technical report for ashram rare earth deposit

Respectfully submitted to: Commerce Resources Corporation

By:

André Laferrière M.Sc. P.Geo. SGS Canada Inc. – Geostat

Date:

April 15, 2011

Technical Report Mineral Resource Estimation

Eldor Property – Ashram Deposit Nunavik, Quebec

Commerce Resources Corporation

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.

Technical Report – Mineral Resource Estimation – Eldor Property – Ashram Deposit Page ii

SGS Canada Inc. - Geostat

TABLE OF CONTENTS

Table of Contents ............................................................................................................................ ii List of Tables ................................................................................................................................. iv List of Figures ................................................................................................................................ iv 1- Executive Summary .....................................................................................................................6 2- Introduction and Terms of Reference ..........................................................................................8

2.1 General ................................................................................................................................................ 8 2.2 Terms of Reference ............................................................................................................................. 8 2.3 Units and Currency .............................................................................................................................. 9 2.4 Disclaimer ......................................................................................................................................... 10

3- Reliance on Other Experts .........................................................................................................10 4- Property Description and Location ............................................................................................11

4.1 Location ............................................................................................................................................. 11 4.2 Property Ownership and Agreements ................................................................................................ 12 4.3 Royalties Obligations ........................................................................................................................ 14 4.4 Permits and Environmental Liabilities .............................................................................................. 14 4.5 Mineralisation .................................................................................................................................... 14

5- Accessibility, Physiography, Climate, Local Resources and Infrastructure ..............................15 5.1 Accessibility ...................................................................................................................................... 15 5.2 Physiography ..................................................................................................................................... 15 5.3 Climate .............................................................................................................................................. 15 5.4 Local Resources and Infrastructures ................................................................................................. 16

6- History .......................................................................................................................................16 6.1 Regional Government Surveys .......................................................................................................... 16 6.2 Mineral Exploration Work ................................................................................................................ 16

7- Geological Setting .....................................................................................................................18 7.1 Regional Geology .............................................................................................................................. 18 7.2 Property Geology .............................................................................................................................. 21

8- Deposit Model ...........................................................................................................................23 9- Mineralisation ............................................................................................................................25 10- Exploration and Drilling ..........................................................................................................26 11- Sampling Method and Approach .............................................................................................28 12- Sample Preparation, Analysis and Security .............................................................................30

12.1 Sample Preparation and Analyses ................................................................................................... 30 12.2 Quality Assurance and Quality Control Procedure ......................................................................... 31

12.2.1 Analytical Standards ................................................................................................................. 31 12.2.2 Analytical Blanks ...................................................................................................................... 35 12.2.3 Drill Core Duplicates ................................................................................................................ 35 12.2.4 Pulp Duplicates ......................................................................................................................... 38 12.2.5 QA/QC Conclusion ................................................................................................................... 44

12.3 Specific Gravity ............................................................................................................................... 45 12.4 Conclusions ..................................................................................................................................... 47

13- Data Verification .....................................................................................................................47 14- Adjacent Properties ..................................................................................................................58 15- Mineral Processing and Metallurgical Testing ........................................................................59 16- Mineral Resource and Mineral Reserve Estimates ..................................................................60

16.1 Introduction ..................................................................................................................................... 60 16.2 Exploratory Data Analysis .............................................................................................................. 60

16.2.1 Analytical Data ......................................................................................................................... 60

Technical Report – Mineral Resource Estimation – Eldor Property – Ashram Deposit Page iii


16.2.2 Composite Data ........................................................................................................................ 63 16.2.3 Specific Gravity ........................................................................................................................ 65

16.3 Geological Interpretation ................................................................................................................. 65 16.4 Spatial Analysis ............................................................................................................................... 67 16.5 Resource Block Modeling ............................................................................................................... 68 16.6 Grade Interpolation Methodology ................................................................................................... 69 16.7 Mineral Resource Classification ..................................................................................................... 71 16.8 Mineral Resource Estimation .......................................................................................................... 71 16.9 Mineral Resource Validation ........................................................................................................... 73 16.10 Comments about the Mineral Resource Estimate ......................................................................... 73

17- Other Relevant Data and Information .....................................................................................74 18- Interpretation and Conclusions ................................................................................................74 19- Recommendations ...................................................................................................................76 20- References ...............................................................................................................................78 21- Signature Page .........................................................................................................................80 22- Certificate of Qualification ......................................................................................................81

Technical Report – Mineral Resource Estimation – Eldor Property – Ashram Deposit Page iv


LIST OF TABLES

Table 2.1 – List of Abbreviations ................................................................................................................. 9 Table 2.2 – Conversion Factors .................................................................................................................. 10 Table 4.1 – Summary of Mineralisation Occurring on the Eldor Property ................................................. 15 Table 10.1 – Summary of Drilling Completed at Eldor by Commerce ...................................................... 27 Table 12.1 – Expected Values and QA/QC Ranges of SX18-01 and SX18-05 Analytical Standards for Y,

La, Ce, Nd and Nb2O5 .......................................................................................................................... 32 Table 12.2 - Summary Statistics of SX18-01 and SX18-05 Analytical Standards for Y, La, Ce, Nd and

Nb2O5 ................................................................................................................................................... 32 Table 12.3 – Comparative Statistics for the Drill Core Duplicates ............................................................. 36 Table 12.4 –Statistics for the Pulp Duplicates (Act Labs vs. Inspectorate) ................................................ 39 Table 12.5 –Specific Gravity Statistics from Independent Check Sampling Program ............................... 45 Table 12.6 –Specific Gravity Statistics from Commerce 2010 Exploration Program ................................ 46 Table 13.1 –Statistics for the Independent Check Samples (Act Labs vs. SGS Minerals) ......................... 48 Table 13.2 –Statistics for the Independent Check Samples (Act Labs vs. ALS Chemex) .......................... 53 Table 13.3 – Final Drill Hole Database ...................................................................................................... 58 Table 16.1 – Summary Statistics of Analytical Data Used in the Mineral Resource Estimate ................... 61 Table 16.2 – Summary Statistics for the 3 metre Composites .................................................................... 64 Table 16.3 – Variogram Model of TREO Grade for 3 m Composite ......................................................... 67 Table 16.4 – Resource Block Model Parameters ........................................................................................ 69 Table 16.5 – Eldor Property Mineral Resource Estimate ........................................................................... 72 Table 16.6 – Eldor Property Mineral Resource Estimate with Individual REO Values ............................. 73 Table 16.7 – Comparative Statistics of the Composite and Block Model Datasets .................................... 73 Table 18.1 – Final Mineral Resources for the Eldor Property .................................................................... 75 Table 19.1 – Proposed Budget for Recommended Exploration Work at Eldor .......................................... 77 LIST OF FIGURES

Figure 4.1 – General Location Map ............................................................................................................ 11 Figure 4.2 – Map of the Property Mineral Titles ........................................................................................ 13 Figure 7.1 – Regional Geology Map ........................................................................................................... 20 Figure 7.2 – Local Geological Map ............................................................................................................ 22 Figure 8.1 – Schematic Representation of St-Honore Carbonatite ............................................................. 24 Figure 9.1 – Drill Core from Hole EC10-028 Showing the A, B, BD and Contact Zones ......................... 26 Figure 10.1 – Plan View of the Drilling in the Ashram REE zone at the Eldor Property ........................... 28 Figure 12.1 - Variation of Reported Values with Time for Analytical Standard SX18-01 ........................ 33 Figure 12.2 - Variation of Reported Values with Time for Analytical Standard SX18-05 ........................ 34 Figure 12.3 – Correlation Plot of the Drill Core Duplicates for TREE+Y ................................................. 37 Figure 12.4 – Correlation Plot of the Drill Core Duplicates for Nb2O5 ...................................................... 37 Figure 12.5 – Correlation Plot of the Drill Core Duplicates for F .............................................................. 38 Figure 12.6 - Correlation Plot of the Pulp Duplicates for TREE+Y, Y, La and Ce (ActLabs vs.

Inspectorate) ........................................................................................................................................ 40 Figure 12.7 - Correlation Plot of the Pulp Duplicates for Pr, Nd, Sm and Eu (ActLabs vs. Inspectorate) . 41 Figure 12.8 - Correlation Plot of the Pulp Duplicates for Gd, Tb, Dy and Ho (ActLabs vs. Inspectorate) 42 Figure 12.9 - Correlation Plot of the Pulp Duplicates for Er, Tm, Yb and Lu (ActLabs vs. Inspectorate). 43 Figure 12.10 – Histogram of Specific Gravity Measurements by Commerce at Ashram ........................... 46 Figure 13.1 - Correlation Plot of the Independent Checks Samples for TREE+Y, Y, La and Ce (ActLabs

vs. SGS Minerals) ................................................................................................................................ 49 Figure 13.2 - Correlation Plot of the Independent Checks Samples for Pr, Nd, Sm and Eu (ActLabs vs.

SGS Minerals) ..................................................................................................................................... 50

Technical Report – Mineral Resource Estimation – Eldor Property – Ashram Deposit Page v


Figure 13.3 - Correlation Plot of the Independent Checks Samples for Gd, Tb, Dy and Ho (ActLabs vs. SGS Minerals) ..................................................................................................................................... 51

Figure 13.4 - Correlation Plot of the Independent Checks Samples for Er. Tm, Yb and Lu (ActLabs vs. SGS Minerals) ..................................................................................................................................... 52

Figure 13.5 - Correlation Plot of the Independent Checks Samples for TREE+Y, Y, La and Ce (ActLabs vs. ALS Chemex)................................................................................................................................. 54

Figure 13.6 - Correlation Plot of the Independent Checks Samples for Pr, Nd, Sm and Eu (ActLabs vs. ALS Chemex) ...................................................................................................................................... 55

Figure 13.7 - Correlation Plot of the Independent Checks Samples for Gd, Tb, Dy and Ho (ActLabs vs. ALS Chemex) ...................................................................................................................................... 56

Figure 13.8 - Correlation Plot of the Independent Checks Samples for Er. Tm, Yb and Lu (ActLabs vs. ALS Chemex) ...................................................................................................................................... 57

Figure 14.1 – Map of Adjacent Properties in the Vicinity of Eldor Property ............................................. 59 Figure 16.1 – Histogram of Samples Length from Ashram Database ........................................................ 61 Figure 16.2 – Plan View of the Drill Holes at Ashram ............................................................................... 62 Figure 16.3 – Longitudinal View of the Drill Holes at Ashram (looking north) ........................................ 63 Figure 16.4 - Plan View Showing the Spatial Distribution of the Composites ........................................... 64 Figure 16.5 – Longitudinal View Showing the Distribution of the Composites (looking north) ............... 65 Figure 16.6 – Modeled 3D Wireframe Envelope in Plan View .................................................................. 66 Figure 16.7 – Modeled 3D Wireframe Envelope in Longitudinal View (looking south) ........................... 67 Figure 16.8 – Variograms of TREO Grade of 3 metre Composite ............................................................. 68 Figure 16.9 –Different Search Ellipsoids Used for the Interpolation Process in Plan View ...................... 70 Figure 16.10 – Plan View Showing Block Model Interpolation Results .................................................... 70 Figure 16.11 – Longitudinal View Showing Block Model Interpolation Results (looking south) ............. 71 Figure 19.1 – Plan View Showing Proposed Drilling Area ........................................................................ 77

Technical Report – Mineral Resource Estimation – Eldor Property – Ashram Deposit


1 EXECUTIVE SUMMARY

SGS Canada Inc. – Geostat (“SGS Geostat”) was commissioned by Commerce Resources Corporation (“Commerce”) on September 28, 2010 to prepare an independent estimate of the mineral resources of the Ashram rare earth deposit for an open pit mining perspective. The mineral resource estimate was completed by SGS Geostat based on data available from recent drilling data collected by Commerce during the 2010 exploration program. The mineral resource estimate was done in accordance with National Instrument 43‐101 Standards and Disclosure for Mineral Projects.

