DRAFT Zandkopsdrift – The World’s Next Major Rare Earth Producer June 2015 Frontier Rare Earths Limited TSX:FRO US:FREFF
Safe Harbour Statement Forward Looking Statements : Certain information set forth in this presentation may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. Readers can identify many of these statements by looking for words such as "will", "intends", "projects", "anticipates", "estimates", "achieving", or similar words or the negative thereof. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of Frontier, including, but not limited to, the impact of general economic conditions, industry conditions, commodity prices, availability of financing , Frontier's ability to raise additional capital, results of feasibility studies, dependence upon regulatory approvals, the estimation of mineral resources and the realization of mineral reserves based on mineral resource estimates and estimated future development, if any, and possible expectations regarding competition from other producers globally, possible customer and supplier relationships, anticipated trends and challenges in Frontier regarding competition; mineral resource estimates and supply outlook and growth opportunities, the future price of and future demand for rare earth elements, title disputes or claims including Black Economic Empowerment initiatives, and the timing and possible outcome of pending regulatory and permitting matters. Readers are cautioned that the assumptions used in the preparations of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. There can be no assurance that the plans, intentions or expectations upon which these forward- looking statements are based will occur. The forward-looking statements contained herein are made as of the date of this presentation and are expressly qualified in their entirety by this cautionary statement. Actual results may differ materially from those anticipated. Readers are cautioned not to put undue reliance on forward-looking statements due to the inherent uncertainty therein. Frontier disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable law. Data used in the Presentation : Frontier's data in this presentation is primarily based on the PFS (as defined below).Mineral resources that are not mineral reserves do not have demonstrated economic viability. Data used in peer comparisons comes from various reports and sources with different levels of confidence attaching to them which may mean that data is not directly comparable and actual production is likely to be different from that shown. The data sources for peer information used in the presentation are as follows: Molycorp - Quarterly Report Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 for the quarterly period ended March 31, 2013 (9 May 2013); Lynas H2 2012 Consolidated Financial Report (22 Feb 2013); Avalon Announces Results of Positive Feasibility Study for the Nechalacho Rare Earth Elements Project (17 Apr 2013); Quest - Preliminary Economic Assessment on the Strange Lake B Zone, Quebec (24 Sept 2010); Arafura Delivers Nolans Project Update - incl. feasibility study update (7 Aug 2012); Tasman - Preliminary Economic Assessment NI 43-101 Technical Report for the Norra Karr (REE-Y-Zr) Deposit Granna, Sweden (11 May 2012); Matamec - Preliminary Economic Assessment Study for Kipawa Project (14 Mar 2012). All output calculations use prices from Metal-Pages (www.metal-pages.com) and REE distributions from Technology Metals Research (www.technologymetalsresearch.com) unless otherwise specified. Technical Information – Details with respect to the scientific and technical information contained in this presentation as it relates to Frontier can be found in the report entitled “National Instrument 43 -101 Independent Technical Report on the Results of a Preliminary Feasibility Study on the Zandkopsdrift Rare Earth Element and Manganese By-product Project in the Northern Cape Province of South Africa for Frontier Rare Earths Limited” (the “PFS”) and is available on SEDAR under the Company's profile and on Frontier’s website . This report has an effective date of June 2, 2015 and was prepared by Venmyn Deloitte (Pty) under the supervision of the following persons: F. Harper B Sc (Hons), Pr Sci Nat., MGSSA (Qualified Person) and G Njowa B Sc (Hons), Pr Sci Nat., MGSSA B Sc Hons (Min Eng) Grad CIS, M Sc MRM (Min Eng), Pr Eng, M.Sc MRM (Min Eng), (Qualified Valuator. Dr Stuart Smith, Frontier's VP Exploration is a "Qualified Person“, as defined by NI 43 -101, and has reviewed and approved the scientific and technical information in this presentation. 2 │
