FRONTIER RARE EARTHS LIMITED SA 
By Oct 11, 2013
Toronto, Ontario: Frontier Rare Earths Limited (TSX: FRO) ("Frontier" or the "Company") is pleased to provide a progress update on the development of its Zandkopsdrift rare earth element project in the Northern Cape Province of South Africa ("Zandkopsdrift"). Zandkopsdrift is being developed by Frontier in partnership with Korea Resources Corporation, the wholly-owned mining and natural resource investment arm of the South Korean Government.
The proposed Zandkopsdrift project comprises mining and processing activities at Zandkopsdrift 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 of South Africa approximately 300 km from Zandkopsdrift.
Zandkopsdrift is expected to be one of the first new major producers of high purity separated rare earth oxides outside China, with a target total production capacity of 20,000 tonnes per annum of separated rare earth oxides, and to become one of the largest producers of high demand critical rare earth oxides ("CREOs"), which comprise dysprosium, terbium, europium, neodymium and yttrium in separated, high purity form, outside China.
Highlights:
• PFS Update
- Individual consultants' reports for input to the PFS completed in Q3 2013 and reviewed by the Company
- Capital and operating costs of mine, processing plant and related infrastructure estimated to be higher than for the PEA, partially offset by lower estimated capital and operating costs for the rare earth separation plant than for the PEA
- Significant process improvements identified by on-going feasibility study test work are planned to be integrated into the PFS and expected to materially improve current PFS cost estimates
- Value engineering and process optimization studies underway in parallel with several areas of additional improvement already identified
- PFS flow sheet expected to result in a higher proportion of higher value CREOs and higher purity products being produced, resulting in a basket price for Zandkopsdrift production at current FoB China prices of $44/kg, compared to an in-situ basket price of $36/kg
- PFS to be finalised after the current test work on process improvements is completed in Q1 2014
• Mining right application
- Application for 30 year mining right submitted to Department of Mineral Resources
- Review of mine environmental impact assessment and environmental management programme under way
- Issuance of mining right and environmental permits expected in 12-18 months
• Product strategy
- Focused on production of critical rare earths (CREOs) with highest demand and growth potential
- Zandkopsdrift flow sheet selected to optimise CREO recovery
- Separation plant process technology to produce higher purity and value rare earth products
• Infrastructure development
- Site identified and land acquired for seawater desalination plant
- Land covering entire Zandkopsdrift mine development footprint acquired
- Purchase option secured for rare earth separation plant site
- Environmental impact assessments for the mine access road, bulk power supply, sea water desalination plant, separation plant and separation plan waste water disposal progressing well
• Financial
- Working capital position strong with c.$38m cash and no debt; sufficient to fund the Company through completion of PFS and DFS
- Kores funding 10% of project evaluation and development costs and providing technical support
- Share buyback programme approved by the Toronto Stock Exchange is continuing
PFS Update
As previously reported, good progress has been made in 2013 on the various studies that are required to allow the preliminary feasibility study ("PFS") report on Zandkopsdrift (the "PFS Report") to be prepared as planned. These studies (the "PFS Studies") cover all aspects of the proposed Zandkopsdrift development, including design of the Zandkopsdrift Processing Plant ("ZPP") and Saldanha Separation Plant ("SSP"), power, water, roads, tailings, mining, reagent supply, logistics and environmental management.
The PFS Studies were completed and presented to the Company for review in Q3 2013. This review has now been completed and has identified several areas where engineering design and process improvements can be made that are expected to have a potentially significant positive impact on the estimated capital and operating costs of both the ZPP and the SSP. The process improvements, which are detailed below, were identified by metallurgical test work and studies that have been undertaken for the planned feasibility study (the "FS" and "FS Test Work", respectively) since the flow sheet was 'frozen' in Q2 2013 for the PFS. While it was originally intended that any process improvements identified by the FS Test Work would be introduced during the FS, the Company has decided that the nature and potential impact of several of the improvements is significant enough that they should be incorporated into the PFS engineering studies for the ZPP and SSP and into the PFS Report. The test work required to do so is on-going and is expected to be completed in Q1 2014, after which the necessary revisions will be made to the PFS Studies and the PFS Report completed and results announced.
Current PFS Flow Sheet
As approximately 97% of the rare earths at Zandkopsdrift are contained in monazite, for which a sulphuric acid cracking process has been widely used on a commercial scale for many years, the sulphuric acid process has been used as the basis for the flow sheet for the ZPP. The following process configuration was initially selected for the PFS based on confirmatory pilot scale test work completed in Q1 2013:
- A front-end crushing and milling circuit. The selected milling technology will produce a sharply defined particle size distribution, with downstream handling benefits.
- An impurity pre-leach circuit, which provides a significant mass reduction with low rare earth losses, and a consequent reduction in both capital and operating costs of the cracking and other downstream processes.
- An acid contacting circuit in which concentrated sulphuric acid is mixed with the feed material to produce a free flowing feed for the cracking circuit.
- A low temperature cracking circuit in which the prepared feed is baked in a rotary kiln at 250