The Eldor Property (“Property”) is located in the Nunavik Region of the Province of Québec, approximately 130 km south of the community of Kuujjuaq and, due to it remoteness, is only accessible by float plane or helicopter. The Property consists in one block totalling 404 claims covering 19,006.52 ha and extends 17.5 km in the east‐west direction and 24 km north‐south. From the 404 claims comprising the Property, 8 claims were acquired in May 2007 by a purchase agreement with Virginia Mines Inc. (“Virginia”), and 396 claims were acquired map staking between May 2007 and October 2010.

The Eldor Property area has been explored since in the 1980’s mainly for uranium but mineralisation in niobium, tantalum, and rare earths were discovered during that period. The Property was re‐activated in 2002 went Virginia acquired 8 claims covering the main mineralisation occurrences then conducted a small reconnaissance exploration program. In 2007, Commerce acquired the claims owned by Virginia through a purchase agreement and staked an additional 357 claims. Since 2008, Commerce conducted exploration programs on the Property using prospecting, soil geochemistry, airborne and ground geophysics, trenching and diamond drilling. In 2009, significant rare earth mineralisation was discovered in the Ashram area followed, in 2010, by a significant exploration program centered at Ashram consisting of mainly diamond drilling.

The Property is situated within the central area of the Proterozoic‐age New Quebec Orogen, straddling two lithotectonic zones separated by a major thrust fault. The eastern portion of the Property comprises paraschist, paragneiss, and amphibolites. To the west are mainly volcanic and sedimentary rocks along with the Eldor carbonatite intrusive complex. The Eldor carbonatite comprises several lithological subdivisions which can be simplified into early, mid and late stage carbonatite. The mid stage carbonatite is most closely related to tantalum‐niobium mineralisation while the late stage carbonatite hosts the REE mineralisation observed at the Ashram zone.

As part of the independent verification program, the author of the report validated the exploration methodology which includes core logging, sampling, analytical procedures, and quality analysis‐quality control protocol implemented by Commerce. SGS Geostat considers the samples representative and of good quality, and is confident that the system is appropriate for the collection of data suitable for the estimation of a NI 43‐101 compliant mineral resources.

The author visited the Property between October 4 and 6, 2010 and conducted an independent sampling of mineralised core from the 2010 exploration program. SGS Geostat also completed a verification of the drill hole database as part of the verification program. The author and SGS Geostat are in the opinion that the data quality is acceptable and that the final drill hole database is adequate to support a mineral resource estimate.



The mineral resource block model is derived from the geological interpretation and modeling of the mineralised carbonatite at Ashram. The resource model is defined by blocks 10 m (east‐west) by 10 m (north‐south) by 10 m (elevation) in size, located below the bedrock/overburden interface. Interpolation of the block grade was performed using ordinary kriging from composited analytical data in multiple successive passes using anisotropic search ellipsoids increasing is size from one pass to another. Finally, a mineral resource was estimate based on the results of the block model interpolation. All the mineral resources were classified inferred resource categories. An average bulk density of 3.0 t/m3 was used to calculate the final tonnage of the mineral resources based on the volumetric estimates of the block model.

The final mineral resource estimate for the Eldor Property at a base case cut‐off grade of 1.25% TREO totals 117,340,000 tonnes grading 1.740% TREO and 5.56% CaF2 in the inferred resource category. The final mineral resources for the Eldor Property are presented in the table below.

SGS Geostat is in the opinion that the Company successfully confirmed the mineral resource potential of the Ashram deposit located on the Eldor Property based on 2010 exploration program and considers the Project to be sufficiently robust to warrant the following work:

Additional drilling to a) confirm the western and eastern extent of the mineralisation, b) test the northern, southern, and depth extensions of the mineralised carbonatite, and c) confirm the existing inferred resources and upgrade the current resources to the indicated category;

Proceed to preliminary metallurgical study to better characterise the rare earth mineralisation processing parameters;

Complete a preliminary economic evaluation of the Project for a potential open pit mining operation.

In addition to the work recommendation listed above, the author recommends to carry out a baseline environmental study of the Property and to conduct discussions with the communities neighbouring the Eldor project about the impact of a potential open pit mining operation.

1.25% Inferred 117,340,000 1.740 1.612 0.069 0.019 0.040 5.56

Mineral resources are not mineral reserves and do not have demonstrated economic viability.

Effective date March 1, 2011. Bulk density of 3.0 t/m3 used.

TREO includes La2O3, Ce2O3, Pr2O3 and Nd2O3, SM2O3, Eu2O3 and Gd2O3, Tb2O3, Dy2O3, Ho2O3, Er2O3, Tm2O3, Yb2O3 and Lu2O3, and Y2O3.

LREO includes La2O3, Ce2O3, Pr2O3 and Nd2O3.

IREO includes SM2O3, Eu2O3 and Gd2O3.

HREO includes Tb2O3, Dy2O3, Ho2O3, Er2O3, Tm2O3, Yb2O3 and Lu2O3.

* Rounded to nearest 10,000. ** Rounded to nearest 0.001. *** Rounded to nearest 0.01

Mineral Resources Estimate ‐ Eldor Property ‐ Ashram REE Deposit

Cut‐off Grade

TREO (%)

Resources

CategoriesTonnes* TREO (%)** LREO (%)** IREO (%)** HREO (%)** Y2O3 (%)** CaF2 (%)***



2 INTRODUCTION AND TERMS OF REFERENCE

2.1 General

This technical report was prepared by SGS Canada Inc. – Geostat (“SGS Geostat”) for Commerce Resources Corporation (“Commerce” or “Company”) to support the disclosure of mineral resources for the Eldor Property (“Property” or “Project”).

The report describes the basis and methodology used for modeling and estimation of the Ashram REE deposit located on the Property from recent holes drilled by Commerce during the 2010 exploration program. The report also presents a full review of the history, geology, sample preparation and analysis, and data verification of the Project. The report also provides recommendations for future work.

SGS Geostat was commissioned by Commerce on September 28, 2010 to prepare an independent estimate of the mineral resources of the Ashram deposit for an open pit mining perspective. Commerce supplied electronic format data from which SGS Geostat generate and validated a final database.

2.2 Terms of Reference

This report on the mineral resource estimation at the Eldor Property was prepared by André Laferrière M.Sc. P.Geo. The author, André Laferrière M.Sc. P.Geo, is responsible for all sections of the report.

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 certificate of qualification for the Qualified Person responsible for this technical report has been supplied to the Company as a separate document and can also be found in section 22 of the report.

The author visited the Property between October 4 and 6, 2010, for a review of exploration methodology, sampling procedures and to conduct an independent check sampling of selected mineralised drill intervals.

Information in this report is based on critical review of the documents, information and maps provided by personnel of Commerce and Dahrouge Geological Consulting Ltd (“Dahrouge”), in particular Mr. Darren Smith, M.Sc. P.Geol., Project Geologist and Mr. Wayne McGuire, Senior GIS Technician. A complete list of the reports available to the author is found in the References section of this report.



2.3 Units and Currency

All measurements in this report are presented in Système International d’Unités (SI) metric units, including metric tonnes (tonnes) or grams (g) for weight, metres (m) or kilometres (km) for distance, hectare (ha) for area, and cubic metres (m3) for volume. All currency amounts are Canadian Dollars (C$) unless otherwise stated. Abbreviations used in this report are listed in Table 2.1.

Table 2.1 – List of Abbreviations

tonnes or t Metric tonnes kg Kilograms g Grams km Kilometres m Metres µm Micrometres ha Hectares m3 Cubic metres km/h Kilometre per hour % Percent sign t/m3 Tonne per cubic metre $ Dollar sign ° Degree °C Degree Celcius NSR Net smelter return NPI Net Profit Interest pH Potential of hydrogen (acidity scale) ppm Parts per million NQ Drill core size (4.8 cm in diameter) SG Specific Gravity NTS National Topographic System UTM Universal Transverse Mercator NAD North America Datum Ga Billion years REE Rare Earth Elements REO Rare Earth Oxides



Table 2.2 – Conversion Factors

2.4 Disclaimer

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

3 RELIANCE ON OTHER EXPERTS

The author of this Technical Report, Mr. André Laferrière, M.Sc. P.Geo, is not qualified to comment on issues related legal agreements, royalties, permitting, and environmental matters. The author has relied upon the representations and documentations supplied by the Company management. The author has reviewed the mining titles, their status, the legal agreement and technical data supplied by Commerce, and any public sources of relevant technical information.

Sections 4 to 6 of this report has been modified from the assessment report “2008 and 2009 Exploration of the Eldor Property, Northern Quebec” by Dahrouge for Commerce and dated June 23, 2010 (Smith and Peter‐Rennich, 2010) and includes additional information from the recent exploration programs completed by Commerce on the Property.

Conversion Factor

(Element to Oxide/Carbonate)

Lanthanum La 1.17276 La2O3

Cerium Ce 1.17127 Ce2O3

Praseodymium Pr 1.17031 Pr2O3

Neodymium Nd 1.16638 Nd2O3

Samarium Sm 1.15961 Sm2O3

Europium Eu 1.15793 Eu2O3

Gadolinium Gd 1.15261 Gd2O3

Terbium Tb 1.15100 Tb2O3

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

Niobium Nb 1.43050 Nb2O5

Fluorine F 2.05490 CaF2

Name Element Oxide/Carbonate

LREO

MREO (or IREO)

HREO

Definitions

TREO



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 center and covers portion of NTS sheet 24C15, 24C16 and 24F01. The Property is only accessible by float plane or helicopter.

Figure 4.1 – General Location Map



4.2 Property Ownership and Agreements

As of April 2011, the Property consists in one block totalling 404 claims covering 19,006.52 ha. The Property area extends are 17.5 km in the east‐west direction and 24 km north‐south. Figure 4.2 shows the claim map of the Property and a detailed listing of the Eldor Property claims is included in Appendix A.

From the 404 claims comprising the Property, 8 claims were acquired in May 2007 by a purchase agreement with Virginia Mines Inc (“Virginia”). The other 396 claims were acquired map staking between May 2007 and October 2010.



Figure 4.2 – Map of the Property Mineral Titles



4.3 Royalties Obligations

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.

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 environmental liabilities pertaining to the Property, according to the Company management.

4.5 Mineralisation

Different type of mineralisation related to the carbonatite intrusive complex occurs at the Eldor Property. The main commodities include rare earth elements and fluorine discovered at Ashram zone but also outlined in other areas on the property, and niobium, tantalum and phosphate uncovered mainly at Star Trench, Southeast and Northwest areas. Table 4.1 summarises the mineralisation occurring on the Property.



Table 4.1 – Summary of Mineralisation Occurring on the Eldor Property

5 ACCESSIBILITY, PHYSIOGRAPHY, CLIMATE, LOCAL RESOURCES AND INFRASTRUCTURE

5.1 Accessibility

Due to its remoteness, the Property is only accessible by float plane or helicopter.

5.2 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 ten metres thick. 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.

5.3 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 (weatherbase website 2011). Lakes freeze‐up generally begins in early October and ice break‐up usually occurs around end of May‐early June.

