Zandkopsdrift The World s Next Major Rare Earth Producer

Transcription

1 DRAFT Zandkopsdrift The World s Next Major Rare Earth Producer June 2015 Frontier Rare Earths Limited TSX:FRO US:FREFF

2 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 forwardlooking 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 PFS (as defined below).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 H 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 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 ( and REE distributions from Technology Metals Research ( unless otherwise specified. Technical Information Details with respect to the scientific and technical information contained in this presentation as it relates to Frontier can be found in the report entitled National Instrument Independent Technical Report on the Results of a Preliminary Feasibility Study on the Zandkopsdrift Rare Earth Element and Manganese By-product Project in the Northern Cape Province of South Africa for Frontier Rare Earths Limited (the PFS ) and is available on SEDAR under the Company's profile and on Frontier s website. This report has an effective date of June 2, 2015 and was prepared by Venmyn Deloitte (Pty) under the supervision of the following persons: F. Harper B Sc (Hons), Pr Sci Nat., MGSSA (Qualified Person) and G Njowa B Sc (Hons), Pr Sci Nat., MGSSA B Sc Hons (Min Eng) Grad CIS, M Sc MRM (Min Eng), Pr Eng, M.Sc MRM (Min Eng), (Qualified Valuator. Dr Stuart Smith, Frontier's VP Exploration is a "Qualified Person, as defined by NI , and has reviewed and approved the scientific and technical information in this presentation. 2

3 TOPICS Rare Earths Overview and Supply Outlook Frontier Rare Earths The Zandkopsdrift Rare Earths Deposit Prefeasibility Study Overview Prefeasibility Study Conclusions and Highlights Western RE Competitor Benchmarking Kores Joint Venture Graphite Frontier Market Profile and Corporate Summary Appendices 3

4 RARE EARTHS - OVERVIEW 16 Rare earth elements (REEs), 15 within the chemical group called Lanthanides Two distinct categories based on atomic weight: Light Rare Earths (LREEs) Heavy Rare Earths (HREEs) Distribution of elements vary from deposit to deposit Distribution of elements vary from deposit. Most have no substitutes and are indispensable in many applications China currently accounts for circa 90% of production of rare earth minerals, although it has only about 30% of the deposits of rare earths in the Earth's crust Periodic Table of the Elements Rare Earths underpin the green tech economy: Hybrid motors and Battery Technology Consumer Electronics Transportation Aerospace and Defense Energy Efficiency Wind and Solar Power 4

5 RARE EARTHS USAGE BY APPLICATION Rare earth consumption divided into traditional and new material applications Traditional metallurgy, machinery, petroleum, chemicals, glass, ceramics, agriculture, light industry and textiles New material - permanent magnet materials, luminescent materials, polishing materials and hydrogen storage materials. Usage in new material applications has driven the growth in consumption of rare earths Petroleum / Chemical Industry Metallurgy 4.8% Machinery 7.2% Other New Materials 3.7% Hydrogen Storage Materials 4.1% Polishing Materials4.5% Luminescent Materials 6.3% Glass / Ceramics 4.7% Agriculture / Light Industry / Textile, 3.5% Magnetic Materials, 61.3% Demand for rare earths from new material applications in 2015 is estimated to account for ~80% of the total demand, of which magnetic materials will comprise the largest component, estimated over 61% 5

6 RARE EARTH KEY APPLICATIONS Magnetics Phosphors Metal Alloys Catalysts Nd Tb, Dy Pr Nd, Eu, Tb, Y Er, Gd Ce, Pr Nd, Eu, Tb, Y Er, Gd Ce, Pr Nd La, Ce, Pr Computer Hard Drives Disk Drive Motors Anti-Lock Brakes Automotive Parts Frictionless Bearings Display phosphors CRT, LPD, LCD Fluorescent Lighting Medical Imaging Lasers Fibre Optics NimH Batteries Fuel Cells Steel Super Alloys Aluminium / Magnesium Petroleum Refining Catalytic Converter Fuel Additives Chemical Processing Air Pollution Controls Magnetic Refrigeration Microwave Power Tubes Power Generation Microphones & Speakers Communication Systems Ceramics Glass & Polishings Defence MRI Nd, Y, Eu Gd, Lu, Dy La, Ce, Pr Nd, Gd, Er, Ho La, Ce, Pr Nd, Eu, Tb, Dy, Y Lu, Sm Pr, La CREOs HREOs LREOs Capacitors Sensors Colorants Scintillators Refractories Polishing Compounds Pigments & Coatings UV Resistant Glass Photo-Optical Glass X-Ray Imaging Satellite Communications Guidance Systems Aircraft Structures Fly-by-Wire Smart Missiles 6

