Frontier Mining

Full Frontier Mining profile here

Frontier Mining Ltd is a mineral exploration and development Company focussed on gold and copper deposits in the Republic of Kazakhstan. Through its subsidiaries and affiliates, Frontier locates, evaluates, acquires, explores and develops mineral properties. Frontier currently operates two licenses in Kazakhstan, Naimanjal (100% owned) and Benkala (50% owned). Naimanjal operations currently consist of five projects; a producing gold mine, a test stage gold production project, a potential copper porphyry deposit with associated gold and molybdenum, and copper/gold prospects along a 25km trend including both VMS and porphyry types. Benkala is a copper-molybdenum-gold deposit located in north-western Kazakhstan, within the Urals gold/copper ore belt.

Libertas Capital sees upside potential in Frontier Mining

Wednesday, August 26, 2009
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Libertas Capital, House Broker and Nominated Advisor (‘NOMAD’) to junior gold and copper developer and producer, Frontier Mining (AIM: FML), released an in-depth note on the company today, highlighting the upside valuation potential if the company can deliver on its ambitions.

In the note, titled ‘Undiscovered Junior Copper-Gold Play’, Libertas highlighted the “potentially world class” Benkala Copper Project and near term gold heap leaching Naimanjal operation as the two key assets that have the potential to drive value in the near and medium term.

At Naimanjal, where the commencement of gold-silver production is ‘imminent’, Libertas noted that even with only 6,000 ounces of gold production anticipated in 2009, the project would deliver much needed cash flow to the company.  In 2010, Naimanjal is expected to produce approximately 15,000 ounces of gold, with cash costs initially around US$400/ounce.  This should provide enough cash flow to cover the company’s overheads and assist with interest payments.

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As for the significantly larger Benkala Project, Libertas pointed out that the project was a potential company maker. “The plan at Benkala is to construct an open cut mine and SX-EW facility capable initially of handling about 5.5 million tpy (tonnes per year) of ore and producing around 20,000 tpy of copper cathode. Start-up is tentatively planned for early second quarter 2011… Benkala is expected to have a competitive cost base with cash costs of under a $1/lb of contained copper at current economics.”  Compared to the current copper spot price of $2.70/pound, the project should therefore be “highly cash generative”.

Frontier’s Broker and Nomad also noted, on valuation grounds, the recent offer for Orsu Metal’s Varvarinskoye Copper-Gold Mine as a benchmark, which suggested Frontier Mining had a potential near term valuation of US$170 million (11 pence per share) if a JORC compliant resource can be defined at Benkala in line with current expectations.

“An earlier study by Wardell Armstrong on Benkala would point to a valuation of around $440m alone at current copper prices.”


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Additional Information

Market:AIM
Sector:General Mining - Copper
EPIC:FML
Latest Price: 5.25p  (0.00%)
52-week High:10.75p
52-week Low:4.88p
Market Cap:48.16M

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