Frontier Announces Positive Pre-Feasibility Study for its Zandkopsdrift Rare Earth Project in South Africa

Rare Earth Deposits & Mining / Rare Earth Exploration, Mining, Processing, & Uses

Date posted: 07/04/15

Frontier Rare Earths Limited announced the results of a Pre-feasibility Study prepared in accordance with Canadian National Instrument 43-101 (NI 43-101) on the Zandkopsdrift rare earth element project in South Africa. Zandkopsdrift is being developed by Frontier in partnership with Korea Resources Corporation, the wholly-owned mining and natural resource investment arm of the South Korean Government, which owns a 10% interest in the Project.\n\nThe results of the PFS indicate that the proposed development of Zandkopsdrift to produce a range of high purity, separated rare earths is both technically feasible and economically robust. In addition, the production of a saleable manganese sulphate by-product has been proven both technically and economically feasible and has been incorporated into the process flow sheet and economic analysis for the PFS.\n\nPFS HIGHLIGHTS\n\nThe economic evaluation of the Project resulted in the following:\n\nInternal rate of return of 30%, after tax and royalties\nNet Present Value of $2.98 billion, after taxes and royalties, at an 8% discount rate\nNPV of $2.2 billion, after tax and royalties, at a 10% discount rate\nNPV of $1.58 billion, after taxes and royalties at a 12% discount rate\nProduction capacity of 8,000 tonnes per annum of high purity, separated total rare earth oxides for the first four years of operation (Phase 1), doubling to 16,000 tpa TREO from year five onwards (Phase 2)\nProven and Probable Reserves of 788,700 tonnes TREO, sufficient for a 45 year Life of Mine\nProduction of 48,000 tpa of manganese sulphate during Phase 1, doubling to 96,000 tpa for Phase 2\nAnnual revenues of approx. $440m at Phase 1 capacity and approx. $880m at Phase 2 capacity\nAverage operating costs of $11.87/kg TREO (pre-contingency and net of by-product revenue credit) for the first 20 years of operations\nAverage annual operating margin of 69% for the first 20 years of operations\nTotal Phase 1 capital expenditure (pre-contingency) of $809m.