Final Results

FRONTIER MINING LTD

("Frontier" or "the Company")

Final Results for the year ended 31 December 2012

Frontier Mining Ltd (AIM: FML), the AIM listed production, exploration and developmentcompany focused on Kazakhstan, today announces its final results for the year ended 31 December 2012.

Corporate Highlights

·; Transition from an exploration and development company into a copper producer

·; Yerlan Aliyev appointed as CEO and Chairman

Operational Highlights - Benkala

·; Commencement of mining operations, full commissioning of the crushing circuit, agglomeration and conveyor systems

·; Two leach pads completed, with additional two under construction at the end of 2012

·; 1,730,000 tonnes of waste mined; 435,000 tonnes of ore mined; 292,200 tonnes of ore processed containing 3,300 tonnes of Copper

·; 3,894 metres (20 holes) of drilling completed at Benkala; 1,062 metres (8 holes) of drilling completed at South Benkala

·; Benkala SX-EW plant was launched in August 2012 with 692 tonnes of LME Grade A copper cathode produced

·; In September 2012 the first shipment of copper cathode was made

Operational Highlights - Baitemir

·; Exploration programmes progressed as planned, with 8,032 metres of drilling and 30,056 cubic metres of trenching completed in 2012

·; Successful assay results, revealing a significant new copper mineralised footprint (with associated gold, silver and molybdenum) of a total length of 2,000 metres and a width of 400 metres

Financial Highlights

·; Revenue $5.4 million (2011: $3.2 million)

·; Profit \ (Loss) Before Tax of $(11.4) million loss (2011: $(17.0) million loss before revaluation gain and income tax )

·; Earnings \ (Loss) per Share of $(0.01) (2011: $0.02 earnings)

·; Net Asset Value of $150.0 million (2011: $161.2 million)

·; Successful refinancing of the group providing further financial stability:

o Sberbank debt facility of $35.0 million

o Raised $6.6 million in loan notes

o Repaid $2.6 million of debt

Post-Period Highlights

·; Sberbank debt facility increased by $17.9 million, with term of the entire facility extended till October 2018

·; DAMU, Entrepreneurship Development Fund, interest rate subsidy of 5% on more than 50% of the existing Sberbank loan secured

·; Operations restarted following winter shut down, first shipments made in June 2013 as planned

For further details please contact:

Notes to Editor

Frontier Mining Limited is a copper company with production, development and exploration operations in Kazakhstan.

The Company's main activity is at Benkala, an open pit copper mine and SX-EW production facility, located on the Urals copper gold ore belt in North West Kazakhstan. Frontier has a 100% interest in Benkala through its subsidiary KazCopper LLP. Frontier is undertaking exploration activities at Baitemir, a potential copper gold porphyry deposit with associated gold and molybdenum, situated on the Naimanjal exploration licence area in North East Kazakhstan. The Company has a 100% interest in Baitemir through its wholly owned subsidiary FML Kazakhstan.

Frontier maintains an administrative and technical office in Almaty, the former capital city of Kazakhstan and the main business centre in the South East. The Company also maintains offices in Aktyubinsk and Semipalatinsk, close to the Benkala and Baitemir operations respectively.

Benkala

A Competent Persons Report completed by Wardell Armstrong International ("WAI") in June 2010, estimated a NPV of $190 million for the oxide section of the Benkala project. This section represents development limited to only ~10% of the total resource at Benkala, based on 0.5% diluted copper grade, 63% recovery and 185,000 tonnes of contained metal, pricing copper at USD6,000 per tonne WAI updated their Joint Ore Reserves Committee resource estimate in February 2011, significantly increasing the measured and indicated resource for both oxide and sulphide ores. The oxide resource has increased by a total of 9,720 tonnes to 174,000 tonnes (+5.9%) and the sulphide resource by 65,540 tonnes to 779,280 tonnes (+9.2%) of copper. Further to the overall increase, both ore types have significantly more resource in the measured category in addition to an increase in the average oxide grade percentage. In addition, the overall inferred resource has also increased by 42,800 tonnes to 607,700 tonnes of copper (+7.6%).

Frontier broke ground at the Benkala production facility in October 2010 and shipped the first batch of copper cathode from the cutting-edge SX-EW plant less than 23 months later in September 2012.

In January 2012 Frontier added the South Benkala mining area to its existing Benkala licence. The South Benkala area is approximately 10 kilometres south of Benkala and has a GKZ forecast resource estimate of 94,500 tonnes of oxide and 515,100 tonnes of sulphide copper.

Baitemir

Identified as the most attractive prospect on the Naimanjal licence area, Frontier have completed a 17,000 metre exploration drill program at Baitemir to confirm the deposit size and grades and are now working to further define the mineral inventory in anticipation of a mineral resource prepared in accordance with both the GKZ resource standard and the guidelines of the JORC Code.

Issued Share Capital

Frontier Mining's shares are traded on the AIM market of the London Stock Exchange.

Frontier has 1,860,913,973 ordinary shares issued. For further information please visit: www.frontiermining.com

Frontier Mining Ltd

Chairman and Chief Executive Officer's Statement

Operational Review

The year to December 2012 was transformational for Frontier Mining as the Company transitioned from an exploration and development Company into an established Copper producer in the region.

Plant construction took just short of two years and commissioning took just over four months with first shipment of copper Cathode taking place in August 2012, which was in-line with management's expectations. We were extremely pleased that the SX-EW plant and ancillary equipment which we procured and constructed performed according to our design. Furthermore, we were also delighted that all commissioning challenges were successfully overcome by our engineering team at Benkala.

