Final Results

27 June 2011

Frontier Mining Ltd

("Frontier" or "the Company")

Final Results for the year ended 31 December 2010

Frontier Mining Ltd (AIM: FML), the AIM listed gold and copper exploration and development company focused on Kazakhstan, today announces its final results for the year ended 31 December 2010.

Financial Highlights

- Revenue $5.7 million (2009: $2.9 million)

- $22.8 million financing obtained, comprising $5.8m equity placement and $17m debt facility

- $19.1 million directly invested into Benkala and Koskuduk projects

- Repayment of $11.8 million of previously existing debt by warrant conversion and cash.

 Operational Highlights

- Acquired the assets of the Company's Joint Venture partner, Coville Intercorp Ltd., contributing remaining 50% of Benkala Project, 100% of Maminskoye Gold Project and an experienced mining technical team

- Completion of a JORC compliant resource statement for Benkala

- Commenced construction of the Benkala Solvent Extraction Electro Winning (SX-EW) Copper Project

- Exploration of Baitemir copper prospect

- Completed re-domicile of the Group from the US to Cayman Islands

- Established operations at Koskuduk and mothballed operations at Naimanjal gold mine

Post-Period Highlights

- Obtained complete Kazakhstan Governmental sign off on the acquisition of Coville assets

- Purchased option over the South Benkala deposit

- Obtained an additional $14 million of financing, with $5 million more conditional

- Commenced Bankable Feasibility Study for Benkala

- Confirmed the Maminskoye resource to Russian standards

- Strengthened the Board of Directors

- Extended and increased the main financial facility from New Technology LLP (formerly Zere Group JSC) for a further 12 months to December 2012

Erlan Sagadiev, CEO of Frontier, commented:"2010 and the period post year-end have been transformational for Frontier and have seen the Company make excellent progress. In particular, the re-domicile process and the key acquisition of the Coville assets have been significant achievements.

"Significant progress at Benkala continues on a monthly basis as we achieve key milestones towards our first copper production. The Company is confident that, with the upcoming release of the Company's Bankable Feasibility Study, the full funding required for Benkala to meet its stated 2011 production targets will be secured.

"The management team is committed to being successful in these efforts, with the goal of solidly establishing Frontier as a premier mid-tier copper producer with a solid project pipeline offering an attractive platform for regional growth."

For further details please contact:

FRONTIER MINING LTD

CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S STATEMENT

Summary

As Chairman and Chief Executive Officer, I am pleased to report on the significant progress made by the Company during 2010 towards the establishment of Frontier as a significant mid-tier company within the Kazakh and Central Asian mining space. Since I joined the Frontier team as Chairman and Chief Executive in March 2009, our early efforts were to solidify the Company's finances and financial position; to evaluate the asset portfolio and to chart the future course for Frontier. Our efforts in 2010 have seen the implementation of our strategic plan to establish Frontier as a significant regional copper producer with an attractive project development portfolio.

Following completion of the acquisition agreement with Coville Intercorp Limited ("Coville") in 2011, the two companies began operating as one unit, focused on development of mining operations at Benkala. The acquisition received final Kazakh government approval in April 2011. Subsequent to year end, the Company has entered into an option agreement to acquire the South Benkala copper deposit, located approximately 10 km from the Company's processing facilities at Benkala which offers significant potential to be developed to support and extend the operating life or increase production of the Benkala SX-EW operation.

Operating and Financial Highlights

Sales revenue for the 2010 year was $5.7 million (2009: $2.9 million) which consisted of 4,180 ounces of gold at an average price of $1,288 an ounce, and 11,300 ounces of silver at an average price of $24 per ounce.

Operating loss for the year was $2.6 million (2009: $2.9 million), which together with finance costs of $2.3 million, re-domicile, acquisition and tax costs of $0.9 million, an additional fair value loss resulting from the 2009 share warrant issue of $9.0 million and an impairment charge against the Naimanjal mine of $16.5 million, resulted in a total loss of $31.3 million for 2010 after tax (2009: $30.6 million).

