In this interview with stockreport.de, David Hodge, president of Commerce Resources Corp. (TSX.V:CCE) (PK SHEETS:CMRZF), discusses the current and future outlook for rare metals, including tantalum and niobium, and provides updates on two of Commerce's current projects Blue River and Eldor.
Daniel Schaad, stockreport.de: Since we first mentioned Commerce in stockreport.de on April 10th 2009, the share price went from 0.26 CAD to more than 0.40 CAD. Do you think people are starting to recognize that rare metals are important for the future?
David Hodge, Commerce Resources: Yes, investor interest in rare metals is increasing and the sector is beginning to gain momentum. Several analysts and newsletter writers have begun to point to this sector as the next major surprise bull market; similar to the gold bull market that began five years ago or the uranium market run that began in 2003. The momentum appears to have just begun to build, however, and those entering the sector now are likely early entrants.
SR: Commerce Resources has its focus on tantalum, niobium and other rare metal deposits. Please give a short overview about tantalum and niobium.
Commerce: Tantalum is a rare metal that is widely used in the production of electronic capacitors, which are in cell phones, DVD players, personal computers, digital cameras, gaming platforms, LCD monitors, airbags and other wireless devices. It is also used for specialty applications in the aerospace, medical, and nuclear power industries. Niobium, on the other hand, is used as an alloy in steel and super alloys. It is used, for example, in the manufacture of bridges, buildings, and oil and gas pipelines.
SR: Most people don't know much about the rare metals. Do you think the public interest will increase or has to increase in the future?
Commerce: The rare metals, particularly tantalum, represent a unique way for investors to participate in the world's shift to microminiaturization, especially in electronics. The public is very familiar with the products that depend on tantalum for their production. We use computers, digital music players, cell phones or cameras, for instance, almost every day. Tantalum is vital for the production of all of these items and so, as investors become more aware of the rare metals, instead of trying to figure out which cell-phone or computer stock to buy, they will likely begin to search for companies with the mineral deposits required for their manufacture.
SR: Since the year 2000 Commerce has been working on its flagship prop¬erty called "Blue River." What are the highlights so far?
Commerce: To date, Commerce has defined three separate tantalum-niobium deposits on the Blue River property, which is located in British Columbia, Canada. The company is current focused on moving the richest and most prospective of these, the Upper Fir deposit, through development to commercial production. The Upper Fir deposits has, based on the first 38 drill holes from 2005 to 2007, a resource of 14.6 million tons in the indicated category and 19.8 million tons in the inferred category. This would basically be enough to supply 20% of the global tantalum market for the next 16 years.
SR: When could we expect a resource update from Blue River, which includes the 118 holes you drilled in 2008?
Commerce: In July of 2007, Commerce was successful in raising C$32.7 million at $1.20, which enabled the company to complete the most extensive drilling program to date at Blue River in 2008. Last year 118 new holes were completed at the Upper Fir, three times what had been drilled in the three years prior. Several other exploration holes targeting other occurrences on the property were also drilled. The updated resource estimate incorporating the 118 new holes is expected to be ready in the next several weeks.
SR: The project is now in the "pre-feasi¬bility stage." What's coming next? How is your timeline?
Commerce: Before year's end, we are aiming to complete a scoping study for the Upper Fir deposit. The report will be a major milestone for the project and will provide us with the early economics for a mine at Blue River. Should a production decision be made, it will lead to a full feasibility study and permitting beginning in 2010.
SR: Commerce has another property called "Eldor" in Quebec. You recently announced drill results for that property. What are the future plans and how is it comparable to your Blue River property?
Commerce: Yes, we just announced the results from the 26 drill holes that we completed at the Eldor project in 2008. The holes were from three separate areas and produced encouraging grades and intersections of tantalum and niobium. In some of the holes, we encountered grades of tantalum and niobium that were two to three times as high as what we have discovered at Blue River. Drilling also discovered that in addition to tantalum and niobium, the property has multi-commodity potential, with local enrichments in uranium, phosphate, fluorite and rare earths. We are pleased with the results of the first drill program and will direct a minimum of $1.2 million to the project this year.
SR: Let's talk about numbers: How much cash has Commerce in his bank account right now? How many shares are held by management, insiders and institutionals?
Commerce: Commerce is well funded with over C$13 million in cash. Approximately 15% of the company is held by management and insiders and 25% by institutions.
SR: There is no spot market for tantalum and niobium. Could you please give us actual prices for these two metals per lb (0,4536kg)?
Commerce: Tantalum pricing is normally established by contractual agreements between miners and processors; rather than being sold over a spot market. The current price for tantalum contained in concentrate is about C$65.00 per pound. If upgraded through processing to tantalum oxide, the price jumps to around C$155 per pound. The current price of niobium is around C$20 per pound.
SR: The tantalum market is controlled by only a few companies. Where do you see Commerce Resources in the future?
Commerce: Current tantalum primary supply is behind market demand; in the long-term, the market desperately requires additional production from new projects—particularly from safe, stable long-term Western suppliers. The supply side shortfall includes the depletion of the United States Defence Logistics Agency stockpiles in 2007, as well as the closure of the world's two largest tantalum mines—Wodgina in Australia and Marropino in Mozambique over the past six months. Talison produced approximately 2 million pounds per year, the USDLA is estimated to have been selling in the range of 500,000 pounds per year, and Noventa was producing approximately 450,000 pounds per year. This is an approximate 2.9 million pound shortfall.
Another major supplier is the Democratic Republic of the Congo, and there is great concern about the unethical and inhumane conditions in which tantalum or 'coltan' (columbite-tantalum) is mined within this country. Commerce Resources is in an extremely strong and advantageous global position. The pressing need to develop new global supplies of tantalum in a politically stable nation like Canada makes Commerce's deposits very attractive to the tantalum industry.