30th Sep 2005 10:00
Frontier Mining Ltd30 September 2005 30 September 2005 Frontier Mining Ltd ("Frontier" or "the Company") Interim Results (Unaudited) to 30 June 2005 Projects Update to 30 September 2005 Gold Highlights • Commenced gold and silver production at the Naimanjal gold mine • New high grade gold discovery - Beschoki • Naimanjal & Satellite prospects commercial discovery and exploration extensions approved • Koskoduk resources increased, commercial discovery and exploration extensions approved • Baltemir prospect exploration license extended 2 years. Copper Highlights • Baitimir confirmed as copper porphyry deposit • Baitimir commercial discovery and exploration extensions approved • Beschoku and Yubileiny commercial discovery and exploration extensions approved • Beschoku and Yubileiny leach test work confirms oxide copper ore amenable to SXEW technology • Preparing to undertake pre feasibility studies on oxide copper deposits Corporate Highlights • £4.375 million raised by placing 17,500,000 ordinary shares at £0.25 per share • £1.650 million raised from exercise of warrants at £0.165 • £90,856.35 raised from Numis Securities Limited's exercise of warrants at £0.15 per share • Project Financing negotiations with International and Kazakhstan banks ongoing • Evaluating options for acquisition of several uranium projects • Net cash of approximately US$2m at end September Enquiries: Frontier Mining Ltd Brian Savage +4420 7849 6530Parkgreen Communications Cathy Malins / Annabel Leather +4420 7493 3713 Chairman's Statement On behalf of Frontier's Board of Directors, I am pleased to present ourunaudited interim results for the six months ending 30 June 2005. We arecurrently analysing the results of the copper exploration programme and will beproviding a comprehensive update on copper and our other projects before the endof October 2005. I want to provide a brief update on Naimanjal, our new golddiscovery, Beschoki, and the status of the uranium projects at this time. Naimanjal gold mine The Company retains independent consultants to perform work on its ore resourcesand reserves, its metallurgical test work and process design. However, incertain circumstances some of the data set out below has been compiled by theCompany's own employees. We continue to stack and leach ore at our Naimanjal gold mine and anticipatestacking over 80,000 tonnes of ore with an average grade of 1.14 grams per tonneof gold and 8.48 grams per tonne of silver by 15 November 2005. There is a 120day leach cycle and we expect to recover approximately 50 kilogrammes of goldand approximately 230 kilograms of silver by the end of 2005. We anticipaterecovering approximately 70% of the contained gold and approximately 60% of thecontained silver over the 120 day leach cycle which extends into 2006. The average gold grade of ore stacked to 15 November 2005 is lower than theaverage gold grade (1.44 gpt) expected to be delivered to the heap leach pads inthe future from the Naimanjal deposit due to stacking of lower grade oreextracted when opening up of the pits. We expect the average grade delivered tothe heap leach pads to increase as we blend in higher grade ore from oursatellite deposits, specifically Baritovy, where we stacked approximately 6,300tonnes of stockpiled Baritovy ore with an average grade of 3 gpt. The saprolitized nature of initial Naimanjal ore did not require crushing, whichfacilitated the fast startup. We will be installing a crushing circuit beforethe end of the year which will have the capacity to crush up to 1.2 milliontonnes of ore per year, double the requirement for the initial target rate of25,000 ounces of gold production per year, and in accordance with our plan forexpanding production capacity. We are currently evaluating the decision to continue to stack ore through thewinter or cease stacking operations during the winter months and start up againin March 2006. While a benefit for early startup, the requirement toagglomerate saprolizited ore makes stacking during the winter problematic as theagglomerate will not have a chance to cure and we could risk freezing the pad.Therefore, unless we can stack ore that does not require agglomeration, we willcease stacking operations during the winter. Also included in the decision tooperate during the winter is the purchase of our own mining equipment fleet tominimize blasting costs and improve mining efficiencies. Beschoki gold deposit We are very excited about the discovery of a new gold deposit called Beschoki onthe 25-kilometre copper trend. Four holes were drilled as part of the copperexploration programme and returned the following: Drill Hole Interval Average gold grade BCH-22 39.5 metres 8.87 gpt BCH-23 20.2 metres 9.29 gpt BCH-24 33.2 metres 3.81 gpt BCH-25 23.3 metres 1.81 gpt While the results are preliminary, we are very encouraged with the initialresults. Uranium projects We continue to evaluate our options for the acquisition of several uraniumprojects. The Company will update the market on the outcome of these evaluationsin due course. About Frontier Frontier Mining Ltd. is a mineral exploration and development company that wasincorporated in the state of Delaware, USA, on 5 August 1998 for the purpose ofexploring and developing gold and copper deposits in the Republic of Kazakhstanand other countries of the Commonwealth of Independent States. Through itssubsidiaries and affiliates, Frontier locates, evaluates, acquires, explores anddevelops mineral properties. Frontier currently has two licenses, over a total area of 4,326 km2, owned byits wholly owned subsidiaries in Kazakhstan. They are the Naimanjal explorationand mining license, held by FML Kazakhstan, and the Baltemir explorationlicense, held by Baltemir LLP. Frontier is currently focused on three goldprojects with more than two million ounces of oxide and sulphide gold resource(JORC, C1, C2, P1 and management estimates) and two copper/gold projects withmore than 5 billion pounds of contained copper resource (P1 managementestimates). Frontier was admitted to trading on AIM on 2 September 2004. Frontier has89,209,917 ordinary shares issued and 10,723,747 outstanding options andwarrants, giving 99,933,664 ordinary shares on a fully diluted basis. Frontier Mining Ltd. Interim Summarised Consolidated Financial Statements Consolidated Balance SheetFor period ended June 30, 2005 In US Dollars Notes Jun 30, 2005 Jun 30, 2004 December 31, 2004 (unaudited) (unaudited)ASSETSNon-current assetsProperty and equipment 3 1,064,964 113,724 182,556Exploration and development cost 4 4,511,073 1,969,142 3,210,726CIP, Naimanjal complex 3 1,919,767 - -Intangible assets 31,026 5,167 47,329Cash restricted for restoration expenses 6 96,392 - - 7,623,222 2,088,033 3,440,611Current assetsTrade and other receivables 5 716,845 62,747 100,246Inventory 1,271,240 - -Cash and cash equivalents 6 5,471,971 572,377 2,650,743 7,460,056 635,124 2,750,989 TOTAL ASSETS 15,083,278 2,723,157 6,191,600 SHAREHOLDERS' EQUITY AND LIABILITIESShareholders' equityShare capital 7 887,522 18,428 610,509Additional paid-in-capital 22,928,999 4,882,720 12,139,942Retained earnings (8,380,992) (6,363,007) (6,287,754)Net loss (1,920,925) (1,774,478) (2,093,238) 13,514,604 (3,236,337) 4,369,459 Site restoration provision 8 112,000 98,402 112,000 112,000 98,402 112,000Current liabilitiesShort term debt 9 449,629 4,757,598 861,735Notes payable - 513,024 -Trade accounts payable 441,929 511,178 201,340Other current liabilities 565,116 79,292 647,066 1,456,674 5,861,092 1,710,141TOTAL SHAREHOLDERS' EQUITY AND 15,083,278 2,723,157 6,191,600LIABILITIES Frontier Mining Ltd. Consolidated Statements of OperationsFor 6 months period ended June 30, 2005 In US Dollars Notes 6 month period 6 month period the year ended ended June 30, ended June 30, December 31, 2005 (unaudited) 2004 (unaudited) 2004 General and administrative expenses 1,362,087 1,732,560 2,172,797Finance cost - - 56,977Loss from operations 1,362,087 1,732,560 2,229,774 Foreign exchange (gain)/loss, net 558,838 - (136,536) Loss before taxation 1,920,925 1,732,560 2,093,238 Taxation - - - Consolidated Net Loss 1,920,925 1,732,560 2,093,238 Frontier Mining Ltd. Consolidated Statements of Cash FlowsFor the six months period ended June 30, 2005 In US Dollars Period ended June Period ended December 31, 30, 2005 June 30, 2004 2004 (unaudited) (unaudited)Cash flows from operating activities:Loss before income tax (1,920,925) (1,528,686) (2,093,238)Adjustments for:Depreciation 25,117 39,904 44,150Finance costs - 41,918 52,428Loss from disposal of property and - - 46,105equipment(Recovery of) provision for bad debts - 44,555 -Operating (loss) profit before working (1,895,808) (1,402,309) (1,950,555)capital changesChanges in operating assets andliabilities:Decrease (increase) in trade accounts (629,592) (48,726) (86,494)receivableIncrease in inventory (1,271,240) - -Increase in site restoration provision (96,392) - 21,015Increase (decrease) in trade accounts 240,589 303,125 112,746payableIncrease (decrease) in other current (81,950) 175,017 1,109,598liabilitiesNet cash flows used in operating activities (3,734,393) (972,893) (793,690) Cash flows from investing activities:Increase in exploration and development (1,300,347) (675,484) (1,902,068)costsPurchase of property and equipment (2,810,989) (98,887) (215,030)Net cash flows from (used in) investing (4,111,336) (774,371) (2,117,098)activities Cash flows from financing activities:Capital contributions, net of direct issue 11,079,063 661,062 4,360,217costProceeds received from convertible notes - 2,350,258 2,306,126Repayment of short term debts (412,106) - (552,894)Repayment of notes payable - (693,942) (495,823)Interest paid - - (56,977)Net cash used in financing activities 10,666,957 2,317,378 5,560,649 Net increase/(decrease) in cash and cash 2,821,228 570,114 2,649,861equivalents Cash and cash equivalents at the beginning 2,650,743 2,263 882of yearCash and cash equivalents at the end of 5,471,971 572,377 2,650,743year Notes to the Accounts 1. General Frontier Mining Ltd. ("Frontier" or the "Company") is a mineral exploration anddevelopment company that was incorporated in the state of Delaware, USA, onAugust 5, 1998 for the purpose of exploring and developing gold and copperdeposits in the Republic of Kazakhstan. Through its wholly owned subsidiariesand affiliates, FML Kazakhstan LLP ("FMLK") and Baltemir LLP ("Baltemir"),Frontier holds interest in, or is the beneficial owner of one producing gold andseveral non-producing gold and copper properties in Kazakhstan. Frontier isactively exploring its wholly owned Naimanjal and Baltemir contract and licenseareas. 2. Basis of preparation The interim Financial Statements have been summarised in accordance with theaccounting policies set out in the Company's audited financial statements forthe year to December 31, 2004. 3. Property and Equipment and Construction-in-Progress ("CIP") NaimanjalComplex The movement of property, plant, and equipment for the period ended June 30,2005 was as follows: Cost: Machinery & Transport Other CIP on Total equipment Naimanjal ComplexAt December 31, 2003 37,919 - 57,944 - 95,863 Additions 29,824 31,224 121,571 - 182,619Disposal - - (55,677) - (55,677)At December 31, 2004 67,743 31,224 123,838 - 222,805 Additions 752,288 28,941 112,502 1,919,767 2,813,498Disposal - - - - -At June 30, 2005 820,031 60,165 236,340 1,919,767 3,036,303 AccumulatedDepreciation:At December 31, 2003 (6,074) - (24,714) - (30,788) Charge for the year (1,846) (2,478) (14,709) - (19,033)Disposal 3,037 - 6,535 - 9,572At December 31, 2004 (4,883) (2,478) (32,888) - (40,249) Charge for the year - (11,323) - - (11,323)Disposal - - - - - At June 30, 2005 (4,883) (13,801) (32,888) - (51,572) Net Carrying Amount:At December 31, 2003 31,845 - 33,230 - 65,075 At December 31, 2004 62,860 28,746 90,950 - 182,556 At June 30, 2005 815,148 46,364 203,452 1,919,767 2,984,731(unaudited) 4. Exploration and Development Costs The movement of exploration and development assets for the period ended June 30,2005 was as follows: Cost:At December 31, 2003 1,308,658Additions 1,902,068At December 31, 2004 3,210,726Additions 1,300,347At June 30, 2005 (unaudited) 4,511,073 5. Trade and Other Receivables As of June 30, 2005 trade and other receivables comprised: June 30, 2005 2004 (unaudited) Prepayments for works and services 354,246 49,298Trade receivables - 24,845Security deposit on office rent 10,845 2,468Due from employees 29,145 7,228VAT Receivables 330,648 -Rent prepaid 4,954 16,407 729,838 100,246 6. Cash And Cash Equivalents As of June 30, 2005 cash and cash equivalents comprised the following: June 30, 2005 2004GBP current bank account 3,931,055 2,465,042US Dollars current bank account 1,367,084 113,011KZT current bank account 141,230 67,410RUR current bank account 5,712 -Cash restricted for restoration - -Cash on hand 26,890 5,280 5,471,971 2,650,743 7. Share Capital As of June 30, 2005, the Company's authorized capital comprised 100,000,000ordinary shares of US $0.01 par value each. (December 31, 2004: 100,000,000shares at US $0.01 par value each) Movements in the share capital for the period ended June 30, 2005 was asfollows: Number of Nominal Treasury Additional Total shares and amount stocks paid in outstanding capital December 31, 2003 1,599,500 15,995 (67) 3,931,766 3,947,694Shares granted to Directors and 200,000 2,000 - 598,000 600,000ManagementCapital contributions in cash 10,000 100 - 29,880 29,980Conversion of operating 40,000 400 - 119,600 120,000liabilities to equityTotal before split 1,849,500 18,495 (67) 4,679,246 4,697,674Stock Split: 10 for 1 16,645,900 166,459 (603) (165,856) -Total shares after split 18,495,400 184,954 (670) 4,513,390 4,697,674 Short term debt conversion and 5,993,526 59,935 - 1,138,770 1,198,705shares granted to Directors andManagementShare granted to convertible loan 158,984 1,590 27,378 28,968notes