UTM East UTM North

536300 6312100 Ashram REE's, FDDH EC10‐045: 1.99% TREO over 309.18 m, including 2.30% TREO

over 172.89 m.Drill Core

538000 6311000 SoutheastNb, Ta, F,

phosphate

DDH EC‐10‐032: 0.43% Nb2O5 over 155.95 m; DDH EC10‐033:

0.58% Nb2O5 and 8.91% P2O5 over 74.25 m and 12.70% F over

32.42 m; DDH EC08‐015: 9.96% P2O5 over 13.45 m and 3552 ppm

Nb over 18.72 m and 353 ppm Ta over 5.73 m; 1.07% REE+Y in soils;

0.51% REE+Y in rocks

Drill Core, Rocks,

Soils

537300 6310100 Star TrenchTa, Nb, U,

phosphate

DDH EC10‐034: 6.90% P2O5 over 6.13 m; DDH EC10‐035: 4.37%

P2O5 and 396 ppm U over 5.34 m; 1.03% Nb2O5 in rocksDrill Core, Rocks

541400 6311700 MC Exposure REE's, F DDH EC10‐037: 1.73% TREO over 7.87 m; 2.32% TREO in rocks Drill Core, Rocks

537400 6313000Miranna

REE's, phosphate 15.9% P2O5 in rocks; 1.06% TREO in soils Rocks, Soils

537800 6313500 Triple‐D REE's 2.44% TREO in rocks; 0.68% TREO in soils Rocks, Soils

535900 6312700 Northwest Nb, phosphateDDH EC08‐008: 3189 ppm Nb over 46.88 m; 1.69% REE+Y in rocks;

2.11% REE+Y in soils

Drill Core, Rocks,

Soils

LocationArea Name Commodities Significant Results Sampling Type



5.4 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 275 km southeast with a population of just above 800 citizens (2006 census). Both communities are serviced by a regional airport and a float plane base. Kuujjuaq has a small sea port and 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 done from a temporary base camp located nearby the Ashram REE deposit. The camp can be open year‐round and has the capacity to accommodate up to 20 persons. The camp is equipped with core logging and sampling facilities, and hosts the drill core archive of the Project. No permanent access road has been built on the Property.

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 1950’s and the 1970’s, different authors from the GSC and the MRNF conducted regional geological surveys in New Quebec Orogen at scale varying from 4 miles per inch (1:253,440) and 1 mile per inch (1:63,360). In 1979, Dressler and Ciesielski completed a geological compilation of the different geological surveys conducted in the area (Dressler and Ciesielski, 1979). Since the end of the 1970’s, just few localised geological surveys collecting new information at more detailed scale were completed by the MRNF.

The geological synthesises 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 metallogical synthesis at 1:500,000 scale (Bandyayera et al., 2002), and more recently a complete lithological and metallogical synthesis of the New Quebec Orogen (Clark and Wares, 2005).

In addition to regional geological surveys, a stream sediment geochemical survey was done in 1974 in the area (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 includes mainly mineral exploration work conducted for the mineralisation 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. Carbonatitic units were outlined during a follow‐up of the geochemical uranium anomalies outlined by the survey.

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 which 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 dug pits or trenches by radioactive carbonatite outcrops or boulders. The samples collected returned anomalous thorium values and some of the samples returned 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 with prospecting. Samples were collected for geochemical analysis and petrographic study and 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. They conducted a small program with the re‐sampled the historical Nb‐Ta showings and confirmed the historical results. No additional work was performed in the area by Virginia.

In April 2007, Commerce concluded a purchase agreement with Virgina on the 8 original claims and subsequently acquired an additional 357 claims covering the carbonatite and immediate vicinity. During the summer, the Company mandated Dahrouge Geological Consulting Ltd to conduct an exploration program consisting of prospecting and rock sampling, soil sampling, and ground radiometric (scintillometer) and magnetic surveys. In addition to the field program, an airborne magnetic‐electromagnetic‐radiometric survey was flown over the Property.

During 2008, Commerce conducted an exploration program on the Property consisting of prospecting, soil sampling, ground geophysics, trenching, and diamond drilling. A total of 5,482 metres of drilling was completed over 26 holes in three different areas of the Property. From these holes, 3,025 samples totalling 3,538 metres were collected and analysed. The best results returned the following: Star Trench area, 4.37 m grading 597 ppm Ta2O5, 3,058 ppm Nb2O5, 736 ppm U3O8, and 16.6% P2O5 (hole EC08‐025); Northwest area, 46.88 m grading 4,562 ppm Nb2O5 (hole EC08‐008); Southeast area, 26.10 m grading 5,466 ppm Nb2O5 (hole EC08‐015). Fifteen (15) trenches were documented on the Property with 71 samples collected from them. The ground geophysics consisted of magnetic and scintillometer surveys. The soil sampling program 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, the Company completed a relatively small exploration program due to the negative global market conditions. The field work consisted of prospecting and additional sampling of 2008 drill



core. Additional work was done in the office which consisted of air‐photo interpretation and re‐analysis of the airborne geophysical survey. The most significant result from the 2009 exploration program was the discovery of REE mineralisation in outcrop on the Ashram peninsula which highlighted the exploration potential for rare earth elements on the Property. From the 70 grab samples collected in the Ashram area, more than half returned TREE greater than 1% with the best sample grading 2.74% TREE.

7 GEOLOGICAL SETTING

7.1 Regional Geology

The Eldor property is located in the Paleoroterozoic‐age New Quebec Orogen (also known as the Labrador Trough) which is interpreted to be the western margin of the Southeastern Churchill Province (“SECP”). The New Quebec Orogen is bounded to the west the Archean‐age Superior Province, by the Proterozoic‐age Grenville Province to the south, and extent as far as the Ungava Bay to the north. To the east, the New Quebec Orogen is in contact with a composite terrane of the SECP named the Core Zone, composed of Archean and Paleoproterozoic‐age lithologies (James et al. 2003, Clark and Wares, 2005).

The New Quebec Orogen is interpreted as an early Proterozoic‐age (Aphebian) fold and thrust belt with and geologic age ranging between 2.17 and 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, deep‐water, 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 by 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 emplacement age from U‐Pb dating 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 metasedimentary rocks forming the third cycle. The belt is later 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 characterised by relatively little tectonic activity followed the first cycle of the orogen. The second cycle is characterised 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.

Generally, the 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 amphibolitic/granulite facies. The Eldor Carbonatitic suite of rocks has thought to have undergone greenschist facies metamorphism and was deformed, along with the surrounding rocks, during the Hudsonian Orogen.



Figure 7.1 – Regional Geology Map



7.2 Property Geology

The Property is situated within the central area of the New Quebec Orogen, straddling two lithotectonic zones separated by a major thrust fault. To the east is the SC Zone, comprised of Proterozoic paraschist, paragneiss, and amphibolites; to the west is the Gerido Zone, comprised of the Le Moyne Group, Doublet Group and the Le Moyne Intrusion (Eldor Carbonatite).

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 the volcanism was violent and may have occurred in a shallow water environment.

The carbonatite complex has been mapped by Clark and Wares (2005) 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 (2005) suggest 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 belts 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 both calco‐carbonatite and magnesio‐carbonatite present (Sherer, 1984 and Wright et al., 1998).

The Eldor Carbonatite geology 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). The late stage carbonatite crosscuts all earlier phases and hosts the REE mineralisation observed at the Ashram zone.



Figure 7.2 – Local Geological Map



8 DEPOSIT MODEL

The deposit model at the Eldor Property is the carbonatite‐hosted REE‐Nb‐Ta deposit. Carbonatites are by definition igneous rocks, intrusive and extrusive, which contain more than 50% by volume of carbonate minerals like 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 with 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 are 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 shape and can be up to 3‐4 km in diametre. Magmatic mineralisation within pipe‐like carbonatites is commonly found in crescent‐shape, steeply dipping zones. Metasomatic mineralisation occurs as irregular forms, breccias or veins. Figure 8.1 illustrates the concentric, steeply dipping features of a pipe‐like shapes of the St‐Honore carbonatite.

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. Mineralisation within carbonatites is typically syn‐ to post‐intrusion. The mineralisation is controlled primarily by fractional crystallisation within the intrusion with tectonic and local structures influence the form of metasomatic mineralisation which occurs as veins and breccia textures (Woolley and Kempe, 1989, Richardson and Birkett, 1996, Birkett and Simandl, 1999).



Figure 8.1 – Schematic Representation of StHonore Carbonatite

Image from IAMGOLD website – March 2011

In addition to the carbonatite deposit model mineralised in REE‐Nb‐Ta, other deposit types with known mineralised occurrences are located in the vicinity of the Property. The other deposit types includes magmatic Cu‐Ni (Co‐PGE) sulfides in mafic and ultramafic intrusive units and vein‐type Au‐Cu (Ag) mineralisation hosted in fractured mafic intrusive.

Known occurrences of magmatic Cu‐Ni (Co‐PGE) mineralisation 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) mineralisation, 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, 2005).

9 MINERALISATION

This section summarises the observations made during the site visit and information provided by the Company in particular two internal reports on the mineralogy of the Ashram lithologies completed in March 2010 and March 2011 by Patrik Schmidt and Roger H. Mitchell respectively, both consultant petrologists.

The preliminary macroscopic and microscopic observations made of the F‐REE mineralisation at the Ashram deposit suggests that three significantly complex zones of mineralisation intersected in drill holes occurs in the carbonatite: A‐Zone, B‐Zone and BD‐Zone. Figure 9.1 shows a picture of representative samples of the different mineralisation zones from hole EC10‐028 selected by the author including the interpreted non‐carbonatite contact unit (an amphibole and phlogopite‐rich lithology). The different zones have been described by the Company consultants as follow.

A‐Zone carbonatite is the most mineralised unit of the Ashram area (with the B‐Zone) and share similarities in composition and textures with the B‐Zone. The units observed in this zone are typically light to dark olive‐grey and composed of clasts of breunnerite (Mg‐siderite), fluorite or fluorite plus monazite set in a complex matrix of several generations of ferrodolomite. The unit has been geochemically classified as magnesio‐ to ferro‐carbonatite. The rocks shows textures described as cataclastic through‐fluorite “schlieren breccias” (referred as mafic minerals, typically apatite/biotite/REE minerals, having a preferential orientation creating bands during crystallisation of magma). Colloform textures are also present. The breccias which occurred in more than one stage (potentially due to deformation or hydrothermal events) are typically composed of fluorite, late stage Fe‐rich coarse‐grained carbonates, and quartz. The most significant economic minerals observed in the A‐Zone and are monazite (La‐Ce), REE‐F‐carbonates (bastnaesite‐La‐Ce), REE‐phosphates (xenotime‐Y‐Dy), apatite, fluorite, pyrite and sphalerite. Accessory minerals are niobium minerals (ferrocolumbite, niobian ilmenite and rutile), barite, magnetite and galena, among others.

B‐Zone carbonatite shows similar mineralogy as the A‐Zone but with fewer clasts of fluorite plus monazite and less tectonic and hydrothermal‐related textures. The units are cream‐yellow to grey‐yellow in colour. The presence of patches or pools of quartz‐phlogopite is common and appear distinct from the A‐Zone material. The unit has been geochemically classified as a magnesio‐carbonatite.

BD‐Zone carbonatite occurs between the B‐Zone and a poorly understood contact lithology best described as an albite‐amphibole‐phlogopite‐rich unit. The BD‐Zone units are typically cream to white in colour with red‐orange pervasive shades from parisite‐baesnesite mineralisation. The BD‐Zone shows a relatively consistent composition but significant variation in texture is observed from one sample to another. The unit has been geochemically classified as a magnesio‐carbonatite.



In general, the BD‐Zone is less mineralised than the A‐Zone and B‐Zone but contains a greater variety of REE‐F‐carbonates consisting of intergrowths of bastnaesite and parisite with minor synchisite. A particularity of the BD‐Zone is the presence of microcline feldspar occurring as a late stage anhedral crystals. Quartz is also commonly observed. The BD‐Zone is observed in contact with a relatively un‐mineralised unit whose origin is enigmatic. The lithology is non‐carbonatite and is best described as an albite amphibole phlogopitite interpreted to be a metasomatised megaxenolith or a discrete intrusion genetically‐related to the Eldor carbonatite complex.

Figure 9.1 – Drill Core from Hole EC10028 Showing the A, B, BD and Contact Zones

10 EXPLORATION AND DRILLING

In 2010, the Company completed exploration work on the Property consisting of diamond drilling, trenching, prospecting, ground geophysics and additional sampling of the 2008 drill core. The areas of the Property that received exploration work in 2010 were Southeast, Star Trench, MC Exposure but specifically Ashram where significant REE mineralisation was discovered in 2009. In addition, other periphery targets received initial ground evaluations.

