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Frontier Rare Earths Reports Rare Earth Grades As High As 19.5% From Zandkopsdrift - UPDATE

*updated with share price added

Frontier Rare Earths' (TSE:FRO) shares rallied over five per cent Friday, after the company reported that final assay results from its 2011 drilling program at its Zandkopsdrift rare earth project in South Africa have yielded total rare earth oxide (TREO) grades as high as 19.5 per cent.

Shares were trading at 50 cents as at about 12 pm EDT.

Grades in excess of 10 per cent and as high as 19.5 per cent TREO were identified in many holes, supporting the "significant economic potential" of Zandkopsdrift, as outlined in the company's preliminary economic assessment (PEA) released earlier this year.

Results were received from 5,563 metres of diamond core drilling and 8,632 metres of reverse circulation percussion drilling, which were completed in the second half of 2011.

Frontier said the results have confirmed the presence of "extensive high grade rare earth mineralization and continuity of mineralization" from surface to an average depth of about 80 metres.

"We are very encouraged by the results of the latest resource drilling, which confirms Zandkopsdrift as one of the largest international resource code-compliant high grade rare earth deposits in the world," said CEO James Kenny.

"With 97 per cent of our rare earth mineralization contained in monazite, for which commercially proven metallurgical extraction processes exist, and with our prefeasibility study on schedule for completion in [the fourth quarter] Q4 2012, we remain confident of achieving our objective of being the next major producer of rare earths outside China after Molycorp (NYSE:MCP), and Lynas (ASX:LYC) by end 2015."

Frontier's latest drill results include grades ranging from 5.4 to 10.1 per cent TREO over depths of 10 to 31 metres. Among the highlights was 6.9 per cent TREO over 11 metres, including the highest grade interval of 19.5 per cent TREO at a minimum interval length of one metre.

Other notable results included 10.1 per cent TREO over 10 metres, including the highest grade interval of 17.8 per cent TREO at a minimum interval length of one metre; 8.1 per cent TREO over 12 metres, the including highest grade interval of 18.6 per cent TREO at a minimum interval length of one metre; and 6.2 per cent TREO over 19 metres, including the highest grade interval of 18.6 per cent TREO at a minimum interval length of one metre.

In addition, the company noted that drilling identified "numerous continuously well mineralized intervals" from surface, including grades of 3.5 to 4.6 per cent TREO from surface to depths ranging from 51 to 81 metres.

Frontier said that the new assay results will be included into an updated mineral resource estimate for Zandkopsdrift, the results of which will be incorporated into the prefeasibility study currently under way and on schedule for completion in the fourth quarter.

The company said it expects that the updated mineral resource estimate will result in the majority of the mineral resources at Zandkopsdrift being upgraded to the measured and indicated categories.

Frontier Rare Earths is a mineral exploration and development company exclusively focused on the development of rare earths projects in Africa.

Its flagship asset is the Zandkopsdrift rare earth project, which is located in the Northern Cape Province of South Africa and is one of the largest undeveloped rare earth deposits worldwide.

Frontier has a direct 74 per cent interest and a current 95 per cent economic interest in Zandkopsdrift.

The company's February 2012 PEA reported that Zandkopsdrift is estimated to contain roughly 950,000 tonnes of TREO applying a one per cent TREO cut-off, and gave a whopping net present value of $3.65 billion, after tax and royalties, at an 11 per cent discount rate.

Internal rate of return for the project was seen at 52.5 per cent, after tax and royalties, with a two year payback from start of production.

Average production was pegged at 20,000 tonnes of separated rare earth oxides per annum over a 20-year mine life with production due to start in the second half of 2015.

Zandkopsdrift's "key to success" is mineralogy - as the property contains conventional rare earth minerals, with 97 per cent being monazite, for which commercial extraction processes already exist.