TORONTO (miningweekly.com) – TSX-listed Frontier Rare Earths, which is developing the Zandkopsdrift rare earth element (REE) project in South Africa’s Northern Cape, on Friday said it expected to release results of its prefeasibility study (PFS) early in 2014, after it had determined more testwork was necessary to improve the flow sheet.
Capital and operating costs of the mine, processing plant and related infrastructure were expected to be higher than the initial economic assessment in 2012, but would be partially offset by lower capital and operating costs for the rare earth separation plant.
The completed PFS was presented to the company for review during the third quarter, and it had identified several areas where engineering design and process improvements could be made that were expected to have a “potentially significant” positive impact on the estimated capital and operating costs of both the Zankopsdrift processing plant and the Saldanha separation plant.
Value engineering and process optimisation studies were currently under way, as well as several other areas of improvement.
The company also said that while it was initially planned that any process improvements found by the feasibility study testwork would be introduced during the feasibility study itself, it had decided that the positive impact was potentially big enough that it should be included in the PFS.
The proposed process improvements included a flow sheet that was expected to result in a higher proportion of higher-value critical rare earths and higher-purity products being produced through another REE recovery method and a new processing technology.
This would, in turn, lead to a basket price for Zandkopsdrift production at current free-on-board China prices of $44/kg, compared with an in-situ basket price of $36/kg.
The Zandkopsdrift project comprises mining and processing activities to produce a mixed rare earth product, a seawater desalination plant to be located 35 km from the mine and a rare earth separation plant to be located at the deep-water port of Saldanha Bay, in the Western Cape province, about 300 km from the deposit.
The Zandkopsdrift B zone has the biggest total rare-earth oxides grade and the highest grade of high-value heavy rare-earth oxides of significantly advanced rare-earth deposits outside China.
Envisioned is a standalone opencast mine, which will be mined by conventional free-dig and/or drill, blast and haul techniques, with minimal drilling and blasting required.
Zandkopsdrift has a target total production capacity of 20 000 t/y of separated rare-earth oxides, and is expected to become one of the largest producers of high-demand critical rare-earth oxides, which comprise dysprosium, terbium, europium, neodymium and yttrium in separated, high-purity form.
Frontier in December struck an accord with with Korean government-owned mining and natural resource investment company Korea Resources Corporation (Kores), which had acquired a 10% interest in Frontier's Zandkopsdrift project, along with an offtake right and obligation for 10% of the production.
The C$23.8-million deal was believed to make the company the only junior company in the rare earths sector to have signed and completed a definitive agreement with a significant strategic partner.
Under the terms of the agreement, Kores has 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 also on Friday said that it had submitted its 30-year mining right application to the Department of Mineral Resources, and that an environmental impact assessment review was now under way, with these processes expected to take between 12 to 18 months.
The company had C$38-million cash in the bank, meaning it is trading below cash with a market capitalisation of some $36-million.
The company’s TSX-listed shares closed up 2.35% at C$0.435 apiece.