The BTW size diamond drilling completed on the Property during 2010 totals 5,390 m with 4 holes drilled at Southeast, 3 at Star Trench, 2 at MC Exposure and finally 12 holes in the Ashram area.



From the drilling completed, a total of 5,882 samples were collected for analysis from which 3297 were sampled in the Ashram drill core. Table 10.1 summarises the drilling completed at Eldor by Commerce since 2008. Figure 10.1 shows a plan view of the drilling completed at Ashram in 2010.

Table 10.1 – Summary of Drilling Completed at Eldor by Commerce

Year Area of the Property Number of Holes Total Metres Drilled

Northwest 12 2466

Southeast 13 2846

Star Trench 1 170

Total (2008) 26 5482

Southeast 4 1392

Star Trench 3 494

MC Exposure 2 192

Ashram 12 3313

Total (2010) 21 5390

47 10872

2008

2010

Grand‐Total



Figure 10.1 – Plan View of the Drilling in the Ashram REE zone at the Eldor Property

In addition to the diamond drilling, the Company conducted additional core sampling from the 2008 drilling (469 samples for 479.96 m), ground magnetic surveying in the Star Trench area (<1.5 km area), trenching (1 trench near Ashram area, 2 trenches near Star Trench area and 3 sub‐parallel trenches at Miranna), and prospecting. The 2010 Data regarding trenches, ground magnetic surveys, and prospecting samples is still being compiled and remains unvetted. Therefore, the total number of samples collected from trenches and prospecting is not confirmed as several samples were also collected from trenches excavated in 2008.

11 SAMPLING METHOD AND APPROACH

This section is based on information supplied by Commerce and observations made during the independent verification program conducted at the Project site by the author between October 4 and 6, 2010.



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 mineralisation 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 Commerce during the course of the 2010 exploration program were sent to Activation Laboratories Ltd (“Act Labs”) 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, mineralisation, 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.

Drill core of BTW size was placed in a 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. After a summary review of the core, it was logged and sampling intervals were defined by a geologist. Before 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, marked and tagged based on observations of the lithology and mineralisation. 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 mineralised intervals. The typical sampling length is 1 m but can vary according to lithological variation within the mineralised carbonatite. The drill core samples were split in two halves with one half placed in a new plastic bag along with the sample tag; the other half was replaced in the core box. The author noted that the Company is not placing a duplicate sample tag in the core box. It has been recommended to change the procedure in order to place a sample tag in the core box for reference. 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 bags 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 Act Labs 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 wooden racks or cross piled at the main camp.

SGS Geostat validated the exploration processes and core sampling procedures used by 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 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.

12 SAMPLE PREPARATION, ANALYSIS AND SECURITY

12.1 Sample Preparation and Analyses

Drill core samples collected during the 2010 exploration program are transported by Commerce representatives and contracted consultants or companies to Act Labs laboratory facilities in Ancaster, Ontario for sample preparation and analysis.

All samples received at Act Labs are inventoried then 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 components (ring and puck) ring mills. 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 45 elements which include the REE (Act Labs code 8‐REE package by fusion ICP and ICP/MS). When the value of the Nb2O5 returned higher than 0.3%, the samples is analysed by fusion X‐ray fluorescence (“XRF”). The element F is analysed using fusion ion selective electrode (“ISE”) (Act Labs code 4‐F‐ISE). Act Labs is an accredited laboratory under ISO/IEC 17025 standards.

The re‐analysis of the pulp materials were conducted at Inspectorate Exploration & Mining Services Ltd – Analytical Division Facilities (“Inspectorate”) in Richmond, B.C. and ALS Canada Ltd laboratories in North Vancouver, B.C. (“ALS Chemex”), although none of the analytical results returned from ALS Chemex were compiled and available at the time of writing the report. The pulp samples sent to Inspectorate were directly analysed by lithium metaborate fusion followed by ICP‐MS. Inspectorate is an accredited laboratory under ISO 9001:2008 and is in the process of being accredited for ISO/IEC 17025.

The independent check samples were analysed at the SGS Canada Inc. – Minerals Services laboratory located in Toronto, Ontario (“SGS Minerals”). The samples were crushed, split riffled then pulverised to 200 mesh. The pulps are then analysed using lithium metaborate followed by ICP‐MS (SGS Minerals code IMS95A). SGS Minerals is an accredited laboratory under ISO/IEC 17025 standards. The pulps of the independent check samples were re‐analysed at ALS Chemex laboratories in North Vancouver, B.C. (“ALS Chemex”). The pulps were analysed using lithium metaborate fusion followed by ICP‐MS (ALS Chemex code ME‐MS81). ALS Chemex is an accredited laboratory under ISO/IEC 17025 standards.

The analytical protocols for Act Labs, Inspectorate, SGS Minerals and ALS Chemex are detailed in Appendix D.



12.2 Quality Assurance and Quality Control Procedure

Above the laboratory quality assurance quality control protocol (“QA/QC”) routinely conducted by Act Labs using pulp duplicate analysis, Commerce implemented an internal QA/QC protocol consisting in the insertion of reference material, analytical standards and blanks, and core duplicates on a systematic basis with the samples shipped to Act Labs. The company also sent pulps from selected mineralised intersection to Inspectorate for re‐analysis. SGS Geostat did not visit the Act Labs facilities, or conduct an audit of the laboratories.

12.2.1 Analytical Standards

The Company used two different certified analytical standards in their internal QA/QC protocol. The analytical standards are certified reference materials number SX18‐01 and SX18‐05 from Dillinger Hutte Laboratory, Germany. The standards are inserted in the sample series at a rate of one for every 25 samples.

Expected values are provided with each certified reference materials. Unfortunately, the expected variance, also known as performance gates, is not readily available with the certified reference materials and the information could not be retrieved from the manufacturer or reseller at the time of writing the report. In order to evaluate the results of the two analytical standards of the Project, the QA/QC warning threshold has been set to plus or minus 10% difference from the expected values and the QA/QC failure to plus or minus 15% difference from the expected values. The selected QA/QC warning and failure thresholds could be considered conservative based on comparison with other similar certified reference materials available from Ore Research & Exploration Pty Ltd, Australia. For the OREAS certified reference materials 101A, 101B, and 100A, which included the element Y, La, Ce, Nd of comparable quantities, the reported performance gates for 2 standard deviation (QA/QC warning) ranges between 8% and 20% and for 3 standard deviation (QA/QC failure) ranges between 12% and 30%. Table 12.1 shows the expected values and QA/QC failure and warning thresholds and Table 12.2 summarises the reported results for each analytical standards. Figures 12.1 and 12.2 are graphs showing the variation of the reported analytical results with time for analytical standards SX18‐01 and SX18‐05 respectively.



Table 12.1 – Expected Values and QA/QC Ranges of SX1801 and SX1805 Analytical Standards for Y, La, Ce, Nd and Nb2O5

Table 12.2 Summary Statistics of SX1801 and SX1805 Analytical Standards for Y, La, Ce, Nd and Nb2O5

Failure (-15%) Warning (-10%) Mean Warning (+10%) Failure (+15%)

Y (ppm) 114 120 134 147 154

La (ppm) 304 322 358 394 412

Ce (ppm) 689 730 811 892 933

Nd (ppm) 372 394 437 481 503

Nb2O5 (%) 0.591 0.626 0.695 0.765 0.799

Y (ppm) 197 209 232 256 267

La (ppm) 426 451 501 552 577

Ce (ppm) 929 984 1093 1202 1257

Nd (ppm) 434 460 511 562 588

Nb2O5 (%) 0.827 0.876 0.973 1.070 1.119

Standard ElementExpected Values and QAQC Ranges

SX18-01

SX18-05

From To Mean Std Dev Min Max Count % Count %

Y (ppm) 94 124 5 106 136 21 22% 1 1%

La (ppm) 94 364 16 332 407 7 7% 0 0%

Ce (ppm) 94 800 26 729 868 1 1% 0 0%

Nd (ppm) 94 393 15 354 425 43 46% 6 6%

Nb2O5 (%) 71 0.685 0.017 0.639 0.731 0 0% 0 0%

Y (ppm) 89 232 9 208 249 1 1% 0 0%

La (ppm) 89 468 16 430 508 14 16% 0 0%

Ce (ppm) 89 993 33 890 1090 30 34% 2 2%

Nd (ppm) 89 460 18 426 518 42 47% 5 6%

Nb2O5 (%) 65 0.973 0.011 0.94 0.997 0 0% 0 0%

QAQC Warning Range QAQC Failure Range

17-Jan-11

StandardPeriod

Element CountObserved

SX18-01

SX18-05

27-Jul-10 17-Jan-11

27-Jul-10



Figure 12.1 Variation of Reported Values with Time for Analytical Standard SX1801

100

110

120

130

140

150

160

Y (ppm)

Eldor Property ‐ SX18‐01 Standard ‐ Y (ppm)

Failure (+15%)

Failure (‐15%)

Warning (‐10%)

Warning (+10%)

Expected Value

300

320

340

360

380

400

420

La (ppm)

Eldor Property ‐ SX18‐01 Standard ‐ La (ppm)

Failure (+15%)

Failure (‐15%)

Warning (‐10%)

Warning (+10%)

Expected Value

600

650

700

750

800

850

900

950

1000

Ce (ppm)

Eldor Property ‐ SX18‐01 Standard ‐ Ce (ppm)

Failure (+15%)

Failure (‐15%)

Warning (‐10%)

Warning (+10%)

Expected Value

350

370

390

410

430

450

470

490

510

Nd(ppm)

Eldor Property ‐ SX18‐01 Standard ‐ Nd (ppm)

Failure (+15%)

Failure (‐15%)

Warning (‐10%)

Warning (+10%)

Expected Value

0.58

0.63

0.68

0.73

0.78

Nb2O5 (%

)

Eldor Property ‐ SX18‐01 Standard ‐ Nb2O5 (%)

Failure (+15%)

Failure (‐15%)

Warning (‐10%)

Warning (+10%)

Expected Value



Figure 12.2 Variation of Reported Values with Time for Analytical Standard SX1805

Reported values for analytical standard SX18‐01 show good correspondence for elements La, Ce and Nb2O5 compared with the expected value. But elements Y and Nd suggest some analytical issue with average values 7.5% and 10% lower respectively than the expected values. The values reported for Y are all within the defined QA/QC thresholds except for one failure which shows a difference of 20.9%. The values for Nd are within the defined QA/QC threshold except for 6 failures showing differences up to 19%.

Reported values for analytical standard SX18‐05 show good correspondence for elements Y and Nb2O5 compared with the expected value. But elements La, Ce and Nd suggest some analytical issue

190

200

210

220

230

240

250

260

270

280

Y (ppm)

Eldor Property ‐ SX18‐05 Standard ‐ Y (ppm)

Failure (+15%)

Failure (‐15%)

Warning (‐10%)

Warning (+10%)

Expected Value

400

420

440

460

480

500

520

540

560

580

600

La (ppm)

Eldor Property ‐ SX18‐05 Standard ‐ La (ppm)

Failure (+15%)

Failure (‐15%)

Warning (‐10%)

Warning (+10%)

Expected Value

800

850

900

950

1000

1050

1100

1150

1200

1250

1300

Ce (ppm)

Eldor Property ‐ SX18‐05 Standard ‐ Ce (ppm)

Failure (+15%)

Failure (‐15%)

Warning (‐10%)

Warning (+10%)

Expected Value

400

420

440

460

480

500

520

540

560

580

600

Nd(ppm)

Eldor Property ‐ SX18‐05 Standard ‐ Nd (ppm)

Failure (+15%)

Failure (‐15%)

Warning (‐10%)

Warning (+10%)

Expected Value

0.7

0.75

0.8

0.85

0.9

0.95

1

1.05

1.1

1.15

1.2

Nb2O5 (%

)

Eldor Property ‐ SX18‐05 Standard ‐ Nb2O5 (%)

Failure (+15%)

Failure (‐15%)

Warning (‐10%)

Warning (+10%)

Expected Value



with average values 6.5%, 9% and 10% lower respectively than the expected values. The values reported for La are all within the defined QA/QC thresholds. The values for Nd are within the defined QA/QC threshold except for 2 failures showing differences up to 18.5%. The values for Nd are within the defined QA/QC threshold except for 5 failures showing differences up to 16.5%.

