28th Sep 2007 07:06
Frontier Mining Ltd28 September 2007 28 September 2006 AIM: FML Frontier Mining Ltd ("Frontier" or "the Company") Interim Results (Unaudited) to 30 June 2007 Projects Update to 27 September 2007 Highlights: • Increased gold and silver resources at Naimanjal • Applied for commercial production at Naimanjal commencing 2008 • Revenue of $569,447 from sale of 816 ounces of gold and 5,585 ounces of silver providing gross operating profit of $211,067 from production of 813 ounces of gold and 5,528 ounces of silver at Naimanjal • Received two year exploration extension for the evaluation of a commercial discovery at the Baltemir License, our fifth since listing in September 2004 • Strengthened technical and corporate management teams Post Period Highlights • Currently acquiring a 50% interest in the Wardell Armstrong estimated 2.79 million tonne contained copper resource project, Benkala, located in northwestern Kazakhstan pending government approvals • $25,317,174 Placing conditional on registration of the Benkala contract • Revenue of $1,712,540 from sale of 2,471 ounces of gold and 14,898 ounces of silver from 1 January 2007 to 27 September 2007 • Produced 2,150 ounces of gold and 13,351 ounces of silver 1 January 2007 to 27 September 2007 • Revised gold production target for 2007 to 5,000 ounces of gold at Naimanjal • Applied for pilot production at Koskuduk, Baitimir, Yubileiny, and Beshoki commencing 2008 Brian Savage, CEO of Frontier commented, "We will complete pilot production testmining phase at Naimanjal at the end of this year and have applied for acommercial production license. We continue to produce gold and silver fromNaimanjal, albeit at lower levels than forecast, and are confident thatNaimanjal will reach its full potential. We are also very please to be in theprocess of acquiring 50% of Benkala which is pending final government approvaland are planning a feasibility study that will confirm resources and reserves toa JORC standard with the intent of placing Benkala into production as soon aspossible.. Enquiries: Frontier Mining Ltd Brian Savage +44 (0) 20 7898 9019Parkgreen Communications Louise Goodeve / Justine Howarth +44 (0) 20 7851 7480Zimmerman Adams International Ray Zimmerman / Jonathan Evans +44 (0) 20 7060 1760 Chairman's Statement and Operations Update On behalf of Frontier's Board of Directors, I am pleased to present ourunaudited interim results for the six months ending 30 June 2007 and projectsupdate to 27 September 2007. We are coming to the end of our pilot production phase at Naimanjal and haveapplied for commercial production. We are limited to producing 360,000 tonnesof ore under the pilot production phase and had expected to have alreadyreceived the commercial production license to allow us to produce more gold. Asa result of the delay, we are revising our gold production for the year ending31 December 2007 to 5,000 ounces. During the six months through to 30 June 2007, we have produced 813 ounces ofgold and 5,528 ounces of silver and sold 816 ounces of gold and 5,585 ounces ofsilver generating revenue of $569,447 and operating profit of $211,067. This isan increase in both revenue and profit from the same period last year where wehad no revenue during the first half of the year. Year to date, we haveproduced 2,150 ounces of gold and 13,351 ounces of silver and sold 2,471 ouncesof gold and 14,898 ounces of silver generating revenue of $1,712,540. The planned exploration programme for 2007 was phased to allow for an initialdrilling campaign to expand the resource base and convert resources to reserves,drill test previously established but untested exploration targets, and withtrenching, better define exploration targets where previous efforts were veryencouraging. 13,610 metres of RC (reverse circulation) drilling have been completed atNaimanjal and Baritovy with 9,633 metres of exploration RC drilling at Naimanjaland 997 metres of exploration drilling at Baritovy, and 2,980 metres of in-pitor adjacent-to-pit mine planning RC drilling at Naimanjal. 43 trenches totaling over 5,800 metres have been excavated. 