Korea Resources Corporation to contribute to Zandkopsdrift operating budget from 3 July 2012
Closing scheduled for 30 September 2012
TORONTO, July 11, 2012 /CNW/ - Frontier Rare Earths Limited (TSX: FRO)
("Frontier") is pleased to announce an update on the status of its
strategic partnership agreement with Korea Resources Corporation ("Kores"), the Korean Government-owned mining and natural resource
On 5 December, 2011 Frontier announced that it had entered into a
definitive agreement with Kores to form a strategic partnership to
accelerate the development of Frontier's Zandkopsdrift rare earth
element project ("Zandkopsdrift") in South Africa (the "Agreement").
Under the terms of the Agreement, Kores will acquire an initial 10%
interest in Zandkopsdrift and off-take rights for 10% of the rare earth
production from Zandkopsdrift. The Agreement also provides that Kores
may acquire a further 10% interest in Zandkopsdrift and/or up to a 10%
share ownership of Frontier following completion of a Definitive
Feasibility Study on Zandkopsdrift, which together, if acquired, would
give Kores off-take rights for an additional 21% of rare earth
production. (Full details of the Agreement are set out in the Press
Release issued on 5 December, 2011. See Frontier news releases)
Under the terms of the Agreement, Frontier was obliged as a condition
precedent of the Agreement to file on SEDAR (www.sedar.com by 30 March, 2012 the results of a positive Preliminary Economic Assessment on Zandkopsdrift prepared in accordance with National Instrument 43-101(the "PEA").
Frontier satisfied this condition and the results of the PEA indicated
that the proposed development of Zandkopsdrift is both technically
feasible and economically robust with a low risk profile. Frontier has
now also complied with its obligations in respect of all other
conditions precedent of the Agreement and notification by Frontier of
its compliance has been formally acknowledged by Kores. Kores has also
confirmed to Frontier that:
The purchase price for the initial 10% interest in Zandkopsdrift to be
acquired by Kores is C$23.78M and will payable to Frontier in cash by
30 September, 2012
As from 3 July, 2012, Kores will be responsible for its share of all
operating costs and expenses related to the Zandkopsdrift project pro rata to its initial 10% interest in Zandkopsdrift.
Korean Consortium Update
Under the terms of the Agreement Kores has the right to form a
consortium of Korean companies (the "Korean Consortium") to jointly
participate with it and Frontier in the development of Zandkopsdrift.
Kores has advised Frontier that it has been engaged in detailed
discussions with several leading Korean corporate groups and it has
been agreed that Kores will have until 30 September, 2012 to finalise
arrangements with the Korean Consortium. Kores has confirmed to
Frontier that in the event that Kores does not form the Korean
Consortium for any reason within the prescribed period, Kores shall
remain liable under the Agreement as principal.
James Kenny, President and CEO of Frontier Rare Earths commented: "Frontier is the only junior company in the rare earths sector to have
signed a definitive agreement with a significant strategic partner such
as Kores, which we believe is a reflection of the potential of
Zandkopsdrift. We have worked closely with our partners in Kores since the signing of
our strategic partnership agreement in December 2011 and are very
pleased to have in Kores a partner with a leading international
reputation and significant technological and financial capabilities.
The matters confirmed today provide an indication of the positive and
collaborative working relationship already established between our
companies and we look forward to Kores' continued involvement with
Frontier and participation in the development of Zandkopsdrift."
About Frontier Rare Earths Limited (TSX: FRO) (TSX: FRO.WT): Frontier Rare Earths Limited (www.frontierrareearths.com) is a mineral exploration and development company principally focused
on the development of rare earths projects in Africa. Frontier's
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, highest grade undeveloped rare earth deposits worldwide.
Frontier has a direct 74% interest and a 95% economic interest in
Zandkopsdrift prior to the acquisition by KORES of an initial 10%
interest. In March 2012 Frontier filed a Preliminary Economic
Assessment ("PEA") on the Zandkopsdrift project prepared in accordance
with National Instrument 43-101. The results of the PEA indicate that
the proposed development of the Zandkopsdrift Project is both
technically feasible and economically robust with a low risk profile.
In conjunction with the PEA a mineral resource estimate for
Zandkopsdrift confirmed 42.5m tonnes at an average grade of 2.23%
containing approximately 940,000 tonnes total rare earth oxides
(applying a 1% cut-off) and with 78% of the mineral resource in the
indicated category. Mineral resources that are not mineral reserves do
not have demonstrated economic viability. Fiona Harper, Pr.Sci.Nat, was
the independent qualified person from Venmyn Rand (Pty) Ltd responsible
for the PEA.
Frontier is listed on the main board of the Toronto Stock Exchange and
currently has 89,562,781 shares outstanding. Frontier is well funded,
with approximately $33m cash and no debt, and this strong working
capital position is expected to be sufficient to finance the proposed
work programme of the Company and the completion of a Preliminary
Feasibility Study (scheduled for Q4 2012) and a Definitive Feasibility
Study for Zandkopsdrift (scheduled for Q3 2013). Frontier plans to
commence production of separated rare earths from Zandkopsdrift in 2015
at a rate of 20,000 tonnes per annum.
About Kores (www.KORES.or.kr): Korea Resources Corporation ("Kores") is wholly-owned by the Korean
government and has a stated objective of becoming a global top 20
mining company by 2020 principally through international investments
and joint ventures. Kores is charged with a policy mandate to further
Korea's access to strategically important mineral resources. Kores
exclusively carries out the Korean government's mineral resources
policy objectives by engaging directly or indirectly through joint
ventures or in the form of investments, in overseas exploration,
development and production of strategically important mineral
resources, and managing Korea's stockpile of rare mineral resources.
Kores works closely with all major Korean industry groups and plays an
active role in assembling consortia of Korean companies to selectively
participate with Kores in commercial ventures. The Korean government
has designated rare earths as a strategic raw material for Korea's
future economic growth and has undertaken considerable work to identify
the most prospective sources of future rare earth supply worldwide.
Forward Looking Statements - Certain information set forth in this news release 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 the Company, including, but not limited to, the impact of
general economic conditions, industry conditions, commodity prices,
availability of financing for the Company and the Company'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 variations of ore
grade or recovery rates; the Company development, if any, and possible
expectations regarding competition from other producers globally,
possible customer and supplier relationships, anticipated trends and
challenges in the Company 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 preparation 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 news
release 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
SOURCE Frontier Rare Earths Ltd.
For further information:
visit www.frontierrareearths.com, e-mail the Company at IR@frontierrareearths.com or contact +352 208 80249. For further information on Kores visit www.KORES.or.kr .