Anglo faces headwinds in keeping restructuring on track
Anglo has been forced to accelerate its restructuring after successfully holding off a bid from BHP, the world’s biggest miner.
Frontier Rare Earths is looking to occupy a spot as one of the largest non-Chinese rare earth companies.
A preliminary economic assessment this week on Frontier’s Zandkopsdrift REE project in South Africa indicates the project could be up and running by 2015.
Mining and processing rare earths is a tricky business. Processing the materials is costly, and the supply of the 17 elements used in manufacturing everything from smart phones to electric cars and missile guidance systems is pretty much sewn up by China, which has 95% of the production. The only other major producers outside China are Molycorp, which operates the Mountain Pass facility in California, and Lynas Corp., the Australian company planning to start up a rare earths plant in Malaysia.
Toronto-based Frontier Rare Earths (TSX:FRO) says the Zandkopsdrift mine can produce 20,000 tonnes of rare earth oxides per annum for 20 years, generating average annual revenues of $1.1 billion. Zandkopsdrift is one of the largest undeveloped rare earths deposits in the world, with an estimated 950,000 tonnes of total rare earth oxides. Recovery rates from the 19.5 million tonnes of mineable ore average 67%.
Frontier has secured an offtake agreement with Korean state-owned Korea Resources Corporation (KORES), for up to 31% of Zandkopsdrift production. KORES is also forming a consortium with other companies including Samsung Group, GS Caltex, Daewoo Shipbuilding & Marine Engineering Group, and AJU Group, for downstream uses including magnets.
RareMetal Blog reports that “Frontier is the only rare earth junior company with a strategic partnership agreement in place that is advancing a major rare earth resource outside of China.”
Frontier President and CEO James Kenney commented Tuesday on the PEA:
“This is the first NI-43-101 compliant independent economic study on a rare earth project published by any company encompassing mining through to separation of individual rare earth oxides,” Kenny stated.
“The PEA indicates that the Zandkopsdrift project demonstrates robust economics over a range of discount rates and that the development of mining, rare earth processing and separation facilities are both economically and technically viable. With a positive PEA in place, a strong working capital position and the benefit of a significant strategic partnership with KORES, Frontier is very well positioned to meet its objective of becoming a major global supplier of rare earths, starting in 2015.”
The mine capex is pegged at $910 million which includes about $100 million for acid and desalination plants. The company indicates that uranium and thorium levels are low and will be removed by precipitation. A pre-feasibility study is due out before the end of the year.