7 UNDERSTANDING THE CRITICAL RARE EARTH OXIDES The rare earths for which there is likely to be the greatest demand growth and potential shortage, and which are of the greatest importance for a technologically advanced, clean energy economy, are the so called Critical Rare Earth Oxides ( CREOs ) - Neodymium, Europium, Terbium, Dysprosium and Yttrium The importance of rare earths, and CREOs in particular, has been highlighted by both the US Government and the European Commission and security of supply of these scarce commodities is now a strategic imperative for many countries and corporations Demand for CREOs is forecast to double over next 7 years and supply shortages are therefore very likely This growing demand and rising political tensions in many areas of the world are forcing Governments to take decisive action to ensure security of critical raw material supplies over the long term. Source: US Department of Energy, Critical Materials Strategy Report (2011) 7

8 HREO LREO UNDERSTANDING THE CRITICAL RARE EARTH OXIDES The CREOs typically have much higher prices than the other REOs Rare Earth Oxide REO price * ($/kg) Lanthanum $4 Cerium $3 Praseodymium $91 Neodymium $58 Samarium $5 Europium $373 Gadolinium $47 Terbium $763 Dysprosium $363 Holmium n/a Erbium n/a Thulium n/a Ytterbium n/a Lutetium n/a Yttrium $11 * Metal-Pages 1 May

9 ANOTHER RARE EARTH SUPPLY CRISIS IS COMING Rare earth demand will continue to grow Magnet based applications forecast to grow at highest rate (c. 10%+ per annum), which implies a doubling in demand for magnet REOs over the next 7 years China domestic production may be insufficient to satisfy domestic demand by 2020 unless there is a major increase in production Molycorp (US) and Lynas (Australia) may not survive in their current form. Molycorp is expected to declare bankruptcy in Q with debt of more than $1.6bn Forecast Rare Earth Supply and Demand to 2020 tpa Widening rare earth supply gap to be met by new non- Chinese supply? Source: Adamas Inteligence and China flat at 2014 production level China Production Quotas Global Demand 9

10 FRONTIER RARE EARTHS - OVERVIEW Frontier is listed on the Toronto Stock Exchange. Headquartered in Luxembourg Experienced Board, management and technical teams Frontier s main asset is the Zandkopsdrift Rare Earth project in South Africa Very high quality deposit in terms of size, rare earth grade, distribution and value Through Zandkopsdrift,Frontier is positioned to be potentially one of the lowest cost and highest margin producers of high purity separated rare earth oxides outside of China Pre-feasibility Study (June 2015) confirmed Zandkopsdrift s significant economic potential 800,000 tonnes of Rare Earth Reserves in place sufficient for 45+ year mine life 10

11 THE ZANDKOPSDRIFT RARE EARTHS DEPOSIT 11

12 ZANDKOPSDRIFT RARE EARTH DEPOSIT - BACKGROUND 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 the mine development in local communities All land required for the mine development already acquired by Frontier 12

13 CAPE TOWN A FIRST WORLD DESTINATION 13

14 THE ZANDKOPSDRIFT DEPOSIT Potential for rapid development and production start-up Good regional infrastructure available - road, rail, power and water Well located on surface in South Africa s oldest mining province Gravel road to N7 Zandkopsdrift carbonatite complex N7 tarred road to Cape Town Exxaro Resources Namakwa Sands Mine (c.45 km) Bitterfontein rail head (c.35 km) 14

15 THE ZANDKOPSDRIFT DEPOSIT The Zandkopsdrift deposit is a REE-enriched carbonatitic breccia pipe Occurs as a 1 km diameter circular intrusive rising 40 meters above the surrounding plain Rare earths (97%) contained in monazite, for which proven commercial extraction processes exist Attractive distribution of CREOs and very low levels of radioactivity present 15

16 CHINESE INDUSTRY DELEGATION VISIT TO ZANDKOPSDRIFT (2014) 16

17 GEOLOGICAL MODEL OF THE ZANDKOPSDRIFT DEPOSIT Very good understanding of geology and controls on rare earth mineralisation RE-enriched dykes ( REDs ) intruded into a RE bearing carbonatitic phlogopite breccia phase ( CPB ) Enriched high grade REE-bearing horizons from surface to m depth 17

18 RESOURCE DELINEATION DRILLING Extensive drilling completed at Zandkopsdrift 313 holes drilled for a total of 21,037 meters, with hole spacing from 20-40m 19,166 meters assayed at 1 meter intervals for resource estimation purposes 18

