of the 55th parallel as: “the whole territory located to the north of the 55th parallel, except in Category I and II lands for the Crees of Great Whale River”. The Eldor Property is located within the territory described above (Category III lands). The procedure described in the EQA and the Regulation Respecting Environmental and Social Impact Assessment and Review Procedure Applicable to the Territory of James Bay and Northern Quebec, is presented in the next Figure.

Figure 20-3: Environmental Assessment Procedure for Mining Projects North of 55th

Parallel


SGS Geostat

20.2.2 Federal Jurisdiction

� Canadian Environment Assessment Act Even though the Project is subject to a joint federal-provincial review panel, some distinct permits may be required to satisfy federal bodies such as Fisheries and Oceans Canada. In June 2010, the Supreme Court of Canada issued an important decision on this issue concerning a mining project in northern Quebec:

“A mining project within the territory covered by the [James Bay and Northern Quebec] Agreement that results in the harmful alteration, disruption or destruction of fish habitat is not exempted from any independent scrutiny by the federal Fisheries Minister by virtue of the Agreement. While there is no doubt that this project, considered in isolation, falls within provincial jurisdiction, a mining project anywhere in Canada that puts at risk fish habitat cannot proceed without a permit from the federal Fisheries Minister, which he or she cannot issue except after compliance with the CEAA. (...) The relevant Administrator will then make an approval decision. While there is to be only one “impact review” of the mine project under the Agreement, the agreement of the parties to avoid duplication internal to the Agreement does not eliminate the post approval permit requirement contemplated by the Agreement itself if imposed externally by a law of general application, such as the CEAA or the Fisheries Act. (...) Since nothing in the Agreement relieves the proponent from compliance with the ordinary procedures governing the issuance of the necessary authorization or permits referred to, it follows that once the project is approved by the provincial Administrator, the proponent would have to make an application for the s. 35(2) fisheries permit to the federal Minister of Fisheries. As a matter of federal law, a CEAA assessment is obligatory prior to the grant of an s. 35(2) permit. .”

The federal environmental review procedures are dealt with in the Act to Establish a Federal Environmental Assessment Process (1992, C. 37) and its four main ensuing regulations:

• Law List Regulations (SOR/94-636); • Inclusion List Regulations (SOR/94-637); • Comprehensive Study List Regulations (SORS/94-638);

• Exclusion List Regulations (SORS/94-639).

According to Section 5 of the Act, one of the following conditions is required for the application of the federal procedure:

• A federal authority is the proponent of the project; • A federal authority has the administration of federal lands and sells, leases, or otherwise

disposes of those lands or any interests in those lands, or; • A federal authority provides a financial support, i.e., makes or authorizes payments or

provides a guarantee for a loan or any other form of financial assistance to the proponent;


SGS Geostat

• A federal authority issues a permit or license, grants approval, or takes any other action for the purpose of enabling the project to be carried out in whole or in part.

� Fisheries Act The objectives of the Fisheries Act are the protection of fish habitat and the prevention of pollution. Fish habitat is defined “Spawning grounds and nursery, rearing, food supply and migration areas on which fish depend directly or indirectly in order to carry out their life processes.”(Fisheries Act, sec. 34(l)). The Act stipulates that: “No person shall carry on any work or undertaking that results in the harmful alteration, disruption or destruction of fish habitat”. However, this interdiction does not apply to a person “causing the alteration, disruption or destruction of fish habitat by any means or under any conditions authorized by the Minister or under regulations made by the Governor in Council under this Act”. � Metal Mining Effluent Regulation The Metal Mining Effluent Regulation (MMER) under the Fisheries Act applies to metal mines. The Regulation specifies the maximum concentration of various parameters at the discharging point. MMRE also requires the execution of Environmental Effect Monitoring (EEM) studies. Prior to operation and during operation, an impact assessment is required if effluents likely to damage a fish habitat are present. � Navigable Waters Protection Act The Navigable Waters Protection Act (NWPA) provides a legislative mechanism for the protection of the public right of marine navigation on all navigable waterways in Canada. This is accomplished through permitting of the construction of works built or placed in, over, through or across navigable waterways and through a legal framework to deal with obstacles and obstructions to navigation. The NWPA is administered by the Navigable Waters Protection Program (NWPP) of Transport Canada (TC). A navigable waterway is defined as being any body of water capable of being navigated by floating vessels of any description for the purpose of transportation, commerce or recreation. This includes both inland and coastal waters. The authority to determine the navigability of a waterway rests with the Minister of Transport or his/her designated representative.

20.3 Potential Issues

� Physical Environment Potential issues associated with mining activities in the physical environment are mainly restricted to the local study area. Potential issues include:

• Concentration processes to extract rare earths may generate radioactive and metal enriched wastes (mine waste rock and tailings) that will need to be confined adequately. However, at this time the radioactivity (thorium) is not anticipated to be significantly elevated enough to prevent practical handling and storage in the waste and tailings areas.

� Biological Environment Potential issues associated with mining activities in the biological environment are mainly restricted to the local study area. Potential issues include:


SGS Geostat

• Construction of mining facilities, mining operations and effluents may affect aquatic, terrestrial and wetland habitats. Those ecosystems need to be properly inventoried and preserved as much as possible. Possible effects may include: o Loss of wildlife and vegetation biodiversity; o Bioaccumulation of metals in fish.

� Human Environment Mining activities south of Kuujjuaq would result in a growing need for mining-related services and personnel in the Kuujjuaq area (regional study area). Potential issues associated with a growing population are:

• Access to jobs, even though the aboriginal (Inuit/Naskapi) labour pool is limited and not all individuals show interest;

• Access to business opportunities; • Protection of the traditional Inuit/Naskapi way of life; • Housing issues in Kuujjuaq.

In the local study area, mining facilities may have more direct potential for impacts on the environment, wildlife and humans, such as:

• Loss of land (sense of loss); • Changes in caribou migration patterns, making hunters travel farther to reach harvesting

areas, a situation that involves higher costs and greater risk due to the greater distances to be travelled;

• Preservation of quality fish stocks associated with possible mine tailings; • Changes to water quality in the lakes affected by possible mine waste and tailings, which

could affect wildlife and availability of drinking water during field trips;

• Population health effects resulting from the two previous points.

20.4 Recommendations for Future Studies


� Soil quality Given the intrinsic variability of the matrix typically observed over large areas, it would be recommended to increase the number of samples collected to obtain a more representative measurement of the geochemical background at the Eldor Property. It is also recommended to collect duplicate samples to verify that soil analysis results fall within the expected laboratory performance intervals. In addition, given that some metals tend to be associated with fine particles and organic matter, it would be relevant in the future to measure the grain-size distribution of the soil samples as well as organic content. � Organic deposits Peat bogs are protected under Quebec’s regulations because of their high ecological value. Therefore, at the stage of designing mining project infrastructures and their footprint on the


SGS Geostat

environment, it is imperative to avoid as much as possible disturbance to those sensitive areas, including the conservation of the natural drainage systems that run in and out of wetlands. � Hydrogeology Despite the possibly limited need for groundwater management in a permafrost environment, some issues must be addressed early in the Project, notably the nature and extent of the permafrost, which will affect groundwater flow. For this purpose, fieldwork will be required in the coming stages of the Project. It may consist of:

• Drilling additional boreholes, and monitoring well installation in bedrock and overburden; • Measurements of water level in open exploration boreholes, and of the topographic

elevation of the numerous lakes and streams in the areas, which are considered to be hydraulically connected to the groundwater system;

• Collecting a larger number of groundwater samples in order to calculate the geochemical background of groundwater;

• Packer testing to determine the hydraulic conductivity of the rock mass; • Borehole resistivity/temperature logging and borehole video imaging; • Borehole flow metre testing to measure water flow rates along a borehole; • Grain size analyses of overburden samples (nature of surface deposits and hydraulic

properties); • Eventually, pumping tests in the proposed mining pit area in order to evaluate the potential

and influence of dewatering; and • Lastly, groundwater modeling using the data collected during the field investigation in order

to predict future groundwater conditions. � Surface Water Quality As for the groundwater, a monitoring network should be established for the surface water to complete the environmental baseline study to ensure that there is sufficient information to identify seasonal trends and to assess potential impacts of mining on the surface water resources of the local study area.

20.4.2 Biological Environment

� Vegetation

• Wetlands in the study area are quite varied and hence often sensitive, species-rich sites; these sites may sometimes cover small areas (e.g., snow beds), while at other times they may cover several hectares (e.g., seepage slopes). A thorough sampling of all such habitats and their corresponding species, including site visits to riparian habitats (lake and river shorelines) is crucial since they may represent rare microhabitats.

• Little knowledge is available about the distribution of species that may be designated

threatened or vulnerable in the boreal forest. However, the two vascular species at risk are more likely to colonize higher land and well-drained sites, thus, sampling drier environments apparently poorer in species must not be neglected.


SGS Geostat

• As northern environments are slow to regenerate, it would be desirable that any proposed mining activities use, to the extent feasible, less sensitive areas (e.g., barrens or areas with poor biodiversity).

• A more detailed vegetation survey is imperative to obtain a complete baseline due to the

diversity of habitats, especially those considered wet. A greater sampling effort with visits to some very specific habitats sensitive to human disturbance, such as wetlands, will help identify and highlight the environmental constraints associated with the project.