During 2009, Frontier suspended operations at the Naimanjal mine. This decision was made on the basis of ore recoveries and other general operating conditions with efforts being transferred to the development of the Koskuduk mine. Further investigation has determined that the mine cannot be operated as a financially viable going concern and the Company anticipates it will be returned to the State, with the Naimanjal License area continuing to be held by Frontier. As a result, an impairment loss of $16.5 million has been taken against that particular mine in 2010.

With the shares issued in December 2010 for the acquisitions of Maminskoye and the other 50% of the Benkala deposit, an initial fair valuation of $99 million dollars has been added to the Company's balance sheet in recognition of this purchase. This takes the Company's overall net asset value to a strong position of $125 million. The final valuation of these purchases will only be confirmed in the 2011 annual accounts and for the 2010 accounts the Benkala project continues to be reflected as 50% owned by Frontier.

During 2010, the Company raised $5.8 million in equity from a share placement and took on board $17.0 million of debt. Previous debt of $11.8 million was repaid, $1.8 million in cash and $9.9 million by way of conversion into shares via the exercise of warrants. $19.1 million was invested directly into the Benkala and Koskuduk projects.

As disclosed in the interim results, the exercise of the Warrants resulted in a further fair value accounting loss of $9.0 million but cleared the $26.4 million financial derivative liability that had been on the Company's balance sheet since December 31, 2009. As part of this transaction, shareholders equity increased from $5.3 million to $39.5 million.

Selling, general and administrative expenses of $3.1 million are up from the previous year (2009: $1.9 million) but this reflects the increased activity at both Benkala and Koskuduk. Corporate overheads increased by only 9% ($126,000) which reflects management's on-going drive to keep these under control and to focus all resources on the productive projects.

Project Review

Acquisition of Coville's Assets

In February 2010, Frontier agreed to acquire all of the assets of Coville for shares in Frontier. This transaction was strategically important because it consolidated ownership of the Benkala project under one management team and also brought Coville's Maminskoye gold deposit into Frontier's development pipeline. In addition, the Coville acquisition contributes a solid and experienced technical operating team to the Company. In particular, joining Frontier from Coville was Adil Tastanov, now the Company's Chief Operating Officer. Adil brings a significant track record of achievement and technical capability to Frontier as well as an experienced and cohesive construction and operating team.

Benkala

Frontier made substantial progress in 2010 towards the development of the Benkala copper oxide project, with approximately $20 million invested into the project during the year, primarily focused on construction and pre-production activities in preparation for commencing operations in 2011

In May 2010, Frontier commissioned Calder Maloney Pty Ltd., an Australian engineering and design firm, to create a detailed engineering and design of a 20,000 metric tonne per year SX-EW production facility for Benkala. By year end, approximately 90 per cent of all plant equipment had been identified, tendered and contracted.

Pre-stripping of the mine began in June and site works commenced in October. By the end of 2010 Frontier had removed 3.4 million tonnes of waste to access the ore body and the pit was at 28 meters below the original surface. Infrastructure work carried out during the year included construction of a personnel camp, office space, 10 kilometres of connecting roads to the main highway and railway, as well as internal roads and foundations for main plant and support facilities being laid. A second electrical line of 10 KvA to support construction operations was brought to the site in June and construction began on the main 110 KvA line. Two 500,000 tonne pads for ore placement and leaching were prepared awaiting lining. The ore body has now been reached and the first ore has been extracted and moved to the stockpile, such that production at the Benkala project is progressing in line with the stated schedule.

At June 1, 2011 construction for the total project was approximately 65% complete. First production is expected in late 2011.

The Company issued an initial Joint Ore Reserves Committee (JORC) statement for Benkala in early December, (which was further updated in February 2011) prepared by Wardell Armstrong International (WAI), which confirmed that the resource estimate was largely in line with previous Soviet estimates. Building on this technical basis, WAI was commissioned to prepare a Bankable Feasibility Study for the Benkala SX-EW project, which is underway, and completion is expected shortly. The results of this effort have enabled Frontier to declare a mining reserve for the oxide project which enable the Company to solicit financing proposals for the project if appropriate.

Benkala is set to be a key driver in bringing Frontier into significant revenue streams in the short to medium term.

Naimanjal License Area

The Naimanjal License comprises an area of approximately 170 square kilometres with a number of mining properties.

