zandkopsdrift - africa’s leading rare earth project · rare earth consumption can be divided into...
TRANSCRIPT
DRAFT
Zandkopsdrift - Africa’s leading Rare Earth project
February 2014
Frontier Rare Earths Limited
TSX:FRO US:FREFF
Safe Harbour Statement Forward Looking Statements :Certain information set forth in this presentation may contain forward-looking statements that involve substantial known and unknown risks and
uncertainties. Readers can identify many of these statements by looking for words such as "will", "intends", "projects", "anticipates", "estimates", "achieving", or similar words or
the negative thereof. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of Frontier, including, but not
limited to, the impact of general economic conditions, industry conditions, commodity prices, availability of financing , Frontier's ability to raise additional capital, results of
feasibility studies, dependence upon regulatory approvals, the estimation of mineral resources and the realization of mineral reserves based on mineral resource estimates and
estimated future development, if any, and possible expectations regarding competition from other producers globally, possible customer and supplier relationships, anticipated
trends and challenges in Frontier regarding competition; mineral resource estimates and supply outlook and growth opportunities, the future price of and future demand for rare
earth elements, title disputes or claims including Black Economic Empowerment initiatives, and the timing and possible outcome of pending regulatory and permitting matters.
Readers are cautioned that the assumptions used in the preparations of such information, although considered reasonable at the time of preparation, may prove to be imprecise
and, as such, undue reliance should not be placed on forward-looking statements. There can be no assurance that the plans, intentions or expectations upon which these forward-
looking statements are based will occur. The forward-looking statements contained herein are made as of the date of this presentation and are expressly qualified in their entirety
by this cautionary statement. Actual results may differ materially from those anticipated. Readers are cautioned not to put undue reliance on forward-looking statements due to the
inherent uncertainty therein. Frontier disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or
results or otherwise, except as required by applicable law.
Data used in the Presentation : Frontier's data in this presentation is primarily based on the PEA (as defined below). The PEA is preliminary in nature, includes inferred mineral
resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves, and
there is no certainty that the PEA will be realized. A mineral reserve has not been estimated for the project as part of the PEA. Mineral resources that are not mineral reserves do
not have demonstrated economic viability. Data used in peer comparisons comes from various reports and sources with different levels of confidence attaching to them which may
mean that data is not directly comparable and actual production is likely to be different from that shown. The data sources for peer information used in the presentation are as
follows: Molycorp - Quarterly Report Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 for the quarterly period ended March 31, 2013 (9 May 2013);
Lynas H2 2012 Consolidated Financial Report (22 Feb 2013); Avalon Announces Results of Positive Feasibility Study for the Nechalacho Rare Earth Elements Project (17 Apr
2013); Quest - Preliminary Economic Assessment on the Strange Lake B Zone, Quebec (24 Sept 2010); Arafura Delivers Nolans Project Update - incl. feasibility study update (7
Aug 2012); Tasman - Preliminary Economic Assessment NI 43-101 Technical Report for the Norra Karr (REE-Y-Zr) Deposit Granna, Sweden (11 May 2012); Matamec -
Preliminary Economic Assessment Study for Kipawa Project (14 Mar 2012). All output calculations use prices from Metal-Pages (www.metal-pages.com) and REE distributions
from Technology Metals Research (www.technologymetalsresearch.com).
Technical Information – Details with respect to the scientific and technical information contained in this presentation as it relates to Frontier can be found in a National
Instrument 43-101 technical report entitled "Amended Independent Technical Report on the Results Of A Preliminary Economic Assessment of Frontier Rare Earths Limited's
Zandkopsdrift Rare Earths Project, located in the Northern Cape Province of South Africa" (the "PEA"), date March 30, 2012, and is available on SEDAR under the Company's
profile. Dr Stuart Smith, Frontier's VP Exploration is a "Qualified Person“, as defined by NI 43-101, and has reviewed and approved the scientific and technical information in this
presentation.
2 │
Contents
Rare Earths –An Introduction
Frontier Rare Earths - Overview
Frontier’s Zandkopsdrift Rare Earth Project
Preliminary Economic Assessment
Zandkopsdrift - Project Development Plans
Kores Joint Venture
Peer Benchmarking
Summary and Management Bios
Appendices
3 │
Rare Earths - Overview
Series of 15 chemically similar elements that occur and are recovered together
Distribution of elements varies from deposit to deposit
Two distinct categories based on atomic weight: Light Rare Earths and Heavy Rare Earths
Each element has a range of distinctive physical properties which allow them to be used in a
variety of technological applications.
