Frontier Rare Earths Increases Size of Public Offering to C$60 Million

Frontier Rare Earths Ltd. raised C$60 million ($59.8 million) in an initial public offering, 50 percent more than planned, to develop a South African deposit of rare metals used in computers and car batteries, said two people familiar with the sale.

The Luxembourg-based company sold 17.65 million units consisting of one share and half a warrant for C$3.40 each in the Canadian offering, according to the people, who asked not to be identified because the plans aren’t public. Frontier sold a 19.8 percent stake, based on 89.08 million shares outstanding, valuing the company at C$302.9 million.

Frontier is developing the Zandkopsdrift deposit in South Africa’s Northern Cape Province, the company said in a Sept. 30 filing with Canadian regulators. Frontier aims to become one of the leading producers of rare-earth metals outside of China and one of the first new producers of the elements after Lynas Corp. and Molycorp Inc.

The rare earths, a group of 17 metals including neodymium, lanthanum, cerium and europium, have industrial uses such as petroleum refining, fiber-optic transmission, and military radar and missile-guidance systems. China dominates the market because it’s been able to produce the elements more cheaply and with fewer environmental restrictions than its competitors.

Frontier, which initially sought to raise C$40 million, will trade on the Toronto Stock Exchange under the symbol FRO starting Nov. 17. CIBC World Markets led a group of banks including Canaccord Genuity, Cormark Securities Inc., Byron Securities Ltd. and National Bank Financial for the sale, and they have the option to sell another 15 percent of the offering.

Prices Soar

Prices for rare earth metals have jumped as much as sevenfold in the past six months as Chinese export quotas have crimped worldwide supplies for the elements. China reduced its second-half export quota for the minerals by 72 percent in July.

Molycorp has more than doubled since its July 29 debut on the New York Stock Exchange, after selling shares for $14 each in its $394 million IPO. Shares of Sydney, Australia-based Lynas Corp. have nearly tripled in the past 12 months.

Frontier Chief Executive Officer James Kenny in Luxembourg didn’t immediately respond to messages seeking comment.

Companies have sold C$4.61 billion in IPOs in Canada this year, the highest amount since 2006, according to Bloomberg data.

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editor responsible for this story: David Scanlan at dscanlan@bloomberg.net; or David Scheer at dscheer@bloomberg.net

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