During the period, we excavated over 1,730,000 tonnes of waste materials, mined approximately 435,000 tonnes of ore and processed 292,200 tonnes of ore containing 3,300 tonnes of Copper. The operational SX-EW plant produced approximately 692 tonnes of LME Grade A copper cathode with an average selling price of $7,763 per tonne with an average cash cost of production of $5,811 per tonne. The average cash cost of production is expected to fall with the continued ramp up and optimization of operations in 2013.

Since production commenced, mining and ore processing ceased during the winter months and recommenced in April 2013 in-line with management's expectations. We have now collected the laboratory results of winter testing and are currently working to ensure operations at Benkala can operate all-year round.

In order to further prove out the Company's copper resources, we also completed 3,894 meters of drilling at Benkala, 1,062 meters at South Benkala and a further 8,032 meters and 30,056 cubic meters of trenching at Baitemir.

Financial Review

Frontier has an off-take agreement with its sole customer for 100% of the Company's production for the earlier of a four year period from commencement of production or the production and delivery of 50,000 metric tonnes of grade A copper. The Company is therefore confident that it can sell all of the Copper its produces for the foreseeable future. Total revenue for the period was $5.4m (2011: $3.2 million) from the sale of cathode copper as opposed to the sales of gold and silver for the previous year.

During 2012, selling, general and administrative expenses of $6.8 million are up from the previous year (2011: $6.0 million) reflecting growth in the Company and accrual of restoration costs for Naimanjal and Koskuduk. The Company incurred a loss before income tax of $11.4 million (2011: loss before revaluation gain and income tax of $17.0 million). Loss per share was $0.01 versus earnings per share of $0.02 for the 2011 financial year.

Completion of plant construction and commencement of production has added assets of $35.1 million to the Company's balance sheet in 2012. However, given the increase in borrowings and further losses, the Company's net asset value decreased to $150 million (2011: $161 million).

The Company has also successfully refinanced the Group to provide further financial stability with Sberbank providing a $35 million debt facility and a further $6.6 million from further loan notes and debt respectively.

Outlook

Operations at Benkala continue apace with an additional leach pad being stacked and an additional three leach pads under construction. Expansion of the SX-EW plant continues to progress on schedule. The Company is reviewing and analysing the potential to run operations at the site all year round and reach optimum levels of production.

Management continues to believe that Baitemir has the potential to be a substantial copper asset containing more than 500,000 tonnes of copper at economic grades. The Company will keep shareholders informed on exploration and development plans for Baitemir

Apart from production related matters, the management is addressing certain financing and administrative issues. With the entire executive management team now being based in Kazakhstan, we are able to respond in a prompt manner to any changing circumstances associated with operating copper mining, producing company in Kazakhstan.

The Company's progress to date and its potential reserves across South Benkala and Baitemir provides significant confidence that the Company can become an established premier copper producer in the region.

FRONTIER MINING LTD

FRONTIER MINING LTD

FRONTIER MINING LTD

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED DECEMBER 31, 2012

CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED DECEMBER 31, 2012

1. BACKGROUND

a) Organizational structure

Frontier Mining Ltd ("Frontier" or the "Company") was incorporated under the laws of the state of Delaware on August 5, 1998 for the purpose of exploring, and if warranted, developing gold and copper deposits in the Republic of Kazakhstan.

On October 18, 2010 notice was given to shareholders of the Company's intention to re-domicile from Delaware to the Cayman Islands. A Special General Meeting of the Company was held on November 8, 2010 and the re-domicile was approved. On December 21, 2010 the Company completed the re-domicile to the Cayman Islands and all shareholdings in existing Group entities were transferred to the newly incorporated Cayman Islands entity.

At December 31, 2012, the Company's registered office was located at: 1st Floor, Landmark Square Building, 64 Earth Close, PO Box 715 KY1-1107, Cayman Islands. At December 31, 2012 the Company had three representative offices, two of which were located in the Republic of Kazakhstan, and one in London, United Kingdom.

The number of employees of the Group at December 31, 2012 was 600 people (2011: 503 employees).

b) Operations

The Group's activities currently relate to: the Naimanjal license area, Benkala and the South Benkala license areas.

The principal activities of the Company and its wholly owned subsidiaries (the "Group") at December 31, 2012 are as follows:

Naimanjal license area

The Naimanjal subsurface use contract dated August 16, 1999 provides combined exploration and extraction rights for a 30-year period for gold, silver and copper deposits. The Naimanjal license No. 1166DD currently covers an approximate area of 529 square kilometres in North Eastern Kazakhstan. It includes five deposits, the status of which at December 31, 2012 is shown below:

During 2010, management suspended operations at the Naimanjal mine. In July 2011, management made a decision to suspend operations at the Koskuduk mine and focus on developing the Group's copper deposits at Baitemir, with Beschoku and Yubileiny as possible satellite feeders to Baitemir. Beschoku is a gold and copper deposit and Yubileuny is a copper deposit. Impairment losses were recognized against Koskuduk in 2011 and Naimanjal in 2010 (see Note 11).