After a review of the QA/QC failures for SX18‐01 and SX18‐05, the differences observed are considered acceptable based on the variance typically returned for REE analytical data which can be in the order of 25% to 30%.

We can note that the analytical standards used by the Company during the 2010 work program have certified values reported for La, Ce and Nd which are LREE. Unfortunately, the analytical standards do not report certified value for IREE or HREE. The author recommends inserting additional analytical standards which include certified values for IREE and HREE.

12.2.2 Analytical Blanks

Commerce implemented the insertion of analytical blanks in the sample series as part of their internal QA/QC protocol. The material use for the blanks is coming from a nearby quartz vein located approximately 2‐3 km from the Ashram deposit. Blanks are inserted at a rate of one blank for every 25 samples in the sample series.

A total of 199 blanks were inserted in the sample series corresponding to 5.6% of the samples analysed. A review of the analytical data for the blanks showed that all the blanks analysed returned a low and variable amount of REE (but also other elements related to typical felsic intrusive systems like Ba, Sr and Th) sometime orders of magnitude above the detection limit of the analytical method.

After a more detailed examination of the blanks data and discussion with the Company representatives, it was concluded that the quartz vein use as analytical blank in the QA/QC protocol was indeed mineralised in REE and could not be considered a proper analytical blank. The geochemical values returned from the quartz veins could suggest that the material could be genetically related to the carbonatite system or other felsic intrusion in the area.

As part of the laboratory QA/QC protocol, Act Labs is inserting analytical blanks in the samples series. A review of the results from the laboratory blanks inserted by Act Labs shows that all blanks returned values below detection limit suggesting that there is no systematic contamination of the samples.

The author recommends modifying the Project QA/QC protocol with the use of certified analytical blanks instead of the currently used analytical blanks collected from a nearby quartz vein.

12.2.3 Drill Core Duplicates

As part of the Company QA/QC protocol, quarter core duplicates from 196 core samples were included in the Project sample series sent to Act Labs. The drill core duplicates are inserted in the sample series at an average rate of one duplicate for every 25 samples. For the 196 duplicates



analysed, 53% returned a TREE+Y values greater for the original sample, 60% returned a Nb2O5

values greater for the original sample, and 51% returned a F values greater for the original sample compare to the duplicate. The relative percent difference (“RPD”) between the original and duplicate analytical values averages 7% for TREE+Y with a range between 0% and 77%, averages 20% for Nb2O5 with a range between 0% and 184%, and averages 26% for F with a range between 0% and 181%. In general, the drill core duplicate samples show a fair to good correlation with the original samples. The variability between the original and duplicate samples can be considered acceptable for the REE with the average RPD for all individual elements falling within 10%, although some individual elements present a greater variability than others. The variability is significantly higher for Nb2O5 and F with the average RPD of 20% and 26% respectively, but can still be considerate in the acceptable range for drill core duplicate. Table 12.3 summarises the comparatives statistics of the drill core duplicates for the individual REE including TREE+Y, Nb2O5 and F. Figures 12.3, 12.4, 12.5 show correlation plots of the drill core duplicates for TREE+Y, Nb2O5 and F respectively.

Table 12.3 – Comparative Statistics for the Drill Core Duplicates

Count % Count % Mean Min MaxLa 195 88 45.1% 107 54.9% 8% 0% 77%Ce 195 92 47.2% 103 52.8% 7% 0% 80%Pr 195 96 49.2% 99 50.8% 7% 0% 78%Nd 195 98 50.3% 97 49.7% 7% 0% 74%Sm 195 88 45.1% 107 54.9% 7% 0% 61%Eu 195 87 44.6% 108 55.4% 7% 0% 56%Gd 195 85 43.6% 110 56.4% 8% 0% 49%Tb 195 79 40.5% 116 59.5% 8% 0% 35%Dy 195 85 43.6% 110 56.4% 8% 0% 39%Ho 195 79 40.5% 116 59.5% 9% 0% 44%Er 195 82 42.1% 113 57.9% 10% 0% 45%Tm 195 84 43.1% 111 56.9% 9% 0% 49%Yb 195 78 40.0% 117 60.0% 9% 0% 45%Lu 195 82 42.1% 113 57.9% 2% 0% 10%Y 195 88 45.1% 107 54.9% 8% 0% 40%

TREE+Y 195 92 47.2% 103 52.8% 7% 0% 77%Nb2O5 111 44 39.6% 67 60.4% 20% 0% 184%

F 195 95 48.7% 100 51.3% 26% 0% 181%

Original ≥ Duplicate Relative Percentage DifferenceTotal samples

Original < Duplicate



Figure 12.3 – Correlation Plot of the Drill Core Duplicates for TREE+Y

Figure 12.4 – Correlation Plot of the Drill Core Duplicates for Nb2O5

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Figure 12.5 – Correlation Plot of the Drill Core Duplicates for F

12.2.4 Pulp Duplicates

Commerce conducted some re‐analysis of pulp material of mineralised samples selected from hole EC10‐28. The re‐analysis were completed by Inspectorate A total of 15 pulps were sent to Inspectorate for a duplicate analysis using a similar analytical protocol. Table 12.4 summarises the comparative statistics of the pulp duplicates for the individual REE including TREE+Y. Figures 12.6 to 12.9 shows correlation plots of TREE+Y, Y, and the individual REE.

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Table 12.4 –Statistics for the Pulp Duplicates (Act Labs vs. Inspectorate)


TREE+Y 15 3 20.0% 12 80.0% 12% 1% 33%

CountOriginal < Duplicate Original ≥ Duplicate Relative Percentage Difference



Figure 12.6 Correlation Plot of the Pulp Duplicates for TREE+Y, Y, La and Ce (ActLabs vs. Inspectorate)

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Figure 12.7 Correlation Plot of the Pulp Duplicates for Pr, Nd, Sm and Eu (ActLabs vs. Inspectorate)

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Figure 12.8 Correlation Plot of the Pulp Duplicates for Gd, Tb, Dy and Ho (ActLabs vs. Inspectorate)

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Figure 12.9 Correlation Plot of the Pulp Duplicates for Er, Tm, Yb and Lu (ActLabs vs. Inspectorate)

A review of the results for the pulp duplicates analysed at Inspectorate shows a correlation between the two laboratories but outlined some issues with the pulp duplicates results. As observed with the independent check samples (please refer to section 13 for details on the independent check samples program), potential analytical bias can be observed for some elements. The sign test conducted on the Act Labs vs. the Inspectorate analytical dataset suggests a potential positive bias toward Act Labs for Ce, Nd, Sm, and Lu but shows a potential negative bias for Eu, Gd, Dy, Ho, Er, Tm, Yb and Y. Elements La, Pr and Tb does not show any significant analytical bias. The variability in the data is significant with average RPD between Act Labs and Inspectorate ranging

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from 6% up to 16% for the different REE. This variation in the analytical data is also observed in the results of the core duplicates and the independent check samples.

The results of the pulp duplicates outline potential analytical bias between Act Labs and Inspectorate, although the number of samples re‐analysed is not significant enough to confirm the trend. Additional re‐analysis of pulp materials from mineralised samples should be carried out to increase the confidence level of the analysis. Potential analytical biases are also observed in the results of the independent check samples. But as with the data returned from SGS Minerals and ALS Chemex, some elements show contradictory results. The pulp duplicates data correlation for elements Eu, Tb, Yb and Y show differences compare to Act Labs – SGS Minerals results. Similar observations are outlined for elements La, Pr, Eu, Gd, Er and Y where contradictory potential analytical biases are shown in the Act Labs – ALS Chemex results versus the correlations observed for the pulp duplicates. Based on the pulp duplicates results and considering the contradictory behaviour observed in some elements compared to the results of the independent check sampling program, we can conclude that the outlined biases are not systematic for all REE and could principally be due to the imprecision of the analytical methods currently available on the market. The author recommends including systematic re‐analysis of pulp materials for mineralised samples in the internal QA/QC protocol of the company in order to help monitor the quality of the analytical data of the Project.

12.2.5 QA/QC Conclusion

As part of the 2010 work program at Ashram, Commerce implemented an internal QA/QC protocol consisting in the insertion of reference materials in the samples series (certified analytical standards 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 in a second analytical laboratory for verification.

Reported results for the certified analytical standards for the 2010 drill program show a good correlation with expected mean values except for some elements where lower average values ranging between 6.5% and 10% are reported compared to the expected values of the analytical standards which includes 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. The author recommends adding certified analytical standards with reported values for IREE and HREE.

A review of the analytical data for the blanks showed that all the blanks analysed returned a low and variable amount of mineralisation. A more detailed examination of the blanks data concluded that the material use as analytical blank in the QA/QC protocol was indeed mineralised in REE and could not be considered a proper analytical blank. After reviewing the laboratory blanks inserted Act Labs in the samples series, the author does not suspect any systematic contamination of the samples but recommends replacing the current blanks with certified analytical blanks.

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 mineralised samples



outlined potential analytical bias for some elements. The observed potential biases, which are also observed in the independent check samples results, 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 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.

12.3 Specific Gravity

As part of the independent data verification program, SGS Geostat conducted specific gravity (“SG”) measurements on 40 mineralised 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 weighting 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 12.5).

Table 12.5 –Specific Gravity Statistics from Independent Check Sampling Program

As part of their exploration protocol, Commerce is conducting systematic measurement of the SG on drill core samples at an average rate of one SG measurement for approximately every 6 samples. A total of 449 SG readings were collected from the Ashram drill core representing approximately 12.7% of the overall samples collected during the 2010 drill program. The SG measurements are conducted at the Project’s core logging facilities using the water displacement method (weight in air / (weight in air‐weight in water)) on representative core pieces before the sampling procedure. Table 12.6 summarises the statistics of the SG measurements collected by Commerce at Ashram in 2010. Figure 12.10 shows a histogram of the SG measurements done by Commerce at Ashram in 2010.

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)



Table 12.6 –Specific Gravity Statistics from Commerce 2010 Exploration Program

Figure 12.10 – Histogram of Specific Gravity Measurements by Commerce at Ashram

The SG values returned by Commerce from the 2010 exploration program at Ashram are consistent with the independent SG measurements completed by SGS Geostat as part of the data verification program. Based on SG values dataset, a value of 3.0 t/m3 was set as the average SG value for the Ashram mineralised carbonatite. This average SG value is use to calculate the mineral resource tonnage from the volumetric estimates of the resource block model.

Count 449

Mean 3.03

Std Dev 0.16

Relative Std Dev 5.2%

Minimum 1.74

Median 3.02

Maximum 4.28

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

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12.4 Conclusions

SGS Geostat completed a review of the sample preparation and analysis including the QA/QC analytical protocol implemented by Commerce for the Project. The Author visited the Company on‐site core logging facilities between October 4 and 6, 2010 to review the Company sample preparation procedures. A statistical analysis of the QA/QC data for the Project outlined only minor issues. The author recommends replacing the current analytical blanks with certified analytical blanks and adding certified analytical standards with reported values for IREE and HREE.

The author and SGS Geostat are of the opinion that the sample preparation, analysis and QA/QC protocol used by 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.

13 DATA VERIFICATION

As part of the data verification program, SGS Geostat completed independent analytical checks of drill core duplicate samples taken from Commerce’s 2010 diamond drilling program. SGS Geostat also verification of the laboratories analytical certificates and validation of the project digital database supplied by Commerce were verified for errors or discrepancies.

