Kenny on Frontier Rare Earths positive PFS results and mine-to-money strategy for rare earth production
June 17, 2015 – In an InvestorIntel interview, Publisher Tracy Weslosky speaks with James Kenny, Director and CEO of Frontier Rare Earths Ltd. (TSX: FRO | OTCQX: FREFF) on the recent positive pre-feasibility study (“PFS”) results for the Zandkopsdrift Rare Earth Project in South Africa. Results discussed include the increase in Frontier’s NPV (net present value), revenue projections for Phase One and how Frontier Rare Earths’ business mandate is to go from mining to production of 14 high-purity individually separated rare earths.
Tracy Weslosky: James, it’s my understanding that your PFS is one of the most detailed ones that have ever been put out on the rare earth sector and it actually positions you as one of the top frontrunners for production in the sector.
James Kenny: Thanks Tracy. We’re very pleased with the outcome on the detail of the study that it went into. You bring up a good point, there have been several economic studies published by various rare earth perspective developers, but a lot of those studies don’t go the full way through from mining through the end separated product. Our business plan and our strategy has been consistent over the last several years and we are going from mining through to producing a range of 14 high-purity individually separated rare earths, which I think is unique amongst those emerging rare earth developers.
Tracy Weslosky: Well, not only is it unique, but for our InvestorIntel audience that may not be familiar with the story, not sure how you couldn’t be, cause we’ve done a lot of coverage of Frontier Rare Earths over the years, but presently they have $25 million in the bank and they’re trading almost at market cap right now with your cash. Is that not correct?
James Kenny: $22 to be exact, but I think your point about us trading at or close to our cash value is correct.
Tracy Weslosky: So now I want to ask you, if you don’t mind, about your PFS, what do you think are the highlights from it because I read it and I thought the NPV was very interesting. If we could just discuss this and then, of course, I do want to talk to you about your unique critical rare earth oxides and your permanent magnets rare earths as well.
James Kenny: Sure. Yes, I mean, the financial profile of the project is very strong. The prefeasibility study has been done at a range of discount rates to take a midpoint of 10%, in that range, as I think you’re referring to, generates a project net present value of in excess of $2 billion dollars, which is obviously very encouraging and an internal rate of return post tax of approximately 30%. These are very strong metrics I think both in their own right and compared to the peer universe in which we operate.
Tracy Weslosky: I felt additionally one of your competitive attributes had to do with the revenue that you were projecting from phase one. Can you talk to me a little bit about that?
James Kenny: Yes Tracy. Our plan for Zandkopsdrift is to develop the project in two phases…to access the complete interview, click here
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