On May 10, 2012 the Group received approval from the Ministry of Industry and New Technologies of the Republic of Kazakhstan ("MINT") for surrender of its subsurface use contracts for the Naimanjal and Koskuduk mines. According to the Kazakhstan Law on Subsurface Use, the Group has to provide a liquidation program to competent state bodies within 180 days from the date of approval. On June 20, 2013 the Group provided the liquidation program to the relevant State bodies and is awaiting regulatory approval prior to starting the liquidation works. The liquidation program is anticipated to be completed within three years after the receipt of approval from the State bodies. Management's estimate of the future remediation costs for the Koskuduk and Naimanjal mines is disclosed in Note 20, together with remediation costs applicable to other Group operations.

Benkala license areas

(i) Benkala

The Benkala copper-molybdenum-gold deposit is located in North-western Kazakhstan within the Ural gold/copper ore belt. The Group's initial 50% interest in the Benkala project was acquired in 2007. The Benkala subsurface use contract dated November 15, 2007 is valid for 29 years with an extension right and includes a four year exploration period and a 25 year development period. At December 12, 2011 the Group extended the exploration period for an additional two years. In 2010 Frontier entered into a contract with Coville Intercorp Ltd ("Colville"), a related party by virtue of it being a joint venture partner in the Benkala project, to acquire the remaining 50% interest in the Benkala project and a 100% interest in the Maminskoye gold exploration asset in Russia, in exchange for Frontier shares. This transaction was approved at a Special General Meeting of the Company held on November 8, 2010 and the acquisition was conditional upon the receipt of certain government approvals. On April 11, 2011 the Company received final approval from the Kazakh authorities to acquire the remaining 50% of the Benkala project from Coville. The Company sold the Maminskoye gold exploration deposit in July 2011 to an unrelated party.

In August 2012, copper cathode production commenced at the Benkala mine. To date, the Company has been trialing crushing, agglomeration and leach processes under different operating parameters to determine the optimal performance and operational efficiencies of the 7,000 tonnes per annum electrowinning ("SX-EW") plant.

(ii) South Benkala

In May 2011 the Company announced that it had entered into a sale and purchase agreement to acquire the subsurface use contract for the exploration deposit known as South Benkala from an unrelated party for a total consideration of $2.5 million. The Republic of Kazakhstan had a pre-emptive right to acquire the property, which was not exercised and thus the licence was officially transferred to KazCopper LLP in December 2011. The subsurface use contract was originally signed in February 2009 and was for a four year exploration period until February 2013. In February 2013 Kazcopper LLP requested an extension of the exploration period until February 2015.On June 12, 2013 Kazcopper LLP was notified that the relevant state body approved the exploration license extension. As at the date of these consolidated financial statements, management is awaiting receipt of official approval of an addendum to the subsoil use contract relating to the exploration period extension at South Benkala. Based on the Group's historical experience, management believes that the official approval will primarily be an administrative process.

2. PRESENTATION OF FINANCIAL STATEMENTS

Consolidated subsidiaries

The consolidated financial statements include the Company and its wholly owned subsidiaries (the "Group") namely Frontier Mining Antilles NV, Frontier Mining Co-operative, Frontier Mining Finance BV, US Megatech Inc., KazCopper LLP, FMLK, Kazakhstan Chemical Company LLP and Baltemir LLP.

Basis of presentation

These consolidated annual financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"). These financial statements are presented in US Dollars ("$" or "USD"), unless otherwise indicated. Management has concluded that USD best represents the economic effects of transactions, events and conditions related to the Group's operations. Transactions in other currencies are treated as transactions in foreign currencies.

The US Dollar is the functional currency of the Company and all entities in the Group.

The consolidated financial statements are prepared under the historical cost convention, except for the valuation of certain financial instruments as described in Note 4 and mineral rights as described in Note 19.

Going concern

These consolidated financial statements are prepared on a going concern basis.

For the year ended December 31, 2012 the Group incurred a loss before income tax of $11,353,061 (2011: loss before gain recognized on previously held interest and income tax of $17,038,534) and had net operating cash outflows of $20,257,152 (2011: $3,957,961). At December 31, 2012 the Group had accumulated losses of $60,042,983 (2011: $48,765,736) and a working capital deficit of $24,512,672 (2011: $19,581,822).

During 2012, the Group completed the initial development of the Benkala mine, construction of a processing plant for oxide ore and commenced production in August 2012. Mining and ore processing ceased during the winter months and recommenced in April 2013. To date, the Group has not earned significant revenues from the Benkala mine which is the Group's sole operating asset and source of operating cash inflow. The Group requires operating and financing cash inflows to progress its cathode copper production plans at Benkala; to continue to explore and develop copper deposits at South Benkala and Baitemir (with Beschoku and Yubileiny as possible satellite feeders to Baitemir) in order to comply with commitments under the subsoil use contracts; and to repay liabilities when they become due. To generate these cash inflows, management's strategy is to achieve a planned level of copper cathode production at Benkala and to complete current negotiations of a new $20 million financing facility. It is expected that this facility will be used to refinance short-term borrowings of $10 million with the remaining balance to be used for future capital expenditures. The amount expected to be available to refinance short-term borrowings is less than the total of such borrowings at December 31, 2012 which amounts to $19.4 million. Management anticipates that they will be able to extend repayment terms of the relevant short-term liabilities to cover the shortfall and, if necessary, will defer capital expenditure until sufficient funds are available to repay short-term borrowings.