Magnetic, optical, electrical, catalytic and metallurgical
Rare Earths underpin the “green” technology economy
Hybrid motor and battery technology
Energy efficiency
Wind power
Consumer electronics
Defence
Transport
Most have no substitutes and are indispensable in many applications
4 │
Rare Earth Application Structure
Rare Earths – Usage by Application Rare earth consumption can be divided into traditional field and new material field
Traditional field - metallurgy / machinery, petroleum / chemicals, glass / ceramics, agriculture / light industry /
textile, etc.,
New material field - permanent magnet materials, luminescent materials, polishing materials and hydrogen
storage materials.
In recent years, driven by downstream demand, the new material field has witnessed rising consumption of rare earths
Source: ResearchInChina– China Rare Earth Industry Report
5 │
In 2015, the forecast
demand for rare earths
from new materials will
account for circa 80% of
the total application
demand, of which,
magnetic materials will
comprise the largest
component at over 61%.
Magnetic Materials, 61.3%
Luminescent Materials 6.3%
Polishing Materials4.5%
Hydrogen Storage
Materials 4.1%
Other New Materials 3.7%
Metallurgy Machinery 7.2%
Petroleum / Chemical Industry 4.8%
Glass / Ceramics 4.7% griculture / Light Industry / Textile, 3.5%
Rare Earths – Key Applications
Computer Hard Drives
Disk Drive Motors
Anti-Lock Brakes
Automotive Parts
Frictionless Bearings
Magnetic Refrigeration
Microwave Power Tubes
Power Generation
Microphones & Speakers
Communication Systems
MRI
6 │
Catalysts
Defence
Glass & Polishing
Metal Alloys
Phosphors
Magnetics
Ceramics
NimH Batteries
Fuel Cells
Steel
Super Alloys
Aluminium / Magnesium
Petroleum Refining
Catalytic Converter
Fuel Additives
Chemical Processing
Air Pollution Controls
Satellite Communications
Guidance Systems
Aircraft Structures
Fly-by-Wire
Smart Missiles
Polishing Compounds
Pigments & Coatings
UV Resistant Glass
Photo-Optical Glass
X-Ray Imaging
Display phosphors - CRT, LPD, LCD
Fluorescent Lighting
Medical Imaging
Lasers
Fibre Optics
Capacitors
Sensors
Colorants
Scintillators
Refractories
CREOs
HREOs
LREOs
Nd Pr La, Ce, Pr Ce, Pr La, Ce, Pr Nd, Y Tb, Dy
La, Ce, Pr Nd Gd, Er, Ho
Nd
La, Ce, Pr Nd, Y, Eu Gd, Lu, Dy Nd, Eu, Tb, Dy, Y Pr, La Lu, Sm
Nd, Eu, Tb, Y Er, Gd
Rare Earth Supply and Demand to 2020
Source: IMCOA
Note: Frontier assumes 2017-2020 straight line growth to mid-point 2020 IMCOA estimate and China maintains current stated supply cap
7 │
Widening
supply gap to
be met by new
non-Chinese
supply?