� Wildlife

• Additional fish surveys would be required to obtain a complete baseline for the impact assessment. The spawning period of the main fish species should be targeted in order to identify spawning ground in the different watercourse of the study area;

• Detailed aquatic habitat mapping and characterization would need to be conducted in order

to obtain a complete baseline for the impact assessment. This information could then be used to assess the availability of the aquatic environments according to the main biological functions of the species present in the study area, in terms of needs for reproduction, foraging and growth of juvenile fish;

• Monitoring of the nesting sites located in 2011 and a survey of cliff-nesting raptors conducted during the breeding season would provide data to confirm species identification and to assess how many pairs are nesting and hunting in the area of the projected mine and its proposed infrastructure including access ways. This would help to determine impacts and whether special mitigation measures are needed, especially if species at risk (e.g., the golden eagle and peregrine falcon) are involved;

• The current state of knowledge with respect to mammals in the local study area is poor. This brings uncertainty to the eventual impact assessment process and to the development of proper mitigation measures. Furthermore, as the MRNF requests more and more that surveys be conducted on small- and medium-size mammals to document species distribution and abundance in northern Quebec, surveys aimed at finding dens should also be performed to assess the use of the local study area by large mammals such as wolves and bears; and

• A bird survey conducted during the breeding season would give a much better idea of the

composition of the avifauna of the local study area.

20.5 Human Environment

A significant amount of information is already available on the human environment of the Eldor Project area. In order to move forward, additional information on the following topics must be collected as soon as possible:


SGS Geostat

• Traditional harvesting (hunting, fishing, trapping, berry picking, etc.) activities by the Naskapi of Kawawachikamach;

• Outfitter activities in the local and regional study areas (e.g., outfitting areas, main and satellite camp locations); and

• The specifications with respect to development of a (road or railway) land link to Kuujjuaq.

An information forum or another communication channel should also be developed to keep the population informed about the project’s development and possible job opportunities for the longer term.


SGS Geostat

21 Capital and Operating Costs

21.1 Capital Cost

The total capital expenditures cost (CAPEX) is estimated at an overall accuracy of ±30%, which is the standard for a preliminary economic assessment. The CAPEX were defined by SGS using in-house database and the Mine & Mill Equipment Costs Estimator's Guide: Capital & Operating Costs (2010). The costs from the Guide were updated to 2012 using an inflation rate of 4% per year. The total required investment is estimated at 763 M$ and includes a contingency of 25%.

*Refer to Table 21-1 for the CAPEX breakdown

SGS made the assumption that Quebec Government will not participate in the investment for the road construction. However, it is possible that an allowance will be allocated to this construction cost, based on Quebec’s Plan Nord in the upcoming years. See Section 18.5 for a brief discussion on Plan Nord and its potential relevance to the project. The capital costs do not include:

- Costs to obtain permits (excepted for airstrip); - Costs for pre-feasibility and feasibility studies; - Any provision for changes in exchange rates; - GST/QST; - Project financing and interest charges; - Price/cost escalation during construction; - Import duties and custom fees; - Pilot plant and other testwork; - Sunk cost; - Exploration activities; - Severance cost for employees at the cessation of operations; - Royalties and taxes; and - Any additional costs (but can partly be absorbed in contingency allowance).

The total equipment capital cost for the project is estimated to be 21.35 M$ in initial start-up. Due to the low tonnage mined per day (average of 4,500 tonnes of ore and waste over the entire mine life) and the decreasing stripping ratio, no major equipment acquisitions will be needed during the mine life to increase the mining fleet. Therefore, a sustaining capital cost is included into the G&A as 1.4 M$ per year ($1.00 per tonne treated) in order to account for major equipment maintenance fees or a replacement program. The equipment capital cost breakdown is outlined in Table 21-2.


SGS Geostat

Table 21-1: Capital Expenditures (CAPEX)

Item Cost % of total Comments

Town office 250,000$ 0.03% Located in Kuujjuaq

Warehouse 250,000$ 0.03% Located at Mackay's Island

Docking facilities 1,250,000$ 0.16% Located at Mackay's Island

Kuujjuaq - MacKay's Island ferry 250,000$ 0.03% Ferry boat and installation

Barges 1,000,000$ 0.13% 2 units required

Fuel tanks 7,000,000$ 0.92% 2 x 10 ML fuel tank located near MacKay's Island docking

Acid tanks 28,000,000$ 3.67% 8 x 10 ML acid tank located near MacKay's Island docking

Concentrate dome and stacker 1,000,000$ 0.13% Sized to contain 15,000 tonnes of concentrate

Transport and Lodging personnel 3,000,000$ 0.39% Transport and lodging in Kuujjuaq during project construction

Road construction 203,500,000$ 26.69% 185 km estimated at a construction cost of 1,1 M$/km

Quebec contribution -$ Estimated contribution ....... %

Shelters 400,000$ 0.05% 1 shelter at each 10 km

Site prep 2,000,000$ 0.26% Cutting trees, ground levelling, drainage, fencing, etc

Main camp 8,500,000$ 1.11% Designed to accomodate 140 persons

Water treatment plant 200,000$ 0.03%

Offices builing + truck shop 8,750,000$ 1.15% Purchasing, construction, and transport to mine site

Processing plant 160,000,000$ 20.98% Throughput of 4,000 tpd. Include laboratory & tailings facilities

Acid cracking plant 35,000,000$ 4.59% 180,000 tonnes per year acid cracking plant

Tailings (site prep., dike, dewatering) 7,500,000$ 0.98%

Site roads 2,000,000$ 0.26% Service roads to all facilities

Powerhouse + Genset 20,000,000$ 2.62% Includes building, 5 - CAT 3612, 3640 ekW + installation

Warehouse 2,000,000$ 0.26%

Mine site fuel tank 750,000$ 0.10% 1 x 2.5 ML tank

Mine site acid tank 3,500,000$ 0.46% 1 x 10 ML tank

Emulsion factory 1,500,000$ 0.20%

Explosives magazines 100,000$ 0.01% 1 magazine for detorators and 1 for powder

Airstrip + Auxiliary 15,000,000$ 1.97% Construction, Control & Communication, Terminal & Permits

Computers and Softwares 500,000$ 0.07% Computers, network system, printers, Softwares licenses, etc.

Rehabilitation and decommissioning 20,000,000$ 2.62%

Drilling 1,470,000$ 0.19%

Mucking 2,050,000$ 0.27%

Hauling 4,000,000$ 0.52%

Auxiliary / Road maintenance 2,290,000$ 0.30%

Service 4,760,000$ 0.62%

All weather road (AWR) 3,700,000$ 0.49%

Others 300,000$ 0.04%

SCP 2,785,500$ 0.37% Shipping, Commissioning and Parts inventory for 6 months (15%)

Subtotal (1) 554,555,500$ 72.73%

EPCM - 10% 55,455,550$ 7.27% Engineering, procurement and construction management

Subtotal (2) 610,011,050$ 80.00%

Contingency (25%) 152,502,763$ 20.00%

Total * 762,513,813$ 100.00%

Total rounded 763,000,000$

* Salvage value is estimated nil due to the long life of the mine, and the transport/shipping are included in the present prices.

Kuujjuaq - MacKay's Island

Infrastructures

Road (Kuujjuaq - Mine site)

Equipment


SGS Geostat

Table 21-2: Equipment Listing

Unit Price Total Cost

$/unit $

Drilling Drill 3.625”- 6” 2 735,000$ 1,470,000$

Loader 14 t 1 950,000$ 950,000$

Shovel 8 t 1 1,100,000$ 1,100,000$

Hauling Truck 50 t 4 1,000,000$ 4,000,000$

Dozer 305 hp 1 750,000$ 750,000$

Grader 297 hp 1 740,000$ 740,000$

Shovel 345 hp 1 800,000$ 800,000$

Water/Fire truck 7 kgal 1 400,000$ 400,000$

Loader 270 hp 1 470,000$ 470,000$

Loader 180 hp 1 210,000$ 210,000$

Skid steer 50 hp 1 30,000$ 30,000$

Pick-up - 12 50,000$ 600,000$

Bus - 2 75,000$ 150,000$

Tire truck - 1 160,000$ 160,000$

Service truck - 1 75,000$ 75,000$

Forklift 10 klbs 1 75,000$ 75,000$

Flat bed truck - 1 60,000$ 60,000$

Tanker truck 2,5 kgal 1 60,000$ 60,000$

Crane 75 t 1 650,000$ 650,000$

Concentrate truck 35 t 2 250,000$ 500,000$

Fuel tanker 45 kL 2 200,000$ 400,000$

Acid tanker 45 kL 4 200,000$ 800,000$

Tower light - 5 12,000$ 60,000$

Truck scale 100 t 1 60,000$ 60,000$

Dozer 305 hp 1 750,000$ 750,000$

Grader 297 hp 2 740,000$ 1,480,000$

Shovel 345 hp 1 800,000$ 800,000$

Loader 270 hp 1 470,000$ 470,000$

Tractor - 1 125,000$ 125,000$

Low bed trailer 50 t 1 75,000$ 75,000$

Others lot 300,000$

Sub-Total Mining Fleet cost 18,570,000$

Shipping, Commissioning and 6 months parts inventory (15%) 2,785,500$

Total Mining Fleet cost 21,355,500$

(Drilling accessories, Pumps, Lines, etc.)