19 WEATHERED CPB INTRUDED BY HIGHLY RE ENRICHED DYKES Weathered CPB 1-3% TREO Weathered REDs 6-8% TREO CPB-carbonatitic phlogopite breccia REDs-rare earth enriched dykes 19

20 ZANDKOPSDRIFT RESOURCE MODELLING 20

21 ZANDKOPSDRIFT SAMPLE GEOLOGICAL SECTION 21

22 BULK SAMPLE TRENCH FOR METALLURGICAL TESTWORK Average grade of 2.64% TREO over 174 metre trench 22

23 RARE EARTH INDUSTRY DELEGATION VISIT TO ZANDKOPSDRIFT 23

24 CONTACT BETWEEN REDS AND CPB IN BULK SAMPLE TRENCH Weathered REDs 4-5% TREO Weathered CPB 1-3% TREO 24

25 RARE EARTH RESERVE BLOCK MODEL 25

26 ZANDKOPSDRIFT RARE EARTH RESERVE ESTIMATE Proven and Probable Rare Earth Reserves of approximately 800k tonnes TREO, sufficient to support a 45+ year mine life 2015 TREO Reserve Estimate Cut-off Grade (TREO) Tonnes (Millions) Average Grade (TREO)* Contained TREO (Tonnes) Proven TREO Reserves 1% % 331k Probable TREO Reserves 1% % 458k Total TREO Reserves 1% % 789k *For breakdown of TREO Grade relative distribution by element see page 27 26

27 Zandkopsdrift Relative RE Distribution and Tonnage Element Tonnes Frontier Relative Distribution Baotou Standard Distribution Lanthanum 200, % 25.00% Cerium 347, % 50.00% Praseodymium 36, % 5.00% Neodymium 125, % 15.00% Samarium 17, % 1.50% Europium 4, % 0.175% Gadolinium 11, % 0.70% Terbium 1, % <0.1% Dysprosium 6, % <0.1% Holmium 1, % <0.1% Erbium 2, % <0.1% Thulium % <0.1% Ytterbium 1, % <0.1% Lutetium % <0.1% Yttrium 32, % <0.1% T 789,

28 PRE-FEASIBILITY STUDY OVERVIEW 28

29 LOCATION OF ZANDKOPSDRIFT PROJECT COMPONENTS Mixed rare earth hydroxide produced at Zandkopsdrift Mixed rare earth hydroxide transported 300kms by road to Saldanha Bay Rare Earth Separation Plant Phase 1: 8,000 tonnes TREO Phase 2: 16,000 tonnes TREO The Saldanha Bay Industrial Development Zone, where Frontier proposes to construct a rare earth separation facility, was established by South African Government in October

30 PRINCIPALKEY PFS CONSULTANTS Consultant Scope of Work Project Status SGS Lakefield / Mintek / ANSTO / Outotec Metallurgical Testwork Zandkopsdrift Complete MSA Geological and Resource Report Complete Sound Mining Solution Mine Design Complete Outotec Acid Contacting, Fluidised Bed and Acid Plant Design Complete WorleyParsons Hydrometallurgical Plant Design Complete Veolia Manganese Recovery Plant Design Complete Epoch Resources Tailing Disposal Facility Design Complete AGES / SRK / CSIR Appointed Environmental Consultants Complete Venmyn Deloitte Overall Qualified Person for NI Report Complete Royal HaskoningDHV Roads Upgrade Project and Volwaterbaai Desalination Plant Complete Benchmark RA Risk Assessment Facilitator Complete SNC-Lavalin Engineering & Design of the REE Separation Plant Complete WorleyParsons / RHDHV Design of Treated Effluent Marine Disposal Pipe Infrastructure Complete ESKOM Bulk Power Supply to Zandkopsdrift Mine and Separation Plant Complete 30

31 PFS FLOWSHEET Significant improvements made by Frontier to the proven monazite sulphuric acid cracking process principally through Outotec (Frankfurt) - fluidized bed roasters to replace kilns Eirich high shear mixers for acid contacting Process improvements eliminate major operational problems of the conventional acid cracking process Produces dry, free flowing feed instead of wet paste Eliminates acid condensation, which prevents corrosion Allows 80% recovery of sulphur (typically zero recovery e.g. Lynas, Molycorp) Allows approx. 99% stabilisation of impurities, resulting in lower impurity removal costs Reduces residence time from circa.1 hour to circa.10 minutes Operational stability and significantly improved process control Lower operating cost Process improvements substantially eliminate the need for beneficiation before cracking in addition to benefits achieved by the manganese pre-leach 31

