Frontier Rare Earths provides an update on the preliminary feasibility study on its Zandkopsdrift rare earth project

TORONTO, March 25, 2013 /CNW/ - Frontier Rare Earths Limited (TSX: FRO) ("Frontier" or the "Company") is pleased to provide an update on the National Instrument 43-101 compliant ("NI 43-101")  Preliminary Feasibility Study ("PFS") that is being carried out at its Zandkopsdrift rare earth element project in South Africa ("Zandkopsdrift").

Following completion of a Preliminary Economic Assessment ("PEA") on Zandkopsdrift in Q1 2012, Frontier commenced work in Q2 2012 on the wide range of studies necessary to complete the PFS on Zandkopsdrift.  These studies are being carried out principally by the same multidisciplinary team of specialist consultants that was used by Frontier for the PEA.

Good progress has been made on the PFS since the update issued by the Company in November 2012, with most of the studies required for the PFS now complete.  A number of improvements to the flow sheet for the Zandkopsdrift rare earth Processing Plant ("ZPP") have been identified since November 2012.  The flow sheet has been revised accordingly and a confirmatory pilot scale metallurgical test program covering all major process steps was successfully completed in Q1 2013, following which the ZPP flow sheet was 'frozen' for the purpose of the PFS. The most significant remaining work required for the PFS is the finalization of engineering design and capital and operating cost estimates for the ZPP, which is currently under way and is scheduled for completion in July 2013. Accordingly, the results of the PFS are expected to be available and announced in Q3 2013.

With preparation of the PFS now at a very advanced stage, planning has commenced for the Definitive Feasibility Study ("DFS") on Zandkopsdrift, which will start immediately after the PFS and is expected to take 9-12 months to complete. Frontier is fully funded to complete the PFS and DFS on Zandkopsdrift from its existing cash resources. Along with its strategic partner, Korea Resources Corporation, which holds a 10% interest in and a 10% off take of production from Zandkopsdrift, Frontier intends to commence rare earth production in 2016, with a target production capacity of 20,000 tonnes of separated rare earth oxides per annum.  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.

Key highlights of progress on the PFS since November 2012 are set out below:

Metallurgical Test Work
The metallurgical test work for Zandkopsdrift has been carried out at Mintek in South Africa and SGS Minerals Services in Canada.  The rare earths at Zandkopsdrift are contained in monazite (97%), for which a sulphuric acid cracking process has been widely used on a commercial scale for many years, and this process has been used as the basis for the flow sheets for both the PEA and PFS.  In the sulphuric acid process concentrated sulphuric acid is mixed with the feed material and baked in a rotary kiln to crack the rare earth minerals.  The baked material is then water leached and the rare earths are precipitated as a mixed rare earth carbonate suitable for feeding to a rare earth separation plant.

The primary focus of the PFS metallurgical test work campaign has been on optimisation of the flow sheet that was used for the PEA, confirmation at a pilot scale of results from bench scale PEA test work and the evaluation of potential process improvements that could provide advantages in relation to capital expenditure, operating costs, metallurgical recoveries, impurity deportment and other factors.  A number of improvements have been identified by the PFS test work, the most notable of which are:

• An impurity pre-leach circuit prior to the cracking circuit, which provides a significant mass reduction with low rare earths losses, and a consequent reduction in both capital and operating costs of the cracking and other downstream processes.
• Identification of acid contacting equipment capable of preparing a free flowing feed for the rotary kiln, which significantly reduces the costs of materials handling and kiln operation.
• A reduction in kiln residence time for the cracking stage from 4 hours to 2 hours.
• The addition of a high temperature bake stage that results in the recovery of approximately 50% of the sulphuric acid consumed by the acid cracking stage.
• A significant reduction in the impurities reporting to the water leach stage, which reduces the costs of leach solution purification prior to the precipitation of the mixed rare earth carbonate.

A confirmatory pilot scale test program covering all major process steps, including the above improvements, was successfully completed in Q1 2013, following which the ZPP flow sheet was 'frozen' for the PFS.

Zandkopsdrift Processing Plant Engineering Design

The PFS engineering design for the ZPP is being undertaken by DRA Mineral Projects.  The design work commenced in Q1 2013 following the finalisation of the PFS flow sheet and is scheduled to be completed in July 2013.

Zandkopsdrift Mine Design
Frontier's mine design consultants have completed a PFS level open cast mine design targeting the resource identified at Zandkopsdrift to date above the selected cut-off grade of 1.0% total rare earth oxide ("TREO"). The life of mine indicated by the PFS mine design has increased to more than 30 years and has a low average stripping ratio of 1:1 over the life of mine.

The PFS mine design comprises a three stage pit development. The initial high grade start-up pit ("Pit 1") is created during the mining of the high grade >2% TREO material for the first 9 years. This is followed by a push back of Pit 1 during the next 8 years, targeting the material between 1.75% and 2% TREO, to create an intermediate pit ("Pit 2"). A final push-back from Pit 2 will result in the lower grade material between 1% and 1.75% TREO, for the following 17 years, creating the final mine pit.

Zandkopsdrift Environmental Impact Assessment
As previously reported, the Environmental Impact Assessment ("EIA") application for the Zandkopsdrift mine was submitted to the Department of Environment and Nature Conservation in the Northern Cape Province in June 2012 in accordance with the National Environmental Management Act ("NEMA"). Specialist consultants have been appointed to carry out the required environmental studies, which are progressing well. Environmental approvals are not expected to impact on the overall Zandkopsdrift project development schedule.