Management's cash flow forecasts, based on the assumption that budgeted production at Benkala will be achieved and market prices are consistent with forecasted copper prices, show that the Group will generate operating cash inflows for period up to June 30, 2014. Key assumptions made by management in its forecasts of operating cash inflows include:

·; minimum copper production from Benkala in 2013 of 3,500 tonnes and 5,500 tonnes in 2014; and

·; copper price of $7,000 per tonne in 2013 and 2014.

In addition, management's cash flow forecasts assume the continued availability of existing finance facilities up to the time that the negotiations of additional debt funding are completed. A summary of the Group's financing arrangements at December 31, 2012 described in Note 19 is as follows:

·; The Group has a $35 million bank financing agreement, which comprises a $25 million investment loan to be used for capital expenditure and a $10 million working capital facility. At December 31, 2012 $33.7 million of the facility was outstanding with an undrawn amount of $1.3 million;

·; The Group extended the maturity date of its financing agreement with a related party until January 2014. At December 31, 2012 $14 million of this facility was payable, with an undrawn amount of $6.7 million;

·; The Group extended the maturity dates of two notes payable totalling $3.4 million with an unrelated party, until September 2013 and July 2013, respectively. At December 31, 2012 $3.4 million of notes payable were outstanding;

·; The Group extended the maturity dates of two notes payable with totalling $10 million with an unrelated party, until August 2013;

·; During 2012, Frontier issued three individual notes payable totalling $6 million to an unrelated party;

·; During 2012, the Group received a loan of $0.6 million from an unrelated party;

·; During 2012, the Group received a loan of approximately $1.1 million from related parties.

At December 31, 2012 the total finance facilities available to the Group under the above arrangements were approximately $69 million of which approximately $8 million was undrawn at that date. Additionally, on April 23, 2013 the bank financier to the Group agreed to provide Frontier with an additional loan and credit facility of $17.9 million.

The Group's funding requirements substantially exceed its cash balance and the repayment of short-term liabilities and successful negotiation of additional funding is a primary area of substantial focus for management. The existing undrawn loan facilities, including the additional bank facility entered into in April 2013, and cash flow from confirmed copper sales is insufficient to meet all working capital needs and repay all short-term debts of the Group for the next 12 months. To meet this shortfall, management has signed a non-binding letter of intent with an investment fund according to which Frontier would issue convertible notes of up to $20 million for a term of four years, with annual interest of 12% and a conversion rate of 5 pence (equivalent to $0.07) per common share. Management believes that this transaction will be finalised after the investment fund completes its due diligence on the Group and agrees on all terms and conditions of the transaction.

As described above, at December 31, 2012 the Group has short-term liabilities of $19.4 million due within the next 12 months. Management believes that if successful completion of the new financing arrangement described above with the investment fund is delayed, it will still be able to successfully renegotiate the repayment terms of its short-term liabilities.

Management believes that based on historical experience and the status of negotiations with the investment fund relating to an issue of convertible debt, sufficient funding will be available to enable the Company to continue operations for the 12 month period from the date of signing of these consolidated financial statements.

In light of the above, a material uncertainty exists which may cast significant doubt on the Group's ability to continue as a going concern and, therefore, it may be unable to realise its assets and discharge its liabilities in the normal course of business. These consolidated financial statements do not include any adjustments that might result from these uncertainties. Such adjustments, if any, will be reported in the Group's consolidated financial statements in the period when they become known and could be reasonably estimated.

3. KEY SOURCES OF ESTIMATION UNCERTAINTY AND CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES

The preparation of consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Critical judgments in applying the entity's accounting policies

In the process of applying the entity's accounting policies, which are described in Note 4, management has made the following judgments and estimates that have the most significant effect on the amounts recognized in the financial statements.

Impairment of non-current assets

The Group assesses its non current assets at the end of each reporting period to determine whether any indicators of impairment exist. If there are any such indicators, the recoverable amount of the assets is calculated and compared to the carrying amount. The excess of the carrying amount over the recoverable amount is recognized as an impairment loss.

The recoverable amount is calculated as the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use. The calculation of value in use requires management to make estimates regarding the Group's future cash flows. The estimation of future cash flows involves significant estimates and assumptions regarding mineral resource estimates, gold, silver and copper commodity prices, level of production, operating costs and discount rates. Due to their subjective nature, these estimates could differ from future actual results of operations and cash flows; any such difference may result in impairment in future periods and would decrease the carrying value of the respective asset.

Impairment losses were recognised against the Naimanjal mine ($16.5 million) in 2010 and the Koskuduk mine ($6.8 million) in 2011.

The Baitemir area of interest is management's principal focus for the Naimanjal licence area and the Group has accelerated previous exploration activities. The Baitemir project is in the exploration and evaluation stage. Management performed an analysis of the exploration and evaluation asset attributable to the Baitemir project (including the related Beschoku and Yubilenyi areas of interest) for existence of impairment indicators at December 31, 2012. No impairment indicators were identified. Management made its conclusion based on the positive results of drilling and geophysical results based on the results of a preliminary valuation report on the Baitemir project prepared by independent geological experts in May 2013 which indicated the existence of potential recoverable reserves.