32 PROPOSED METALLURGICAL FLOWSHEET 32

33 CONVENTIONAL ACID CRACKING PROCESS Uses rotary kilns, which results in: Poor temperature and residence time control, resulting in inefficient cracking Corrosion in areas where temperature is below acid dew point Material build up and blockage Inefficient heat transfer Limited/no heat recovery No sulphur recovery 33

34 FRONTIER S PLANNED ACID CRACKING PROCESS Does not use kilns but uses fluidised bed reactors, which results in More precise temperature and residence time control for effective cracking No corrosion, as temperature maintained above acid dew point No material build up or blockage Very efficient heat transfer Approx. 80% lower residence time Approx. 50% heat recovery Approx. 80% sulphur recovery 34

35 OUTOTEC ROASTING TECHNOLOGY-THE MARKET LEADER 35

36 FRONTIER S PROPOSED CALCINING PROCESS Calcining in a rotary kiln has never been possible due to technical limitations Calcining in a fluidised bed reactor allows precise control of both temperature and residence time providing: Stabilisation of 99% of impurities Recovery of 80% of sulphur Waste heat provides all of the energy input required for the cracking stage 36

37 PFS FLOWSHEET Outotec to provide a fully integrated process package Acid mixing, low temperature cracking, high temperature calcining, off-gas treatment, sulphur recovery and sulphuric acid plant Design and build on Lump Sum Turn Key (fixed price) contract Commission and operate for first 2-3 years before client handover Process guarantee unique among Western RE projects Outotec are world leaders in the key technologies being applied fluidized bed roasters Off-gas treatment sulphuric acid plants Potentially allows access to German finance and export credit guarantees Patent application process under way by Frontier 37

38 ZANDKOPSDRIFT MINE LAYOUT 38

39 ZANDKOPSDRIFT MINE PIT DESIGN PUSHBACKS

40 ZANDKOPSDRIFT OPTIMISED MINE PIT SHELL 40

41 K t ZANDKOPSDRIFT MINING SCHEDULE 1,100 1, Pushbacks Feed Years Pushback 1 Pushback 2 Pushback 3 Pushback 4 41

42 ZANDKOPSDRIFT PROCESSING PLANT LAYOUT 42

43 PLANT COMPONENTS 43

44 INFRASTRUCTURE - ACCESS ROADS & DESALINATION PLANT 44

45 INFRASTRUCTURE - GRID ELECTRICITY SUPPLY 45

46 SALDANHA BAY - OVERVIEW Sichen to Saldanha iron ore export rail line Saldanha Port Arcelor Mittal Saldanha Steel Works Exxaro ilmenite smelter-saldanha Bay 46

47 SALDANHA BAY PROPOSED SEPARATION PLANT LOCATION 47

48 PROJECT ENVIRONMENTAL PERMITTING PROCESS IS WELL ADVANCED Stages Completed 48

49 PREFEASIBILITY STUDY CONCLUSIONS AND HIGHLIGHTS 49

50 PFS CONCLUSIONS All of the specialist PFS studies were reviewed by Venmyn Deloitte, a wholly owned subsidiary of Deloitte ( specialising in the technical and economic evaluation of mineral projects. It is concluded that: the studies undertaken comprehensively examined at a PFS level of accuracy all the necessary significant components of the Zandkopsdrift Project the capital and operating cost and price estimates are conservative the overall PFS can be considered to be an advanced study of sufficient accuracy and confidence level that potential investors can make reasonable decisions based on the outcomes of the study A technically feasible and economically robust open pit mining and beneficiation operation can be undertaken at Zandkopsdrift at production capacity of 8,000tpa TREO for four years and thereafter, up to 16,000tpa TREO for a total life of mine of 45.5 years, together with the production and sale of a feed grade manganese sulphate by-product. Environmental authorisation and mine permitting are well advanced and no significant environmental or legal permitting issues or risks were identified that cannot be managed or mitigated. The required infrastructure in terms of power and water both to the Zandkopsdrift Mine and the Saldanha Separation Plant can be adequately provided With net opex projected at $11.9/kg separated TREO ( excl. contingency) Frontier wiould be amongst the lowest cost, highest margin producers of high purity, separated rare earth oxides outside China Frontier also likely to be amongst the lowest cost producers of manganese sulphate globally as feedstock is,in effect, free 50