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
220,000
240,000
2005 2006 2007 2008 2009 2010 2011 2012 2013f 2014f 2015f 2016f 2017f 2018f 2019f 2020f
China Supply Global Demand
Tonnes
Benchmarking Rare Earth Projects
Rare earths are comprised of light and heavy elements, however
the use of “light vs. heavy” ratios is very misleading and should
not be the metric to rank/rate RE projects
Ratios do not reflect grade or value and is a flawed metric
Not all LREOs are “bad” (low value & in oversupply)
There are 4 LREOs - 2 are critical for magnets (Nd & Pr)
Not all HREOs are “good” (high value & in undersupply)
There are 11 HREOs - 4 are critical for magnets (Nd, Pr, Dy & Tb)
and 3 for phosphors (Tb, Eu & Y)
5 - negligible value as they are produced and used in limited
quantities (Ho, Er, Tm, Yb & Lu)
2 - non-critical and have relatively low values (Sm & Gd)
A better metric than a HREO/LREO ratio is needed
8 │
Rare Earth Oxide REO price *
($/kg)
LR
EO
Lanthanum $6
Cerium $6
Praseodymium $118
Neodymium $68
Samarium $9
HR
EO
Europium $975
Gadolinium $47
Terbium $825
Dysprosium $465
Holmium $0
Erbium $0
Thulium $0
Ytterbium $0
Lutetium $0
Yttrium $22
* Metal-Pages 1 January 2013
A better benchmark - Critical Rare Earth Oxides (CREOs) Of the 15 elements there are 5 CREOs - Neodymium, Europium, Terbium, Dysprosium and Yttrium (Nd, Eu, Tb, Dy & Y)
Neodymium (Nd) is the largest of the CREOs by value and volume
A deposit with a high proportion of CREOs could have a very low grade, and as a result be less attractive and produce less
CREOs than a deposit that has a lower proportion of CREO but a higher overall TREO grade
Some “LREO projects” will produce more CREOs/t ore processed than certain high profile, so called “HREO projects”
Absolute CREO grade and projected CREO production levels ($m) provide more meaningful metrics to compare Rare Earth
projects and a better benchmark with which to rate these projects
Source: US Dept. of Energy
9 │
Criticality of CREOs is
based on their importance
to sustainable clean
energy and the supply
risk of such elements over
the short (0-5yrs) and
medium term (5-15yrs)
Frontier Rare Earths - Overview
Flagship asset is the Zandkopsdrift Rare Earth project in South Africa
High quality deposit in terms of size, rare earth grade, distribution and value
Preliminary Economic Assessment
confirms Zandkopsdrift’s potential to become a major producer of separated rare earth oxides
NPV11% of $3.7bn generating a post-tax IRR of 53% and 2 year payback
Pre-feasibility Study well advanced stage with Definitive Feasibility Study scheduled to commence
later in 2014
Strategic Partnership signed with Korea Resources Corporation
Frontier is the only rare earth junior advancing a major rare earth resource with a definitive strategic
partnership agreement in place
Initial Kores investment of $23.8m for 10% interest (December 2012)
Kores option to acquire up to a total 50% interest in Zandkopsdrift if arranges project finance for
development and provides 50% of equity required
Strong financial position: c.$36m cash and fully funded through completion of PFS and DFS
Listed on the Toronto Stock Exchange
Experienced Board, management and technical teams
10 │
Corporate Information
TSX: FRO / US: FREFF
Shares Outstanding: 89.6m
Market Cap c.$34m
Recent Share Price $0.40
(52 week hi/low $0.96 - $0.28)
Working Capital c.$36m(no debt)
Research Coverage:
Euro Pacific Capital
Cormark Securities
11 │
Frontier Relative Share Price (rebased)
The Zandkopsdrift Rare Earth Project Well-situated in the Northern Cape Province, South Africa’s
oldest mining region
Mining / related infrastructure available locally and regionally
450km from Cape Town on N7 highway
35km to nearest railhead (Bitterfontein)
300km north of deep water port of Saldanha Bay
Strong support for development in local communities
Frontier controls mineral rights over c.60,000ha in the
Zandkopsdrift area
12 │
Cape Town – a first world destination
Satellite Image of Zandkopsdrift Carbonatite
13 │
Zandkopsdrift
carbonatite
complex
Gravel road to N7
N7 tarred road
to Cape Town
Bitterfontein rail head
(c.35 km)
Exxaro Resources
Namakwa Sands Mine
(c.45 km)
Zandkopsdrift Deposit
14 │
The Zandkopsdrift Deposit
The biggest intrusion in a complex of carbonatite intrusions
One of the largest known rare earth deposits, containing approx. 950k tonnes TREO
Contains significant high grade zones extending from surface that will allow preferential mining
The majority of rare earths in Zandkopsdrift (~ 97%) are contained in monazite
Proven commercial extraction processes exist
Metallurgical test work optimisation on going in Canada, Australia, South Africa, Korea and China
Rare earth minerals in many other new RE projects by contrast have never had commercial processes
developed, which will increase their development time, cost, and process risk
Attractive distribution of CREOs and very low radioactivity
Potential for rapid development and production start-up
