Zandkopsdrift - Africa s leading Rare Earth project

Transcription

1 DRAFT Zandkopsdrift - Africa s leading Rare Earth project February 2014 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 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 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 ( 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 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 , and has reviewed and approved the scientific and technical information in this presentation. 2

3 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

4 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

5 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 Rare Earth Application Structure Hydrogen Storage Materials 4.1% Metallurgy Machinery 7.2% Other New Materials 3.7% Polishing Materials4.5% Glass / Ceramics 4.7% Petroleum / Chemical Industry 4.8% griculture / Light Industry / Textile, 3.5% Magnetic Materials, 61.3% 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%. Luminescent Materials 6.3% Source: ResearchInChina China Rare Earth Industry Report 5

6 Rare Earths Key Applications Magnetics Phosphors Metal Alloys Catalysts Nd Tb, Dy Pr Nd, Eu, Tb, Y Er, Gd Ce, Pr Nd, Y La, 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 MRI Ceramics Glass & Polishing Defence 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 Capacitors Polishing Compounds Satellite Communications HREOs LREOs Sensors Colorants Scintillators Pigments & Coatings UV Resistant Glass Photo-Optical Glass Guidance Systems Aircraft Structures Fly-by-Wire Refractories X-Ray Imaging Smart Missiles 6

7 Rare Earth Supply and Demand to 2020 Tonnes 240, , , , , ,000 Widening supply gap to be met by new non-chinese supply? 120, ,000 80,000 60,000 40,000 20, f 2014f 2015f 2016f 2017f 2018f 2019f 2020f China Supply Global Demand Source: IMCOA Note: Frontier assumes straight line growth to mid-point 2020 IMCOA estimate and China maintains current stated supply cap 7

8 HREO LREO 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 Rare Earth Oxide REO price * ($/kg) Lanthanum $6 Cerium $6 Praseodymium $118 Neodymium $68 Samarium $9 Europium $975 Gadolinium $47 Terbium $825 Dysprosium $465 Holmium $0 Erbium $0 Thulium $0 Ytterbium $0 Lutetium $0 Yttrium $22 * Metal-Pages 1 January

9 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 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) 9

10 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

11 Corporate Information TSX: FRO / US: FREFF Shares Outstanding: 89.6m Market Cap c.$34m Recent Share Price $0.40 (52 week hi/low $ $0.28) Working Capital c.$36m(no debt) Research Coverage: Euro Pacific Capital Cormark Securities Frontier Relative Share Price (rebased) 11

12 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 Cape Town a first world destination 12

13 Satellite Image of Zandkopsdrift Carbonatite 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) 13

14 Zandkopsdrift Deposit 14

15 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

16 Geological Interpretation 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 m 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 16

17 Zandkopsdrift Geological Map and Drill Locations 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 17

18 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 Resource Estimate Relative distribution of REOs in Zandkopsdrift is shown on page 46.The resource estimate is NI 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

19 Zandkopsdrift PEA Resource Block Model 19

20 Zandkopsdrift Sample Geological Section 7.98% TREO over 16 meters with 17.98% TREO over 1 meter 20

21 Weathered CPB intruded by weathered RE enriched REDs Weathered CPB 1-3% TREO Weathered REDs 6-8% TREO 21

22 Contact Between REDs and CPB in Bulk Sample Trench Weathered CPB 1-3% TREO Weathered REDs 4-5% TREO 22

23 Bulk Sample Trench for Pilot Testwork (2012) Average XRF TREO grade of 3% for 174 metre trench 23

24 Preliminary Economic Assessment Financial Highlights* Post-Tax NPV & IRR Post-Tax Net Present 11% discount rate NPV attributable to Frontier Rare Earths $3.65bn $3.60bn Post -Tax Internal Rate of Return 52.5% Pre -Tax NPV & IRR Pre-Tax Net Present 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 24

25 Location of Zandkopsdrift Project Components Mining, flotation and cracking plants to produce mixed rare earth carbonate Mixed rare earth carbonate transported 300kms by road (N7) to Saldanha Bay Saldanha Bay Rare Earth Separation Plant-20,000 tonnes TREO p.a. target full production 25

26 Zandkopsdrift Preliminary Mine Pit Design (looking southwest) Pit Dimensions (approx.) East -West extent 830m North-South extent 900m Maximum no. benches planned 12 - 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 26

27 Zandkopsdrift Mine Detailed Layout (PEA) 27

28 Zandkopsdrift Mine Acid Cracking Plant Metallurgical flow sheet (PEA) 28

29 Saldanha Bay- Separation Plant Location Sichen to Saldanha iron ore export rail line Saldanha Port Arcelor Mittal Saldanha Steel Works Exxaro ilmenite smelter-saldanha Bay 29

