Frontier Rare Earths secures key prospecting right in South Africa

Frontier Rare Earths (TSE:FRO) said on Wednesday that the South African Department of Mineral Resources for rare earths has granted the company a new prospecting right in the Namaqualand region of Northern Cape province, South Africa.
The property covers approximately 75,000 hectares and is thought to be "highly" prospective for rare earth mineralization.
The new prospect rests about 80 kilometres northeast to the Zandkopsdrift rare earth deposit, where the company is currently carrying-out an economic appraisal. The results are slated to be released by the fourth quarter this year.
Frontier said it plans to conduct an exploration program for the new area, which is also expected to start sometime in the fourth-quarter. The proposed work program is fully funded, and was provided for in the budget set out in the prospectus issued by the company during its initial public offering in November 2010.
In a statement, Frontier’s Chief Executive, James Kenny said: "We are pleased to have been awarded a prospecting right over an area that we believe to be highly prospective for rare earth mineralisation.”
"There are already two significant rare earth deposits being evaluated in the Namaqualand region of South Africa, including Frontier's world class Zandkopsdrift deposit, and we believe that the region has the potential for further rare earth discoveries to be made."
Frontier’s subsidiary, Victor Minerals, holds 74% of the new prospecting right. The rest is held by South African shareholders, the company said.
Frontier's flagship asset, the Zandkopsdrift rare earth project, is located in the Northern Cape Province of South Africa and is one of the largest undeveloped rare earth deposits worldwide.
The company, which was yesterday rated "top pick" by Cormark Securities on a report on the rare earths industry, is  fully funded to complete a bankable feasibility study on its main project, which has a 3.65% grade of total rare earth oxides (TREO), and "excellent" distribution of elements, ranking fourth in Cormark's list of rare earth projects value per tonne, the report stated.
"We believe the project is capable of starting construction in H2/13 [second half of 2013], with first production in H2/16, and ramping to full production in 2018," Cormark said.
The mine is expected to average 20,000 tonnes of rare earths per year over a 40-plus year life. The Zandkopsdrift deposit is currently the largest NI 43- 101 compliant rare earth resource in Africa.
After Molycorp's Mountain Pass and Lynas' Mount Weld projects, the Zandkopsdrift B Zone has the highest total rare earth oxide grade and the highest grade of high value heavy rare earths of significant advanced deposits outside China.
Rare earth minerals – comprised of 17 elements including Cerium, Thulium, Ytterbium and Scandium – are used in lasers, magnets and batteries. China produces over 97% of the world's supply, and recently cut export quotas of the metals, resulting in a sharp increase in prices and a signal to the rest of the world to secure new sources of production. Since 2006, rare earths prices have increased between 1,000-10,000%.
State-backed Korea Resources Corp (Kores) signed an initial joint venture agreement to acquire a 10-20% interest in the Zandkopsdrift project, up to a 10% interest in Frontier, and the right and obligation to purchase up to 40% of production at market prices - another positive for Frontier. The deal marks Kores' first investment in a rare earth mine development project worldwide.
The Luxembourg-based early stage metal explorer’s stock closed Tuesday at $1.55 a share, up 4.73% on the Toronto Stock Exchange.