Hattip Maniwazi
Hello Manfred:
Nice to hear from you and of course we want to see you and your daughter both laughing in the hopefully not too distant future.
I am happy to answer your questions here.
Commerce Resources has enough capital at the moment to continue drilling but we will need a little more capital to allow us to complete our pilot plant and to complete our Pre-feasibility study, which is a requirement on the road towards the completion of a Bankable Feasibility study.
The requirements of the Canadian mining legislation 43-101 are such that we, and all Canadian companies, have to prove our economics up to a degree of complete accuracy, that is with a Bankable Feasibility study, upon the completion of which we would be then looking for a debt facility from a major lender (Canadian bank for example) and this lender would provide the debt required for the capital expenditure to put the project into production.
The lender would then be paid out by the profits of the company for the first couple of years, and then for the rest of the mine life all shareholders should see dividends from the corporate profits generated, and for us the outstanding mine life for the current resource is much more than 100 years – so much laughing for you, your daughter, your grandchildren, and your great grandchildren etc.
The key thing here with the economic reports are the internal rate of return (IRR), and in our Preliminary Economic Assessment (PEA) our IRR was 44% - this is extremely good and we hope that this is what we see with our Pre-feasibility study (PFS) and then with our Bankable Feasibly study (BFS).
Now, in terms of the full amount of capital we would need to complete our PFS this would be in the range of $5 Million CAD. To complete our BFS we would need approximately another $15 M CAD.
So, if we are looking for in total $20M, let me just say that we are not looking for this amount of capital from the capital markets; we are looking for this kind of money from a Joint Venture (JV) partner, and this is my primary goal at this time – securing such an offtake agreement or a sale of a percentage of the asset to secure the $20 M in what would be a non-dilutive style of financing, that is, where no new shares are added to our company.
In terms of the companies that have expressed a potential interest in doing such a JV with us, this is where it gets quite interesting. At this time we have the world’s largest REE producer Solvay interested, and at least 4 other companies, some of which are under Non-disclosure agreements (NDA) with us and so I cannot say their names.
4 of these companies including Solvay are waiting for a sample of our material that we will be producing in the second phase of the pilot plant later this year, and we are looking forward to delivering these samples to them.
I know that this may be more information than you might have wanted, and in more detail, but these are fundamentally very important questions to know the answers for.
I hope I have answered all of your questions. If you have any others, please let me know.
And I hope that we will see you the next time we are in Munich.
Best regards,
Chris Grove
President