51 PFS FINANCIAL HIGHLIGHTS* Post-Tax NPV & IRR Post-Tax Net Present 10% discount rate $2.1bn Post -Tax Internal Rate of Return 30.0% Revenue and Cashflow Average annual revenue phase 1 (8kt) $440m Average annual revenue phase 2 (16kt) $880m Average operating margin years 1 to 20 70%+ Phase 1 Zandkopsdrift Mine ex contingencies $523m Capital Expenditure* Phase 1 Manganese Sulphate Plant ex contingencies $38m Phase 1 Separation Plant ex contingencies $248m Total Phase 1 construction Capex ex contingencies $809m Total Phase 2 construction Capex ex contingencies** $645m Operating (cost/kg) Separated REO* Total cash net operating cost/kg separated REO ex contingency (years 1-20) $11.9 *A contingency of 12% of capex and 7% of opex has been added to these estimates in the PFS financial model ** Phase 2 capex to be funded out of operating cash flow 51

52 CAPITAL EXPENDITURE (PFS) $900m $800m $700m $600m $500m $400m Zandkopsdrift Capex Saldanha Separation Plant Manganese Sulphate Plant $248m Zandkopsdrift Mine Site (ex MnS) $177m $38m $38m Zandkopsdrift to be developed in 2 phases of 8,000 tpa capacity each Capex for Phase 1 is estimated to be c.$790m. Capex for Phase 2, which is expected to be funded from phase 1 cash flow, is estimated to be lower, at c.$630m, due to the bulk of infrastructure related spending being incurred in Phase 1 $300m $200m $502m $413m Approximately 65% of the capex relates to the mine site, with an additional 5% related to the manganese sulphate by product $100m $0m Phase 1 Phase2 The remaining 30% relates to the Saldanha Bay separation plant and associated infrastructure 52

53 OPERATIONAL EXPENDITURE (PFS) Opex US$/ kg of Separated REO (yrs 1-20)* 11.9 (3.7) Zandkopsdrift Mine Site (ex MnS) * Excluding contingency Manganese Sulphate byproduct credit 8.2 Opex per kg of Mixed REO Separation Plant Opex Opex per kg of Separated REO Overall opex projected to be $11.9/kg of separated TREO ( excl. contingency). Mine site opex to produce mixed REO is estimated to be $8.20/kg (net of a manganese sulphate by-product credit of $3.70/kg) Separation plant opex is estimated to be $3.70/kg At PFS opex project can make >50% margin at May 2015 China FOB prices, and >30% margin at May 2015 China domestic prices This financial profile makes Zandkopsdrift very competitive compared with any integrated producing or prospective western rare earth producer outside of China 53

54 US$m at Spot Prices Tonnes PA PROJECTED ANNUAL TREO OUTPUT Production tonnes per annum La Ce Pr Nd Sm Eu Gd Tb Dy Other Y Contribution to revenue La Ce Pr Nd Sm Eu Gd Tb Dy Other Y * Revenue contributions are calculated using FOB China prices from Metal Pages as at 1 May Based on 16ktpa TREO target output at full production - No value is attributed to the five heavy rare earths from Holmium to Lutetium CREOs (highlighted in red) comprise 23% of projected output by volume, but ~69% by revenue Magnet REEs (Pr, Nd, Tb and Dy) would represent ~23% of the output by volume but ~76% by revenue The percentages are predicted to increase as the relative value of the CREO materials and magnet materials is expected to increase Ce and La contribute only ~9% of project revenue at current FOB China prices 54

55 ZANDKOPSDRIFT PFS KEY OPERATIONAL METRICS Zandkopsdrift Project Summary: Key PFS Operational Metrics Life of Mine 45.5 years Waste mined 24.3Mt Ore mined 43.5Mt Stripping ratio 0.56 TREO feed grade(average LoM) 1.9% Manganese feed grade (as MnO) 4.7% Zandkopsdrift plant recovery - TREO 71% Zandkopsdrift plant recovery - manganese 68% Saldanha separation plant recovery TREO 94% Total saleable separated TREO 558Kt Total saleable manganese sulphate 3.3Mt 55

56 ZANDKOPSDRIFT ESTIMATED PROJECT TIMELINE PEA PFS/DFS Resource Pre Feasibility Study Definitive Feasibility Study Financing Construction Est. Production Start-up 56

