TSX-listed Frontier Rare Earths on Friday said Korean Government-owned mining and natural resource investment company Korea Resources Corporation (Kores) has completed the acquisition of a 10% interest in Frontier's Zandkopsdrift rare-earths project, in South Africa, along with an off-take right and obligation for 10% of the production.
The company said it believed the C$23.8-million deal made it the only junior company in the rare-earths sector to have signed and completed a definitive agreement with a significant strategic partner.
"The acquisition by Kores of a 10% interest in Zandkopsdrift is a strong vote of confidence in both the potential of the Zandkopsdrift project and the management of Frontier. With our partnership with Kores and a significantly strengthened balance sheet, we believe that Frontier is very well positioned to meet its objective of becoming the next major producer of separated rare earths outside of China,” Frontier CEO James Kenny said.
Under the terms of the agreement, Kores had the option to increase its participation in Zandkopsdrift up to 50%, together with an offtake right and obligation for up to half of the production from the project.
Further, Kores had agreed to arrange project finance to develop the entire project on the best-available market terms and to provide pro rata funding for the portion of Zandkopsdrift development costs not covered by the project finance, while it would also be responsible for providing technical and operating experience for the design, construction and operation of the Zandkopsdrift facilities.
Frontier added that it was also willing to cooperate with Kores with regard to downstream opportunities in the area of rare-earth metals, alloys and magnets.
Frontier said its cash balance was boosted by the transaction to C$52-million and is expected to be sufficient to fund the completion of a preliminary feasibility study (PFS) and a definitive feasibility study at Zandkopsdrift, work on the company's other proposed exploration and development programs and corporate overheads. Kores is also required to pay Frontier 10% of all operating costs and expenses related to Zandkopsdrift from July onwards, amounting to about C$400 000 as at the end November.
In April Frontier started work on a Canadian National Instrument 43-101-compliant PFS on Zandkopsdrift, and on Friday said “good” progress has been made, with most of the requisite studies now either completed or at an advanced stage.
The company’s TSX-listed stock traded 6.35% higher at Friday noon at 67 Canadian cents apiece.
Edited by: Creamer Media Reporter