Frontier Rare Earths said that Korea Resources Corp the state owned mining and natural resource investor has officially acquired the initial 10%stake in the company's Zandkopsdrift rare earth project in South Africa.
Along with the 10%interest,Kores has also acquired an off take right and obligation for 10%of Zandkopsdrift rare earth production,for a total cash payment of CAD 23.8 million.
The acquisition is part of a strategic alliance agreement initially signed between the two parties in last December,with an expanded deal announced in late October.
Frontier said the acquisition makes it the only junior company in the rare earths sector to have signed and completed a definitive agreement with a significant strategic partner.Including the USD 23.8 million payment from Kores,Frontier,with no debt,has a cash balance of around USD 52 million.
Mr James Kenny president and CEO of the company said that"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."
He said that"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."
Under the new deal announced in October,Kores has the option to increase its interest in the project to up to 50%becoming an equal partner with Frontier,with an off-take right and obligation for up to 50%production from Zandkopsdrift.