6th Sep 2007 16:51
Frontier Mining Ltd06 September 2007 Frontier Mining Ltd. Frontier Acquires 50% Interest in Benkala Copper Deposit and attendant Placing Acquisition Frontier Mining Ltd ("Frontier" or "the Company"), the AIM listed Kazakhstanfocused gold mining and exploration company, announces that it has todayentered into a conditional purchase agreement with Coville Intercorp Ltd ("Coville") to acquire a 50 percent interest in the Benkala copper-molybdenum-golddeposit ("Benkala", or "the Benkala Project") located in north-westernKazakhstan within the Urals gold/copper ore belt. The aggregate considerationpayable for the interest in Benkala is US$21 million comprising $18.5m payablein cash and the issue of 6,250,000 shares of Frontier common stock of US$0.01each ("Ordinary shares"). Rights to the Benkala deposit were won in January 2006 by a subsidiary ofCoville in an open government tender. Upon government approval, the contractwill cover an area of 1.194 km2 and will be effective for a 4 year explorationperiod followed by a 25 year mining licence. Frontier and Coville have entered into a shareholders agreement relating totheir joint ownership of the Benkala project. Placing The board of Frontier has authorised the issuance of an aggregate amount of94,034,929 Ordinary Shares. 87,784,929 Ordinary Share have been placed at 14p to a combination of new andexisting shareholders raising a total of $25,317,174. In addition, 6,250,000Ordinary Shares are to be issued to Coville as referred to above. Frontier anticipate that the net proceeds available to the company will beapproximately $7.6 million to proceed through to the feasibility phase asindicated below. The Placing is conditional on government approval on or before 21 September 2007and admission of the placing shares to trading on the AIM market of the LondonStock Exchange. Frontier currently has 132,581,587 common shares issued. Following thetransaction, the company will have 226,616,516 common shares issued. Related Party Transaction Sokol Holdings Inc., a Delaware corporation ("Sokol"), is a related party, as itis jointly owned and controlled by the Company's two executive directors, BrianSavage and Tom Sinclair. Sokol made certain advance payments, to secure the conditional purchaseagreement with Coville, totalling $10,806,190. Frontier agreed to repay that sumto Sokol. Sokol has agreed to participate in the placing in the amount of$8,806,190, giving it a holding of 30,534,639 placing shares in the Company. The balance of $2,000,000 will be an interest free debt until 29 February 2008and thereafter will bear interest of 8% per annum and will be convertible atSokol's election at a price of 20p per share. The independent non-executive directors of Frontier consider, having consultedwith ZAI, believe that the terms of the related party transaction are fair andreasonable insofar as its shareholders are concerned. Closing of the Acquisition and the Placing The acquisition and the placing are conditional on government approval occurringon or before 21 September 2007. Information on the Benkala Project The Benkala Project, a porphyry copper project, is situated in north-westernKazakhstan in the Urals gold/copper ore belt, north east of Aktobe Oblast and100km south east of the Zhitikara town, an area close to the Russian border witha long regional mining history. Benkala is in an attractive position for minedevelopment given that it already contains developed infrastructure, including amain line railway, an all weather highway and excellent power supply to thesite. The property was discovered in 1968. Between 1976 and 1980, 70 holes totalling21,800 metres were drilled, with depths of up to 700 metres and with corerecovery between 70% and 75%. Metallurgical test work was conducted between1973 and 1979 and determined that that the oxide ores were amenable to heapleaching using sulphuric acid as well as flotation. A Competent Person Report ("CPR") on the Benkala Project completed by WardellArmstrong International ("WAI") in March 2007 estimates 47.75 Mt at an averagegrade of 0.36% Cu for the oxide mineralisation, and 873.75 Mt at an averagegrade of 0.30% Cu for the sulphide mineralisation. Brian Savage, CEO of Frontier, commented "We are delighted to be acquiring a 50%stake in the exciting Benkala Copper project as its near surface oxide resourceand good infrastructure should allow us to get into production quickly. Weintend to get underway with a multidisciplinary team to confirm the near surfaceoxide resource base to a JORC standard, continue to test the deeper sulphide oreresource, and undertake additional metallurgical test work with the intent ofputting Benkala into production as soon as possible. Benkala strengthensFrontier's portfolio of mining assets in Kazakhstan and positions us to takeadvantage of the ongoing strength in metal prices". Enquiries: Frontier Mining Ltd Brian Savage +44 (0)20 7898 9019Parkgreen Communications Louise Goodeve / Justine Howarth +44 (0)20 7851 7480Zimmerman Adams Ray Zimmerman / Jonathan Evans +44 (0)20 7060 1760 About Frontier Mining Ltd: Frontier Mining Ltd. is a mineral exploration and development company that wasincorporated in the state of Delaware, USA, on 5 August 1998 for the purpose ofexploring and developing gold and copper deposits in the Republic of Kazakhstan.Through its subsidiaries and affiliates, Frontier locates, evaluates,acquires, explores and develops mineral properties Frontier has two licenses in Kazakhstan. They are the Naimanjal exploration andmining licence, held by FML Kazakhstan, and the Baltemir exploration licence,held by Baltemir LLP. Both companies are wholly-owned subsidiaries of FrontierMining Ltd. Frontier has one producing gold mine, Naimanjal; onepre-feasibility stage gold project, Koskuduk; and one exploration stage goldprospect, Baltemir. Frontier also has one potential copper porphyry deposit with associated gold andmolybdenum, Baltemir; and several copper/gold prospects along a 25-km trendincluding both VMS and porphyry types. Metallurgical tests on its Beschoku andYubileiny copper projects confirm the oxide copper ore is amenable to extractionusing low cost SX-EW technology. Issued and Fully Diluted Ordinary Shares Frontier shares are traded on the AIM market of the London Stock Exchange. Priorto the completion of the Placing, Frontier has 132,581,587 ordinary sharesissued and 6,057,091 reserved and outstanding options and warrants, giving138,638,678 fully diluted ordinary shares. Further company information may be accessed at the Frontier Mining Ltd. websiteat: www.frontiermining.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
FML.L