23 trenchesencountered strongly-anomalous to ore-grade gold and/or silver values,particularly east and south of Pit 1 and far to the west of Pit 6. Initial RCdrilling near Pit 1 is underway and assays are pending. Previous press releases reported over 100 targets at Naimanjal and the satelliteprospects. For ease of evaluation, many individual targets have beenconsolidated into geologically and structurally consistent high-priority targetareas. At Naimanjal, over two dozen large high-priority target areas have beenestablished. Those that have been extensively drilled developed into the newresource areas mentioned below. Those with minimal drilling have returnedencouraging results. More than half of the high-priority targets have not yetbeen drilled. These targets however do not form a part of the resourceestimates. The initial RC drilling exploration programme has been very successful inexpanding the resource base east of Pit 4, Grassy Knoll South, and Pit 3 Westtargets as well as proving continuity at Area 124. All holes are drilledinclined and approximately at right angles to the vein zone strike direction. East of Pit 4 target, substantial gold and silver mineralization has beendiscovered over a width of 200 metres, and the zone remains open-ended to theeast. At Grassy Knoll South, drilling has proven both internal continuity andcontinuity of mineralization on the northern portion of the vein zone. A widthof 90 metres of mineralization is indicated. Here again, the mineralized zoneis open-ended along strike. At Pit 3 West, the mineralized vein zones have beenextended further west, while in-fill drilling has shown continuity of gold andsilver values. Here also, mineralization is open-ended to the west. At Baritovy, approximately 9 kilometres north of Naimanjal, an RC drillingprogramme is underway. Initial assay results are encouraging with several holesreturning strong gold and silver values. Utilizing a composite cutoff grade of 0.50 g/t gold equivalent, for the 2007 RCdrilling programme through August, the average width per hole (measureddown-hole length) of mineralization for the five Naimanjal deposits is 5.195metres, 1.2 g/t gold, 35.9 g/t silver, and 1.559 g/t gold equivalent while theaverage width per intercept is 3.91 metres. Including Baritovy, the averagewidth per hole of all six deposits is 5.195 metres, 1.229 g/t gold, 39.081 g/tsilver, and 1.62 g/t gold equivalent while the average width per intercept is3.86 metres. At all deposits, substantial thicknesses of lower grade mineralization (0.2 to0.499 g/t gold equivalent) surround these highlighted values. At a gold cut-off grade of 0.3 grams per tonne ("g/t") there are 3,502,393tonnes of Measured and Indicated resource at an average grade of 0.73 g/t goldand 17.31 g/t silver containing 82,022 ounces of gold and 1,948,699 ounces ofsilver. In addition, the model indicates that there are 8,300,939 tonnes ofInferred resource at an average grade of 0.64 g/t gold and 18.95 g/t silvercontaining 170,626 ounces of gold and 5,058,476 ounces of silver. The Measured, Indicated, and Inferred resource at the Naimanjal deposit using acut-off grade of 0.3 g/t gold totals 11,803,332 tonnes at an average grade of0.67 g/t gold and 18.46 g/t silver containing 252,648 ounces of gold and7,007,175 ounces of silver. The Company also asked Behre Dolbear to audit and affirm Frontier's calculationsof the gold and silver resources using a cut-off grade of 0.50 g/t gold. At acut-off grade of 0.5 grams per tonne ("g/t") there are 2,008,769 tonnes ofMeasured and Indicated resource at an average grade of 1.06 g/t gold and 23.07 g/t silver containing 68,617 ounces of gold and 1,489,828 ounces of silver. Inaddition, the model indicates that there are 4,645,044 tonnes of Inferredresource at an average grade of 0.90 g/t gold and 27.52 g/t silver containing134,372 ounces of gold and 4,109,157 ounces of silver. The Measured, Indicated, and Inferred resource at the Naimanjal deposit using acut-off grade of 0.5 g/t gold totals 6,653,813 tonnes at an average grade of0.95 g/t gold and 26.17 g/t silver containing 202,989 ounces of gold and5,598,985 ounces of silver. The results of this season's positive exploration results are not included inthe above resource statements. Koskuduk We have applied for a pilot production license at Koskuduk, which is similar toNaimanjal where zinc-lead dominant gold-silver vein mineralization has beenintercepted below the oxide zone. At least three styles of mineralization arepresent at Koskuduk. The first is gold-dominant oxide mineralization occurringfrom surface to depths of approximately 50 metres where minor zinc and lead maybe present and positive silver grades are closely associated with the presenceof lead. Second is high grade gold-silver-lead-zinc and lesser leadmineralization associated with discrete veins and feeder zones. These zones aregenerally narrow ( < 2 metres) but have excellent depth potential. Third,relatively thick ( > 10 metres) lower grade gold-silver-zinc and lesser leadmineralization occurs as disseminated stratigraphically-controlled bodiesassociated with some tuff horizons. All styles of mineralization areattractive. Baltemir The Ministry of Energy and Mineral Resources of the Republic of Kazakhstanapproved a two year exploration