Naimanjal Mine

In late 2009, Frontier determined to put Naimanjal on a care-and-maintenance basis and to focus on developing gold production at Koskuduk. During 2010, the Company suspended operations at the Naimanjal mine. This decision was made on the basis of low ore recoveries and other general operating conditions. Further investigation has determined that the mine cannot be operated as a financially viable going concern and the Company anticipates it will be returned to the State with full impairment of the assets recognised in the 2010 accounts.

Koskuduk

Despite an unusually cold winter with record temperatures and snow levels, Frontier's team at Koskuduk did an excellent job to build a plant and complete the pit excavation over winter. Establishment of the pit, construction of the processing plant and project infrastructure, as well as project commissioning were all achieved within the first seven months of the year.

The Company began leaching at Koskuduk in June 2010 and production for the year was 4,180 ounces of gold and 11,300 ounces of silver. This was 50% of the Company's target budget due to significant delays encountered in permitting the power line to the site, which delayed the supply of electrical power to the site by several months and reduced available crushing capacity by 60% during the period. While disappointed with the production levels achieved in 2010, the Company is pleased with the successful commissioning of the Koskuduk project as an example of its technical capability within the Kazakh mining and business environment. Operations at Koskuduk, which were closed over the winter months, have now restarted for 2011 and, weather dependant, the Company expects to produce up to 6,000 ounces of gold this year.

Baitemir

The Naimanjal District also includes the Baitemir copper prospect located approximately 40 km south-east of Naimanjal. Copper-gold mineralisation is hosted both in intrusive and volcanic rocks.

The Company is very optimistic about the Baitemir copper resource. Further drilling and analytical work was completed in 2010 which suggests that Baitemir may exceed 800,000 tonnes of contained copper with an oxide portion of over 100,000 tonnes at economic grades in excess of 0.40% Cu. The Company is working with WAI to gain an initial understanding of the Baitimir resource and prospective project economics and to plan further exploration and metallurgical testing which will enable the Company to fast-track development at Baitimir as technical information is developed.

Frontier is now confident that Baitemir has the potential to be a substantial copper asset. The Company's proposed strategy at this stage is to continue exploration and technical work necessary to advance the project, with the goal of constructing a large flotation plant within the mid-term. Frontier will also examine the potential to use the other deposits within the Naimanjal licence area as satellite feeders to Baitemir.

Maminskoye

The Maminskoye gold project is located in south-western Russia's Ural mountain chain approximately 500km north of Benkala in an established gold and copper producing region. The Maminskoye licence hosts a number of significant gold bearing vein structures which have only been partially explored. The most advanced of these prospects is the Maminskoye gold deposit which hosts a resource of approximately 11.56 Mt, of ore grading approximately 2.4g/t and containing approximately 27.2 tonnes of gold. The Maminskoye resource was recently registered on to the State Balance of the Russian Federation. Frontier intends to engage independent consultants for further review of Maminskoye in 2011, with a goal of establishing a JORC compliant mineral resource. Frontier believes the license area is highly prospective for further discovery.

Maminskoye is located in a well established mining district, with significant regional infrastructure. The project is straightforward technically and economically attractive and offers a range of development options for Frontier: The Company could develop Maminskoye as a medium sized producer with significant potential for expansion, could work to expand the resource before committing to a development option, or could explore the possibility of a joint venture or sale to a third party.

Corporate

There have been significant changes to the Board in 2010 and in the recent months since year end. Both Tom Sinclair and Brian Savage have now left the Board, having been directors since the AIM listing. The Company would like to recognise their past efforts, especially in ensuring Frontier acquired excellent assets. Randy Eppler, Greg Vojack, Yerbulat Tastanov and Yerlan Aliyev have now joined the Board and, with their collective and varied experience, the Company believes it now has a very strong base of commercial and mining experience on which to draw.

Summary and Outlook

2010 and the period post year-end have been transformational for Frontier and have seen the Company make excellent progress. In particular, the re-domicile process and the key acquisition of the Coville assets have been significant achievements in the history of Frontier

It is at Benkala where Frontier believes it will transform itself from a development into a production company. Significant progress continues on a monthly basis as we achieve key milestones towards our first copper production. Management and the Board continue to explore all funding options to ensure that the Company meets its stated production goal and are confident that, with the upcoming release of the Company's Bankable Feasibility Study, full funding will be secured to complete Benkala.