holdersConversion of loan notes to equity 12,656,657 126,567 - 2,179,559 2,306,126AIM placing 23,333,330 233,333 - 4,096,904 4,330,237Shares granted to employees 480,000 4,800 - 183,941 188,741December 31, 2004 61,117,897 611,179 (670) 12,139,942 12,750,451 Placing shares on open market 17,500,000 175,000 - 7,812,897 7,987,897Exercise of warrants 10,201,259 102,013 670 2,989,586 3,091,166June 30, 2005 88,752,156 887,522 - 22,942,425 23,829,514 On 1 January 2005 43,310 options were exercised to purchase 43,310 ordinaryshares of US$0.01 each at a price of US$0.30 providing the Company withUS$12,993. On 4 March 2005, the Company placed 17,500,000 ordinary shares of US $0.01 parvalue each ("New Ordinary Shares") with institutional investors in the UnitedKingdom at a price of 25 pence per ordinary share to raise £4.375 million beforeexpenses (US $8.122 million equivalent at the exchange rate in effect on thatdate). These New Ordinary Shares were admitted to trading on AIM on March 10,2005. On June 17, 2005 Numis Securities Limited exercised its option to purchase605,709 ordinary shares of US $0.01 each at a price of 15 pence per ordinaryshare (US $0.27 equivalent at the exchange rate in effect on that date)providing the Company with £90,856 (US $163,541.43 equivalent at the exchangerate in effect on that date). As of June 30, 2005, 9,552,240 out of 12,656,657 warrants were exercised at aprice of 16.5 pence per ordinary share providing the Company with £1.576 millionadditional proceeds (US $2.993 million equivalent at the exchange rate in effecton that date). The ordinary shares issued upon exercise of warrants areadmitted to trading on the AIM as soon as possible after their issuance. 8. Site Restoration Provision As of June 30, 2005 environmental restoration provisions related to obligationsto restore and make safe mines after use and the estimated costs of cleaning upany chemical leakage. Most of these costs are expected to be incurred at the endof the mines' useful operations, approximately between the years 2025 to 2026.The extent and cost of future remediation programmes are inherently difficult toestimate. They depend on the estimated lives of the mines, the scale of anypossible contamination and the timing and extend of corrective actions. The Company placed $96,392 on long term deposit with a Kazakhstani bank to coversite restoration expenses when they incurred. 9. Short-Term Debt As of June 30, 2005 short-term debt comprised the following: June 30, 2005 2004Debt to Degelen Company - 412,106Loans from Small World Associates Company ("SWA") 109,629 109,629 109,629 521,735 Debt to the Trade Development Agency of the 340,000 340,000United States of America ("TDA") 449,629 861,735 As of June 30, 2005 the debt to Degelen LLP, the former shareholder of BaltemirLLP, was fully repaid. As of December 31, the grant from the Trade Development Agency of the USA wasinterest free and denominated in US Dollars. In accordance with the terms of thegrant, the grant is refundable to the TDA when the Company succeeds in obtainingfunding for the Naimanjal Project based on feasibility study that the grant wasprovided to finance. 10. Subsequent Events Share Capital Increase As of 30 September 2005, 447,761 additional warrants were exercised at a priceof 16.5 pence per ordinary share providing the Company with £73,881 additionalproceeds (US $130,000 equivalent at the exchange rate in effect on that date).The ordinary shares issued upon exercise of warrants are admitted to trading onthe AIM as soon as possible after their issuance. In July 2005, 10,000 shares of stock were granted to an employee as aperformance bonus. Subsurface contracts & licenses On 26 July 2005 regulatory approval for 21 year land utilization of theNaimanjal license and contract was received from Karaganda Regional Authority. On 15 August 2005 regulatory approval for the 2005 mining plan was approved byCenterKazNedra. On 18 August 2005 regulatory approval for the cyanide license was received fromthe committee of Industry and Scientific & Technical Development (a departmentof the Ministry of Industry of Trade). On 27 August 2005 regulatory approval for 21/2 year evaluation of commercialdiscoveries, pilot production and exploration extension at the Naimanjal licenseand contract from the Ministry of Energy & Mineral Resources was received. Naimanjal Gold Mining Complex The Company has spent approximately US$4.5 million on capital expenditures forthe Naimanjal Complex from start of construction in January 2005. The Companycommenced gold production on 1 September 2005. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
FML.L