Today, Commerce Resources Corp. has announced entering into a MOU with NorFalco, one of North America’s largest suppliers of sulphuric acid, which is one of the largest consumables in the flowsheet of Commerce’s Ashram REE Project in Quebec, Canada.
NorFalco, a division of Glencore Canada Corp., trades about 2 million tonnes of sulphuric acid annually. According to the agreement, NorFalco wants to be the sole provider of sulphuric acid for Ashram and sell it to Commerce at highly competitive prices and terms.
It is not hard to see the depth and reasoning behind such an agreement as Glencore is far more than a sulphuric acid supplier as they made a ~$2 billion profit last year. Glencore trades over 90 commodities, including fluorspar, which Commerce has recently identified as a potential by-product. The fluorspar supply market is dominated by China and Mexico with essentially no production from the United States or Canada although there is significant consumption in that part of the world. Commerce and its Ashram Project may be uniquely positioned to capitalize on this geographic “hole” in supply, with Glencore as their partner.
Today’s deal is, at a minimum, a strong vote of confidence from a major industry player that Commerce’s Ashram Project has legs and is well positioned to advance to production.
Chris Grove commented in today’s news:
“We are very excited to be working with NorFalco, an industry leader in marketing, trading, and distribution of sulphuric acid. This agreement is a significant first step in what we expect to be a meaningful ongoing supply relationship with NorFalco. The nature of this agreement today is that it is a benefit to the Ashram Project with favourable pricing for one of the largest project consumables. We look forward to working with NorFalco.”
The high discount on the market price of sulphuric acid, the largest consumable in Ashram’s processing, will be incorporated into the ongoing Pre-Feasibility Study (PFS), with costs and benefits to be described in more detail therein. Additionally, fluorspar as a potential by-product will be included in the PFS (not considered in the 2012-PEA), which has the potential to increase operating margins even further.
As both graphs from December 2015 show, Ashram’s projected OPEX are already projected to be the lowest of a select peer group, whereas its operating margins are not only the highest but more importantly positive, i.e. projected to make a profit even at current low REE market prices, which may sound like music to the ears of some majors.
When Commerce achieved a 42% TREO mineral concentrate at 76% recovery (October 19, 2015), it also resulted in a fluorspar concentrate with a grade of ~75% CaF2 (“met-grade”, i.e. metallurgical grade) at 80% recovery. This information was published on March 1, 2016. Commerce also disclosed that they will work towards the production of samples from its pilot plant for evaluation.
It will be very interesting to see if this news from today is the start of a series of deals with other companies who see this news as being the fundamental “turning point” for the Ashram project – the point after which these other companies may need to express their interest in working also with Commerce, the point at which we will say they will “put their money where their mouth is."