Based on Frontier's continued efforts at Benkala the goals to advance the Company are clear:

·; Transition Frontier from a Development Company to an Operating Company

·; Improve market valuation with re-rating as an Operating Company

·; Generate cash flow to solidify financial position and fund development of the project pipeline

·; Evaluate South Benkala deposit and assess integration within Benkala SX-EW project

·; Continue Baitimir exploration and technical evaluation

The management team is committed to being successful in these efforts, with the goal of solidly establishing Frontier as a premier mid-tier copper producer with a solid project pipeline offering an attractive platform for regional growth.

Erlan Sagadiev

FRONTIER MINING LTD

FRONTIER MINING LTD

FRONTIER MINING LTD

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED DECEMBER 31, 2010

FRONTIER MINING LTD

CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED DECEMBER 31, 2010

FRONTIER MINING LTD

1. BACKGROUND

a) Organizational structure and operations

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 assets were transferred to a newly incorporated Cayman Islands entity. On December 22, 2010 the shares of the new Cayman Islands entity began trading and the shares of the former Delaware entity ceased trading.

In conjunction with the re-domicile process, the Company announced that it proposed to acquire the remaining 50% of the Benkala project and 100% of the Maminskoye gold deposit in southern Russia from Coville Intercorp Ltd ("Coville"). This acquisition was approved at the Special General Meeting of the Company that was held on November 8, 2010 but the acquisition was conditional upon the receipt of certain government approvals. These approvals were granted on April 11, 2011(see note 30).

At December 31, 2010, the Company's registered office was located at: 1st Floor, Landmark Square Building, 64 Earth Close, PO Box 715 KY1-1107, Cayman Islands

The principal activities of the Company and its wholly owned subsidiaries (the "Group") as of December 31, 2010 are as follows:

In addition, as at December 31, 2010 the Company owned a 50% interest in US Megatech BVI (incorporated in the British Virgin Islands) which is the sole shareholder of KazCopper LLP (incorporated in Kazakhstan). The remaining 50% of US Megatech BVI is owned by Coville and is the subject of a proposed acquisition by Frontier as described above. The principal activity of KazCopper LLP is exploration and development of the Benkala license.

Frontier is the parent entity of the Group (see Note 27).

At December 31, 2010 the Company had three representative offices, two of which were located in the Republic of Kazakhstan, and one in London, England. The number of employees of the Group at December 31, 2010 was 451 people (2009: 253 employees). The Group's activities currently relate to two licenses: the wholly owned Naimanjal contract license area and the 50% owned Benkala joint venture license.

Naimanjal license

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 kilometers in North Eastern Kazakhstan. It includes five deposits, the status of which as at December 31 is shown below:

During 2010, management suspended operations at the Naimanjal mine and commenced development of the Koskuduk mine. This decision was made on the basis of ore recoveries and other general operating conditions. Whilst a final decision has yet to be formally made, management anticipates that the Naimanjal mine will be returned to the State and, as a result, an impairment loss has been recognized against that particular area of interest in 2010 (see note 11). Production of dore began at the Koskuduk mine during 2010.

Benkala License

The Benkala copper-molybdenum-gold deposit is located in North-western Kazakhstan within the Urals gold/copper ore belt. Benkala is currently in the development stage with initial production of copper planned for 2011. The Group's interest in the Benkala project was acquired in 2007. The Benkala contract dated November 15, 2007 is valid for 29 years with an extension right and includes a 4 year exploration period and a 25 year development period.

b) Operating environment

Emerging markets such as Kazakhstan are subject to different risks than more developed markets, including economic, political and social, and legal and legislative risks. As has happened in the past, actual or perceived financial problems or an increase in the perceived risks associated with investing in emerging economies could adversely affect the investment climate in Kazakhstan and Kazakhstan's economy in general.

Laws and regulations affecting businesses in Kazakhstan continue to change rapidly. Tax, currency and customs legislation within Kazakhstan are subject to varying interpretations, and other legal and fiscal impediments contribute to the challenges faced by entities currently operating in Kazakhstan. The future economic direction of Kazakhstan is largely dependent upon economic, fiscal and monetary measures undertaken by the government, together with legal, regulatory, and political developments.

