Ashram Project: Canada's Rare Earth Crown Jewel Aligned with NATO's Critical Minerals Strategy

Commerce Resources Corp.'s Ashram rare earth deposit in Quebec has emerged as a linchpin in Canada's push to secure its position as a global supplier of critical minerals. With strategic alignment to NATO's defense spending targets and government-backed infrastructure initiatives, the project is primed to capitalize on soaring demand for neodymium, praseodymium, and other rare earth elements (REEs) vital to modern defense and clean energy technologies. Here's why investors should take note.

The Scale of Ashram's Resource Potential

The Ashram deposit holds 73.2 million tonnes of Indicated resources grading 1.89% TREO (Total Rare Earth Oxide), with a critical 21.2% neodymium-praseodymium (NdPr) content, the backbone of permanent magnets used in electric vehicle (EV) motors and missile guidance systems. Its 131.1 million tonnes of Inferred resources further expand its long-term potential. Crucially, the deposit's mineralogy—dominated by monazite and bastnasite—supports metallurgical recoveries exceeding 40%, a significant advantage over lower-grade deposits requiring complex processing.

A key advantage lies in its surface-level outcropping, enabling open-pit mining and early extraction of high-value minerals. This contrasts sharply with underground projects, which face higher costs and delays.

Strategic Location and Government Backing

Ashram's location in Quebec places it at the heart of Canada's critical minerals strategy. The Quebec government has already committed $300 million in direct and indirect funding for infrastructure and research, including a $1 million equity stake and support for pilot plants and tailings optimization. This aligns with Canada's $2 billion pledge to critical minerals projects under its Critical Mineral Infrastructure Fund (CMIF).

The project's proximity to existing rail networks and hydroelectric power reduces operational costs, while plans for a 185-km road to Ungava Bay—funded in part by CMIF—will unlock access to global markets. Quebec's streamlined permitting process and pro-mining policies further mitigate regulatory risks.

NATO's Role in Shaping Ashram's Trajectory

Canada's pledge to meet NATO's 5% GDP defense spending target by 2035 has elevated critical minerals to a strategic priority. Rare earth elements like NdPr and dysprosium are essential for advanced defense systems, from radar arrays to hypersonic missiles. By classifying Ashram as a “dual-use” infrastructure project, Ottawa has positioned it to benefit from defense-related funding streams.

NATO's 2024 roadmap explicitly identifies REEs as critical to supply chain resilience, and the U.S. Department of Defense (DOD) has already signaled interest in supporting Canadian projects to reduce reliance on China, which dominates 80% of global REE refining. The $20 million DOD grant to Electra Battery Materials for cobalt production highlights the potential for similar support for Ashram's metallurgical upgrades.

Catalyst: The Mont Royal Merger

The merger with Mont Royal Resources, finalized in July 2025, is a transformative move. It injects $150 million in liquidity and adds two key assets: the Eldor niobium deposit and the Northern Lights lithium project. This diversification shields Commerce Resources from REE price volatility and positions it as a multi-mineral player. The dual listing on the TSX Venture and ASX also widens investor access, crucial for funding infrastructure projects like the Ungava road.

CEO Nicholas Holthouse's leadership—bolstered by his track record in optimizing Brazil's Ema Deposit—adds credibility. His focus on in-situ recovery (ISR) technology could slash capital costs by 20%, a game-changer for a project initially estimated at $763 million.

Risks and Challenges

• Infrastructure Costs: The Ungava road could exceed $300 million, with funding still pending. While CMIF and DOD grants may cover portions, execution risks remain.
• Regulatory Delays: Though Quebec's policies are favorable, environmental approvals for open-pit mining could lag behind timelines.
• Commodity Volatility: REE prices are tied to EV and defense demand, which could fluctuate amid macroeconomic headwinds.
• Resource Conversion: Inferred resources must be upgraded to proven/reserve status, requiring further drilling.

Investment Thesis: A Strategic Buy with Upside

Ashram's alignment with Canada's critical minerals strategy and NATO's defense priorities creates a “tailwind” scenario. With $15 billion in annual REE market growth through 2030, the deposit's scale and metallurgical advantages position it to capture premium pricing for NdPr. The Mont Royal merger and Holthouse's expertise further reduce execution risks.

Target Price: Based on a $1.20/share valuation (pre-merger), current trading at $0.85/share offers 41% upside if the project secures CMIF/DOD funding and advances to feasibility studies.

Final Word

Commerce Resources is no longer just a rare earth explorer—it's a strategic asset in Canada's defense and economic playbook. While risks like funding gaps remain, the confluence of geopolitical urgency, government backing, and diversified assets makes Ashram a compelling long-term play. Investors seeking exposure to critical minerals and NATO-aligned infrastructure should consider a buy, with a horizon of 3–5 years to realize full potential.