Good regional infrastructure available (road, rail, power and water) will also facilitate development
Targeting annual production of 20,000 tonnes of separated rare earth oxides (at full production utilizing
two lines of 10,000 tpa to be developed on a phased basis)
15 │
Geological Interpretation
16 │
The Zandkopsdrift deposit is a REE enriched carbonatitic breccia pipe
Occurs as a 1km diameter circular intrusive rising 40 meters above the surrounding plain
Extensive drilling in excess of 20,000 meters completed
313 boreholes drilled for a total of 21,037 meters
19,166 meters assayed at 1 meter intervals for resource estimation purposes
Very good understanding of geology and controls on mineralisation
Series of vertical to sub vertical RE-enriched dykes (“REDs”) intruded into a RE bearing carbonatitic
phlogopite breccia phase (“CPB”)
The CPB and REDs have undergone several stages of alteration and deep weathering resulting in
the development of supergene enriched high grade REE-bearing horizons from surface to 80-100m
depth
Geologically similar to Lynas’ Mount Weld deposit in Australia
Geological and Resource risk removed
No additional drilling planned or required before completion of Definitive Feasibility Study
Zandkopsdrift Geological Map and Drill Locations
17 │
Assay results from final
phase of resource drilling
(14,200 meters drilling) to
be incorporated into a
revised resource estimate
for PFS, and will upgrade
the majority of the
resource into the
Measured and Indicated
resource categories
Zandkopsdrift Resource Estimate
Large, high confidence resource estimate (c.950k tonnes TREO) with c.80% of the contained TREO at
the Indicated Resource level
Final phase of resource drilling (14,200 meters) at Zandkopsdrift completed and will advance majority of
the resource into the Measured and Indicated categories and PFS will convert such resources to Proven
and Probable reserves
Relative distribution of REOs in Zandkopsdrift is shown on page 46.The resource estimate is NI 43-101 compliant and presented in accordance with CIM definitions The mineral resource
estimates reflect 100% of the estimated resources at Zandkopsdrift. Frontier’s 64% owned subsidiary, Sedex, has complied with the BEE equity ownership requirements as laid down by the
Mining Charter and MPRDA, through shareholder agreements with historically disadvantaged South African individuals and entities that together hold the remaining 26% of the issued share
capital of Sedex. In addition to Frontier’s direct interest in the Zandkopsdrift Project through its 64% shareholding in Sedex, Frontier shall also be entitled to, in consideration for Frontier’s
funding of the BEE Shareholders’ share of Sedex’s expenditure on the Zandkopsdrift Project up to bankable feasibility stage, a payment from certain of the BEE Shareholders following the
completion of the bankable feasibility study equal to 21% of the then valuation of the Zandkopsdrift Project. This gives Frontier an effective 85% interest in the Zandkopsdrift Project until
such payment has been received.
18 │
Resource Estimate
Zandkopsdrift PEA Resource Block Model
19 │
Zandkopsdrift Sample Geological Section
20 │
7.98% TREO over 16 meters
with 17.98% TREO over 1 meter
Weathered CPB intruded by weathered RE enriched REDs
21 │
Weathered CPB
1-3% TREO
Weathered REDs
6-8% TREO
Contact Between REDs and CPB in Bulk Sample Trench
22 │
Weathered REDs
4-5% TREO
Weathered CPB
1-3% TREO
Bulk Sample Trench for Pilot Testwork (2012)
23 │
Average XRF TREO grade of 3% for 174 metre trench
Preliminary Economic Assessment – Financial Highlights*
24 │
Post-Tax NPV & IRR
Post-Tax Net Present Value @ 11% discount rate $3.65bn
NPV attributable to Frontier Rare Earths $3.60bn
Post -Tax Internal Rate of Return 52.5%
Pre -Tax NPV & IRR Pre-Tax Net Present Value @ 11% discount rate $4.3bn
Pre-Tax Internal Rate of Return 57.6%
Revenue and Cashflow Average annual revenue $1.1bn
Annual after-tax free cashflow in full production $711m
Capital Expenditure
Total construction Capex excluding contingencies $910m
Start-up costs excluding contingency $27m
Project payback from commencement of full production 2 years
Revenue/kg and cost/kg
xSeparated REO
“Basket price” per kg of separated REO from Zandkopsdrift $58.23
Total cash operating cost/kg separated REO incl contingency $15.04
* The PEA is preliminary in nature. Please refer to safe-harbour statement at beginning of this presentation
Location of Zandkopsdrift Project Components
25│
Saldanha Bay Rare Earth
Separation Plant-20,000 tonnes
TREO p.a. target full production
Mixed rare earth carbonate
transported 300kms by road (N7)
to Saldanha Bay
Mining, flotation and cracking
plants to produce mixed rare
earth carbonate
Zandkopsdrift Preliminary Mine Pit Design (looking southwest)
26 │
- Life of mine increased to 30+ years in current mine design
- A low average stripping ratio of 1:1
- Three stage pit development: pit 1 for first 9 years, push
back (pit 2) for the next 8 years and push back (pit 3) for
the following 17years
Pit Dimensions (approx.)
East -West extent 830m
North-South extent 900m
Maximum no. benches planned 12
Zandkopsdrift Mine Detailed Layout (PEA)
27 │
Zandkopsdrift Mine Acid Cracking Plant –
Metallurgical flow sheet (PEA)
28 │
Saldanha Bay- Separation Plant Location
29 │
Sichen to Saldanha iron ore export rail line
Exxaro ilmenite smelter-Saldanha Bay Arcelor Mittal Saldanha Steel Works
Saldanha Port
Saldanha Bay Industrial Development Zone
30 │
Rare Earth Separation Plant Location and Layout (PEA)
31 │
Saldanha Separation Plant-Metallurgical Flow Sheet (PEA)
32 │
Environmental Impact Assessments
Preliminary Environmental Assessments completed
Botany
Archaeology
Air and water quality
Human health risk and radiology impact
Uranium and Thorium are at very low levels
Although the rare earths at Zandkopsdrift are contained (97%) in monazite the grades of
both uranium (60-70ppm) and thorium (215-235ppm) are unusually low
Uranium and thorium removed by precipitation and disposed to double-lined tailings
disposal facility at Zandkopsdrift
Environmental studies concluded that “the environmental impact of the radionuclides will
be negligible”
33 │
5,083
8,833
910
3,154
462 118 288 34 154
814
4,274
-
2,000
4,000
6,000
8,000
10,000
To
nn
es p
er
An
nu
m
Projected Output of Separated Rare Earths
34│
Based on 20ktpa TREO target output at full production
*Revenue contributions are calculated using FOB China prices from Metal Pages as at 1 January 2014
No value is attributed to the five heavy rare earths from Holmium to Lutetium
CREOs comprise
22% of projected
output by volume,
but would contribute
circa 70% of project
revenue*
Ce and La would
contribute only 13%
of potential project
revenue, so the
Zandkopsdrift overall
economics are not
greatly sensitive to
their prices
Production – tonnes per annum
Relative contribution to revenue
4.5% 8.1%
14.6%
35.2%
0.6%
17.1%
1.9% 4.4%
11.2%
2.5%
70.4%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
Co
ntr
ibu
tio
n t
o v
alu
e
Zandkopsdrift Current Estimated Project Timeline
35 │
PEA Resource
2011 2012 2013 2014 2015
PFS/DFS Resource
PEA
Pre Feasibility
Study
Definitive
Feasibility Study
Financing
Construction
Production
Start-up
2016 2017
Korea Resources Corporation
Korea Resources Corporation (“KORES”) is wholly-owned by the Korean government
Objective of becoming a global top 20 mining company by 2020, principally through international
investments and joint ventures
Policy mandate to further Korea's access to strategically important mineral resources
Works with major Korean industry groups and assembles consortia of Korean companies to participate
with KORES in commercial ventures
Korean government has designated rare earths as a strategic raw material for Korea’s future economic
growth and selected Zandkopsdrift source of their future rare earth supply
“In order to support Korea’s high technology, automotive and other industries, the development of
Zandkopsdrift will be a strategic priority project for the KORES Consortium and a critical element of
KORES’ efforts to secure a long term, stable source of rare earth supply for Korean industry.”