The key assumptions used in the determination of value in use for non-current assets related to the Benkala project include:

·; Commercial mineable reserves of oxide copper ore of 32,563 thousand tonnes;

·; Estimated mineable reserves of sulphide copper ore of 181,936 thousand tonnes;

·; Estimated mineable resources of oxide copper ore of 17,000 thousand tonnes from the South Benkala project;

·; Production capacity for copper cathode from oxide ore of 20,000 tonnes per annum and sulphide ore of 50,000 tonnes per annum;

·; Sulphide ore operations start in the sixth year of oxide production;

·; The life of the mine period is expected to be 2038.;

·; Total capital expenditure of $77 million for expansion of oxide copper plant to capacity of 20 thousand tonnes per annum and $485.5 million capital expenditure for construction of a flotation plant to process sulphide ore;

·; Copper price of $7,000 per tonne;

·; Gold price of $1,563 per 1 ounce, Molybdenum price of 18,000 per tonne, and silver price of $26 per 1 ounce; and

·; Cost per unit ("CPU") of $2,430 per tonne for oxide ore and $3,500 per tonne for sulphide ore;

·; Discount rate of 16.6%.

Ore reserves

Ore reserves are a critical component of the Group's projected cash flow estimates that are used to assess the recoverable values of assets, to determine depreciation and amortization expense and to forecast the timing of the payment of mine abandonment and site restoration costs. In estimating the amount of ore reserves for the Benkala and South Benkala areas of interest, management used 2011 and 2013 reports related to each area of interest, respectively, obtained from independent geological experts. The reserve and resource estimations were prepared under the Joint Ore Reserves Committee ("JORC") quantification methodology to interpret geological and exploration data to determine measured, indicated resources and inferred reserves. The estimation of reserves is based on expert knowledge and estimation. The quantification of the reserves involves a degree of uncertainty. The uncertainty is primarily related to completeness of reliable geological and technical information. In addition, the presence of reserves does not mean that all reserves will be able to be extracted on a cost effective basis. Ore reserves are analysed and assessed on a periodic basis. The quantity of reserves can be subject to revision as a result of changes in production capacities and changes in development strategy.

Exploration and evaluation assets

The Group's accounting policy for exploration and evaluation expenditure results in such expenditure being capitalized for those projects for which such expenditure is considered likely to be recoverable through future extraction activity or sale, or for which the exploration activities have not yet reached a stage which permits a reasonable assessment of the existence of reserves. This policy requires management to make certain estimates and assumptions as to future events and circumstances, in particular whether the Group will proceed with development based on existence of reserves or whether an economically viable extraction operation can be established. Such estimates and assumptions may change from period to period as new information becomes available. If, subsequent to the capitalization of the exploration and evaluation expenditure, a judgment is made that recovery of the asset is unlikely or the project is to be abandoned, the relevant capitalized amount will be written off in the statement of comprehensive income.

Depreciation and amortization of mining assets

The Group's mine development assets and mineral rights are depreciated over the respective life of the mine using the unit-of-production (UOP) method based on the estimated ore reserves.

Any changes to the ore reserves has a direct impact on the depreciation rates and, subsequently, the asset carrying values. Any change in the depreciation rate is applied on a prospective basis, which could result in higher depreciation in future periods.

Property, plant and equipment are depreciated on a straight line basis over the useful economic lives or life of mine whichever is shorter. Management periodically reviews the appropriateness of economic useful lives of the assets based on the current condition and the estimated period during which they will bring economic benefit to the Group.

Provision for mine abandonment and site restoration

The Group's mining activities are subject to various laws and regulations governing the protection of the environment. The Group estimates the provision for mine abandonment and site restoration obligations based on management's understanding of the current legal requirements and license agreements. The provision is based on management's estimate of the total cost of restoration for disturbance caused at the reporting date and is discounted to its net present value and recorded as an asset over the estimated mine life. The estimate of total cost requires management to make a number of assumptions including restoration activities and discount rates. A change in these assumptions, or a change in the environmental laws, could result in a change in the provision in a future period. Any such change is recorded at the time of the revision, and the amount of asset and expense each period is modified on a prospective basis.

Financial liability at fair value through profit or loss

The Group has financial liabilities recorded at fair value through profit or loss being loans from various entities. The fair values of these liabilities are determined using a discount valuation model.

As described in Note 19, the Group uses valuation techniques that include inputs that are not based on observable market data to estimate the fair value of certain types of financial instruments. Note 19 provides detailed information about the key assumptions used in the determination of the fair value of financial instruments.

Contingencies

By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of such contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events.

Contractual commitments

As described in Note 28, the Group has minimum license commitments stipulated under the Subsoil Use Contract ("SUC"). During the year ended 31 December 2012 the Group was not fully in compliance with the provisions of the SUC for Benkala, South Benkala and Naimanjal license area. There is a risk that SUC may be annulled by the government of the Republic of Kazakhstan if the Group breaches its contractual obligations.

Management believes that incomplete contractual obligations will be paid in the following years and the Group is not exposed to risk of annulment with the State Authority requirements.

Income taxes

The operating subsidiaries of the Group are subject to income taxes in the Republic of Kazakhstan. The taxation system in Kazakhstan is relatively new and is characterized by frequent changes in legislation, official pronouncements and court decisions, which are often unclear, contradictory and subject to varying interpretation by different tax authorities. Taxes are subject to review and investigation by various levels of authorities, which have the authority to impose severe fines, penalties and interest charges. These circumstances may create tax risks in Kazakhstan that are more significant than in other countries. 

The Group recognizes liabilities attributable to its Kazakhstani subsidiaries for anticipated additional tax based on its interpretations of the current tax laws and the amount it believes that is probable to be paid upon any inspection by the tax authorities.

Management believes that it has provided adequately for tax liabilities based on its interpretations of applicable tax legislation, official pronouncements and court decisions.