extension for the evaluation of a commercialdiscovery at Baltemir. The exploration license is now valid until 5 March 2009. Baltemir is about 56km east of Frontier's producing gold mine, Naimanjal. TheLicense covers an area of 154km2. So far, the Baltemir exploration programmehas identified the potential for a small gold resource of narrow high grade veinmaterial at West Baltemir occurring within a zone 1km wide and 7km long. Behre Dolbear has recommended a limited three phase exploration programme totest the potential of three key targets. Benkala We entered into a conditional purchase agreement on 6 September 2007 withCoville Intercorp Ltd ("Coville") to acquire a 50 percent interest in theBenkala copper-molybdenum-gold deposit ("Benkala", or "the Benkala Project")located in north-western Kazakhstan within the Urals gold/copper ore belt. Theaggregate consideration payable for the interest in Benkala is US$21 millioncomprising $18.5m payable in cash and the issue of 6,250,000 shares of Frontiercommon stock of US$0.01 each ("Ordinary shares"). Rights to the Benkala deposit were won in January 2006 by a subsidiary ofCoville in an open government tender. Upon government approval, the contractwill cover an area of 1.194 km2 and will be effective for a 4 year explorationperiod followed by a 25 year mining licence. Frontier and Coville have entered into a shareholders agreement relating totheir joint ownership of the Benkala project. We are acquiring a 50% ownershipin the Benkala copper project and are awaiting the registration of the contractwith the government to make the final payment of approximately $7.7 million andissue 6,250,000 shares of stock to Coville. The Benkala Project, a porphyry copper project, is situated in north-westernKazakhstan in the Urals gold/copper ore belt, north east of Aktobe Oblast and100km south east of the Zhitikara town, an area close to the Russian border witha long regional mining history. Benkala is in an attractive position for minedevelopment given that it already contains developed infrastructure, including amain line railway, an all weather highway and excellent power supply to thesite. The property was discovered in 1968. Between 1976 and 1980, 70 holes totalling21,800 metres were drilled, with depths of up to 700 metres and with corerecovery between 70% and 75%. Metallurgical test work was conducted between1973 and 1979 and determined that that the oxide ores were amenable to heapleaching using sulphuric acid as well as flotation. A Competent Person Report ("CPR") on the Benkala Project completed by WardellArmstrong International ("WAI") in March 2007 estimates 47.75 Mt at an averagegrade of 0.36% Cu for the oxide mineralisation, and 873.75 Mt at an averagegrade of 0.30% Cu for the sulphide mineralisation. Placing for the interest in Benkala The board of Frontier has authorised the issuance of an aggregate amount of94,034,929 Ordinary Shares. 87,784,929 Ordinary Share have been placed at 14p to a combination of new andexisting shareholders raising a total of $25,317,174. In addition, 6,250,000Ordinary Shares are to be issued to Coville as referred to above. Frontier anticipates that the net proceeds available to the company will beapproximately $7.6 million for working capital and to proceed through to thefeasibility phase as indicated below. The Placing is conditional on government approval and admission of the placingshares to trading on the AIM market of the London Stock Exchange. Frontier currently has 132,581,587 common shares issued. Following thetransaction, the company will have 226,616,516 common shares issued. Appointments We appointed a team of key technical and financial advisors to the company withextensive experience in both mining and undertaking business in Kazakhstan hasmade a considerable contribution to current project development. They bring animpressive array of skills and experience to our technical and financial teamand will be of great value to the Company as we look to develop our portfolio ofprojects. Future Prospects I would like to take this opportunity to thank our shareholders for theircontinued support. We believe Naimanjal and our other commercial discoverieswill reach their full potential and are excited about the positive explorationresults we have achieved to date. We are very pleased to be in the process ofacquiring 50% of the Benkala copper project pending government approvals. We areplanning a feasibility study that will confirm resources and reserves to a JORCstandard with the intent of placing Benkala into production as soon as possible. Brian Savage, Chairman 28 September 2007 Frontier Mining Ltd. Interim Summarised Consolidated Financial Statements CONSOLIDATED BALANCE SHEETAS OF JUNE 30, 2007 (unaudited) In US Dollars June 30, 2007 June 30, 2006 December 31, (unaudited) (unaudited) 2006Exploration and Development costs 9,950,515 9,919,725 9,745,844Property Plant and equipment 9,594,636 7,889,710 9,620,499Long-term portion of VAT receivable 760,983 626,512 756,159Cash restricted for restoration expenses 112,000 112,000 112,000Deferred tax asset 1,100,856 - 1,100,856Total Non-current assets 21,518,990 18,547,947 21,335,358Current assetsInventory 3,648,714 2,095,283 2,984,369Trade receivables 27,944 414,610 586,404Other receivables 541,607 953,565 160,979Cash and cash equivalents 383,253 6,103,890 1,253,063Total Current assets 4,601,518 9,567,348 4,984,815 TOTAL ASSETS 26,120,508 28,115,295 26,320,173 SHAREHOLDERS' EQUITY AND LIABILITIESShareholders' equityShare capital 1,325,816 1,325,816 1,325,816Additional paid-in-capital 36,440,425 36,440,425 36,440,425Accumulated deficit (15,526,570) (11,993,118) (14,272,859) 22,239,671 25,773,123 23,493,382Non-current liabilitiesSite restoration provision 59,477 119,187 59,477Due to Government of the Republic of Kazakhstan 731,774 821,751 731,774 791,251 940,938 791,251Current liabilitiesTrade accounts payable 399,816 95,382 959,720Debt to the US Trade Development Agency 340,000 340,000 340,000Other current liabilities 2,349,770 965,852 735,820 3,089,586 1,401,234 2,035,540TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 26,120,508 28,115,295 26,320,173 CONSOLIDATED STATEMENT OF OPERATIONSFor 6 months period ended June 30, 2007 (unaudited) In US Dollars June 30, 2007 June 30, 2006 December 31, (unaudited) (unaudited) 2006Revenue 569,447 - 2,974,472Cost of sales (358,380) - (1,968,840)Gross profit / (loss) 211,067 - 1,005,632 Selling, General and administrative expenses 1,418,509 1,213,659 3,340,652Legal and related fees - - 576,404Operating profit/ (loss) 1,207,442 1,213,659 2,911,424 Other Income 43,881 40,762 (75,155)Foreign exchange gain, net 2,388 (1,990,536) (191,786)Loss/(gain) from operation 1,253,711 (736,115) 2,644,483 Taxation - - (1,051,840) Consolidated Net loss/(income) 1,253,711 (736,115) 1,592,643 STATEMENTS OF CASH FLOWSFor 6 month period ended June 30, 2007 In US Dollars 6 month period 6 month ended June 30, period ended 2007 June 30, 2006OPERATING ACTIVITIES:Income/(Loss) from operations (1,253,711) 736,115Adjustments for non cash flow items:Depreciation of property and equipment 25,863 32,096Operating cash flows before movement in working capital (1,227,848) 768,211 Increase in value added tax receivable (4,824) (225,890)Increase in inventory (664,345) (1,160,448)Increase in trade accounts receivable 558,460 (693,850)Decrease/ (increase) in other receivable (380,628) -Increase in accounts payable (559,904) (767,905)Increase /(decrease)in other current liabilities 1,613,950 134,098 NET CASH USED IN OPERATING ACTIVITIES (665,139) (1,945,784) INVESTING ACTIVITIES:Additions to exploration and development costs (204,671) (3,036,118)Purchase of property and equipment - (2,872,246)Purchase of intangible assets -NET CASH USED IN INVESTING ACTIVITIES (204,671) (5,908,364) Net decrease/(increase) in cash and cash equivalents (869,810) (7,854,148) Cash and cash equivalents at beginning of year 1,253,063 14,070,038 Cash and cash equivalents at end of year 383,253 6,215,890 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 Kazakhstan.Through its subsidiaries and affiliates, Frontier locates, evaluates,acquires, explores and develops mineral properties Frontier has two licenses in Kazakhstan. They are the Naimanjal exploration andmining licence, held by FML Kazakhstan, and the Baltemir exploration licence,held by Baltemir LLP. Both companies are wholly-owned subsidiaries of FrontierMining Ltd. Frontier has one producing gold mine, Naimanjal; onepre-feasibility stage gold project, Koskuduk; and one exploration stage goldprospect, Baltemir. Frontier also has one potential copper porphyry deposit with associated gold andmolybdenum, Baitimir; and several copper/gold prospects along a 25-km trendincluding both VMS and porphyry types. Metallurgical tests on its Beschoku andYubileiny copper projects confirm the oxide copper ore is amenable to extractionusing low cost SX-EW technology. Issued and Fully Diluted Ordinary Shares Frontier shares are traded on the AIM market of the London Stock Exchange. Priorto the completion of the Placing, Frontier has 132,581,587 ordinary sharesissued and 6,057,091 reserved and outstanding options and warrants, giving138,638,678 fully diluted ordinary shares. Further company information may be accessed at the Frontier Mining Ltd. websiteat: www.frontiermining.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
FML.L