57 WESTERN RARE EARTH COMPETITOR BENCHMARKING 57

58 FRONTIER PEER COMPARISON - OVERVIEW Company Lynas Molycorp Frontier Avalon Arafura Rare Element Quest Tasman Peak Namibia Northern Deposit Mt Weld Mtn Pass Zandkopsdrift Nechalacho Nolan's Bore Bear Lodge Strange Lake Norra Karr Ngulla Lofdal Browns Range Location Australia California South Africa NW Territories Australia Wyoming Quebec Sweden Tanzania Namibia Australia Tonnes per annum 22kt 19kt 16kt 10kt 20kt 7.5kt 10kt 5kt 10kt 1.5kt 3kt Separated REOs Yes Yes Yes Yes Yes No No No No No No Stage in process Production ramp up Production ramp up PFS DFS DFS PFS PEA PFS PFS PEA DFS Primary RE Mineral Monazite Bastnaesite Monazite Fergusonite Fluorapatite & Cheralite Ancylite & Bastnaesite Kainosite Eudialyte Bastnaesite Xenotime Xenotime Commercial Process Yes Yes Yes No No? No No Yes Yes Yes Industry Partner Yes No Yes No No No No No Yes No Yes Start-up year (est.) 2012/ / /9 Unknown Unknown Unknown Unknown Unknown Unknown Unknown Unknown Data sources for peers include the documents listed in the safe harbour statement, financial statements, publicly available market data and Frontier s analysis. 58

59 POTENTIAL CREO REVENUE AT FULL PRODUCTION CREO US$m Frontier would be the third largest producer of CREOs by value of any of the current or prospective RE producers outside China, including Lynas and Molycorp Notes: 1. Bars in solid colours represent projects for which there is a commercially proven metallurgical process for extracting the rare earth minerals in the deposit. 2. Bars with cross hatched colours represent projects for which no commercially proven metallurgical process exists for extracting the rare earth minerals in the deposit. 3. Based on FOB China REO prices from Metal Pages 1 May

60 POTENTIAL MAGNET CREO AND PHOSPHOR CREO REVENUE CREO(magnet) US$m Frontier would be the third largest producer of CREO(m) and second largest producer of CREO(p) by value of any of the current or prospective RE producers outside China, including Lynas and Molycorp CREO(phosphor) US$m Notes: 1. Bars in solid colours represent projects for which there is a commercially proven metallurgical process for extracting the rare earth minerals in the deposit. 2. Bars with cross hatched colours represent projects for which no commercially proven metallurgical process exists for extracting the rare earth minerals in the deposit. 3. Based on FOB REO prices from Metal Pages on 1 May

61 KOREA RESOURCES CORPORATION JOINT VENTURE Korea Resources Corporation ( KORES ) is owned by the Korean government 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 as a key source of their future rare earth supply KORES acquired a 10% interest in Zandkopsdrift for $23.8m in Dec Kores has no shareholding in Frontier. KORES pays 10% of capital and operating costs and will purchase 10% of rare earth production at open market prices 61

62 GRAPHITE Frontier has an interest in two graphite deposits in Mozambique the most advance is the Lurio Project which is located near Pemba Geological mapping, ground geophysical surveys, sampling, trenching, metallurgical test work and conceptual engineering studies were undertaken in 2014 The results of the 2014 program confirmed the presence of high grade, large flake graphite mineralisation, identified the potential for the production of a high purity large flake graphite concentrate and indicated that the project had sufficient economic potential for further work to be undertaken The grade of samples taken in the Lurio project area ranges from 5% to 15% total graphitic carbon although the representivity of the material analysed has yet to be verified. Initial bench scale metallurgical test results indicate that the graphite can be easily liberated, with approximately 60% of the flake being classified as +80 Mesh Frontier is commencing resource drilling on the property with the intention of doing sufficient drilling in 2015 to allow for the definition of a maiden graphite resource 62

63 FRONTIER MARKET PROFILE TSX: FRO / US: FREFF Shares Outstanding: 89.6m Market Cap c.$22m Recent Share Price $0.24 (52 week hi/low $ $0.15) Working Capital c.$20m (no debt) Frontier vs. Peers LTM Frontier Share Price Peer Average (RER, Tasman, Quest, Arafura, Avalon) Industry Leader Average (Molycorp + Lynas) 63

64 SUMMARY Zandkopsdrift is a high quality rare earth deposit with a valuable manganese by-product potential High grade monazite deposit, attractive CREO distribution, large tonnage, on surface, low radioactivity and near infrastructure One of the largest potential producers of CREOs and Magnet REEs outside of China Completed PFS independently confirming the economic potential of the project and the robustness of the metallurgical process Sufficient Proven and Probable TREO reserves for a 45 year+ mine life PFS financial model indicates a 30% IRR (post-tax) and an NPV10% of $2.2bn Well positioned to become the next major western producer of separated rare earth oxides with plan to produce 14 separated rare earth oxides in purities up to % Only RE junior with strategic industry partner and off-take agreement Experienced management and technical teams Strong financial position with $20m in cash and no debt For further information visit 64

65 APPENDICES 65

66 INTRODUCTION TO FRONTIER S 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 James Kenny B Comm, MBS Co-founder and 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. Philip Kenny B Eng, MBA Co-founder and 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, prefeasibility 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. 66

67 Zandkopsdrift production profile Zandkopsdrift Production Profile Rare Earth Oxide Product purity Proportion of element output Lanthanum 2N-3N 75% 5N 25% 2N 30% Cerium 3N 30% 3N5 40% Praseodymium 3N 50% to Didymium 50% Neodymium 3N 55% to Didymium 45% Samarium 2N-3N 100% Europium 4N 100% Gadolinium 2N-3N 100% Terbium 4N 100% Dysprosium 3N 100% Yttrium 5N 100% Holmium to Lutetium Mixed 100% 67

68 HREO LREO ZANDKOPSDRIFT PEER COMPARISON - GRADE REO price Lynas Molycorp Frontier** Rare Element Arafura Avalon Quest Tasman Peak Namibia Northern Mt Weld Mtn Pass Zandkopsd Bear Nolans Nechalach Strange Norra Browns Ngulla Lofdal rift Lodge Bore o Lake Karr Range Rare Earth Oxide ($/kg)2 Lanthanum $5 1.88% 2.18% 0.487% 0.78% 0.50% 0.24% 0.11% 0.06% 1.35% 0.00% 0.01% Cerium $5 3.76% 3.22% 0.845% 1.14% 1.28% 0.51% 0.26% 0.13% 2.02% 0.00% 0.02% Praseodymium $ % 0.28% 0.089% 0.14% 0.16% 0.06% 0.03% 0.02% 0.22% 0.00% 0.00% Neodymium $ % 0.79% 0.305% 0.50% 0.54% 0.24% 0.10% 0.07% 0.78% 0.00% 0.01% Samarium $5 0.19% 0.05% 0.044% 0.08% 0.05% 0.04% 0.02% 0.02% 0.06% 0.00% 0.01% Europium $ % 0.01% 0.011% 0.02% 0.01% 0.01% 0.00% 0.00% 0.01% 0.00% 0.00% Gadolinium $ % 0.01% 0.027% 0.04% 0.02% 0.05% 0.02% 0.02% 0.02% 0.01% 0.04% Terbium $ % 0.00% 0.003% 0.00% 0.00% 0.01% 0.01% 0.00% 0.00% 0.00% 0.01% Dysprosium $ % 0.00% 0.015% 0.01% 0.00% 0.04% 0.04% 0.03% 0.00% 0.03% 0.06% Holmium* $0 0.00% 0.00% 0.002% 0.00% 0.00% 0.01% 0.01% 0.01% 0.00% 0.01% 0.01% Erbium* $0 0.01% 0.00% 0.006% 0.00% 0.00% 0.01% 0.02% 0.02% 0.00% 0.02% 0.04% Thulium* $0 0.00% 0.00% 0.001% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Ytterbium* $0 0.01% 0.00% 0.004% 0.00% 0.00% 0.01% 0.02% 0.02% 0.00% 0.02% 0.03% Lutetium* $0 0.00% 0.00% 0.000% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Yttrium $ % 0.01% 0.079% 0.03% 0.01% 0.15% 0.25% 0.20% 0.01% 0.20% 0.39% Total TREO 7.90% 6.57% 1.92% 2.75% 2.57% 1.36% 0.90% 0.59% 4.47% 0.29% 0.63% Total HREO 0.42% 0.09% 0.20% 0.19% 0.10% 0.32% 0.40% 0.33% 0.11% 0.29% 0.59% Total CREO 1.96% 1.10% 0.53% 0.70% 0.71% 0.50% 0.42% 0.32% 1.02% 0.23% 0.48% Total CREO (m) 1.86% 1.08% 0.43% 0.65% 0.70% 0.35% 0.17% 0.12% 1.00% 0.03% 0.08% Total CREO (p) 0.11% 0.02% 0.10% 0.05% 0.02% 0.16% 0.26% 0.21% 0.02% 0.20% 0.40% 68

69 SOUTH AFRICA IN BRIEF South Africa is the largest economy in Africa, generating approx. 25% of African GDP 40% of African industrial output 50% of African electrical supply Ranked as an upper-middle income economy by the World Bank Population of 52 million Multi-ethnic society with diverse culture and religions (Christian, Hindu, Islam, Judaism) 11 Official languages but English used for business and legislation Area is 1,219,090 sq. km (5 times larger than UK) 69