30 Saldanha Bay Industrial Development Zone 30

31 Rare Earth Separation Plant Location and Layout (PEA) 31

32 Saldanha Separation Plant-Metallurgical Flow Sheet (PEA) 32

33 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 ( ppm) 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

34 Contribution to value Tonnes per Annum Projected Output of Separated Rare Earths 10,000 8,833 8,000 6,000 4,000 2,000-5, , Production tonnes per annum ,274 CREOs comprise 22% of projected output by volume, but would contribute circa 70% of project revenue* 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 4.5% 8.1% 14.6% 35.2% 0.6% 1.9% 4.4% 11.2% 17.1% Relative contribution to revenue 2.5% Ce and La would contribute only 13% of potential project revenue, so the Zandkopsdrift overall economics are not greatly sensitive to their prices 60.0% 70.0% 80.0% 70.4% 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 34

35 Zandkopsdrift Current Estimated Project Timeline PEA Resource PEA PFS/DFS Resource Pre Feasibility Study Definitive Feasibility Study Financing Construction Production Start-up 35

36 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

37 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

38 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

39 HREO LREO In Situ REO Grade of Advanced Western Deposits Rare Earth Oxide REO price ($/kg)** Frontier Rare Element Zandkopsdrift Bear Lodge Nolans Bore Nechalacho Arafura Avalon Quest Tasman Matamec Strange Lake Norra Karr Kipawa 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 $ % 0.15% 0.16% 0.06% 0.03% 0.02% 0.02% Neodymium $ % 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% Europium $ % 0.02% 0.01% 0.00% 0.00% 0.00% 0.00% Gadolinium $ % 0.04% 0.03% 0.03% 0.02% 0.02% 0.01% Terbium $ % 0.00% 0.00% 0.00% 0.01% 0.00% 0.00% Dysprosium $ % 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 $ % 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% * 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 *** Data for peers is sourced from various documents. Please refer to safe harbour statement at beginning of this presentation. 39

40 Potential Western CREO Production Relative CREO value per annum 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 Quest Frontier Lynas Arafura Tasman Avalon Rare Element Matamec Molycorp - Based on REO prices from Metal Pages in 1 January 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 40

41 Potential Western MCREO and PCREO Production Relative MCREO value per annum Quest Arafura Frontier Lynas Tasman Avalon Matamec Molycorp Rare Element Relative PCREO value per annum 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 Quest Frontier Lynas Tasman Arafura Rare Element Avalon Matamec Molycorp - Based on REO prices from Metal Pages in 1 January 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 41

42 Frontier Peer Comparison - Summary 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/ / Unknown 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. 42

43 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 % 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 43

44 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 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 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. 44

45 Appendices 45

46 Zandkopsdrift Relative Rare Earth Distribution Element Tonnes Relative Distribution Lanthanum 240, % Cerium 418, % Praseodymium 43, % Neodymium 150, % Samarium 21, % Europium 5, % Gadolinium 13, % Terbium 1, % Dysprosium 7, % Holmium 1, % Erbium 3, % Thulium % Ytterbium 2, % Lutetium % Yttrium 39, % TTt 949, % 46

47 Planned Rare Earth Product Specifications and Quantities* Lanthanum Cerium Praseodymium Neodymium Product Purity Proportion of output Tonnes per annum * 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 2N-3N 75% N 25% N 30% N 30% N5 40% N 50% 455 to Didymium 50% 455 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%

48 Potential Western CREO Production (tonnes/annum) Rare Earth Oxide Lynas Molycorp Frontier Rare Element Mt Weld Mtn Pass Zandkopsdrift Bear Lodge Nolans Bore Nechalacho Arafura Avalon Quest Tasman Matamec Strange Lake Norra Karr Lanthanum 5,245 6,310 5,083 2,775 3,807 1,896 1, Cerium 10,468 9,320 8,833 4,544 9,747 4,371 3,850 1,503 1,049 Praseodymium 1, , Neodymium 3,979 2,286 3,154 1,873 4,112 2,125 1, Samarium (1) * Europium (1) * Gadolinium (1) * Terbium 23 3 (1) * Dysprosium (1) * Other (1) * 1, Yttrium (1) * 4,250 2, Total TREO 22,000 19,000 20,000 10,400 20,000 10,000 13,623 6,637 3,758 Total HREO 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, Total PCREO ,343 2, Kipawa 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 48