-

All Weather

Road

(AWR)CAT 966H

CAT D8RCAT 16MCAT 345

--

--

-

--

-

-

----

CAT 966H

-

AC FlexiROC D55

-

Model

CAT 988HMucking

CAT 385CAT 773CAT D8RCAT 16MCAT 345

Auxiliary

CAT 938

Services &

Support &

Others

-

QuantityUnit SizePurpose


SGS Geostat

21.2 Operating Costs

The operating costs (OPEX) are estimated at an overall accuracy of ±30%, which is the standard for a preliminary economic assessment. The operating costs were defined by SGS using in-house database and the Mine & Mill Equipment Costs Estimator's Guide: Capital & Operating Costs (2010). The costs from the Guide were updated to 2012 using an inflation rate of 4% per year. The operating costs do not include:

- Any provision for inflation; - Any provision for changes in exchange rates; - GST/QST; - Corporate administration and head offices costs; and - Exploration activities;

The total operating cost for mining and processing over the life of the mine is estimated at $3,332 M which represents $95.20 per tonne of ore treated.

Table 21-3: Operating Costs

Cost type $/tonne treated Total cost ($) Mining 6.23 217,900,000

G&A 47.70 1,669,500,000

Processing 41.27 1,444,450,000

Total 95.20 3,331,850,000

Figure 21-1: Total Operating Cost Breakdown

Mining

7%

G&A

50%

Processing

43%


SGS Geostat

21.2.1 Mining Cost

The total mine operating cost is estimated at $217.9 M which equates to $6.23 per tonne treated or to an average of $5.32 per tonne mined ($4.57 per tonne mined at year 1 and $5.83 per tonne mined at year 25). To calculate the mining cost, SGS took into consideration the following parameters:

• Quantity of tonnes needed to be mined per year; • Equipment mechanical availability; • Overall efficiency; • Percentage of daily use per equipment; • Equipment tonnage capacity (loading units and haulers); • Various distances (in-pit, ramp, on site); • Maximum achievable speeds based on hauler status (loaded or empty); • Total cycle time; • Fuel cost of (1.30 $/litre); • Operators and mechanics hourly wages (plus benefits); • Equipment maintenance costs; and • All other relevant parameters.

The overall operating costs are higher than those of a similar size operating further south. This comes from a lower mechanical availability due to the cold weather and a higher cost of fuel per litre coming from shipping cost. The overall mining cost will vary through the life of the mine in respect of the variation of stripping ratio and also to the increasing total cycle time attributable to the deepening of the pit. The estimated cost is presented by the next figure:

Figure 21-2: Mining Cost per Tonne Through Mine Life

$4.00

$4.25

$4.50

$4.75

$5.00

$5.25

$5.50

$5.75

$6.00

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

$/t

Year

Mining cost per tonne through mine life


SGS Geostat

The breakdown of the average mining cost per tonne is defined as:

Table 21-4: Average Mining Cost Breakdown

Drilling 0.40$

Blasting 0.68$

Mucking 0.71$

Hauling 1.19$

Auxiliary 1.86$

Sub-Total 4.84$

Contingency (10%) 0.48$

Total Mining cost per tonne** 5.32$

*Based on 5,000 tonnes mined per day

**Include the salary of operators and mechanics

ITEMAverage

$/t

21.2.2 General and Administration (G&A) Costs

The total G&A cost is estimated at $1,669 M which equates to $47.70 per tonne treated through the life of the mine. The G&A costs include all costs that are not directly related to the mining operation and they are composed of several items such as staff salaries (see Table 21-5), maintenance costs of the camp, transportation costs of personnel, fuel, concentrate, goods, etc.. A full list of these costs is presented in Table 21-6.


SGS Geostat

Table 21-5: Staff and Camp hourly salaries

Salary Costs & Total

- 35 % -

$/pers./year $/pers./year $/year $/tonne

Open-pit OperationMine superintendant 1 130,000$ 45,500$ 175,500$ 0.13$ General foreman 1 120,000$ 42,000$ 162,000$ 0.12$ Shiftboss 4 100,000$ 35,000$ 540,000$ 0.39$

Clerk 2 50,000$ 17,500$ 135,000$ 0.10$

Mine MaintenanceMaintenance superintendant 1 130,000$ 45,500$ 175,500$ 0.13$ Maintenance superintendant assistant 1 110,000$ 38,500$ 148,500$ 0.11$

Maintenance planner 2 75,000$ 26,250$ 202,500$ 0.14$ Shiftboss 2 90,000$ 31,500$ 243,000$ 0.17$ Clerk 2 50,000$ 17,500$ 135,000$ 0.10$

Mine Engineering

Engineering superintendant 1 150,000$ 52,500$ 202,500$ 0.14$ Senior mine engineer 1 130,000$ 45,500$ 175,500$ 0.13$ Mine engineer 2 110,000$ 38,500$ 297,000$ 0.21$ Environmental engineer 1 95,000$ 33,250$ 128,250$ 0.09$ Environmental technician 1 80,000$ 28,000$ 108,000$ 0.08$

Surveyor 2 80,000$ 28,000$ 216,000$ 0.15$

Surveyor assistant 2 50,000$ 17,500$ 135,000$ 0.10$

Clerk 2 50,000$ 17,500$ 135,000$ 0.10$

GeologyGeology superintendant 1 130,000$ 45,500$ 175,500$ 0.13$

Senior geologist 1 115,000$ 40,250$ 155,250$ 0.11$

Grade control geologist 2 100,000$ 35,000$ 270,000$ 0.19$

Administration

Mine manager 1 160,000$ 56,000$ 216,000$ 0.15$

Managing secretary 1 60,000$ 21,000$ 81,000$ 0.06$

General services superintendant 1 130,000$ 45,500$ 175,500$ 0.13$

General services superintendant assistant 1 100,000$ 35,000$ 135,000$ 0.10$ HR superintendant 1 120,000$ 42,000$ 162,000$ 0.12$ HR superintendant assistant 1 100,000$ 35,000$ 135,000$ 0.10$ HR agent 2 75,000$ 26,250$ 202,500$ 0.14$ Health and safety superintendant 1 110,000$ 38,500$ 148,500$ 0.11$

Health and safety superintendant assistant 1 100,000$ 35,000$ 135,000$ 0.10$

Formation coordinator 2 85,000$ 29,750$ 229,500$ 0.16$

Accountant clerk 2 65,000$ 22,750$ 175,500$ 0.13$

Logistic superintendant 1 120,000$ 42,000$ 162,000$ 0.12$ Logistic superintendant assistant 1 100,000$ 35,000$ 135,000$ 0.10$ Warehouse employee 6 75,000$ 26,250$ 607,500$ 0.43$ Nurse 2 80,000$ 28,000$ 216,000$ 0.15$

I.T. 4 75,000$ 26,250$ 405,000$ 0.29$

Concentrator*Included in processing cost

CampCamp superintendant 1 110,000$ 38,500$ 148,500$ 0.11$ Camp manager 1 90,000$ 31,500$ 121,500$ 0.09$

Camp supervisor 2 80,000$ 28,000$ 216,000$ 0.15$ Protocol agent 2 80,000$ 28,000$ 216,000$ 0.15$ Chief janitor 2 60,000$ 21,000$ 162,000$ 0.12$ Janitor 10 50,000$ 17,500$ 675,000$ 0.48$ Chief cook 2 80,000$ 28,000$ 216,000$ 0.15$ Cook 6 60,000$ 21,000$ 486,000$ 0.35$ Cook helper 2 50,000$ 17,500$ 135,000$ 0.10$ Plane controler 2 75,000$ 26,250$ 202,500$ 0.14$ Camp mechanic 2 75,000$ 26,250$ 202,500$ 0.14$

92 4,310,000$ 1,508,500$ 10,017,000$ 7.16$

Cost per

tonne

Staff Salaries Qty.


SGS Geostat

Table 21-6: Estimated G&A Costs

21.2.3 Processing costs

The total processing cost is estimated at $1,593 M which equates to an average of $41.27 per tonne treated through the life of the mine ($23.87 per tonne for flotation and $17.40 per tonne for acid cracking). Refer to Section 17 for cost breakdown.

G & A $/t treated* Comments

Staff Salaries - Open-pit Operation 0.72$

Staff Salaries - Mine Maintenance 0.65$

Staff Salaries - Engineering 1.00$

Staff Salaries - Geology 0.43$

Staff Salaries - Administration 2.37$

Staff Salaries - Concentrator -$ Included in processing costs

Staff + Hourly Salaries - Camp 1.99$

Flights - Employees transportation 2.36$ 60 flights per year

Flights - Cargo 3.06$ 78 flights per year

Power consumption 0.51$ Excluding mill consumption

Camp 0.98$ Food, supply and yearly investments

Local office fees 0.07$

Investment in local community 0.14$

Material transportation 1.43$ Mackay's Island to mine site

Concentrate storage and loading 0.25$

Road maintenance 1.32$

Offices 0.11$ Softwares, hardware, supply, etc.