70 SOUTH AFRICA IN BRIEF South Africa has 9 Provinces 3 Capital cities -Pretoria (administrative) -Cape Town (legislative) -Bloemfontein (Judicial) Climates range from semi-tropical on the North East Cost to a Mediterranean type climate on the South Cape Coast Very popular tourist destination. Cape Town was rated as the world s #1 travel destination in 2014 Racial Mix of South African population -79% African -9% White -9% Coloured -3% Asian and Indian Political System: South Africa operates a multi-party democracy. The President is limited to 2 five year terms of office. The current ruling party is the African National Congress (ANC), of which Jacob Zuma is President. 70

71 SOUTH AFRICAN INVESTMENT CLIMATE South Africa welcomes foreign investment and virtually all business activities are open to foreign investors. Foreign investors are generally treated the same as local South African investors. The South African Government exercises control over the transfer of money into and out of the country and a foreign investor must obtain permission to transfer money, however the process is very routine. The Government has developed five industrial development zones ( IDZ ) in South Africa (including at Saldanha Bay) which offers several advantages and incentives for companies locating there. The Saldanha Bay IDZ, where Frontier proposes to construct a rare earth separation facility was launched in Oct 2013 "Our strategy [at Saldanha] is aimed at strengthening the maritime support capacity to create economic opportunities from the gas and oil mining activities along the African west coast, as well as the expansion of iron ore mining production and beneficiation in the Northern Cape. Jacob Zuma President of South Africa 71

72 SOUTH AFRICA MINING AND MINERALS All mineral rights in South Africa are held by the State Applications may be made to the Department of Mineral Resources ( DMR ) for a reconnaissance permit, prospecting right and mining right The DMR applies a first in line approach to the processing of applications Prospecting rights may be granted for an initial period of 5 years and renewed for an additional 3 years. The holder of a prospecting right has the right to apply for a mining right which may be granted for a maximum period of 30 years. Mining rights can be renewed for up to a further 30 years The holder of a mining right is entitled to enter land, build, construct and lay down infrastructure which may be required for mining, to mine, use water, drill boreholes and any other activity related to mining and processing Prospecting and mining rights can be transferred with the consent of the Minister (DMR) 72

73 SOUTH AFRICA ENVIRONMENTAL LAW The right to an environment that is not harmful to one s health or well-being is set out as a fundamental right in the South African constitution The environmental right in the Constitution is supported by other environmental legislation that aims to protect the environment while pursuing sustainable economic growth on terms applicable to a developing nation There is no integrated environmental permitting system in South Africa. It is the responsibility of the project developer to determine which environmental permits are necessary and to ensure that all such permits are obtained. Separate permits are often required from separate environmental authorities and from different levels of government. Regulatory Regime for Water The use of any water source requires the consent of the authorities. Permission to use water for large developments is granted in the form of a water use licence Regulatory Regime for Air Pollution Air pollution is regulated by the National Environmental Management Air Quality Act The Act provides that no person may, without a provisional atmospheric emission licence or an atmospheric emission licence, conduct an activity listed on the national list With regard to polluters liabilities to pay compensation for air pollution, the internationally accepted principle that the polluter pays applies and along with any common law remedies that a party may have, a party may be able to claim compensation from a polluter 73

74 SOUTH AFRICA ENVIRONMENTAL LAW Environmental Impact Assessments (EIA) Legislation provides that certain listed activities cannot be initiated unless an EIA or basic assessment (depending on the size and nature of the activity) is carried out and approval obtained from the relevant authority If the activity is a listed activity under EIA regulations, then a permit is required before the activity can begin. Other permits from authorities may also be required as there is no integrated permitting system Regulatory Regime for Waste The National Environmental Management: Waste Act provides for national standards for the storage, collection, transportation, treatment, disposal, re-use and recycling of waste in general as well as hazardous waste The Act provides that no person may commence, undertake or conduct a waste management activity without a waste management licence if that activity is listed as an activity for which a waste management licence is required 74

75 SOUTH AFRICA TAXATION Standard corporation tax rate is 28% however accelerated capital allowances are available for mining companies allowing all capital costs to be offset against profits immediately There is a royalty payable by mining companies based on the value of the first sale of the product. For Frontier this will be the sale of a Mixed Rare Earth product before separation. The royalty is from 0.5% to 7% of sales depending on Gross Profit margins. Due to capital allowances Frontier is unlikely to any significant royalties for a number of years after production commences Personal income tax ranges from 25% - 40% Value Added Tax (VAT) is 14% Capital Gains Tax is 18.6% but non-residents are not liable for this tax South Africa has double tax agreements with more than 60 countries. 75