The global financial turmoil that negatively affected Kazakhstan's financial and capital markets in 2008 and 2009 has receded and Kazakhstan's economy returned to growth in 2010. However significant economic uncertainties remain. Adverse changes arising from systemic risks in global financial systems, including any tightening of the credit environment or from decline in the oil and gas prices could slow or disrupt Kazakhstan's economy, adversely affecting the Group's access to capital and cost of capital for the Group and, more generally, its business, results of operations, financial condition and prospects.

Kazakhstan is facing a relatively high level of inflation (according to the government's statistical data consumer price inflation for the years ended 31 December 2010 and 2009 was 7.3% and 17%, respectively).

As Kazakhstan produces and exports large volumes of oil and gas, the Kazakhstan economy is particularly sensitive to the price of oil and gas on the world market that fluctuated significantly during 2010 and 2009.

The consolidated financial statements reflect management's assessment of the impact of the Kazakhstan operating environment on the operations and the financial position of the Group. The future business environment may differ from management's current assessment (see especially the going concern discussion in Note 2)

2. PRESENTATION OF FINANCIAL STATEMENTS

Consolidated subsidiaries

The consolidated financial statements include the Company and its wholly owned subsidiaries namely Frontier Mining Antilles NV, Frontier Mining Co-operative, Frontier Mining Finance BV, FMLK 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 ("$"), unless otherwise indicated. The US Dollar is the functional currency of all entities in the Group and is also the presentation currency of the Group financial statements. In designating the US Dollar as the functional currency of all entities in the Group, management has concluded that it 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.

As detailed in Note 1(a) above, during the year the Company changed its domicile and a new Cayman Island incorporated parent company was introduced, Frontier Mining Ltd. The previous Delaware parent company, Frontier Mining Ltd, was merged into the new parent company and the Delaware entity ceased to exist from December 21, 2010.

The introduction of the new parent company and its controlled entities constitutes a Group reconstruction and has been accounted for using merger accounting principles. Therefore, although the Group reorganization did not become effective until December 21, 2010, the consolidated financial statements of Frontier Mining Ltd and its controlled entities are presented as if Newco and Oldco had always been part of the same Group. Accordingly, the results for the Group for the entire year ended December 31, 2010 are shown in the consolidated statement of comprehensive loss and the comparative figures for the year ended December 31, 2009 are also prepared on this basis. Earnings per share is unaffected by the reorganization.

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

Going concern

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

The Group's activities are the exploration, development and production of gold, silver and copper. To date, the Group has not earned significant revenues and, as described in Note 1 at December 31, 2010, had recently commenced production at the Koskuduk mine and was in the development stage for the Benkala license area. At December 31, 2010, mining operations at the Koskoduk area were the Group's sole source of operating cash inflow. For the year ended December 31, 2010 the Group incurred a loss of $ 31,315,169 (2009: $30,635,161) and had cash outflows from operating activities of $7,624,396 (2009: $6,098,122) and as at December 31, 2010 had accumulated losses of $85,042,631 (2009: $53,727,462) and a working capital deficit of $15,747,134 (2009: deficit $30,951,451).

Management's cash flow forecasts, based on the assumption that budgeted production in the Benkala and Naimanjal license areas (the latter being from the Koskuduk mine) will be achieved and on the prevailing outlook for gold and copper prices, show that the Group's operations will be cash generative for the foreseeable future (being the period up to June 30, 2012) and that it can raise the finance required to fund the planned development of the Benkala mine and processing plant. The major risks and uncertainties which management considered in its assessment of going concern were the level of gold and copper production and gold and copper prices in the foreseeable future which impact the Group's ability to generate operating cash inflows required for working capital purposes; and the availability of capital (debt and/or equity funding) required to complete the planned development of Benkala.

Key assumptions made by management in its forecasts include:

·; minimum gold production from Koskuduk of 5,000 ounces in 2011 and 9,500 ounces in 2012 which is increased from the 2010 achieved production level of 4,180 ounces following completion of infrastructure works at Koskuduk in 2010;

·; gold price of $1,250 per ounce during 2011 and 2012;

·; minimum copper production from Benkala in 2011 of 3,000 tonnes and 8,300 tonnes in 2012;

·; copper price of $9,000 per tonne in 2011 and $8,500 in 2012; and

·; the raising of $32 million (2011) and $20 million (2012) of capital to complete the planned development of Benkala. Lesser amounts of available capital (estimated to be in the range of $15 million - $20 million in the foreseeable future) would result in a reduced scale of development of Benkala with consequent reductions in the planned level of copper production.