Fuel transportation 2.72$ 21 Mlitres transported to mine site per year

Acid transportation 14.19$ 40 Mlitres transported to mine site per year

Concentrate transportation 2.85$ 21,000 tonnes shipped to China per year

Operating capital 0.29$ Ongoing studies

Sustaining capital 0.71$ Capital replacement program

Sub-total 38.16$

Contingency (25%) 9.54$

Total 47.70$

*Based on 1,400,000 tonne per year mill thoughput (350 days x 4,000 tonnes per day)


SGS Geostat

22 Economic Analysis

22.1 DCF Method – Base Case Scenario

The discounted cash flow valuation method (DCF) was used to evaluate the economic potential of the Ashram Deposit. The DCF method estimates the attractiveness of an investment opportunity such as capital expenditure for a mining project. Discounted cash flow analysis uses future cash flow projections and discounts them at a fixed discount rate to arrive at a value, which is used to evaluate the potential for investment. The cash flow projections have been generated from the life of mine scenario presented in Section 16. Capital expenditures, operating costs and oxides values (with their associated discount) were all used to produce the economic analysis. The base case scenario implies a 25 year open-pit operation and a processing plant (flotation and acid attack) located directly at the mine site to produce a rare earth carbonate concentrate. The economic analysis is based on the following parameters:

Table 22-1: DCF Parameters for the Base Case Scenario

Parameters Unit Value Yearly mill throughput* tonnes 1,400,000 Life of Mine years 25 Metal recovery (Flotation + Acid) % 66.5 Oxides prices $/kg See Table 19-1 Oxides values discount** % 25.0 Mining cost $/t mined 5.32 G&A cost $/t treated 47.70 Processing cost $/t treated 41.27 Total investment $ 763,000,000 Discount rate % 10.0 Tax rate and Royalties % 0.0 Exchange rate Cdn$:US$ 1:1 * 350 days per year, 4000 tonnes of ore treated per day. **Account for selling a rare earth carbonate concentrate that will need hydrometallurgy process to liberate and separate the oxides.

22.2 Tax Rate and Royalties

The economical profitability of mining the Ashram Deposit has been evaluated without any consideration of taxes and royalties. This is mainly due to the complexity and the numbers of tax credits and allowances (such as; New Mine Allowance, Investment Allowance, Allowance for a Mine Located in Northern Quebec, etc.) that a company can benefit during the development stage and in the production period.


SGS Geostat

� Tax Rate The Quebec mining tax flat rate is 16% on the annual profits from a mine (2012). For the purpose of the Quebec’s Mining Tax Act, annual profit is determined by subtracting from gross revenues the operating expenses and allowances directly related to the mine. Federal tax flat rate is 16.5% (2012)21. Commerce can expect to be subjected to a combined tax rate around 32.5% when the project will begin commercial production. � Royalties As presented in Section 4.3, the original 8 claims acquired from Virginia are subject to a 1% NSR royalty in favour of Virginia and a 5% NPI royalty in favour of two individuals. Commerce has the right to buy back the 5% NPI royalty in consideration of $500,000. However, the Ashram projected open-pit is not located within the Virginia claims, and is not subject to any royalties.

22.3 DCF Results for the Base Case Scenario

The Ashram consolidated cash flow model is presented in Table 22-2. The valuation results from the base case scenario are defined as:

Table 22-2: DCF Results for the Base Case Scenario

Item Unit Value

Pre-tax and Pre-finance NPV $ 2,318,000,000 Pre-tax and Pre-finance IRR % 44 Pre-tax and Pre-finance Payback period* year 2.25

*from start of production The potential by-product of phosphate, primarily from the cracking of monazite, is not considered in this economic evaluation. Further, the recovery of fluorite as a by-product is also not considered as part of this study. All economics are based only on the rare earth oxide content of the Ashram Deposit.

21 KPMG, A guide to Canadian Mining Taxation, September 2011


SGS Geostat

Table 22-3: Discounted Cash Flows (DCF)

0 1 2 3 4 5 6 7 8 9 10Ore treated tonnes 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000

TREO % 1.77% 1.71% 1.71% 1.71% 1.72% 1.72% 1.73% 1.73% 1.74% 1.74%

Avg. $ / t. treated $/tonne 687.00$ 681.90$ 665.20$ 665.10$ 663.40$ 663.40$ 662.80$ 662.70$ 665.70$ 667.70$

Metal recovery 66.5% 67% 67% 67% 67% 66.5% 66.5% 66.5% 66.5% 66.5% 66.5%

Discount 25.00% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25%

Revenues $ 479,697,750$ 476,136,675$ 464,475,900$ 464,406,075$ 463,219,050$ 463,219,050$ 462,800,100$ 462,730,275$ 464,825,025$ 466,221,525$

Ore mined tonnes 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000

Waste mined tonnes 750,000 865,143 785,673 640,040 632,175 526,288 526,288 370,789 350,654 287,981 244,825

Stripping ratio t. waste / t. ore 0.62 0.56 0.46 0.45 0.38 0.38 0.26 0.25 0.21 0.17

Mining $/t mined 4.57$ 4.57$ 4.61$ 4.66$ 4.69$ 5.01$ 5.03$ 5.11$ 5.15$ 5.20$ 5.25$

Mining $ 3,429,268$ 10,357,044$ 10,075,995$ 9,504,907$ 9,527,511$ 9,642,782$ 9,698,815$ 9,049,900$ 9,014,227$ 8,778,741$ 8,635,215$

G&A $/t treated 47.70$ 47.70$ 47.70$ 47.70$ 47.70$ 47.70$ 47.70$ 47.70$ 47.70$ 47.70$

G&A $ 66,781,813$ 66,781,813$ 66,781,813$ 66,781,813$ 66,781,813$ 66,781,813$ 66,781,813$ 66,781,813$ 66,781,813$ 66,781,813$

Processing $/t treated 41.27$ 41.27$ 41.27$ 41.27$ 41.27$ 41.27$ 41.27$ 41.27$ 41.27$ 41.27$

Processing $ 57,778,000$ 57,778,000$ 57,778,000$ 57,778,000$ 57,778,000$ 57,778,000$ 57,778,000$ 57,778,000$ 57,778,000$ 57,778,000$

Investment $ 763,000,000$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Pre-tax benefits $ 766,429,268-$ 344,780,894$ 341,500,867$ 330,411,181$ 330,318,751$ 329,016,456$ 328,960,422$ 329,190,388$ 329,156,236$ 331,486,472$ 333,026,497$

Year

11 12 13 14 15 16 17 18 19 20 21

Ore treated tonnes 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000

TREO % 1.75% 1.76% 1.77% 1.79% 1.80% 1.83% 1.84% 1.86% 1.87% 1.88% 1.89%

Avg. $ / t. treated $/tonne 668.10$ 668.70$ 670.80$ 677.20$ 680.20$ 692.70$ 696.90$ 704.10$ 709.80$ 714.80$ 721.50$

Metal recovery 66.5% 66.5% 66.5% 66.5% 66.5% 66.5% 66.5% 66.5% 66.5% 66.5% 66.5% 66.5%

Discount 25.00% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25%

Revenues $ 466,500,825$ 466,919,775$ 468,386,100$ 472,854,900$ 474,949,650$ 483,677,775$ 486,610,425$ 491,637,825$ 495,617,850$ 499,109,100$ 503,787,375$

Ore mined tonnes 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000

Waste mined tonnes 190,199 110,468 99,081 64,974 52,981 3,178 4,081 5,625 1,299 - -

Stripping ratio t. waste / t. ore 0.14 0.08 0.07 0.05 0.04 0.00

Mining $/t mined 5.30$ 5.37$ 5.40$ 5.44$ 5.48$ 5.54$ 5.57$ 5.60$ 5.63$ 5.67$ 5.70$

Mining $ 8,429,643$ 8,108,065$ 8,094,485$ 7,976,068$ 7,964,599$ 7,775,078$ 7,813,722$ 7,876,915$ 7,896,076$ 7,932,695$ 7,978,792$

G&A $/t treated 47.70$ 47.70$ 47.70$ 47.70$ 47.70$ 47.70$ 47.70$ 47.70$ 47.70$ 47.70$ 47.70$

G&A $ 66,781,813$ 66,781,813$ 66,781,813$ 66,781,813$ 66,781,813$ 66,781,813$ 66,781,813$ 66,781,813$ 66,781,813$ 66,781,813$ 66,781,813$

Processing $/t treated 41.27$ 41.27$ 41.27$ 41.27$ 41.27$ 41.27$ 41.27$ 41.27$ 41.27$ 41.27$ 41.27$

Processing $ 57,778,000$ 57,778,000$ 57,778,000$ 57,778,000$ 57,778,000$ 57,778,000$ 57,778,000$ 57,778,000$ 57,778,000$ 57,778,000$ 57,778,000$

Investment $ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Pre-tax benefits $ 333,511,370$ 334,251,897$ 335,731,803$ 340,319,020$ 342,425,238$ 351,342,884$ 354,236,890$ 359,201,097$ 363,161,962$ 366,616,592$ 371,248,770$

Year

22 23 24 25 Total

Ore treated tonnes 1,400,000 1,400,000 1,400,000 1,400,000 35,000,000

TREO % 1.90% 1.92% 1.96% 2.05% 1.81%

Avg. $ / t. treated $/tonne 727.50$ 738.00$ 748.90$ 766.50$ 692.80$

Metal recovery 66.5% 66.5% 66.5% 66.5% 66.5% 66.5%

Discount 25.00% 25% 25% 25% 25% 25%

Revenues $ 507,976,875$ 515,308,500$ 522,919,425$ 535,208,625$ 12,059,196,450$

Ore mined tonnes 1,400,000 1,400,000 1,400,000 1,400,000 35,000,000

Waste mined tonnes - - - - 6,511,742

Stripping ratio t. waste / t. ore 0.19

Mining $/t mined 5.72$ 5.75$ 5.79$ 5.83$

Mining $ 8,003,121$ 8,054,586$ 8,110,168$ 8,158,308$ 217,886,726$

G&A $/t treated 47.70$ 47.70$ 47.70$ 47.70$

G&A $ 66,781,813$ 66,781,813$ 66,781,813$ 66,781,813$ 1,669,545,313$

Processing $/t treated 41.27$ 41.27$ 41.27$ 41.27$

Processing $ 57,778,000$ 57,778,000$ 57,778,000$ 57,778,000$ 1,444,450,000$

Investment $ -$ -$ -$ -$ 763,000,000$

Pre-tax benefits $ 375,413,942$ 382,694,102$ 390,249,444$ 402,490,505$ 7,964,314,412$

Year


SGS Geostat

22.4 Sensitivity Analysis

Sensitivity analysis was performed on the base case scenario on major variables that have the greatest impact on the overall economics of the project. These variables are oxide values discount, basket price (or overall revenues), CAPEX, OPEX and processing recovery. Table 22-4 presents the results of this analysis.

Table 22-4: Sensitivity Analysis

Variation Discount NPV (M$) IRR

-30% 18% 2,719 50%

-20% 20% 2,604 48%

-10% 23% 2,432 46%

0 25% 2,318 44%

+10% 28% 2,145 42%

+20% 30% 2,031 40%

+30% 33% 1,859 37%

Variation* Basket Price ($/kg) NPV (M$) IRR

-30% 24.52 1,028 25%

-20% 28.02 1,458 32%

-10% 31.53 1,888 38%

0 35.03 2,318 44%

+10% 38.53 2,747 50%

+20% 42.04 3,177 56%

+30% 45.54 3,607 63%

Variation OPEX (M$) NPV (M$) IRR

-30% 2,332 2,683 49%

-20% 2,666 2,561 48%

-10% 2,999 2,439 46%

0 3,332 2,318 44%

+10% 3,665 2,196 42%

+20% 3,998 2,074 40%

+30% 4,332 1,953 39%

Variation CAPEX (M$) NPV (M$) IRR

-30% 534 2,546 63%

-20% 610 2,470 55%

-10% 687 2,394 49%

0 763 2,318 44%

+10% 839 2,241 40%

+20% 916 2,165 37%

+30% 992 2,089 34%

Variation Recovery NPV (M$) IRR

-30% 47% 1,029 25%

-20% 53% 1,458 32%

-10% 60% 1,888 38%

0 67% 2,318 44%

+10% 73% 2,747 50%

+20% 80% 3,177 56%

+30% 86% 3,607 63%

*While oxides values discount remains at 25%

Recovery

CAPEX

Oxide Value

Discount

Basket Price

($/kg of oxide)

OPEX


SGS Geostat

Figure 22-1: Sensitivity Analysis (Spider Graph)

As is typically the case, the Project is more sensitive to the metal pricing and the variations are identical to the one obtained from varying the processing recovery.

-30% -20% -10% 0 +10% +20% +30%

Oxide Value Discount 2 719 2 604 2 432 2 318 2 145 2 031 1 859

Basket Price 1 028 1 458 1 888 2 318 2 747 3 177 3 607

CAPEX 2 546 2 470 2 394 2 318 2 241 2 165 2 089

OPEX 2 683 2 561 2 439 2 318 2 196 2 074 1 953

Recovery 1 029 1 458 1 888 2 318 2 747 3 177 3 607

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

NP

V (M

$)

Sensitivity analysis


SGS Geostat

23 Adjacent Properties Other companies or individuals own mineral titles in the vicinity of the Eldor Property. Other than rare earths, the area is explored for a variety of commodities including precious metals, base metals, iron-ore and uranium. Figure 23-1 shows a map of the mineral titles in the vicinity of the Eldor Property.


SGS Geostat

Figure 23-1: Map of Adjacent Properties in the Vicinity of the Eldor Property


SGS Geostat

24 Other Relevant Data and Information In the opinion of SGS, no additional information or explanation is necessary to make this Technical Report understandable and not misleading.


SGS Geostat

25 Interpretation and Conclusions The preliminary economics for the Ashram Deposit are highly favourable using the parameters detailed herein. Mining will be completed by conventional open-pit methods as minimal overburden is present. The final product from the mine site will be a mixed rare earth carbonate concentrate ready to be delivered to a hydrometallurgical plant.

� Geology and Mineral Resources SGS Geostat has validated the exploration processes and drill core sampling procedures used by Dahrouge, on behalf of Commerce, as part of an independent verification program. SGS Geostat concluded that the drill core handling, logging and sampling protocols are at conventional industry standard or better and conform to generally accepted best practices. The author, Gaston Gagnon, completed a review of the sample preparation and analysis including the QA/QC analytical protocol implemented by Dahrouge, on behalf of Commerce, for the Project. The author, accompanied by Robert de l’Étoile, visited the Eldor Property between September 18 and 21, 2011 to review the sample preparation procedures. SGS Geostat considers that the samples are of sound quality and that the samples are generally representative. Finally, the author is confident that the system is appropriate for the collection of data suitable for the estimation of a NI 43-101 compliant mineral resource. As part of the data verification program, SGS Geostat completed independent analytical checks of drill core duplicate samples taken from the summer 2011 diamond drilling program. The author also conducted verification of selected laboratory analytical certificates and validation of the Project’s digital database, supplied by Dahrouge on behalf of Commerce, for errors or discrepancies. The bulk density of the carbonatite material was estimated by SG measurements on mineralized drill core sample and is consistent with expected values from the rock type. SGS Geostat is of the opinion that the final drill hole database is of sufficient quality to support a mineral resource estimate. Geological interpretation and modeling of the mineralized carbonatite at Ashram was completed by Dahrouge. The resource model, prepared by SGS Geostat, contains blocks of 10 m (east-west) by 10 m (north-south) by 10 m (elevation) in size, located below the bedrock/overburden interface. The block grade was estimated using analytical values from 3 m long drill hole composites. Interpolation was performed using ordinary kriging. Three mineralized zones are estimated separately: Central, Inner and Outer. Finally, a mineral resource was estimated based on the results of the block model interpolation. The final mineral resource estimates are presented in the following Tables 25.1 and 25.2


SGS Geostat

Table 25.1: Final Mineral Resources for the Ashram Deposit (all Zones)

Table 25.2: Final Mineral Resources for the MHREO Zone


*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

*TREO = LREO + MREO + HREO

*MH / T = MHREO / TREO

SGS Geostat is of the opinion that the Company successfully confirmed the mineral resource potential of the Ashram Deposit located on the Eldor Property based on recent exploration programs. The author considers the Project to be sufficiently robust to warrant additional drilling to augment the confidence level of the current mineral resource. The tonnage quantity in the Ashram

Deposit is more than enough for a practical mining operation. Only better grades or distribution would change the target for a mining operation. Exploration has revealed multiple other rare metal and rare earth targets on the Property with much potential still remaining.

The majority of the resource used to prepare this report is in the inferred category, however is based on sound geological evidence and limited sampling. There is enough information to reasonably assume, yet not verify, that those resources display geological and grade continuity. Although there is significant tonnage in the measured and indicated categories, additional drilling information will better define the extent, grade, and REE distribution of the mineralization. Although some of these factors may affect the economics of the Project, no major effects are anticipated. This is supported by long intersections of very continuous and consistent mineralization suggesting significant lateral extent of similar style as estimated for the determination of the inferred resources. In addition the QA/QC program shows that grades of samples used for resources estimates are very close to the true grades. Moreover, grades are on the conservative side and for this reason, the associated risks are considered minimal.


(t)

Density

(t/m3)

TREO*

(%)

LREO*

(%)

MREO*

(%)

HREO*

(%)

MHREO*

(%)

F

(%)

MH/T

Ratio

Measured 1,590,000 3.07 1.77 1.60 0.089 0.085 0.17 3.76 9.8%

Indicated 27,670,000 3.02 1.90 1.77 0.073 0.056 0.13 2.89 6.7%


Inferred 219,800,000 3.00 1.88 1.77 0.068 0.045 0.11 2.21 6.0%


Classification ZoneTonnage

(t)

Density

(t/m3)

TREO

(%)

LREO

(%)

MREO

(%)

HREO

(%)

MHREO

(%)

F

(%)

MH/T

Ratio

Measured Central 1,140,000 3.10 1.69 1.50 0.098 0.099 0.20 4.18 11.6%

Indicated Central 5,420,000 3.10 1.62 1.44 0.091 0.091 0.18 3.9 11.3%

Measured + Indicated Central 6,550,000 3.10 1.63 1.45 0.093 0.093 0.19 3.95 11.3%

Inferred Central 2,790,000 3.10 1.57 1.39 0.085 0.088 0.17 3.43 11.1%



SGS Geostat

� Mining Mining the Ashram Deposit will be by straightforward open-pit methods with the deposit not representing any unusual challenges. The tonnage to be extracted is low and the pit shape makes it easy to mine. Possible variations in the mining cost per tonne will not strongly affect the economics of the Project since the mining cost is only 7% of total operating costs (see Figure 21-1). A risk to consider is possible water infiltration into the pit. Major infiltration may require an expensive pumping system. Variation of pit slope angles will not strongly affect the Project economics considering the low stripping ratio. � Processing A mineral concentrate with a grade of 10% TREO at 70% recovery (12.7% of the original feed weight) is selected as the PEA base case as a result of physical upgrading at the mine site by way of conventional grinding and flotation techniques. The process plant is designed to produce a rare earth mineral concentrate by conventional froth flotation. Cracking of the mineral concentrate will be completed at the mine site using standard techniques common to the rare earth minerals monazite, bastnaesite, and xenotime. Acid cracking, with concentrated sulphuric acid, will remove the impurities (e.g. Ca, F, P, Th, and Fe) and precipitate the rare earth elements as carbonates which will be sold at market. The process and economics for producing a mixed REO end-product, as a potential alternative to an REC product, will be evaluated in a pre-feasibility study.

� Cracking Plant Location In this report, SGS has made the assumption that the acid plant will be located directly at the mine site since the radioactivity analysis of the thorium had not yet been completed. Treating the flotation concentrate with acid will require a large volume of acid to be sent by ship and eventually by barge to Mackay's Island and then be transported by land to the mine site. An environmental hazard would therefore be associated with these operations. In the next section, a recommendation will be made to eliminate this risk.

� Oxide Prices Even with analysis from various experts to estimate the future price of the oxides, it is impossible to predict their exact value. For this reason, the values used in this report are considered conservative. The Ashram Project, even while being sensitive to the values of the oxides on the market, can absorb a significant decline in the value used in this report and still remain profitable. The same approach can be applied to the oxide price discount.

� General In general, the Ashram Project presents a robust NPV, a good rate of return and a short payback period. The preliminary economic potential is ultimately positive. � Conclusion Based on the results of this PEA, SGS Geostat recommends that Commerce proceeds with the next phase of the Project in order to identify opportunities and further assess the viability of the whole venture.


SGS Geostat

26 Recommendations Geology Because of the extensive geological work completed, SGS Geostat is confident that the density of information is presently sufficient to move the Project to the pre-feasibility level. SGS Geostat considers that the resource potential of the Ashram Deposit is sufficient at this time, and that future work should aim at upgrading the resource categories for an open-pit mining operation. The expected LoM of the current resources at a geological CoG of 1.25% TREO, is ~177 years based on an estimated daily mining rate of 4,000 tpd. At the economic CoG of 0.51% TREO, a mining operation could potentially be sustained for 300 years (open-pit + underground). SGS Geostat also recommends continuing with the QA/QC protocol presently used with the failure threshold of 500 ppm TREE for the blanks. The protocol should include the systematic verification of the REE analytical values using more than one certified laboratory in order to monitor the quality of the analysis completed for the Project. A large infill drilling program should be planned for the forthcoming field programs to upgrade all in-pit resources to indicated status in anticipation of a pre-feasibility study. Mining Mining itself is, for all practical purposes, straightforward. However, since the open-pit will occupy part of Center Pond, SGS Geostat recommends a geotechnical and a comprehensive hydrological study to better define the stability and impermeability of the bedrock and ultimately the pit slopes. Detailed topographic data with 1 m contours is available from Commerce and a detailed study of the open-pit and waste stockpiling areas is recommended. The acid generating and metal leaching potential of the waste rock will need to be further assessed. Preliminary testwork suggests the acid generation potential is negligible. However, measures to mitigate any potential problems should be defined. Always, within the framework of a pre-feasibility study, it is recommended that a detailed optimization schedule be conducted for the mining operation. There are a number of software programs on the market that can be used for this implementation. Mineral Processing and Metallurgical Testing Ongoing metallurgical testworks on a representative sample of the Ashram Deposit is currently being completed at Hazen Research Inc. in Colorado and UVR-FIA GmbH in Germany. Presently, the best result obtained in the laboratory is a mineral concentrate grade of approximately 10.37% TREO at 73.4% recovery and another of 11.18% TREO at a 68.5% recovery using conventional flotation techniques with no attempt at optimization. The short term objective is to obtain a 20% TREO mineral concentrate grade with 60 to 70% TREO recovery.


SGS Geostat

Whatever the final concentrate grade and recovery obtained at the bench scale level, the process will have to be confirmed at the pilot plant level. A 300-tonne pilot plant is recommended at this stage to assure enough concentrate material to undergo cracking. A trade-off study is recommended to assess the practicality and economics of transporting and cracking a mineral concentrate in the south versus cracking the mineral concentrate on site. Radioactivity of the flotation concentrate, the residue from the bulk acid bake, and leached flotation concentrate (cracking) will need to be addressed. If the radioactivity is low enough, the cracking plant could be built somewhere along the St. Lawrence River where services are abundant, thus minimizing freight costs and issues related to the transportation of the acid and other chemicals. Initial testwork suggests the radioactivity is significantly lower compared to the amount of thorium in the resource, which is already relatively low (~315 ppm). However, additional testwork is required to quantify it and is currently underway. Uranium is not present. A separated REO product would generate higher revenue than a bulk acid and leached flotation concentrate (mixed carbonate/oxide product). As such, further laboratory and pilot plant testing may be needed to determine the means of separation necessary to establish the added costs versus revenue. A trade-off study should be considered to assess the economics of Commerce producing a separated rare earth oxide product via its own facility. Permanent Access Road The access road will need a detailed topographic survey and soil study to finalize the optimal route. This study will also make an inventory of the quality and quantity of on-site construction material: till, eskers, sand, gravel, and future quarries. Drainage is also an important issue of this road to be studied. Wharfs and Docking To facilitate the supply boat and barge loading and unloading operations, a bathymetric study of the Koksoak River will have to be done to properly locate the two docking areas: Kuujjuaq and Mackay’s Island.

Tailings, Waste and Water Management Tailings Management A complete survey of the Ashram Deposit area will have to be undertaken to locate an area for emplacement of the tailings and polishing ponds. This area will have to be chosen in such a way as to minimize disturbance to the local environment. Physical and chemical characteristics of the tailings will have to be addressed, including rheology, specific gravity, acid base accounting/metal leaching, flocculation, sedimentation, precipitation of heavy metals, turbidity of supernatant water, rain falls, snow melting, etc. Because of the high amount of carbonate within the mineralisation and the recirculation of the tailings pond overflow back to the mill, the effluent from the tailings impoundment is not considered to be a potential environment problem with respect to acid generation. However, further tailings wastewater testing (from the pilot plant) should be scheduled as part of the environmental assessment for permitting in order to identify any parameters of concern and identify


SGS Geostat

mitigation requirements. Finally, at the pre-feasibility stage, dam stability will be addressed for static and post-earthquake conditions. Waste Mining the Ashram Deposit will result in 3.25 Mm3 of waste rock material (with a TREO content lower than 1.25%) that needs to be disposed over the 20 first years of operation, the last five years being without waste to remove. SGS assumes that 50% of this material will be used to build pads, footings, roads, dikes, airstrip, etc. Therefore, an area capable of containing a waste dump of 1.625 Mm3 needs to be planned. The proposed waste dump has an overall height of 20 metres and a footprint of 285 m x 285 m (81,250 m2). The waste rock (and the mine tailings) is not considered acid generating due to the high amount of carbonates and corresponding low sulphides content. This conclusion is currently being confirmed by Hazen, however, initial testwork is supportive. Water Management A preliminary environmental baseline study was completed by Environnement Illimité Inc. (EI) and its collaborators, Roche Ltd., and G.R.E.B.E. inc., in the surrounding area of the Eldor Property where the Ashram Rare Earth Deposit is located. As for surface water, most metal and anion concentrations are below or near the detection limit, and below the water quality criteria for the protection of aquatic life. There are two exceptions: for Centre Pond, copper exceeded both the Canadian Council of Ministers of the Environment (CCME) criterion and MDDEP acute effect criterion, and zinc exceeded the CCME criterion only. However, these values may represent natural elevated levels in the environment. From the beginning of the operation at least some 630 m3/hr of water will be pumped from Centre Pond to the mill and ultimately report to the tailings pond, some mitigation for these two metals will have to be addressed. A complete water balance will be worked out between, precipitation, evaporation, seepage, mill requirement, pit dewatering, tailings discharge, potable water, fresh water, septic tank and leaching bed, ground water inflow, Centre Pond in and outflows, etc. Human Environment The Eldor Property is located in Nunavik, in the province of Quebec, Canada. Nunavik is the territory north of the 55th parallel that is inhabited largely by Inuit. The Kativik region, created pursuant to the James Bay and Northern Quebec Agreement (JBNQA) in 1975, covers most of the Nunavik Territory, except for the Cree reserved land of Whapmagoostui. Nunavik is also part of the North-Eastern Quebec Agreement (NEQA) and determines Naskapi Lands. Due to the above and also because it is a practice of good social responsibility, meetings with Aboriginal Communities must be held in order to explain the whole Project. Commerce has already held several of these meetings, including a formal presentation to the community, and will continue to do so. Commerce will take every measure to minimise the environmental impact on the Aboriginal Communities. Commerce has already begun formal community engagement and has recently retained NATIONAL Public Relations Inc. in order to take discussions to a more formal level.


SGS Geostat

Because obtaining a Certificate of Authorisation (CA) from the Ministère du Développement Durable de l’Environnement et des Parcs (MDDEP) of the Province of Quebec is required, communication with the Quebec government should begin as soon as possible. Future Work The recommended future work will apply to the next two phases of this study, Pre-feasibility (PFS) and Feasibility (FS) Studies. The recommended future work summarized below is a budgetary estimation of the workings necessary to be realized for the completion of the PFS phase. The estimated cost of the PFS study is also included in the budget to get a complete estimation of the expenditures related to the PFS study completion.

Table 26-1: Future Work Cost Summary

Item Description Budget

Geology Diamond drilling campaign (all inclusive): 12,000 m at $200/m 2,400,000$ Mineralogy and petrography study 100,000$ Eldor camp operation and personnel salaries 1,500,000$

Mining Geotechnical study 400,000$ Hydrological study for mining area, 1,500,000$ dewatering parameters and permeability of pillars

Infrastructures Permanent access road location and specifications 750,000$ Bathymetric and water transportation study 300,000$

Processing Complete actual laboratory bench scale testings 100,000$ Pilot plant testing: 300 t sample for concentration, cracking 3,000,000$ and REO separation testing (hydrometallurgy)Assess radioactivity impact 10,000$ Tailings management study 500,000$

Environmental Soil quality sampling 150,000$ Hydrological study of surface & groundwater c/w monitoring network 1,500,000$ Special survey and sampling of wetlands 500,000$ Wildlife detailled surveys of fish and bird 250,000$ Human environment: traditional harvesting & outfitter activities 250,000$ Complete Study of Environmental and Social Impacts Assessment 500,000$

and Review Procedures of a mining project north of the 55th parallel forpermits and certificates of authorization, including federal requirements

Pre-feasibility PFS technical report in compliance with NI43-101 3,000,000$ Sub total 16,710,000$

Contingencies (25%) 4,177,500$ TOTAL 20,887,500$


SGS Geostat

27 References An Independent Technical Report on the Results of a Preliminary Economic Assessment of Frontier Rare Earths Limited, a Zandkopsdrift Rare Earths Project, Located in The Northern Cape Province of South Africa – Venmyn Rand (Pty) Ltd. Avalon Rare Metals NI 43-101 August 25, 2011 and Press Release February 2012. Avramtchev et al., (1990) Carte des Gites Mineraux du Quebec: Region de la Fosse du Labrador, DV 84-01, Publication du M.E.R., 42 pages with maps. Bandyayera et al., (2002) Cartes Préliminaires en Couleur des Travaux de Cartographie et des Études 2002-2003, DV 2002‐11, Publication de M.E.R., 28 maps. Beaumier, M. (1987) Geochimie des Sediments de Lac: Region du Lac Otelnuk, DP 87‐14, Publication du M.E.R., 35 maps. Birkett, T.C. and Simandl, G.J. (1999) Carbonatite Associated Deposits: Magmatic, Replacement and Residual; in Selected British Columbia Mineral Deposit Profiles, Volume 3, Industrial Minerals, G.J. Simandl, Z.D. Hora and D.V. Lefebure, Editors, British Columbia Ministry of Energy and Mines. China’s Role in a Changing Global Rare earth elements Market, Dr Chen Zanheng June 3-4, 2011. Clark, T. and Wares, R. (2006) Lithotectonic and Metallogenic Synthesis of the New Quebec Orogen (Labrador Trough), MM 2005‐01, Publication du M.E.R., 175 pages with map.

Clarus Securities – Analyst Report December 6, 2011. Cormark’s Rare Earth Metals Report (09-13-11) – Cormark Securities September 13, 2011. Critical Rare earth elements: Global supply & demand projections and the leading contenders for new sources of supply – Technology Metals Research, LLC – August 2011. Demers, M. and Blanchet, C. (2001) Propriete Lac Erlandson‐Ta Reconnaissance Geologique Aout 2001, for Mines d’Or Virginia, 101 pages with maps. Deloitte, Rare Earth Elements, Summary of analyst and data and peer review report, March 2012. Dressler, B. (1974) Geochimie des Sediments de Ruisseau: Region du Lac Nachikapau (Nouveau Quebec), DP 422, Publication du M.E.R., 15 pages with maps. Dressler, B. and Ciesielski, A. (1979) Region de la Fosse du Labrador, rapport geologique RG‐195, MRN Quebec, 130 pages with maps. Environment Illimité Inc. – Preliminary Environmental Baseline Study – Eldor Rare Earth Project, March 2012.


SGS Geostat

Forêt de Demain Cie, Outland Camp, Amos QC, 2012. Hazen Reaserch Inc. - Development of a Beneficiation Process for Rare earth Minerals from the Ashram Deposit (Eldor Carbonatite), Nunavik, Quebec, Progress Report. Hoek and Bray: Rock Slope Engineering, 1974. Hudson Resources Preliminary Assessment on the Sarfartoq Rare Earth Element Project, Greenland, October 2011. IMCOA Meeting the Challenges of Supply this Decade – Dudley Kingsnorth March 2011. IMCOA Rare earth elements Price Forecast – Dudley Kingsnorth August 24, 2010. Jacob Securities Inc: Rare Earth Elements – Industry Primer January 21, 2011. JBNQA: James Bay and Northern Quebec Agreement in 1975. James et al., (2003) The Southeastern Churchill Province Revisited: U-Pb Geochronology, Regional Correlations, and Enigmatic Orma Domain, Current Research, Newfoundland Department of Mines and Energy Geological Survey, Report 03-1, p.35-45. John Kaiser Bottom Fish: 2011 Critical Materials Investment Report November 2011. Knox, A.W. (1986) 1985 Field Examination Eldor Carbonatite, Quebec, for Unocal Canada Ltd, 75 pages with maps. Knox, A.W. (2011) Some Notes and Observations on the Geology of the Ashram Zone, Eldor Carbonatite, New Quebec. Internal Report for Commerce Resources Corp. 5 pages. KPMG, A guide to Canadian Mining Taxation, September 2011. Laferrière, A (2011) Technical Report: Mineral Resource Estimation, Eldor Property – Ashram Deposit, Nunavik, Quebec. For Commerce Resources Corp., 99 pages with maps and figures. Lafontaine, M. (1984) Permis 669 Prospection et Cartographie, for Eldor Resources Ltd, GM40910, 19 pages with maps. Le Maitre, R.W. (2002) Igneous Rocks: A Classification and Glossary of Terms. Cambridge University Press, Cambridge, U.K. Master Plan for Land Use in the Kativik Region (KRG, 1998). Matamec Exploration Inc. – NI 43-101 Report – Preliminary Economic Assessment Study for Kipawa Project. Metal Pages – Rare Earth Conference September 2011.


SGS Geostat

Meusy et al., (1984) The Carbonatite Complex of Permit 669, New Quebec, for Eldor Resources Ltd., 10 pages with map. Mine & Mill Equipment Costs Estimator's Guide: Capital & Operating Costs (2010). Mitchell, R.H. (2005) Carbonatites and Carbonatites and Carbonatites. The Canadian Mineralogist, Vol. 43, pp. 2049-2068. Mitchell, R.H. (2011) Mineralogy of the Ashram Rare Earth Element Occurrence. Internal Report for

Commerce Resources Corp. 24 pages plus plates. Navigating the Rare Earth Metals landscape: Gareth Hatch – Streetwise Reports November 8, 2011. New Rare Earth Metals Deposits in 2012: Jon Hykawy – Streetwise Reports January 03, 2012. Parc national des Monts-Pyramides Project Status Report (KRG, 2011). Picking the front runners in the Rare Earth Horse Race – Mackie Research Capital July 22, 2011. Plan Nord - Economic development strategy by the Quebec government. Quebec’s Mining Tax Act, 2012. Quest Rare Minerals Limited Preliminary Assessment on the Strange Lake B Zone September 2010. Rare earth elements & Yttrium: Market Outlook to 2015 – Roskill Information Services November 2011. Rare Earth Elements Fall Q3 takes a breather – Macquatch Express September 30, 2011. Rare Earth Metals Bears and Bulls: Anthony Alfidi – Streetwise Reports December 20, 2011. Rare Earth Metals demand is unstoppable : Jeb Handwerger – Streetwise Reports February 14, 2012. Rare Earth Metals: Not your father’s mining biz: Byron King – Streetwise Reports January 31, 2012. Richardson, D.G., and Birkett, T.C., (1996) Carbonatite Associated Deposits, in Geology of Canadian Mineral Deposit Types, (ed.) O.R. Eckstrand, W.D. Sinclair, and R.I. Thorpe; Geological

Survey of Canada, Geology of Canada, no. 8, p.541-558 (also Geological society of America, The Geology of North America, v.P-1). Roskill: Rare Earths & Yttrium Market Outlook to 2015, 2011. Sherer, R.L. (1984) Evaluation of Selected Samples from Eldor Resources Ltd., Permit 669 Carbonatite, Quebec. Union Molycorp Rept., 62 pages.


SGS Geostat

Schmidt, P. (2011) Ashram Zone (Preliminary Report). Internal Report for Commerce Resources Corp. 30 pages with plates. Smith, DL., D’Souza R., and Knox A.W. (2008) 2007 Exploration of the Eldor Property, Northern Quebec. Assessment Report, 21 pages plus figures and appendices. Smith, D.L. and Peter‐Rennich, A. (2010) 2008 and 2009 Exploration of the Eldor Property, Northern Quebec. Assessment Report, 48 pages plus figures and appendices. Steffen, O. K. H., Contreras, L. F., Terbrugge, P. J., Venter, J., A Risk Evaluation Approach for Pit Slope Design, 2008. Technology Metals Summit 2012: Extracts of IMCOA demand forecasts from Dudley Kingsnorth key, note speech Feb 2012. The Age of Rare Earth Metals: Luisa Moreno - Streetwise Reports December 6, 2011. UVR-FIA GmbH: Beneficiation plant in Germany. Woolley, A.R. and Kempe, D.R.C. (1989) Carbonatites: Nomenclature, Average Chemical Compositions, and Element Distribution. In Carbonatites, Genesis and Evolution, Keith Bell (ed.), London, Unwin Hyman Ltd., pp. 1-14.

Wright, W.R., Mariano, A.N. and Hagni, R.G. (1998) Pyrochlore, mineralization, and glimmerite formation in the Eldor (Lake LeMoyne) carbonatite complex, Labrador Trough, Quebec, Canada. In: Proceedings of the 33rd Forum on the Geology of Industrial Minerals. Canadian Institute of Mining, Metallurgy and Petroleum; Special Vol. 50, pages 205-213.

Yuanta Research: China Rare Earth Industry: An industry at a turning point January 6, 2011.

Commerce Resources Corp. – Ashram Project – Preliminary Economic Assessment

SGS Geostat

APPENDIX A

______________________________________________________________________________

CERTIFICATES OF QUALIFIED PERSONS


SGS Geostat

Certificate of Qualified Person

GASTON GAGNON 350 rue du Galet, Saint-Eustache Qc J7P 5R9 Canada [email protected]

• I am Senior Mining Engineer with SGS Canada Inc. - Geostat with an office at 10 Boul. de la Seigneurie Est, Suite 203, Blainville, Quebec, Canada, J7C 3V5.

• This certificate applies to the technical report entitled Preliminary Economic Assessment on the Ashram Rare Earth Deposit, Nunavik in Quebec Province dated July 5th 2012 (the “Technical Report)

• I am a graduate of the University of Laval in Quebec City (B.Sc. Mining Engineering, 1964). I am a member of good standing (#15918) of the l’Ordre des Ingénieurs du Québec (Order of Engineers of Quebec). My relevant experience includes over 40 years of experience in mining minerals in underground and surface producers, processing mainly gold, silver, copper, zinc, aggregates and niobium. Experience also includes 5 years of consulting for several mining projects under development. EPCM experience covers scoping (now PEA) studies and prefeasibility studies, detailed economic estimation and construction management in Canada, Africa, Mexico, South America and Saudi Arabia. I am a “Qualified Person” for purposes of National Instrument 43-101 (the “Instrument”).

• I have visited the property site between September 18th to September 21th, 2011.

• I am responsible for all Sections except 11.3, 11.4,11.5, 12,13,14 and 17 of the Technical Report.

• I am independent of Commerce Resources Corporation as defined by Section 1.5 of the Instrument.

• I have no prior involvement with the property that is the subject of the Technical Report.

• I have read the Instrument and the sections of the Technical Report that I am responsible for has been prepared in compliance with the Instrument.

• As of the date of this certificate, to the best of my knowledge, information and belief, the sections of the Technical Report for which I am responsible contain all scientific and technical information that is required to be disclosed to make the the Technical Report not misleading.

Signed and dated this 5th day of July 2012 at Blainville, Quebec.

“Original document signed and sealed by Gaston Gagnon, Eng” Gaston Gagnon. Eng Senior Mining Engineer SGS Canada Inc. – Geostat


SGS Geostat


YANN CAMUS

[email protected]

I, Yann Camus, Eng., of Blainville, Quebec, do hereby certify:

• I am project Engineer with SGS Canada Inc.- Geostat with an office at 10 Boul. de la Seigneurie

Est, Suite 203, Blainville, Quebec, Canada, J7C 3V5.

• This certificate applies to the technical report entitled Preliminary Economic Assessment on the Ashram Rare Earth Deposit, Nunavik in Quebec Province dated July 05th 2012 (the “Technical Report)

• I am a graduate from École Polytechnique de Montréal (B.Sc. Geological Engineering, 2000). I am a member of good standing (#125443) of the l’Ordre des Ingénieurs du Québec (Order of Engineers of Quebec). My relevant experience includes continuous geological engineering since my graduation from University. I am a “Qualified Person” for purposes of National Instrument 43-101 (the “Instrument”).

• I did not visit the property.

• I am responsible for Sections 11.3, 11.4, 11.5, 12 and 14 of the Technical Report.


• I have no prior involvement with the property that is the subject of the Technical Report.

• I have read the Instrument and the sections of the Technical Report that I am responsible for have been prepared in compliance with the Instrument.

• As of the date of this certificate, to the best of my knowledge, information and belief, the sections of the Technical Report for which I am responsible contain all scientific and technical information that is required to be disclosed to make the the Technical Report not misleading.


“Original document signed and sealed by Yann Camus, Eng” Yann Camus. Eng. Geological Engineer SGS Canada Inc. – Geostat


SGS Geostat


GILBERT ROUSSEAU

[email protected] I, Gilbert Rousseau B Sc.A, Eng., of Ville de Saguenay, Province of Quebec, do hereby certify : • I am a Senior Mining-Metallurgical Engineer with SGS Canada Inc., with a business address at

10 Boul. de la Seigneurie, Blainvile, Quebec, J7C 3V5. • This certificate applies to the Preliminary Economic Assessment report entitled : Ashram Rare

Earth Deposit, Nunavik, province of Quebec dated July 05th, 2012 (the “Technical Report”).

• I graduated from The Ecole Polytechnique of the University of Montreal (B.Sc.A, Mining Engineer in 1969). I am a member in good standing of the “l’Ordre des Ingénieurs du Québec” #20288). My relevant experience includes more than 40 years of experience in the mining and milling of minerals including iron, copper, lead, zinc, silver, gold, asbestos, graphite, nickel, silica, etc. I am a “Qualified Person” for the purposes of National Instrument 43-101 (the “Instrument”).

• I did not visit the property.

• I am responsible for Sections 13 and 17 of the Technical Report.


• I have read the Instrument and the sections of the report that I am responsible. These sections have been prepared in compliance with the Instrument.

• As of the date of this certificate, to the best of my knowledge, information and belief, the sections of the report for which I am responsible contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.


“Original document signed and sealed by Gilbert Rousseau, Eng”

Gilbert Rousseau, Eng. SGS Canada Inc. – Geostat


SGS Geostat

APPENDIX B

______________________________________________________________________________

LIST OF MINERALS TITLES


SGS Geostat

NTS sheetType of

titleTitle No Status

Date of

registrationExpiry date

Number of

renewalsArea (Ha) Titleholder(s) (Name, Number and Percentage)

SNRC 24C16 CDC 1007657 Active 11/04/2001 0:00 13/05/2014 23:59 6 47.04 Commerce Resources Corporation (18766) 100 % (responsable)





































































SGS Geostat

NTS sheetType of


Date of


Number of







SNRC 24C16 CDC 2087805 Active 30/05/2007 0:00 13/05/2014 23:59 3 47 Commerce Resources Corporation (18766) 100 % (responsable)
































































SGS Geostat

NTS sheetType of


Date of


Number of





















SNRC 24F01 CDC 2118788 Active 22/08/2007 0:00 13/05/2014 23:59 2 46.96 Commerce Resources Corporation (18766) 100 % (responsable)


















































SGS Geostat

NTS sheetType of


Date of


Number of







































































SGS Geostat

NTS sheetType of


Date of


Number of







































































SGS Geostat

NTS sheetType of


Date of


Number of



































































SGS Geostat

APPENDIX C

ANALYTICAL PROTOCOLS


SGS Geostat


SGS Geostat

Inspectorate Analytical Methodology

Sample Preparation Parameters: - Up to 2kg of sample is dried for up to 24hrs, crushed and riffle split to ~250g sample weight. The split sample is then pulverized to >85% passing -200 mesh. Please keep in mind that for this particular job we were the check laboratory and did not prep core or rock from this client. Whole Rock: - Lithium Metaborate Fusion, followed by nitric acid leach and ICP-MS scan. LOI was included. Detection limits for each element were: Al2O3, BaO, CaO, Cr2O3, MgO, Na2O, P2O5, Fe2O3, K2O, SiO2, TiO2 - 0.01 - 100% Ce, Dy, Er, Eu, Ho, La, Lu, Nd, Pr, Sm, Tb, Tm, Yb - 0.1 - 10,000 ppm Gd, Hf - 0.1 - 1,000 ppm


SGS Geostat


SGS Geostat


SGS Geostat

Investor Relations

Technical Report: PEA Ashram Deposit at the Eldor Project