TOPICS Rare Earths Overview and Supply Outlook Frontier Rare Earths The Zandkopsdrift Rare Earths Deposit Prefeasibility Study Overview Prefeasibility Study Conclusions and Highlights Western RE Competitor Benchmarking Kores Joint Venture Graphite Frontier Market Profile and Corporate Summary Appendices 3
RARE EARTHS - OVERVIEW 16 Rare earth elements (REEs), 15 within the chemical group called Lanthanides Two distinct categories based on atomic weight: Light Rare Earths (LREEs) Heavy Rare Earths (HREEs) Periodic Table of the Elements Distribution of elements vary from deposit to deposit Rare Earths underpin the “green” Distribution of elements vary from tech economy: deposit. Most have no substitutes and are indispensable in many applications Hybrid motors and Battery Technology Consumer Electronics China currently accounts for circa 90% of Transportation production of rare earth minerals, Aerospace and Defense although it has only about 30% of the Energy Efficiency deposits of rare earths in the Earth's crust Wind and Solar Power 4
RARE EARTHS – USAGE BY APPLICATION Rare earth consumption divided Petroleum / Agriculture / Light Glass / Ceramics Chemical Industry Industry / Textile, into traditional and new material 4.7% 4.8% 3.5% Metallurgy applications Machinery 7.2% Other New Traditional – metallurgy, machinery, Materials 3.7% petroleum, chemicals, glass, ceramics, Hydrogen Storage Magnetic Materials, Materials 4.1% agriculture, light industry and textiles 61.3% Polishing New material - permanent magnet Materials4.5% materials, luminescent materials, Luminescent polishing materials and hydrogen Materials 6.3% storage materials. Usage in new material applications has driven the growth in consumption of rare earths Demand for rare earths from new material applications in 2015 is estimated to account for ~80% of the total demand, of which magnetic materials will comprise the largest component, estimated over 61% 5
RARE EARTH – KEY APPLICATIONS Magnetics Catalysts Phosphors Metal Alloys Nd, Eu, Nd, Eu, Er, Gd Ce, Pr Er, Gd Ce, Pr Nd Tb, Dy Pr Nd Tb, Y Tb, Y La, Ce, Pr Computer Hard Drives NimH Batteries Display phosphors – CRT, Petroleum Refining LPD, LCD Fuel Cells Disk Drive Motors Catalytic Converter Fluorescent Lighting Steel Anti-Lock Brakes Fuel Additives Medical Imaging Super Alloys Automotive Parts Lasers Chemical Processing Fibre Optics Aluminium / Magnesium Air Pollution Controls Frictionless Bearings Magnetic Refrigeration Microwave Power Tubes Power Generation Microphones & Speakers Defence Ceramics Glass & Polishings Communication Systems MRI Nd, Eu, Tb, Gd, Er, Ho Nd, Y, Eu Gd, Lu, Dy La, Ce, Pr Nd, La, Ce, Pr Lu, Sm Pr, La Dy, Y CREOs Polishing Compounds Satellite Communications Capacitors Pigments & Coatings Guidance Systems Sensors HREOs Colorants UV Resistant Glass Aircraft Structures Scintillators Photo-Optical Glass Fly-by-Wire LREOs Refractories X-Ray Imaging Smart Missiles 6
UNDERSTANDING THE ‘CRITICAL RARE EARTH OXIDES’ The rare earths for which there is likely to be the greatest demand growth and potential shortage, and which are of the greatest importance for a technologically advanced, clean energy economy, are the so called “ Critical Rare Earth Oxides ” (“CREOs”) - Neodymium, Europium, Terbium, Dysprosium and Yttrium The importance of rare earths, and CREOs in particular, has been highlighted by both the US Government and the European Commission and security of supply of these scarce commodities is now a strategic imperative for many countries and corporations Demand for CREOs is forecast to double over next 7 years and supply shortages are therefore very likely This growing demand and rising political tensions in many areas of the world are forcing Governments to take decisive action to ensure security of critical raw material Source: US Department of Energy, Critical Materials supplies over the long term. Strategy Report (2011) 7
UNDERSTANDING THE CRITICAL RARE EARTH OXIDES The CREOs typically have much higher prices than the other REOs REO price * Rare Earth Oxide ($/kg) Lanthanum $4 LREO Cerium $3 Praseodymium $91 Neodymium $58 Samarium $5 Europium $373 Gadolinium $47 Terbium $763 Dysprosium $363 HREO Holmium n/a Erbium n/a Thulium n/a Ytterbium n/a Lutetium n/a Yttrium $11 * Metal-Pages 1 May 2015 8
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