Shin-Jong Kim, Kores President and CEO
36 │
Frontier - KORES Joint Venture Summary
KORES acquired initial 10% interest in Zandkopsdrift for $23.8m in cash - December 2012
On completion of a positive Definitive Feasibility Study on Zandkopsdrift:
Kores may increase participation up to a 50% interest* in Zandkopsdrift, together with an
off-take right and obligation for up to 50% of production from Zandkopsdrift (the “50% Option”)
Kores required to arrange project finance for entire Zandkopsdrift development on best
available market terms and, provide its pro rata equity funding for the portion of
Zandkopsdrift development costs not covered by the project finance
Kores will provide technical and operating support for the design, construction and
operation of the Zandkopsdrift facilities
Frontier and Kores will cooperate in relation to downstream opportunities in the area of
rare earth metals, alloys and magnets
Frontier may introduce an Alternative Strategic Partner into
Frontier/Zandkopsdrift prior to the exercise of the option by Kores
and in such event the 50% Option will be cancelled
Zandkopsdrift is Kores’ only investment in a rare earth mine
development worldwide *Full details of the Frontier Kores JV are in the news release dated 23 Oct 2012
37 │
Benchmarking RE Projects - Absolute CREO Grade is Key
The use of relative grades (% HREO or % LREO or % CREOs) can be misleading
Absolute grade is more important than relative distribution
A deposit with a high proportion of CREOs could have a very low grade, and as a result be less
attractive and produce less CREOs than a deposit that has a lower proportion of CREO but a higher
overall TREO grade
Some “LREO projects” will produce more CREOs/t ore processed than certain high profile, so called
“HREO projects”
Absolute CREO grade and projected CREO production levels ($m) provide more meaningful
metrics to compare Rare Earth projects and a better benchmark with which to rate these projects
It is also useful to further break down CREOs into:
Magnet CREOs (MCREOs) – Nd, Tb, Dy
Phosphor CREOs (PCREOs) – Eu, Tb, Y
38 │
Rare Earth Oxide REO price
($/kg)**
Frontier Rare
Element Arafura Avalon Quest Tasman Matamec
Zandkopsdrift Bear Lodge Nolans Bore Nechalacho Strange
Lake Norra Karr Kipawa
LR
EO
Lanthanum $6 0.70% 0.80% 0.50% 0.20% 0.13% 0.06% 0.06%
Cerium $6 1.22% 1.31% 1.28% 0.46% 0.27% 0.14% 0.13%
Praseodymium $118 0.13% 0.15% 0.16% 0.06% 0.03% 0.02% 0.02%
Neodymium $68 0.44% 0.54% 0.54% 0.23% 0.11% 0.07% 0.06%
Samarium $9 0.06% 0.08% 0.06% 0.04% 0.02% 0.02% 0.01%
HR
EO
Europium $975 0.02% 0.02% 0.01% 0.00% 0.00% 0.00% 0.00%
Gadolinium $47 0.04% 0.04% 0.03% 0.03% 0.02% 0.02% 0.01%
Terbium $825 0.00% 0.00% 0.00% 0.00% 0.01% 0.00% 0.00%
Dysprosium $465 0.02% 0.01% 0.01% 0.02% 0.03% 0.03% 0.02%
Holmium* $0 0.00% 0.01% 0.00% 0.00% 0.01% 0.01% 0.00%
Erbium* $0 0.01% 0.00% 0.00% 0.01% 0.02% 0.02% 0.01%
Thulium* $0 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Ytterbium* $0 0.01% 0.00% 0.00% 0.01% 0.02% 0.02% 0.01%
Lutetium* $0 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Yttrium $22 0.11% 0.03% 0.04% 0.08% 0.23% 0.21% 0.09% Total – TREO 2.77% 3.00% 2.63% 1.15% 0.90% 0.60% 0.42%
Total – HREO 0.28% 0.20% 0.15% 0.20% 0.36% 0.32% 0.15%
Total – CREO 0.59% 0.60% 0.60% 0.33% 0.38% 0.31% 0.17%
Total – MCREO 0.46% 0.55% 0.55% 0.25% 0.15% 0.10% 0.08%
Total – PCREO 0.13% 0.05% 0.05% 0.08% 0.24% 0.21% 0.09%
In Situ REO Grade of Advanced Western Deposits
39 │
* No value attributed to Holmium, Erbium, Thulium, Ytterbium and Lutetium as these elements have small markets, are typically produced to order and do
not have regularly published prices.
** REO prices from Metal Pages 1 January 2014.
*** Data for peers is sourced from various documents. Please refer to safe harbour statement at beginning of this presentation.
Potential Western CREO Production
40│
- Based on REO prices from Metal Pages in 1 January 2014
- Assumes all project’s production distribution equals their in-situ distribution except Avalon where c.50% of HREO are not extracted under current flowsheet
- Data for peers is sourced from various documents. Please refer to safe harbour statement at beginning of this presentation
- At full production
- Quest, Tasman, Rare Element and Matamec will produce an intermediate rare earth product and not separated rare earth oxides
Frontier would be the second
largest producer of CREOs by
value of any of the current or
leading prospective RE
producers outside China,
including Lynas and Molycorp
Note: Columns with solid
colours indicate projects
where the contained RE
minerals have a commercially
proven extraction process
0
20
40
60
80
100
120
Quest Frontier Lynas Arafura Tasman Avalon RareElement
Matamec Molycorp
Relative CREO value per annum
Potential Western MCREO and PCREO Production
41│
- Based on REO prices from Metal Pages in 1 January 2014
- Assumes all projects production distribution equals their in-situ distribution except Avalon where c.50% of its HREO will not be extracted under current flowsheet
- Data for peers is sourced from various documents. Please refer to safe harbour statement at beginning of this presentation
- At full production
Frontier would be the third
largest producer of MCREO and
second largest producer of
PCREO by value of any of the
current or prospective RE
producers outside China,
including Lynas and Molycorp
0
20
40
60
80
100
120
140
160
Quest Arafura Frontier Lynas Tasman Avalon Matamec Molycorp RareElement
Relative MCREO value per annum
0
20
40
60
80
100
120
Quest Frontier Lynas Tasman Arafura RareElement
Avalon Matamec Molycorp
Relative PCREO value per annum
Frontier Peer Comparison - Summary
42 │
Company Lynas Molycorp Frontier Avalon Arafura Rare Element Quest Tasman Matamec
Deposit Mt Weld Mtn Pass Zandkopsdrift Nechalacho Nolan's Bore Bear Lodge Strange
Lake Norra Karr Kipawa
Location Australia California South Africa NW Territories Australia Wyoming Quebec Sweden Quebec
Est. Tonnes p.a. 22kt 19kt 20kt 10kt 20kt 10kt 12kt 6kt 5kt
Rare Earth Product Separated
REO
Separated
REO
Separated
REO
Separated
REO
Separated
REO Concentrate Concentrate Concentrate Concentrate
Stage in process Production Production PFS DFS PFS PFS PFS PFS DFS
Primary RE Mineral Monazite Bastnaesite Monazite Fergusonite Fluorapatite &
Cheralite
Ancylite &
Bastnaesite Kainosite Eudialyte
Eudialyte &
Mosandrite
Industry Partner Yes No Yes No No No No No Yes
Start-up year (est.) 2012/13 2012/13 2017 2018 Unknown 2018 2018 Unknown 2017
Cash/(Net Debt) est. ($317m) ($1182m) $36m $10m $22m $30m $11m $4m $1m
Market Cap (Jan 2014) $647m $1261m $34m $62m $32m $81m $35m $97m $14m
Enterprise Value ($m) $964m $2443m $-2m $52m $10m $51m $24m $93m $13m
-Data sources for peers include the documents listed in the safe harbour statement, financial statements, publicly available market data and Frontier’s analysis.
Summary
Zandkopsdrift is a high quality rare earth deposit
high grade, attractive REE and CREO distribution, large tonnage, on surface, low radioactivity
Well positioned to become the next major western producer of separated rare earth oxides
Only advanced RE junior with proven metallurgy
Plan to produce 14 separated rare earth oxides in purities up to 99.999%
Only RE junior with strategic industry partner and off-take agreement
One of the largest potential producers of CREOs outside of China
Experienced management and technical teams
Strong financial position ($36m in cash) and fully funded to complete PFS and DFS
Share price trading at significant discount to peers and share buyback in progress
For further information visit www.frontierrareearths.com
43 │
Senior Management Team
Frontier’s team have extensive experience of exploration and development of mineral projects
in Southern Africa, rare earths, financing and corporate development
Philip Kenny B Eng, MBA Chairman
25+ years experience in natural resource sector.
Founder and former Executive Chairman and CEO of
Firestone Diamonds plc, an AIM-listed diamond mining
company focused which built and operated diamond
mines in South Africa, Botswana and Lesotho.
Derick de Wit B Tech, Chem. Eng. Vice President, Project Development
15+ years experience in minerals industry. Has managed
or prepared more than 30 independent reviews, scoping,
pre-feasibility and definitive feasibility studies in Africa
and Canada.
Ms Vivian Wu B Sc, EMBA Business Development Director- Greater China
20+ years experience in rare earth industry in senior
roles with China Minmetals Corporation, Rhodia (China)
Investment Co and Treibacher Industrie AG.
James Kenny B Comm, MBS Chief Executive Officer
25 years experience in natural resources sector as an
executive, adviser and broker. Co-founder of Frontier and
centrally involved in all aspects of Frontier's
development, corporate, strategic and financing activities
since incorporation.