However, the interpretations of the relevant authorities could differ and the effect on these consolidated financial statements, if the authorities were successful in enforcing their interpretations, could be significant. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax provisions in the period in which such determinations are made.

Deferred tax assets are initially recognised only to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The Group did not recognise deferred tax assets due low probability that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized during the period determined by current tax legislation.

Value added tax ("VAT")

The stage and timing of development of the Benkala project meant that the Group did not generate sufficient revenue in the year ended December 31, 2012 to recover its VAT receivable balance at December 31, 2012 and accordingly, did not receive any VAT refunds from the government. Recoverability of VAT receivable is dependent upon the Group having sufficient future VAT payable on sales of copper cathode against which VAT recoverable can be offset. Management believes that the Group will have sufficient future VAT payable to be used to offset the VAT receivable, but does not expect a full recovery to take place within 12 months from date of the last statement of financial position. Accordingly, VAT receivable was classified as both a current and non-current asset based upon management's estimate of the timing of offsets. The Group creates an impairment provision against VAT receivable up to the amount which management considers to be not recoverable.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

4.1 Principles of consolidation

The consolidated financial statements of the Group include Frontier and the companies that it controls, and from which it obtains economic benefits. This control is normally evidenced when the Company is able to govern the financial and operating policies of an entity so as to benefit from its activities. The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate. Intercompany balances and transactions, including intercompany profits and unrealized profits and losses are eliminated on consolidation.

4.2 Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The cost of the business combination is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date, except that:

·; Deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively; and

·; Assets (or disposal Groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

The identifiable intangible assets acquired in a business combination are recognised separately from goodwill. An intangible asset is identifiable if it meets either the separability criterion or the contractual-legal criterion.

When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e. the date when the Group obtains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of.

4.3 Interests in joint ventures

A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control, which is when the strategic financial and operating policy decisions relating to the activities of the joint venture require the unanimous consent of the parties sharing control.

Joint venture arrangements that involve the establishment of a separate entity in which each venture has an interest are referred to as jointly controlled entities. The Group reports its interests in jointly controlled entities using proportionate consolidation. The Group's share of the assets, liabilities, income and expenses of jointly controlled entities are combined with the equivalent items in the consolidated financial statements on a line-by-line basis.

Any excess of purchase consideration over the acquisition of the Group's interests in a jointly controlled entity is accounted for in accordance with the Group's accounting policy for business combinations.

Where the Group transacts with its jointly controlled entities, unrealized profits and losses are eliminated to the extent of the Group's interest in the joint venture.

4.4 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable.

Revenue is recognized when the risks and rewards associated with ownership of goods are passed to customers; the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; it is probable that the economic benefits associated with the transaction will flow to the Group; the amount can be measured reliably; and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue from copper cathode sales contracts is recognised when title passes to the customer which is also when the risks and rewards of ownership pass to the customer. Cathode copper sales are initially recorded based on market prices at the date of delivery and subsequently adjusted when the final selling price is determined by the Group's sole customer. Such adjustments may relate to changes in metal quantities upon assay results as well as pricing terms that may be amended by the customer during a quotation period defined in the copper sales agreement. For all "open" and not finalized invoices, revenue is recognised based on market copper prices at the date of goods delivery and any subsequent adjustments made by the customer after price finalization are recorded in the subsequent period profit and loss.

Revenue from saleable gold and silver produced during the testing phase of production activities is deducted from capitalized mine development costs.

4.5 Foreign currencies

The functional currency of the all companies in the Group is the US Dollar. The presentation currency of the Group is the US Dollar.

In preparing the financial statements of the individual entities that form part of the Group, transactions in currencies other than the entities' functional currency (foreign currencies) are recorded at the rates of exchange prevailing at the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated into the functional currency at the rates prevailing at the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in items of historical cost in a foreign currency are not retranslated.

Exchange differences are generally recognized in the statement of comprehensive income in the period in which they arise.

4.6 Borrowing costs

Borrowing costs are recognized as an expense in the period in which they are incurred, except to the extent that they are directly attributable to the acquisition, construction or production of qualifying assets. In that case, borrowing costs are added to the cost of these assets, until such time as the assets are substantially ready for their intended use.

4.7 Taxation

The operating subsidiaries of the Group are subject to Kazakhstan income tax laws. The Company and subsidiaries registered in Cayman Islands are exempt from all corporate and other tax.

Income tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates enacted or substantially enacted at the reporting date.

Deferred tax is recognized using the balance sheet liability method in respect of temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements to the extent that there is a reasonable expectation of their realization. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither taxable profit nor accounting profit.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company intends to settle its tax assets and liabilities on a net basis. Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Current and deferred tax for the period is charged or credited to the consolidated statement of comprehensive income, except when it relates to items credited or charged directly to equity (in which case the deferred tax is also recognized directly in equity) or where they arise from initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in determining the excess of the Group's interest in the net fair values of the acquiree's net assets over the cost of the business combination.

4.8 Retirement benefit costs

The Group accounts for its employee retirement benefit costs in accordance with the pension scheme of the Republic of Kazakhstan, which requires current contributions by the employer and employee calculated as a percentage of current gross salary payments. This plan is a defined contribution plan and such contributions (social tax payments) are charged to expense as incurred.

4.9 Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

The initial cost of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

Capital work in progress is carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Group's accounting policy. Depreciation for these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

Capitalized cost includes major expenditures for improvements and replacements that extend the useful lives of the assets or increase their revenue generating capacity. Repairs and maintenance expenditures that do not meet the foregoing criteria for capitalization are charged to statement of comprehensive incomeas incurred.

Depreciation is computed on a straight-line basis over the following estimated useful lives:

The useful lives and depreciation method are reviewed annually to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits to be derived from items of property, plant and equipment. The effects of any changes in estimate are accounted for on a prospective basis.

4.10 Exploration and evaluation assets

Exploration and evaluation assets are measured at cost.

Expenditures related to the following activities are capitalized and included in the initial measurement of exploration and evaluation assets:

·; acquisition of rights to explore mining licenses;

·; topographical, geological, geochemical and geophysical studies;

·; exploratory drilling;

·; trenching;

·; sampling; and

·; activities in relation to evaluating technical feasibility and commercial viability of extracting a mineral resource.

Expenditures not included in the initial measurement of exploration and evaluation assets are:

·; the development of a mineral resource once technical feasibility and commercial viability of extracting a mineral resource have been established; and

·; administration and other general overhead costs.

Exploration and evaluation costs for each area of interest, other than that acquired from the purchase of another mining company, are carried forward as an asset provided that one of the following conditions is met:

·; such costs are expected to be recouped in full through successful development and exploration of the area of interest or alternatively, its sale; or

·; exploration and evaluation activities in the area of interest have not yet reached a state which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active significant operations in relation to the area are continuing, or planned for the future.

Purchased exploration and evaluation assets are recognised as assets at their cost of acquisition or at fair value if purchased as part of a business combination.

An impairment review is performed when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. Where a decision is made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to mine development assets.

4.11 Mine development assets

The decision to develop a mine property within a project area is based on an assessment of the commercial and technical viability of the project, the availability of financing and the existence of markets for the product. Once the decision to proceed to mine development is made, development expenditures relating to the project are capitalized and carried at cost with the intention that these will be amortized by charges against earnings from future mining operations.

Development expenditure is recognized at cost. Upon reaching designed commercial production capacity, mine development assets are amortized using the unit of production method.

Mineral rights

Mineral rights are recorded as assets upon acquisition at fair value and are included within mining assets.

Intangible assets

Intangible assets include non-mining and exploration licenses and computer software. Intangible assets under development are not amortized. Amortization of these assets begins when the related assets are placed in service.

Licenses

Licenses are stated at cost net of accumulated amortization. Amortization is provided so as to write down the cost of an asset on a straight-line basis over its estimated useful economic life.

Computer software

Computer software costs are recognized as assets at cost net of accumulated amortization. Amortization is recognised on a straight-line basis over their useful lives, but not exceeding a period of seven years.

4.12 Impairment of tangible and intangible assets

The Group reviews on an annual basis the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. Impairment losses are recognized as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that its carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a re-valued amount, in which case the reversal of the impairment loss is treated as a revaluationincrease.

4.13 Inventories

Inventories are stated at the lower of cost and net realizable value. Cost, including an appropriate portion of fixed and variable overhead expenses, is assigned to inventories by the method most applicable to the particular class of inventory. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

Ore stockpiles are recognised using the weighted average cost method and include the cost of direct materials, power, labour costs and proportion of stripping costs.

4.14 Accounts receivable

Accounts receivable are classified as receivables. Receivables are measured at amortized cost using the effective interest method. Interest income is recognized by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Accounts receivable are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

4.15 Cash and cashequivalents

Cash includes cash on hand and deposits with banks with original maturity terms not more than three months.

4.16 Restrictedcash deposits

Cash deposits with banks are made pursuant to requirements of the Group's subsurface use contracts. The Group accumulates such cash deposits for restoration provisions related to obligations to restore and make the mines safe after use and the estimated costs of cleaning up any chemical leakage.

4.17 Site restorationcosts

Provision is made for closure, restoration and environmental clean-up costs where there are legal or constructive obligations to do so, (which includes the dismantling and demolition of infrastructure, removal of residual materials and remediation of disturbed areas) in the accounting period when the related environmental disturbance occurs, based on the estimated future costs. The provision is discounted where material and the unwinding of the discount is recorded as a finance expense in the period incurred. At the time of establishing the provision, a corresponding asset is capitalized and amortised on a unit of production basis upon the commencement of production. For those mines which are suspended and will be returned back to the government restoration provision is recorded in statement of comprehensive income.

The provision is reviewed on an annual basis for changes in cost estimates, economic useful life of existing operations and inflation and discount rates. 

4.18 Provisions

A provision is recognized when, and only when, the Company has a present obligation (legal or constructive) as a result of a past event and it is probable (that is, more likely than not) that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of the provision is determined based on the present value of the expenditures expected to be required to settle the obligation.

4.19 Financial liabilities and equity instruments issued by the Group

Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

Equity instruments

Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs or at the fair value of the consideration given when issued for asset purchases or services received.

Compound instruments

The component parts of compound instruments issued by the Group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. The amount is recorded as a liability on an amortized cost basis using the effective interest method until extinguished upon conversion or at the instrument's maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not subsequently re-measured.

Derivative financial instruments

Derivatives are initially recognized at fair value at the date a derivative contract is entered into and are subsequently re-measured to their fair value at each balance sheet date. The fair values are estimated based on quoted market prices or pricing models that take into account the current market and contractual prices of the underlying instruments and other factors. The resulting gain or loss is recognized in the profit or loss.

A derivative with a positive fair value is recognized as a financial asset whereas a derivative with a negative fair value is recognized as a financial liability. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realized or settled within 12 months.

Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. They are subsequently measured at amortized cost using the effective interest method, with interest expense recognized on an effective yield basis.

4.20 Adoption of new and revised standards and interpretations

New and revised IFRSs in issue but not yet effective

At the date of authorization of these consolidated financial statements, the following new standards and interpretations were in issue, but not yet effective, and which the Group has not early adopted:

·; IFRS 7 "Financial Instruments: Disclosures" - amendments enhancing disclosures about offsetting financial assets and financial liabilities1;

·; IFRS 9 "Financial Instruments"4;

·; IFRS 10 "Consolidated Financial Statements"2;

·; IFRS 11 "Joint Arrangements"2;

·; IFRS 12 "Disclosure of Interest in Other Entities"2;

·; IFRS 13 "Fair Value Measurement"1;

·; IAS 19 "Employee Benefits" ( as revised in 2011);

·; IAS 1 "Presentation of Financial Statements" - amendments to revise the way other comprehensive income is presented3;

·; IAS 1 "Presentation of Financial Statements" - amendments to clarify the requirements for comparative information1;

·; IAS 27 - reissued as IAS 27 "Separate Financial Statements" (as amended in May 2011)2;

·; IAS 28 - reissued as IAS 28 "Investments in Associates and Joint Ventures" (as amended in May 2011)2;

·; IAS 32 "Financial Instruments: Presentation" - amendments which provide clarifications on the application of the offsetting rules and disclosure requirements5;

·; Amendments to IFRSs: Annual Improvements to IFRSs 2009-2011 Cycle1; and

·; IFRIC 20 "Stripping Costs in the Production Phase of a Surface Mine" - clarifies when production stripping should lead to the recognition of an asset and how that asset should be measured, both initially and in subsequent periods1.

1 Effective for annual periods beginning on or after January 1, 2013, with earlier application permitted.

2 Each of the five standards becomes effective for annual periods beginning on or after January 1, 2013, with earlier application permitted if IFRS 10, IFRS 11, IFRS 12, IAS 27 (2011) and IAS 28 (2011) are early applied at the same time (except for IFRS 12 that can be applied earlier on its own).

3 Effective for annual periods beginning on or after July 1, 2012, with early adoption permitted.

4 The amendments to IFRS 7 are required for annual periods beginning on or after January 1, 2013 and interim periods within those annual periods. The disclosures should be provided retrospectively for all comparative periods. The amendments to IAS 32 are effective for annual periods beginning on or after January 1, 2014, with retrospective application required.

5 Effective for annual periods beginning on or after January 1, 2015, with earlier application permitted

The Group is considering the impact of these amendments on the consolidated financial statements and the timing of their application.

5. SEGMENT ANALYSIS

5.1 IFRS 8 Operating Segments

Pursuant to IFRS 8, the Group is required to identify and report operating segments on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources and to assess performance. The Group's chief operating decision maker has been determined as the Group's chief executive.

Information reported to the Group's chief operating decision maker for the purposes of resource allocation and assessment of segment performance is specifically focused on license areas. The Group's reportable segments for 2012 are as follows:

·; Naimanjal license area (gold, silver and copper)

ü Naimanjal mine

ü Koskuduk mine

ü Baitemir (includes Beschoku and Yubileiny)

·; Benkala (copper)

ü Benkala and South Benkala license area

The Group's measure of segment results is loss/profit before taxation and before the allocation of central administrative costs, Directors' salaries, and selling, general and administrative costs, finance costs and other gains or losses, in each case not directly related to license areas. Information regarding the Group's reportable segments is presented below.

5.2 Segment revenues and results

The following is an analysis of the Group's revenue and results by reportable segment:

Revenue recorded represents revenue generated from the Group's sole external customer (see Note 6). There were no intersegment sales.

The following is an analysis of the reconciling items between the total for operating segments and the consolidated total:

5.3 Segment assets and liabilities

For the purposes of monitoring segment performance and allocating resources between segments:

·; all assets are allocated to reportable segments other than financial assets and tax assets; and

·; all liabilities are allocated to reportable segments other than financial liabilities, current and deferred tax liabilities, and other liabilities

5.4 Other segment information

The accounting policies of the reportable segments are the same as the Group's accounting policies described in Note 4.

Depreciation and amortization charges for the year are:

Naimanjal license area:

·; Naimanjal mine nil (2011: nil)

·; Koskuduk mine nil (2011: $752,939)

·; Baitemir mine $56,014 (2011: nil)

·; Benkala license areas $4,717,105 (2011: $1,020,039)

6. REVENUE

The Company has an off-take agreement with its sole customer for 100% of KazCopper's production for the earlier of a four year period from commencement of production (being August 2012) or production and delivery of 50,000 metric tonnes of grade A copper. During the year ended December 31, 2012 the Group delivered 692 metric tonnes of copper to its customer. The off-take agreement includes a $60 discount on the spot price of grade A copper.

All of the Group's sales of copper in 2012 are made to one customer registered in the Cayman Islands and prior to 2012 all gold and silver dore alloy sales were made to one customer in Switzerland.

7. COST OF SALES

8. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

9. FINANCE COSTS

10. EXPLORATION AND EVALUATION ASSETS

Movements for the year are summarized as follows:

11. MINE DEVELOPMENT ASSETS