The global financial turmoil described in Note 1 restricted the available sources of finance for the Group. On April 30, 2009 Frontier completed a $10 million financing agreement with Zere Group JSC which was initially available up to April 30, 2011 (see Note 19). In October 2010, the facility limit was increased to $20 million and repayment extended to December 2011. In May 2011, the repayment date was further extended until December 2012. In connection with this debt facility, in 2009 the Company issued to the lender share warrants which entitled the lender to subscribe for shares in the Company (refer Notes 18 and 19). On January 15, 2010 the above share warrants were exercised and the exercise price payable by the lender was offset against Frontier's financial liability under the debt agreement at that date. At December 31, 2010 the Group had amounts payable of $17,101,112 under this facility (2009: $11,268,670 million), including accrued interest. During 2010, Zere Group JSC changed its name to New Technology Kazakhstan LLP ("New Technology LLP").

On August 28, 2009 Frontier announced that it had entered into a £5 million Standby Equity Distribution Agreement ("SEDA") with YA Global Master SPV LTD, which is administered by Yorkville Advisors LLC ("Yorkville"). This agreement enables the Company, at its discretion and subject to certain conditions being met, to obtain funding at any time for up to 5 years from the date of signing by way of subscription for new shares in the Company (refer Note 18). During 2010, the Company did not use this facility.

At December 31, 2010 total finance facilities available to the Group under the above arrangements were approximately $27.7 million of which approximately $5.5 million was undrawn at that date.

Indications received to date by the Group are that the forecasted capital requirements for Benkala can be met and, post balance date to the end of May 2011, debt funding of $9.4 million had been received together with conditional offers for an additional $35 million of debt funding. One of those conditions requires the Group to complete a bankable feasibility study which is planned to occur by July 2011.

If market conditions are unfavourable and the capital funding for Benkala is unavailable, the Group's development timetable for that project will be delayed. This may also impact the Group's compliance with work program commitments under the Benkala license. Management anticipates that no significant issues would be encountered in managing any such non-compliance with the relevant regulatory authorities.

Accordingly, at the time of approving the consolidated financial statements, the directors believe that the Group has adequate resources to continue in operational existence for the foreseeable future.

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 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 impairment.

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 the Group 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 its 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.

The Naimanjal mine is now unlikely to be put back into operation and, as a result, an impairment loss of $ 16,525,902 was recorded in 2010 (refer Notes 11 and 12).

The key assumptions used in the determination of value in use for the non-current assets related to the Koskuduk mine in the Naimanjal area of interest include:

·;  Estimated mineable reserves of 25,700 ounces of gold

·; Gold price of $1,250 per ounce

·; Discount rate of 17%

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

·; Estimated mineable reserves of 175,000 tons of copper

·; Copper price of $9,000 per ton

·; Discount rate of 17%

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 area of interest, management used a 2010 report it obtained from independent geological experts prepared under the JORC quantification methodology to interpret geological and exploration data to determine measured, indicated resources and inferred reserves. For the Koskuduk mine, management used internal estimates and a historical Soviet resource statement. 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 analyzed 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 to profit and loss.

Depreciation and amortization of mining assets

The Group's mine development assets are depreciated over the respective life of the mine using the unit-of-production (UOP) method based on the ore reserves. Any changes to the ore reserves will have a direct impact on the depreciation rates and 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 expense over the estimated mine life. The estimate of total cost requires management to make a number of assumptions including restoration activities and discount rate. 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 will be recorded at the time of the revision, and the amount of expense each period will be modified on a prospective basis.

Financial liability at fair value through profit or loss 

The Group had a financial liability recorded at fair value through profit or loss which was settled in 2010 by the issue of Frontier shares. The fair value of this liability was determined using an option valuation model, the key inputs to which are disclosed in Note 19.

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.