During a site visit conducted between October 4 and 6, 2010, a total of 40 mineralised drill core duplicates were collected from holes EC10‐027 and EC10‐028 by the author and submitted for analysis at the SGS Minerals laboratory in Toronto. Certified reference materials were included in the sample series. The core duplicates were processed using the 31 elements lithium metaborate fusion with ICP‐MS finish analytical protocol described in section 12.1. Table 13.1 summarises the comparatives statistics of the independent check samples for the individual REE including TREE+Y. Figures 13.1 to 13.4 shows correlation plots of the TREE+Y, Y and the individual REE.



Table 13.1 –Statistics for the Independent Check Samples (Act Labs vs. SGS Minerals)


TREE+Y 40 6 15.0% 34 85.0% 12% 0% 26%

Original < DuplicateCount

Relative Percentage DifferenceOriginal ≥ Duplicate



Figure 13.1 Correlation Plot of the Independent Checks Samples for TREE+Y, Y, La and Ce (ActLabs vs. SGS Minerals)

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Figure 13.2 Correlation Plot of the Independent Checks Samples for Pr, Nd, Sm and Eu (ActLabs vs. SGS Minerals)

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Figure 13.3 Correlation Plot of the Independent Checks Samples for Gd, Tb, Dy and Ho (ActLabs vs. SGS Minerals)

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Figure 13.4 Correlation Plot of the Independent Checks Samples for Er. Tm, Yb and Lu (ActLabs vs. SGS Minerals)

A review of the independent check sample results confirmed a correlation between the Act Labs and SGS Minerals data but outlined some issues in particular potential analytical bias and significant variability in the data. The sign test conducted on the Act Labs vs. the SGS Minerals analytical dataset suggests a potential positive bias toward Act Labs for LREE, IREE, Lu and Y but outlined a potential negative bias for Tb, Dy, Ho, Er and Tm. Only Yb does not shows any significant analytical bias between Act Labs and SGS Minerals. The most problematic elements are Nd, Gd, Tb and Lu where the observed average RPD is higher than 15%, although as seen with drill core duplicates done by Commerce (section 12.2.4) a variation of 7% to 10% is common for the REE. The analytical issues outlined for the independent check samples analysed at SGS Minerals were

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considered significant enough to conduct a third party validation and the pulps from the check samples were sent to ALS Chemex for a re‐analysis using a comparable methodology; 38 elements lithium borate fusion with ICP‐MS finish. Table 13.2 summarises the comparatives statistics of the pulp re‐analysis of the independent check samples at ALS Chemex for the individual REE including TREE+Y. Figures 13.5 to 13.8 shows correlation plots of the TREE+Y, Y and the individual REE returned from pulp re‐analysis at ALS Chemex.

Table 13.2 –Statistics for the Independent Check Samples (Act Labs vs. ALS Chemex)


TREE+Y 40 4 10.0% 36 90.0% 12% 1% 27%

Relative Percentage DifferenceCount

Original < Duplicate Original ≥ Duplicate



Figure 13.5 Correlation Plot of the Independent Checks Samples for TREE+Y, Y, La and Ce (ActLabs vs. ALS Chemex)

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Figure 13.6 Correlation Plot of the Independent Checks Samples for Pr, Nd, Sm and Eu (ActLabs vs. ALS Chemex)

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Figure 13.7 Correlation Plot of the Independent Checks Samples for Gd, Tb, Dy and Ho (ActLabs vs. ALS Chemex)

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Figure 13.8 Correlation Plot of the Independent Checks Samples for Er. Tm, Yb and Lu (ActLabs vs. ALS Chemex)

The results for the re‐analysis of the independent check sample pulps at ALS Chemex generally confirm the results returned from SGS Minerals but with a few notable exceptions. The elements Tb and Yb show a good correlation against Act Labs without any significant bias, and Er also demonstrate a better correlation. Element Y is interesting as it now has a negative bias versus Act Labs. The RPD is generally less for the ALS Chemex data, with Tb and Lu showing a significant improvement compare to SGS Minerals.

The results of the independent check sampling program highlight the difficulty of analysing REE and demonstrate the limitations of the current analytical methods in providing reliable and

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Check Samples (Tm) ‐ Eldor Project

+20%

‐20%

0

5

10

15

20

25

30

0 5 10 15 20 25 30

Yb (ppm) ‐ActLabs

Yb (ppm) ‐ ALS

Check Samples (Yb) ‐ Eldor Project

+20%

‐20%

0

0.5

1

1.5

2

2.5

3

3.5

4

0 0.5 1 1.5 2 2.5 3 3.5 4

Lu (ppm) ‐ActLabs

Lu (ppm) ‐ ALS

Check Samples (Lu) ‐ Eldor Project

+20%

‐20%



repeatable analytical results. The variance in the check samples results, although significant compare to other types of commodity, demonstrate the significant heterogeneity in the REE mineralisation occurring at small scale but also outline the precision limits of the analytical protocols developed for REE. As far as the analytical bias observed in the results, the fact that SGS Minerals and ALS Chemex returned some contradictory results compare to Act Labs, it can be concluded that the outlined biases are mainly due to the difficulty of analysing REE. The analytical issues observed in the data verification program could be related to the unequal conditions during the fusion process (difficulty to have all the REE minerals in solution prior to the analysis using ICP) or the difficulty to calibrate the equipments used for the analysis. The author recommends to perform sample duplicates at more than one laboratory on a systematic basis and to monitor the QA/QC data for any significant variation in the analytical data. Based on the results of the data verification program, SGS Geostat considered the analytical data to be of sufficient quality to support a mineral resource estimate.

The digital drill hole database supplied by Commerce has been validated for the following data field: 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 by the Company in 2010. Table 13.3 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 13.3 – Final Drill Hole Database

14 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 14.1 shows a map of the mineral titles in the vicinity of the Eldor Property. The map has been provided by the Nunavik Mineral Exploration Fund.

Number of

Holes

Metres

Drilled

Number of

Survey

Record

Number of

Lithological

Record

Number of

Assays

Record

% Assayed

Metres

12 3313 59 3531 3531 98%



Figure 14.1 – Map of Adjacent Properties in the Vicinity of Eldor Property

Map provided by the Jean‐Marc Seguin, technical director of the Nunavik Mineral Exploration Fund

15 MINERAL PROCESSING AND METALLURGICAL TESTING

No mineral processing or metallurgical testing has been conducted on the Property.



16 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

16.1 Introduction

No previous mineral resource estimate was reported for the Eldor property. The mineral resource has been estimated by SGS Geostat using recent drilling data completed by the Company in 2010. The final database used to produce the mineral resource estimate totals 12 diamond drill holes and contains information for collar, survey, lithology and analytical results. Please refer to Table 13.3 for a summary of the records in the database used for the mineral resource estimate.

The mineral resource has been estimated by the author, André Laferrière, M.Sc. P.Geo., Senior Geologist for SGS Geostat. Mr. Laferriere is a professional geologist registered with the Ordre des Géologues du Québec and has worked in exploration and development stage projects for metallic and non‐metallic mineral deposits including magmatic Ni‐Cu‐PGE, volcanogenic Zn‐Pb‐Cu‐Ag‐Au, porphyry Cu‐Au, intrusive Li‐REE‐Nb‐Ta, and diamonds. The author has been involved in mineral resource estimation work on a continuous basis since joining SGS Canada Inc. in 2009, which includes participation in the data verification and mineral resource estimation of the Kipawa rare earth deposit located near the community of Témiscaming, Québec. Mr. Laferriere is an independent Qualified Person as per section 1.4 of the NI 43‐101 Standards of Disclosure for Mineral Projects.

The mineral resource estimate is derived from a computerised resource block model. The construction of the block model starts with the modeling of 3D wireframe envelopes or solids of the mineralisation 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 composite data is use 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 and outside the modeled waste solids comprise the mineral resources. The blocks are then classified based on confidence level using proximity to composites, composite grade variance and mineralised solids geometry. The 3D wireframe modeling was interpreted by Commerce under the supervision of SGS Geostat. The block model and mineral resource estimation were conducted by SGS Geostat based on information provided by Commerce.

16.2 Exploratory Data Analysis

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

16.2.1 Analytical Data

There are a total of 2944 assay intervals in the database used for the current mineral resource estimate. The drill hole intervals defining the mineralised envelopes have been sampled continuously. Sample length averages 0.94 m and ranges between 0.18 m and 2.04 m. Table 16.1



summaries the statistics of the analytical data used for the resource estimate. Figure 16.1 shows the histogram of the samples length.

Table 16.1 – Summary Statistics of Analytical Data Used in the Mineral Resource Estimate

Figure 16.1 – Histogram of Samples Length from Ashram Database

Variable Mean Std. dev. Min Median Max

La (ppm) 3314.3 1831.3 28.0 3090.0 13800.0

Ce (ppm) 6195.8 2672.2 56.5 6110.0 20700.0

Pr (ppm) 656.5 232.2 6.2 665.0 1710.0

Nd (ppm) 2409.4 729.3 27.0 2480.0 4810.0

Sm (ppm) 313.8 97.4 5.0 312.0 733.0

Eu (ppm) 75.7 26.3 1.4 72.8 228.0

Gd (ppm) 185.2 73.5 4.7 176.5 622.0

Tb (ppm) 20.2 9.9 0.7 18.2 91.0

Dy (ppm) 84.7 44.4 4.0 74.9 400.0

Ho (ppm) 12.2 6.6 0.8 10.9 55.9

Er (ppm) 26.3 13.8 1.6 24.0 113.0

Tm (ppm) 3.0 1.5 0.2 2.8 13.2

Yb (ppm) 16.1 7.6 1.1 14.8 57.3

Lu (ppm) 2.2 1.0 0.2 2.0 7.7

Y (ppm) 317.8 170.6 18.0 284.0 1491.0

Nb2O5 (%) 0.08 0.06 0.00 0.07 0.92

F (%) 2.58 2.09 0.02 2.14 19.00

0

100

200

300

400

500

600

700

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

Frequency

Sample Length (m)

Ashram Database ‐ Samples Length



The drill pattern at Ashram is fairly irregular with 3 holes near vertical, 8 holes oriented between N226° and N240° azimuth and dipping between 39° and 73°, and one hole oriented N050° azimuth an dipping 44°. Figure 16.2 and 16.3 show a plan view and a longitudinal view looking north of the drill holes at Ashram.

Figure 16.2 – Plan View of the Drill Holes at Ashram



Figure 16.3 – Longitudinal View of the Drill Holes at Ashram (looking north)

16.2.2 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. The minimum length of composite kept for the interpolation process is 1.5 m. Compositing is conducted at the start of the defined mineralised intervals. No capping was applied to the assays before compositing. Table 16.2 shows summary statistics of the composites used for the interpolation of the resource block model. Figure 16.4 and 16.5 displays the spatial distribution of the composites along drill holes axis in plan and longitudinal view looking north respectively.



Table 16.2 – Summary Statistics for the 3 metre Composites

Figure 16.4 Plan View Showing the Spatial Distribution of the Composites

Variable Mean Std. dev. Min Median Max

La (ppm) 3383.4 1613.4 29.5 3283.9 9440.4

Ce (ppm) 6301.8 2368.0 58.6 6453.0 13375.5

Pr (ppm) 665.9 207.3 6.5 687.6 1207.1

Nd (ppm) 2436.9 654.0 28.5 2537.8 4060.7

Sm (ppm) 316.8 88.2 5.3 315.0 661.5

Eu (ppm) 76.2 24.2 1.4 73.0 198.4

Gd (ppm) 187.0 67.7 5.1 179.9 534.5

Tb (ppm) 20.3 9.0 0.8 18.4 70.7

Dy (ppm) 85.2 39.9 4.4 76.9 294.0

Ho (ppm) 12.3 5.8 0.9 11.3 41.8

Er (ppm) 26.4 11.9 2.3 24.7 86.0

Tm (ppm) 3.0 1.3 0.4 2.9 10.0

Yb (ppm) 16.2 6.4 2.2 15.5 45.6

Lu (ppm) 2.2 0.8 0.3 2.1 5.9

Y (ppm) 319.7 151.3 18.8 291.5 1063.8

Nb2O5 (%) 0.09 0.05 0.01 0.08 0.52

F (%) 2.60 1.69 0.07 2.47 8.89



Figure 16.5 – Longitudinal View Showing the Distribution of the Composites (looking north)

16.2.3 Specific Gravity

Section 12.3 summarises the SG determination in details. A value of 3.0 t/m3 was set as the average SG value for the Ashram mineralised carbonatite. This average SG is used for the calculation of the tonnages from the volumetric estimates of the resource block model.

