Frontier Rare Earths (TSE:FRO) said Friday that it plans to make a "normal course issuer bid" to buy back some of its outstanding ordinary shares.
company said that, through the facilities of the Toronto Stock
Exchange, shares to be purchased during the period of the bid from May
29 to May 28, 2013 will not exceed 1.0 million.
This equates to
around 5.2 per cent of the public float, or shares not held by insiders
or related parties, and 1.1 per cent of the outstanding shares as of May
Frontier said the move is due to the fact "that the market
may materially undervalue the ordinary shares of Frontier from time to
time, and that the ordinary shares may trade in a price range which may
not adequately reflect the value of such shares in relation to the
business, assets and future prospects of Frontier."
said that management will determine the actual number of shares
purchased during the course of the bid, as well as the timing of such
As of last Friday, there were roughly 89.56 million
Frontier shares outstanding, and the public float was approximately
19.31 million shares.
Under the terms of the bid, Frontier will
not acquire on any trading day more than 25 per cent of the average
daily trading volume of shares for the most recently-completed six month
period, being 17,973 shares.
All buybacks made through the bid will be done via the facilities of the TSX, or any alternative trading system.
Frontier said it will hold any shares purchased in treasury for resale or cancellation.
bid has been authorized by Frontier’s board to allow the company to buy
shares if the purchases can be made on terms that will enhance the
value of the remaining outstanding shares, according to management's
Frontier Rare Earths is a mineral exploration and development company exclusively focused on the development of rare earths projects in Africa.
flagship asset is the Zandkopsdrift rare earth project, which is
located in the Northern Cape Province of South Africa and is one of the
largest undeveloped rare earth deposits worldwide.
Frontier has a direct 74 per cent interest and a current 95 per cent economic interest in Zandkopsdrift.
The company, which is aiming to become the next major producer of rare earths outside China after Lynas (ASX:LYC) and Molycorp (NYSE:MCP),
said it is on track to complete a pre-feasibility study by the third
quarter of this year, and a definitive feasibility report by next year's
Zandkopsdrift's "key to success" is mineralogy -
as the property contains conventional rare earth minerals, with 97
percent being monazite, for which commercial extraction processes
In February, the company announced the results of
its preliminary economic assessment (PEA) for Zandkopsdrift, which gave a
whopping net present value of $3.65 billion, after tax and royalties,
at an 11 percent discount rate.
Internal rate of return for the
project was seen at 52.5 percent, after tax and royalties, with a two
year payback from start of production.
Average production was
pegged at 20,000 tonnes of separated rare earth oxides per annum over a
20-year mine life with production due to start in the second half of