Income Taxes

The Group is subject to income taxes in the Republic of Kazakhstan and, prior to the re-domicile of the parent entity during 2010, the United States of America. 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 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 reviewed at the end of each reporting period and are reduced to the extent that it is not probable that sufficient taxable profit will be available to allow all or part of the deferred tax assets to be utilized. Various factors are considered in assessing the probability of the future utilization of deferred tax assets, including past operating results, operational plans, expiration of tax losses carried forward, and tax planning strategies. If actual results differ from these estimates or if these estimates must be adjusted in future periods, the financial position, the deferred tax asset currently recorded may be impaired in that period and results of operations and cash flows may be negatively affected.

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 loss 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 purchase 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.

The acquiree's identifiable assets and liabilities are recognized at their fair values at the acquisition date. Any premium paid as part of the purchase consideration is assessed as to whether it relates to mining properties or exploration potential before determining whether goodwill on acquisition is to be recognized.

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 venturer 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 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 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 profit or loss 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 Share-based payments

Equity-settled share-based payments to employees and others including non-executive directors are measured at the fair value of the equity instruments at the grant date. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest. At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss over the remaining vesting period, with a corresponding adjustment to the equity-settled employee benefits reserve.

4.8 Taxation

The Group is subject to Kazakhstan and United States (prior to its re-domicile) income tax laws. The Company is exempt from all corporate and other tax in the Cayman Islands.

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 loss 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 balance sheet 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 loss, 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.

4.9 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.

4.10 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.

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 the consolidated statement of comprehensive loss as 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.

4.11 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.

4.12 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.

4.13 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 and are amortized on a straight-line basis over their useful lives, but not exceeding a period of seven years.

4.14 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 revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

4.15 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.

4.16 Accounts receivable

Accounts receivable are classified as loans and receivables. Loans and 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.

4.17 Cash and cash equivalents

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

4.18 Restricted cash deposits

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

4.19 Site restoration costs

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.

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

4.20 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.

4.21 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 rate 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 remeasured.

Derivative financial instruments

One of the Group's loan agreements included a derivative financial instrument. 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.

4.22 Adoption of new and revised standards and interpretations

New and revised IFRSs applied with no material effect on the consolidated financial statements

The following new and revised IFRSs have been adopted in these consolidated financial statements. There application has not had any material impact on the amounts reported in the consolidated financial statements for the current and prior years but may affect the accounting for future transactions or arrangements.

New and revised IFRSs in issue but not yet effective

The Group has not applied the following new and revised IFRSs that have been issued but are not yet effective:

Management anticipates that all of the above standards and interpretations will be adopted in the Group's consolidated financial statements when effective. The adoption of those Standards and Interpretations will have no material impact on the consolidated financial statements of the Group in the future periods.

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 under IFRS 8 are therefore as follows:

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

ü Naimanjal mine

ü Koskuduk mine

ü Baitemir

·; Benkala license area (copper)

The Group does not allocate central administration costs, directors' salaries and other gains or losses to its segments, and accordingly these amounts are presented as Unallocated. 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 above represents revenue generated from the Group's sole external customer(refer Note 6). There are no intersegment sales.

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 (including amounts capitalized to mine development assets) are:

Naimanjal license area:

ü Koskuduk mine $924,691 (2009: nil)

ü Naimanjal mine nil (2009: $1,322,231)

ü Baitemir mine nil (2009: nil)

Benkala license area $ 405,504 (2008: $26,429)

The non cash transactions described in Note 17 are not allocated to either of the Group's segments.

Movements during the year to non current assets were:

6. REVENUE

All of the Group's sales of gold and silver dore alloy are made to one customer in Switzerland.

7. COST OF SALES

Abnormal production costs

Abnormal production costs related to wages and other costs incurred during 2009 when production levels were below normal operating capacity at the Naimanjal area of interest.

8. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

In 2009 the Company was advised by the United States Internal Revenue Service that it had all outstanding tax returns deemed to be time filed in the periods prior to 2007 and that no penalty would be charged. As a result, the Company reversed the USD 380,000 provision for tax penalties

9. FINANCE COSTS

10. EXPLORATION AND EVALUATION ASSETS

Movements for the year are summarized as follows:

11. MINE DEVELOPMENT ASSETS

Movements for the year are summarized as follows: