Frontier to team up with Koreans in South Africa

Frontier Rare Earths (FRO-T) saw its share price jump after announcing an agreement with a Korean firm that will speed-up the development of its Zandkopsdrift rare earth project in South Africa.

The agreement was made with Korea Resources Corporation (KORES) a government-owned mining company and will let KORES acquire up to a 20% interest in the project and a 10% equity position in Frontier along with the right to buy up to 40% of the project’s rare earth production.

A binding strategic partnership agreement is expected to be signed in the fourth quarter of this year.

In Toronto on July 13 the news sent Frontier shares up 11% or 21¢ to $2.20 on 198,000 shares traded.

Frontier says the deal paves the way for the company to enter into the big leagues of rare earth production.

“Working together with KORES, we are confident that Frontier will achieve its objective of becoming one of the first new large scale rare earth producers outside China,” Frontiers’ president and chief executive James Kenny said in a statement.

The move is just the latest in a series for KORES with western firms, as it seeks to secure stable supplies of natural resources.

Discussions between the two firms began last year and KORES president and chief executive, Shin-Jong Kim, called Zandkopsdrift a strategic priority project for both his the company and Korea.

“The development of Zandkopsdrift will be a critical element of KORES’ efforts to secure a long term, stable source of rare earth supply,” Kim said in a statement.

The agreement also calls for KORES to provide financial, technical and operational assistance.

A preliminary economic assessment on Zandkopsdrift is currently underway and should be finished in the fourth quarter, Frontier says.

The completion of a definitive feasibility study, which is scheduled for the fourth quarter of next year, would give KORES the right to acquire another 10% of the project.

Frontier holds a 95% interest in the project which is located in the Northern Cape Province of South Africa and is one of the largest undeveloped rare earth deposits in the world.

The project currently hosts an indicated resource of 22.9 million tonnes grading of 2.32% TREO for 532,000 tonnes of TREO and an inferred resource of 20.8 million tonnes grading 1.99% TREO for 415,000 tonnes.

That resource comes out of two zones, the A and the B zones, with the B-zone hosting an exceptionally high average grade of 2.5% TREO.

The zone is one of the highest grade advanced rare earth deposits outside of China, after only Molycorp’s (MCP-N) Mountain Pass project and Lynas’ (LYC-A) Mount Weld projects.

Frontier currently has $48 million in the kitty, which it says, will finance it through the Preliminary Economic Assessment and pre-feasibility studies.