Introduction

Frontier Rare Earths Limited (“Frontier”), through its wholly owned subsidiary Frontier FZE, holds a 70% interest in Dombeya Mineração Lda (“Dombeya”), a Mozambique registered company. Dombeya holds a number of Prospecting and Exploration Licenses (Licença de Prospecção e Pesquisa) for graphite, including licence number 4117L (“the Licence”), for the project known as the Lurio project (“the Project” or “the Lurio Project”), which is located in the Cabo Delgado Province, Mozambique.

Property, Location and OwnershipLurio Locality Map

The License is located in the south-eastern part of the Cabo Delgado Province of Mozambique and covers an area of 19,465 ha. The License was awarded to Dombeya on 9 July 2012 and is valid for a period of five years, expiring on the 9 July 2017, with an option to renew for a further three years from that date.

Geology and Mineralisation

The graphite-bearing sequences that have been identified in the Project area are hosted by shallow to steeply dipping (25 to 90 degrees) quartz-feldspar-graphite gneisses which form part of the Montepuez Complex. Regionally, the rocks are strongly folded into tight isoclinal folds, cross-cut by a number of predominantly north-east to south-west trending shear zones.

The graphite-bearing gneisses range in true thickness from 0.3m to 120m, and are laterally continuous, lenticular, strata-bound layers that can be traced over many kilometres. The graphite grade in the Licence area, based on grab and rock chip samples of the units, ranges from 5 to 15% Total Graphitic Carbon (“TGC”) with an average of 7 to 8% TGC. The graphite flake size varies but in most cases is large (0.2 – 3.0 mm).

The Nipacue graphite sequence, identified as the most prospective in the Project area, comprises two main graphite layers referred to as the Nipacue Outer (“NPO”) and the Nipacue Inner (“NPI”). These graphite layers have a weak to moderate foliation and vary from 40m to over 120m in thickness. The Nipacue graphite sequence, as mapped, is split into three prospects; i.e. Nipacue North, Nipacue Central and Nipacue South, of which Nipacue North was selected as the main target for drilling. The Nipacue sequence is believed to correspond to the deposit described by Cílek (1987) as Monte Nipacue.

Status of Exploration, Development and Operations

Phased, systematic exploration activities conducted by Dombeya from 2012 to 2015 included geological mapping, rock-chip sampling, trenching, mineralogical investigations, ground geophysical surveys and metallurgical test work programmes.

In 2015 the most prospective of the graphite layers that had been identified, the Nipacue Outer Layer, was evaluated by means of reverse circulation and diamond drilling in order to provide data for the preparation of a Mineral Resource estimate. Representative samples of drill core were submitted for metallurgical test work and geotechnical analysis in order to provide data for the preparation of technical and economic studies on the potential economic viability of the Project. Currently no mine developments or operations exist on the property.

Mineral Resource and Mineral Reserve Estimates

On behalf of Frontier and Dombeya, MSA completed maiden NI43-101 compliant Mineral Resource estimates for the Nipacue North, Nipacue Central and Nipacue South portions of the Nipacue Outer Layer (Figure 1-1).Nipacue drillhole collar locations

The principal source of information used for the Mineral Resource estimates was data generated during the course of the exploration drilling programmes. The Mineral Resource estimates were based on TGC assays from diamond and reverse circulation drillholes, and density measurements from cores of the 22 diamond drillholes. Drilling was generally angled vertically downwards at -90°, although two diamond drillholes were angled at -60° at Nipacue North to perpendicularly intersect the graphitic mineralisation.

The Mineral Resource estimates incorporate drilling data obtained by Frontier, which in the QP’s opinion were collected in accordance with The Canadian Institute of Mining, Metallurgy and Petroleum’s (CIM) “Exploration Best Practices Guidelines” (2000). The drilling assay data was validated through a rigorous QAQC programme and in the opinion of the QP is deemed acceptable for use in the Mineral Resource estimates.

The Nipacue Mineral Resource estimate as at 1 June 2016 is presented in (Table 1-1). The Mineral Resource is stated as that material contained within the high-grade (HG) domain. No cut-off grade is applied within this domain, as in the QP’s opinion, all material contained in the HG domain has “reasonable prospects for economic extraction” when considering mining and processing assumptions. An open pit mining depth of 200m is applied at Nipacue North, and 120 m depth applied at Nipacue Central and South. Metallurgical test work indicates that a saleable graphite concentrate can be produced from this material. The Mineral Resource therefore represents that material within 200m (Nipacue North) and 120m (Nipacue Central and South) of surface in the HG domain. The reader should note that the assessment of the mineralisation estimate that is incorporated in the Mineral Resource is solely for the purpose of reporting Mineral Resources that have “reasonable prospects for economic extraction” and does not represent an attempt to estimate Mineral Reserves.

The Mineral Resource was estimated using The Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Best Practice Guidelines (2003) and is reported in accordance with the 2014 CIM Definition Standards, which have been incorporated by reference into National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101). All Mineral Resources are classified as either Indicated or Inferred Mineral Resources.

Table 1-1 Nipacue Mineral Resource as at 1 June 2016
Nipacue Prospect Mineral Resource Category Reporting Depth (m) Tonnes (millions) TGC (%) Contained Graphite (thousand tonnes) Density (t/m3)
North Indicated 200 26.4 7.34 1,936.3 2.51
TOTAL Indicated 26.4 7.34 1,936.3 2.51
North Inferred 200 17.3 5.98 1,033.8 2.50
Central Inferred 120 5.2 7.51 392.8 2.48
South Inferred 120 7.1 8.13 578.9 2.46
TOTAL Inferred 29.7 6.76 2,005.5 2.49