Zandkopsdrift Mine Access and Road Design

A preliminary design report has been completed for the upgrade of the access roads from the nearby N7 national highway to the Zandkopsdrift mine site.  This report will be issued for design review to the appropriate Provincial Authority later in 2013. The proposed road upgrading will see the surfacing of approximately 13km of provincial roads and 7km of private roads to a standard that will meet the long term transport and infrastructure requirements of the Zandkopsdrift mine.

Sea Water Desalination Plant

A suitable site for a sea water reverse osmosis desalination plant to supply circa 2M m³/year of water to Zandkopsdrift has been identified approximately 35km southwest of Zandkopsdrift. The Company has purchased the property on which this site is located in order to expedite planning and environmental activities. The initial design of the bulk water transfer infrastructure, power supply and access road from Zandkopsdrift to the desalination plant is progressing well. The NEMA EIA application for the desalination plant is at an advanced stage and is expected to be submitted once the initial infrastructure design has been completed during Q2 2013.

Geohydrology

During 2012 a detailed groundwater assessment on properties surrounding Zandkopsdrift identified sufficient groundwater to supply water requirements for the construction stage of the project and to supplement process water requirements during mine operation. An additional water source close to the Zandkopsdrift was identified in late 2012 on which a ground geophysical assessment has been completed. The data generated by this assessment is currently being interpreted by Frontier's geohydrological consultants, following which a decision to proceed with a further groundwater drilling campaign will be made.

Saldanha Bay Separation Plant Engineering Design

The PFS design for the Company's Saldanha Bay Rare Earth Separation Plant ("SSP"), which will produce 20,000 tonnes per annum of separated rare earth oxides at purities of between 99% and 99.999%, has been completed by the Company's engineering consultants, who were also responsible for the design of the SSP for the PEA.

In addition, the Company has recently contracted an experienced REE engineering company to review and propose, where applicable, potential design improvements to the SSP PFS design based on comparable plants in operation elsewhere.  The results of this review are expected to be available after the results of the PFS are announced and the review will not delay the completion of the PFS.  Should any significant potential improvements be identified as a result of this review, an update to the PFS would be prepared accordingly.

Saldanha Bay Separation Plant Environmental Impact Assessment

The NEMA EIA application for the SSP has been submitted by the Company and accepted by the Department of Environmental Affairs and Development Planning in the Western Cape Province and the Company's environmental consultants have commenced with their specialist studies and assessment as necessary.

Saldanha Bay Regional Marine Outfall Project

The Company is in discussions with the relevant local municipalities in the Saldanha Bay area regarding a regional marine outfall project for disposal of treated water and brine generated from the SSP and the proposed chlor-alkali plant. The Company has appointed an international engineering consultancy and separate environmental specialists to assist with the engineering design and NEMA EIA process.

Reagent Supply
Discussions are progressing with an established chemical company in relation to the development and operation of a dedicated chlor-alkali plant to be located on a site secured by Frontier adjacent to the SSP.  The chlor-alkali plant will provide a dedicated, secure supply of hydrochloric acid and sodium hydroxide, which are the principal reagents required for a separation plant, to Frontier's SSP on an 'over-the-fence' basis. The requisite NEMA EIA application for the chlor-alkali plant has been submitted and good progress has been made by specialist environmental consultants with the required studies and assessments.

The Company has also appointed a well-established chemical manufacturer and distributor to advise on procurement, transport, logistics and storage of the other reagents and chemicals that would be required for both the ZPP and SSP, and this work is progressing well.

Geology and resource modelling
As advised in the November 2012 update, all drilling, geological studies and resource modelling work at Zandkopsdrift have been completed and no further work is required in relation thereto for the PFS. A revised resource estimate has been prepared and will be incorporated into the PFS.  It is expected that on completion of the PFS the majority of the Zandkopsdrift mineral resource will be converted into proven and probable mineral reserves.

Mining Right Application
Work on the mining right ("MR") application for Zandkopsdrift has further progressed and is scheduled to be completed and submitted to the South African Department of Mineral Resources (the "DMR") in Q2 2013.  Initiatives relating to the Company's Social and Labor Plan ("SLP") for Zandkopsdrift, which will be submitted with the MR application, have continued and have included more than 200 consultation meetings over the last 18 months with more than more than 1,400 people representing a very broad range of interested and effected parties in the Zandkopsdrift area.  Through this process Frontier has engaged with and established widespread support from local communities, political, business and traditional organisations and leaders.  The Company believes that this consultation will ensure the support from the regional, provincial and national government agencies that are responsible for the assessment of MR applications.  It is expected that approval of the MR application and issuance of the MR will take approximately 12-15 months from submission.

About Frontier Rare Earths Limited (TSX: FRO): 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 64% interest and a 85% economic interest in Zandkopsdrift following the acquisition by its strategic partner Korea Resources Corporation of an initial 10% interest in Zandkopsdrift. 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 C$50 million in cash (excluding amounts owing by Kores in respect of its obligation under the Strategic Agreement to pay 10% of all operating costs and expenses related to Zandkopsdrift from July 2012 onwards) and no debt, and this strong cash position is expected to be sufficient to fully fund the completion of a Preliminary Feasibility Study and a Definitive Feasibility Study on Zandkopsdrift and work on the Company's other proposed exploration and development programs.

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 law.

SOURCE Frontier Rare Earths Ltd.