Paul McGuinness B Comm, ACA Chief Financial Officer
15+ years experience in investment banking and
financial control with Arthur Anderson, Salomon Brothers,
Schroders, Collins Stewart and MG Capital.
Dr. Stuart Smith B Sc, PhD Vice President, Exploration
30+ years experience in mineral exploration with
particular experience in rare earths, uranium, base
metals and diamonds.
44 │
Appendices
45│
Zandkopsdrift Relative Rare Earth Distribution
Element
Tonnes
Relative Distribution
Lanthanum 240,833 25.37%
Cerium 418,225 44.06%
Praseodymium 43,870 4.62%
Neodymium 150,723 15.88%
Samarium 21,538 2.27%
Europium 5,597 0.59%
Gadolinium 13,441 1.42%
Terbium 1,570 0.17%
Dysprosium 7,364 0.78%
Holmium 1,230 0.13%
Erbium 3,015 0.32%
Thulium 377 0.04%
Ytterbium 2,090 0.22%
Lutetium 283 0.03%
Yttrium 39,145 4.12%
TTt 949,301 100.00%
46│
47│
Planned Rare Earth Product Specifications and Quantities*
Note:
* Based on recovery in line with in situ distribution and 20,000 tpa production
** Didymium tonnage includes respective percentages of praseodymium and neodymium
*** To be sold together or separated to order
Product Purity Proportion of output Tonnes per annum *
Lanthanum 2N-3N 75% 3812
5N 25% 1271
Cerium
2N 30% 2650
3N 30% 2650
3N5 40% 3533
Praseodymium 3N 50% 455
to Didymium 50% 455
Neodymium 3N 55% 1735
to Didymium 45% 1419
Didymium ** 2N 100% 1874
Samarium 2N-3N 100% 462
Europium 4N 100% 118
Gadolinium 2N-3N 100% 288
Terbium 4N 100% 34
Dysprosium 3N 100% 154
Yttrium 5N 100% 814
Holmium, Erbium, Thulium, Ytterbium & Lutetium *** 100% 150
Potential Western CREO Production (tonnes/annum)
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Notes:
No value attributed to Holmium, Erbium, Thulium, Ytterbium and Lutetium as these elements have small markets, are typically produced to order and do not have regularly published prices.
* Assumes all projects production distribution equals their in-situ distribution except Avalon which has recently announced that 50% of its HREO cannot be extracted using their current process.
Molycorp is currently not separating its HREO, however analysis above assumes it does so.
Data for peers is sourced from various documents. Please refer to safe harbour statement at beginning of this presentation
Rare Element, Quest,Tasman and Matamec do not currently plan to produce separated rare earth oxides
Rare Earth Oxide
Lynas Molycorp Frontier Rare
Element Arafura Avalon Quest Tasman Matamec
Mt Weld Mtn Pass Zandkopsdrift Bear Lodge Nolans Bore Nechalacho Strange
Lake Norra Karr Kipawa
Lanthanum 5,245 6,310 5,083 2,775 3,807 1,896 1,350 668 541
Cerium 10,468 9,320 8,833 4,544 9,747 4,371 3,850 1,503 1,049
Praseodymium 1,130 810 910 520 1,218 544 460 191 131
Neodymium 3,979 2,286 3,154 1,873 4,112 2,125 1,400 755 482
Samarium 543 145 (1) 462 277 457 209 * 200 199 113
Europium 113 26 (1) 118 69 76 25 * 13 25 15
Gadolinium 249 43 (1) 288 139 213 172 * 360 211 115
Terbium 23 3 (1) 34 0 17 23 * 80 42 22
Dysprosium 45 10 (1) 154 35 70 100 * 600 283 144
Other 589 162 (1) 612 341 0 310 * 1,060 652 233
Yttrium 158 29 (1) 814 104 281 433 * 4,250 2,307 913
Total – TREO 22,000 19,000 20,000 10,400 20,000 10,000 13,623 6,637 3,758
Total – HREO 1,177 274 2,020 688 1,115 1,064 6,563 3,520 1,555
Total – CREO 4,318 2,356 4,274 2,081 4,557 2,706 6,343 3,412 1,576
Total – MCREO 4,047 2,300 3,342 1,908 4,199 2,248 2,080 1,080 648
Total – PCREO 294 59 966 173 375 481 4,343 2,374 950