16.3 Geological Interpretation

Commerce completed the interpretation and modeling of the 3D wireframe envelopes of the mineralisation based on drill hole data. The work was conducted under the supervision of SGS Geostat. The 3D wireframe envelop was defined with the following guidelines:

Extrapolation of the wireframe was limited to 50 m away from the nearest drill hole along the outer perimeter;

The wireframe envelop was filled where reasonable confidence of the continuity of the TREO grade between drill holes;

The eastern side was constrained by the 50 m extrapolation pass the nearest drill hole and by an interpreted surface representing the end of the mineralisation (interpreted to be the end of the BD‐Zone);

The western side was constrained by an interpreted surface representing the base of the BD‐Zone;



Topography was used to constrain the top of the wireframe envelope.

Figures 16.6 and 16.7 illustrate the 3D wireframe envelopes with east and west surface in plan view and longitudinal view looking south.

Figure 16.6 – Modeled 3D Wireframe Envelope in Plan View



Figure 16.7 – Modeled 3D Wireframe Envelope in Longitudinal View (looking south)

16.4 Spatial Analysis

The spatial continuity of the TREO grade of composites was assessed by variography. Variograms were computed and modeled for the 3 m composite. Variograms in a series of directions were analysed in order to identified potential anisotropies in the grade continuity within the modeled mineralised envelop. Table 16.3 presents the variogram model of TREO and Figure 16.8 shows the variogram graph of TREO.

Table 16.3 – Variogram Model of TREO Grade for 3 m Composite

Max Interm. Min Azimuth Dip Spin Max Interm. Min Azimuth Dip Spin

0.04 0.1 0.18

(12%) (31%) (57%)300 300 300 320 0 45

Second Spherical Variogram Component

Sill (C)Ranges (in metre) Orientation (in degrees)

80 80 10 320 0 90

First Spherical Variogram Component

Ranges (in metre) Orientation (in degrees)Sill (C)

Nugget

effect



Figure 16.8 – Variograms of TREO Grade of 3 metre Composite

Generally, the variography is suggesting some anisotropy at relatively short distance (less than 50‐75 m) but with fairly good isotropy and continuity at longer distances (up to 250‐300 m). The best continuity in the analytical data is observed on a vertical plane more or less parallel to the western contact wall (azimuth N320° and dip between 45° and 90°) while the direction of worst continuity is perpendicular to the plane of best continuity (azimuth N230° and dip between 0° and 45°). The nugget effect is relatively low (12%).

16.5 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 mineralisation. 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 49,345 blocks located below the overburden/bedrock surface for a total of 49,243,280 m3. The blocks located at the interface with the overburden/bedrock surface have been calculated with block fraction. Table 16.4 summarizes the parameters of the block model limits.

SILL

0.0 35.0 70.0 105.0 140.0 175.0 210.0 245.0 280.0 315.0 350.00.000

0.040

0.080

0.120

0.160

0.200

0.240

0.280

0.320

0.360

0.400

ABS,TREO

Distance

Ashram Deposit - 3 m Composite (TREO%)

Variable : TREO Date : 04-04-2011Variogram : Absolute File : Ashram_TREO_3mComp.gsd

Direction :Azimuth :Dip :Tolerance :Lag Dist :

Gamma = N(0.0400) + S(0.1000, 80.0/80.0/10.0, 320.0/0.0/90.0) + S(0.1828, 300.0/300.0/300.0, 320.0/0.0

average 0.00 0.00 180.00 3.00

DH_verti 0.00 -90.00 10.00 3.00

H_360 0.00 0.00 30.00 30.00

H_90 90.00 0.00 30.00 30.00

V 0.00 -90.00 30.00 20.00

H320 320.00 0.00 30.00 20.00

Dip45_23 230.00 -45.00 30.00 20.00



Table 16.4 – Resource Block Model Parameters

16.6 Grade Interpolation Methodology

The grade interpolation for the Ashram mineral resource block model was estimated using the Ordinary Kriging (“OK”) methodology. Anisotropic search ellispoids 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 mineralised 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 N320° azimuth, 0° dip and 0° spin.

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 5 composites and a maximum of 25 composites with a maximum of 3 composites selected from each hole. Thirty‐percent (30%) of the blocks were estimated in the first pass. 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. The second pass resulted in the interpolation of 78% of the blocks. 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) and again the same composites selection criteria were applied. Figure 16.9 shows the three search ellipsoids used for the different interpolation passes. Figures 16.10 and 16.11 present the interpolation results on representative sections and plan levels respectively.

Minimum Maximum

East-West 10 m 81 536,000 mE 536,800 mE

North-South 10 m 51 6,311,800 mN 6,312,300 mN

Direction Block Size Number of BlocksCoordinates (m)

10 m 46 -150 mZ (a.s.l.) 300 mZ (a.s.l.)Vertical

(Elevation)



Figure 16.9 –Different Search Ellipsoids Used for the Interpolation Process in Plan View

Figure 16.10 – Plan View Showing Block Model Interpolation Results



Figure 16.11 – Longitudinal View Showing Block Model Interpolation Results (looking south)

16.7 Mineral Resource Classification

The mineral resources at Ashram have all been classified as inferred category. The parameters used to determine the mineral resource classification is the current drill density, which is fairly sparse, and the fact that no metallurgical testing has been conducted so far on the Ashram mineralisation.

16.8 Mineral Resource Estimation

The base case cut‐off TREO grade for the reporting of the mineral resource estimate of the Project, which must reflect a potential for reasonable economic extraction, was defined using a conceptual economic model. The conceptual economic model is based on a 25 years life‐of‐mine open‐pit mining operation feeding a 7,500 tonnes per day concentrator located at the Project site. The concentrator produces by floatation a bulk concentrate which is transported and processed at the nearby community of Kuujjuaq in a hydrometallurgical plant. The final products are high purity rare earth oxides. The conceptual model does not take into account the value of the other potential by‐products like CaF2.

The modeled costs for the conceptual model were estimated using information compiled from different sources including Mining Cost Services (CostMine – InfoMine USA Inc., 2009), Quest Rare Minerals Ltd ‐ Strange Lake Project Preliminary Economic Assessment study dated September 24, 2010 (Wardrop, 2010), and Avalon Rare Metals Inc. ‐ Thor Lake Project Pre‐Feasibility study dated September 21, 2010 (Scott Wilson RPA, 2010). The revenues where estimated using a trailing three



years average for the REO and Y2O3 (Technology Metals Research LLC, 2011), except for Ho2O3, Er2O3, Tm2O3, Yb2O3, and Lu2O3 where 2007 pricing was used (Wardrop, 2010).

The conceptual total production costs were estimated at $168.58 per tonne milled and include mining (0.25:1 waste to ore ratio), processing, infrastructures, freight, contingencies, and general & administration costs. The conceptual net metal value per tonne milled was estimated at $193.85 per unit of TREO (based on the average analytical composition of the composite dataset) using an average process recovery of 75%. Using the conceptual cost and net metal value estimates, the calculated breakeven TREO grade returns 1.16% TREO. A base case 1.25% TREO cut‐off grade was selected for the mineral resource estimate of the Ashram deposit.

The final mineral resource estimate for the Eldor property at a base case cut‐off grade of 1.25% TREO totals 117,340,000 tonnes grading 1.740% TREO and 5.56% CaF2 in the inferred resource category. The mineral resource tonnage has been calculated from the volumetric estimates of the resource block model using an average bulk density of 3.0 t/m3 which was defined based on measurements from 449 mineralised core samples (refer to section 12.3 for details on specific gravity). The mineral resource estimation for the Ashram deposit is tabulated in Tables 16.5 and 16.6 using 1.00%, 1.25% (base case), 1.50%, and 1.75% TREO cut‐off grade.

Table 16.5 – Eldor Property Mineral Resource Estimate

1.00% Inferred 134,970,000 1.663 1.538 0.067 0.018 0.040 5.30

1.25%

(base case)Inferred 117,340,000 1.740 1.612 0.069 0.019 0.040 5.56

1.50% Inferred 95,000,000 1.818 1.687 0.071 0.019 0.041 5.78

1.75% Inferred 50,950,000 1.966 1.831 0.074 0.020 0.042 6.15








IREO (%)** HREO (%)** Y2O3 (%)**Cut‐off Grade

TREO (%)

Resources

CategoriesTonnes* TREO (%)** LREO (%)**


CaF2 (%)***



Table 16.6 – Eldor Property Mineral Resource Estimate with Individual REO Values

16.9 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 16.7 summarises the comparative statistics of the composite and block model datasets without any cut‐off grade.

Table 16.7 – Comparative Statistics of the Composite and Block Model Datasets

In addition to the grade validation, a verification of the mineral resource tonnage was conducted. The tonnage validation consists in the comparison of the tonnage calculated from the volume of the 3D wireframe envelop of the mineralised pegmatite compared to the tonnage calculated from the volumetric estimate of the block model using identical average bulk density value. The tonnage calculated from the mineralised envelop is 148,093,854 tonnes and the tonnage calculated for the block model at no cut‐off grade totals 147,729,840 tonnes for a net difference of 0.25% between the two datasets. The difference can be explained by the fact that the individual blocks at the edge of the 3D wireframe envelop were not estimated using a block fraction parameter except at the bedrock/overburden interface.

16.10 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.

1.00% Inferred 134,970,000 0.411 0.759 0.080 0.288 0.037 0.009 0.021 0.002 0.010 0.001 0.003 0.000 0.002 0.000

1.25%

(base case)Inferred 117,340,000 0.435 0.796 0.083 0.298 0.038 0.009 0.022 0.002 0.010 0.001 0.003 0.000 0.002 0.000

1.50% Inferred 95,000,000 0.459 0.834 0.086 0.308 0.039 0.009 0.023 0.002 0.010 0.001 0.003 0.000 0.002 0.000

1.75% Inferred 50,950,000 0.506 0.905 0.093 0.328 0.041 0.010 0.023 0.002 0.010 0.001 0.003 0.000 0.002 0.000

Effective date March 1, 2011. Mineral resources are not mineral reserves and do not have demonstrated economic viability. Bulk density of 3.0 t/m3 used.

* Rounded to nearest 10,000. ** Rounded to nearest 0.001.

La2O3

(%)**

Ce2O3

(%)**

Pr2O3

(%)**

Nd2O3

(%)**

Sm2O3

(%)**

Tm2O3

(%)**

Yb2O3

(%)**

Lu2O3

(%)**


Eu2O3

(%)**

Gd2O3

(%)**

Tb2O3

(%)**

Dy2O3

(%)**

Ho2O3

(%)**

Er2O3

(%)**

Cut‐off Grade

TREO (%)

Resources

CategoriesTonnes*

Dataset Count Average TREO (%) Std. Dev.

Composites 929 1.623 0.568

Block Model 49345 1.585 0.381



Even if the continuity of the TREO grade data can be considered relatively good for the Project, significant distance away from the drill hole data at depth and to the north can be observed for the eastern portion of the 3D wireframe envelop (sometime up to 200 m away from composite data). Although this represent significant extrapolation of the analytical data, it has been decided to model the Ashram deposit that way to keep it fairly regular and consistent, and to avoid long legs‐like shapes in the 3D wireframe envelop. 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 mineralisation.

