Frontier Rare Earths now expects prefeasibility study for Zandkopsdrift in Q3; most work required now complete

Frontier Rare Earths (TSE:FRO) updated investors Monday on its preliminary feasibility study that is being carried out at its Zandkopsdrift rare earth project in South Africa, saying that most of the work required for the report is now complete, but the target has been pushed back to the third quarter. 

Since the preliminary economic assessment report released last year and even since the last update in November 2012, the company told investors that "a number of improvements" have been made to the flow sheet for the processing plant. 

A confirmatory pilot-scale metallurgical test program covering all major process steps was successfully wrapped up this quarter. 

The company said in its statement Monday that the most important piece of work left that is required for the prefeasibility study is the finalization of engineering design, and capital and operating cost estimates. This is expected to be finished in July, with the results of the prefeasibility report now expected in the third quarter. The report was initially anticipated in the first quarter. 

Work on the definitive feasibility study will immediately follow, and is expected to take anywhere between nine to 12 months to complete. 

Frontier says it is fully funded to complete both reports on its project from its existing cash resources. The company plans to start rare earth production in 2016, with a target capacity of 20,000 tonnes per year of separated rare earth oxides. 

"This would position Frontier as one of the first new major rare earths producers and one of the  largest producers of separated rare earths outside China," it said in its release. 

A revised  resource estimate has been prepared, and will be included in the prefeasibility study. The company said it is expected that the majority of the Zandkopsdrift mineral resource will be converted into proven and  probable mineral reserves.

Last year, Korea Resources Corp (Kores) - the state-owned mining and natural resource investor - officially acquired the initial 10 per cent stake in Zandkopsdrift. 

Along with the 10 per cent interest, Kores has also acquired an off-take right and obligation for 10 per cent of Zandkopsdrift rare earth production, for a total cash payment of C$23.8 million.

Kores also has the option to increase its interest in the project to up to 50 per cent, becoming an equal partner with Frontier, with an off-take right and obligation for up to 50 per cent production from Zandkopsdrift. 

Frontier lauds itself as being the only junior in the rare earth business to get a strategic partner for offtake. It also has around $50 million in cash, excluding amounts owing by Kores. 

Zandkopsdrift is considered one of the largest undeveloped rare earth deposits worldwide containing approximately 950,000 tonnes of total rare earth oxides (TREO). The Zandkopsdrift B Zone has the highest TREO grade and the highest grade of high value heavy rare earth oxides of significant advanced deposits outside of China.