Victoria Hall (Geneva, Switzerland)
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 USA 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”.
About NorFalco
NorFalco is a company built from the combined histories of Noranda, Falconbridge, Xstrata and Glencore. In 2013, Xstrata merged with Glencore to form one of the world’s largest global diversified natural resource companies. NorFalco Inc. is headquartered in Seven Hills, Ohio, with a subsidiary, NorFalco Sales Inc., in Mississauga, Ontario.
NorFalco is one of North America’s largest traders of sulfuric acid, responsible for the marketing and distribution of about 2 million tonnes per year. Through parent company Glencore, NorFalco has exclusive access to sulfuric acid production from four major North American production facilities and to an unrivaled global sulfuric acid supply and trading network. Additionally, NorFalco has offtake agreements with several other Producers outside of the Glencore group. Norfalco’s fully integrated distribution network, comprising of rail cars, trucks, barges, vessels, trans-load terminals and import terminals, is one the most expansive and reliable networks in North America. These production, marketing, and distribution strengths help ensure excellent reliability to a diverse range of consumers across more than 20 different industries. The company is a Responsible Care® company with the Chemistry Industry Association of Canada. NorFalco is committed to delivering “More than H2SO4 “. This means delivering customer solutions that make it easy to order, receive and use sulfuric acid in a safe and reliable manner.
Sulfuric acid is a powerful, virtually irreplaceable constituent of countless industrial processes. It is used in the manufacture of products such as fertilizers, paints and pigments, explosives, pulp and paper, plastics, detergents, textiles, batteries and a variety of specialty chemicals. It is also used for processing mineral ores, metal refining, petrochemical processing and water treatment. NorFalco markets sulfuric acid in strengths from 93% to 99% concentration. From the four plants of our parent Glencore and Noranda Income Fund, we ship about 2 million tons of sulfuric acid per year by road, rail and vessel, safely delivering tens of thousands of shipments annually. The plants produce sulfuric acid in a variety of grades meeting industry standard requirements such as Technical, Commercial and Battery Electrolyte.
Our commitment to delivering more than H2SO4 means:
• Reliable and secure supply
• Safe deliveries and Responsible Care
• Technical support delivered to customers’ sites
• 24/7 customer service support
• Dependable multiple-plant sourcing
• Consistent quality
• Multi-modal logistics system
• Extensive terminal network
• Experienced sales force
• Direct working relationship with the producer
• Access to Glencore’s global supply network
More information: www.norfalco.com
Source: NorFalco
About Fluorspar
Approximately two-thirds of the fluorspar market is acid-grade, which is primarily used in the production of aluminum and in the manufacture of hydrofluoric acid. The remaining one-third of the market is dominated by met-grade which is primarily used as flux in steel making to lower melting temperature and remove impurities. China, and to a lesser extent Mexico, dominate global fluorspar production which is estimated by the USGS to be approximately 6.9 million tonnes per annum (2014).
Company Details
Commerce Resources Corp.
#1450 - 789 West Pender Street
Vancouver, BC, Canada V6C 1H2
Phone: +1 604 484 2700
Email: cgrove@commerceresources.com
www.commerceresources.com
Shares Issued & Outstanding: 234,409,864
Canadian Symbol (TSX.V): CCE
Current Price: $0.065 CAD (April 6, 2016)
Market Capitalization: $15 million CAD
German Symbol / WKN (Frankfurt): D7H / A0J2Q3
Current Price: €0.041 EUR (April 6, 2016)
Market Capitalization: €10 million EUR
Technical Analysis:
Since 2001: http://schrts.co/wR62L5
Since 11/2013: http://schrts.co/kAtslu
Analyst Coverage
Research #15 “First Come First Serve“
Research #14 “Q&A Session About My Most Recent Article Shedding Light onto the REE Playing Field“
Research #13 “Shedding Light onto the Rare Earth Playing Field“
Research #12 “Key Milestone Achieved from Ashram’s Pilot Plant Operations“
Research #11 “Rumble in the REE Jungle: Molycorp vs. Commerce Resources – The Mountain Pass Bubble and the Ashram Advantage“
Research #10 “Interview with Darren L. Smith and Chris Grove while the Graveyard of REE Projects Gets Crowded“
Research #9 “The REE Basket Price Deception & the Clarity of OPEX“
Research #8 “A Fundamental Economic Factor in the Rare Earth Space: ACID“
Research #7 “The Rare Earth Mine-to-Market Strategy & the Underlying Motives“
Research #6 “What Does the REE Market Urgently Need? (Besides Economic Sense)“
Research #5 “Putting in Last Pieces Brings Fortunate Surprises“
Research #4 “Ashram – The Next Battle in the REE Space between China & ROW?“
Research #3 “Rare Earth Deposits: A Simple Means of Comparative Evaluation“
Research #2 “Knocking Out Misleading Statements in the Rare Earth Space“
Research #1 “The Knock-Out Criteria for Rare Earth Element Deposits: Cutting the Wheat from the Chaff“
Disclaimer: Please read the full disclaimer within the full research report as a PDF (here) as fundamental risks and conflicts of interest exist.