The metallurgical characteristics of the mineralised carbonatite material are unknown at this stage. But the preliminary mineralogical studies outline the presence of fairly common REE‐bearing minerals which suggest that the recovery of the rare earths could be completed using known metallurgical processes already tested in other projects currently in operation or under development. The natural next step for the Project is to complete preliminary metallurgical testing of the mineralised material at Ashram.

17 OTHER RELEVANT DATA AND INFORMATION

No other relevant data and information is reported for the Project

18 INTERPRETATION AND CONCLUSIONS

SGS Geostat validated the exploration processes and drill core sampling procedures used by 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 and conform to generally accepted best practices.

The author completed a review of the sample preparation and analysis including the QA/QC analytical protocol implemented by Commerce for the Project. The author visited the Eldor property between October 4 and 6, 2010 to review the Company sample preparation procedures. SGS Geostat considers that the samples quality is good and that the samples are generally representative. The author noticed that the analytical blanks used in the QA/QC protocol contains small amount of mineralisation and recommends replacing them by certified analytical blanks. 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 Commerce recent diamond drilling program. The author also conducted verification of selected laboratories analytical certificates and validation of the project digital database supplied by Commerce for errors or discrepancies. The bulk density of the carbonatite material was estimated by SG measurements on mineralised drill core sample and appears to be consistent with expected values from the rock type. SGS Geostat is in the opinion that the final drill hole database is adequate to support a mineral resource estimate.



Geological interpretation and modeling of the mineralised carbonatite at Ashram was completed by Commerce following the guidelines defined by SGS Geostat. The resource model contains 49,345 blocks, 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 929 analytical values from 3 m long drill holes composites. Interpolation was performed using OK in 3 successive passes. Anisotropic search ellipsoids were used starting with a dimension of 100 m (long axis) by 100 m (intermediate axis) by 50 m (short axis) oriented vertically in the N320° azimuth direction, doubling in size for the second pass, and ending with a dimension of 400 m (long axis) by 400 m (intermediate axis) by 200 m (short axis). Search conditions were set for a minimum of 5 composites and a maximum of 25 composites with a maximum of 3 composites selected from each hole required to estimate each block.

Finally, a mineral resource was estimate based on the results of the block model interpolation. All the mineral resources were classified inferred resource categories. The final mineral resources are presented in Table 18.1.

Table 18.1 – Final Mineral Resources for the Eldor Property

SGS Geostat is in the opinion that the Company successfully confirmed the mineral resource potential of the Ashram deposit located on the Eldor property based on 2010 exploration program. The author considers the Project to be sufficiently robust to warrant: 1) conducting additional drilling to potentially increase the quantity and augment the confidence level of the current mineral resource, 2) proceeding to preliminary metallurgical study to better characterise the rare earth mineralisation processing parameters, and 3) completing a preliminary economic evaluation of the Project for a potential open pit mining operation.

1.25% Inferred 117,340,000 1.740 1.612 0.069 0.019 0.040 5.56









Cut‐off Grade

TREO (%)

Resources

CategoriesTonnes* TREO (%)** LREO (%)** IREO (%)** HREO (%)** Y2O3 (%)** CaF2 (%)***



19 RECOMMENDATIONS

The author considers that there is very good potential to increase the mineral resources of the Ashram deposit and to define mineral reserves for a potential open pit mining operation. The author recommends that Commerce carry out all necessary work to secure the mining rights.

The QA/QC protocol implemented by Commerce should be modified to include certified analytical blanks instead of quartz‐rich material collected in the vicinity of the Project. The protocol should also include a systematic verification of the REE analytical values using more than one certified laboratory in order to monitor the quality of the analysis completed at the Project.

A quantitative mineralogical study of representative mineralised carbonatite samples should be completed in order to characterise and quantify the different rare earth‐bearing minerals.

Preliminary metallurgical testing should be undertaken on representative mineralised samples.

Additional drilling should be conducted at the Ashram deposit on the Property with the objectives of: 1) testing the north and south extensions of the deposit, 2) confirming the east and west extent of the mineralised carbonatite, 3) testing the depth extension of the deposit pass 300 m below surface, and 4) increasing the resource confidence level by converting the outlined inferred resources into indicated resources using infill drilling. The proposed exploration program should target the following area of the Ashram deposit (see Figure 19.1):

a) Test the northern extension of the deposit with an emphasis in the high grade sector;

b) Test the southern extension of the deposit with the objective of closing the deposit;

c) Confirm the western contact of the mineralisation;

d) Confirm the eastern contact of the mineralisation;

e) Testing the depth extension pass 300 m with a focus in the north‐western area where high grade has been localised;

f) Infill drilling to confirm existing inferred resources where analytical grade extrapolation is the most significant;

g) Infill drilling to upgrade the inferred resources to the indicated category where current drilling was completed.



Figure 19.1 – Plan View Showing Proposed Drilling Area

A preliminary economic assessment of the Project is recommended using the current or a potential updated NI 43‐101 compliant mineral resource estimate and the results from a preliminary metallurgical study in order to evaluate the economics of a potential open pit mining operation.

Significant exploration work should also be considered outside the Ashram area with the objective to better define the known REE and Nb‐Ta occurrences on the Property and follow‐up on un‐tested exploration targets. Recommended exploration work includes desktop data compilation, prospecting and reconnaissance drilling.

In addition to the work recommendation listed above, the author recommends to carry out a baseline environmental study of the Property and to conduct discussions with the communities neighbouring the Eldor project about the impact of a potential open pit mining operation. Table 19.1 summarises the proposed budget for the recommended exploration work on the Eldor Property.

Table 19.1 – Proposed Budget for Recommended Exploration Work at Eldor

A

B

C

DFG

Target Type Details Budget

Drilling 10,000 m @ $200/m 2,000,000$

Mineralogy 100,000$

Metallurgy 150,000$

Environment Baseline study 150,000$

Preliminary Economic Assessment 150,000$

Regional Work Prospecting, sampling, drilling 2,500,000$

General Camp logistics and Salaries 2,500,000$

Contingencies 250,000$

Total 7,800,000$

Ashram Area

Proposed Budget Estimate for Eldor Property



20 REFERENCES

Property Description and Location

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.

Accessibility, Physiography, Climate, Local Resources and Infrastructure

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.Weatherbase website, 2011: http://www.weatherbase.com/ data for Kuujjuaq, Quebec, Canada

History

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 Preliminaires en Couleur des Travaux de Cartographie et des Etudes 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.

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.

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.

Demers, M. and Blanchet, C., 2001: Propriete Lac Erlandson‐Ta Reconnaissance Geologique Aout 2001, for Mines d’Or Virginia, 101 pages with maps.

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.

Knox, A.W., 1986: 1985 Field Examination Eldor Carbonatite, Quebec, for Unocal Canada Ltd, 75 pages with maps.

Lafontaine, M., 1984: Permis 669 Prospection et Cartographie, for Eldor Resources Ltd, GM40910, 19 pages with maps.

Meusy et al., 1984: The Carbonatite Complex of Permit 669, New Quebec, for Eldor Resources Ltd, 10 pages with map.



Geological Settings


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.

Deposit Model

Birkett, T.C. and Simandl, G.J., 1999: Carbonatite associatedDeposits: 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.


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).

Wolley, 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.

Mineralisation

Mitchell, H.R., 2011: Mineralogy of the Ashram Rare Earth Element Occurrence, Commerce Resources Corporation ‐ internal report, 24 pages with plates.

Schmidt, P., 2011: Ashram Zone, Commerce Resources Corporation ‐ internal report, 30 pages.

Adjacent Properties

Nunavik Mineral Exploration Fund, 2011: Mineral Titles Compilation Map.

Mineral Resource and Mineral Reserve Estimates

Cost Mine – InfoMine USA Inc., 2009: Mining Cost Services, Electronic Edition, January 2009.

Scott Wilsom RPA, 2010: Technical Report on the Thor Lake Project, Northwest Territories, Canada. For Avalon Rare Metals Inc., 314 pages.

Technology Metals Research LLC, 2011: Rare‐Earth‐Oxide Princing Data Compilation.

Wardrop, 2010: Preliminary Economic Assessment on the Strange Lake B Zone, Quebec. For Quest Rare Minerals Ltd, 178 pages.



21 SIGNATURE PAGE

Technical Report Mineral Resource Estimation Eldor Property – Ashram Deposit, Nunavik, Quebec

(According to National Instrument 43101 and Form 43101F1)

Prepared for

Commerce Resources Corporation

789 West Pender Street, Suite 1450 Vancouver, BC V6C 1H2, Canada

Tel: (604) 484‐2700 Fax: (604) 681‐8240

(signed and sealed) ″André Laferrière″ ____________________________________ Signed in Blainville, Québec, on April 15, 2011

André Laferrière, M.Sc. P.Geo

Senior Geologist – SGS Canada Inc. (Geostat)



22 CERTIFICATE OF QUALIFICATION

CERTIFICATE OF AUTHOR

André Laferrière M.Sc. P.Geo

To Accompany the Report entitled

“Technical Report ‐ Mineral Resource Estimation Eldor Property – Ashram Deposit, Nunavik, Quebec”

Commerce Resources Corporation” dated April 15, 2011

I, André Laferrière, M.Sc. P.Geo., do hereby certify that:

1) I am senior geologist with SGS Canada Inc. - Geostat with an office at 10 Blvd Seigneurie Est, Suite 203, Blainville, Quebec, Canada, J7C 3V5;

2) I am a graduate from Université de Montréal in 1995 and 1999;

3) I am a registered member of the Ordre Géologue du Quebec (#557);

4) I have worked as a geologist continuously since my graduation from university;

5) I have worked in exploration and development stage projects for metallic and non-metallic mineral deposits including magmatic Ni-Cu-PGE, volcanogenic Zn-Pb-Cu-Ag-Au, porphyry Cu-Au, intrusive Li-REE-Nb-Ta, and diamonds. I have been involved in mineral resource estimation work on a continuous basis since I joined SGS Canada Inc. in 2009, which includes participation in the data verification and mineral resource estimation of the Kipawa rare earth deposit located near the community of Témiscaming, Québec;

6) I have read the definition of “Qualified Person” set out in the National Instrument 43-101 and certify that by reason of my education, affiliation with a professional association and past relevant work experience, I fulfil the requirements to be an independent qualified person for the purposes of NI 43-101;

7) I have participated in the preparation of all sections of this technical report;

8) I have visited the site between October 4 and 6, 2010;

9) I have no personal knowledge as of the date of this certificate of any material fact or change, which is not reflected in this report;

10) Neither I, nor any affiliated entity of mine, is at present, under an agreement, arrangement or understanding or expects to become, an insider, associate, affiliated entity or employee of Commerce Resources Corp., or any associated or affiliated entities;

11) Neither I, nor any affiliated entity of mine, own, directly or indirectly, nor expect to receive, any interest in the properties or securities of Commerce Resources Corp., or any associated or affiliated companies;



12) Neither I, nor any affiliated entity of mine, have earned the majority of our income during the preceding three years from Commerce Resources Corp., or any associated or affiliated companies

13) I have read NI 43-101 and Form 43-101F1 and have prepared the technical report in compliance with NI 43-101 and Form 43-101F1; and have prepared the report in conformity with generally accepted Canadian mining industry practice, and as of the date of the certificate, to the best of my knowledge, information and belief, the technical report contains all scientific and technical information that is required to be disclosed to make the technical report not misleading.

Signed at Blainville, Quebec this 15th day of April 2011

(signed and sealed) ″André Laferrière″ _______________________________ André Laferrière, M.Sc. P.Geo, Senior geologist SGS Canada Inc. - Geostat



Appendix A: List of Mineral Titles



Appendix B: Pictures from Site Visit



Eldor base camp

Drill setup at hole EC10‐046



Core shack

Core logging facilities



Specific gravity measurement facilities

Core cutting and sampling facilities



Core storage facilities

General view of the camp



Appendix C: Analytical Protocols



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 - 10,000ppm Gd, Hf - 0.1 - 1,000 ppm