29th Sep 2006 07:04
Frontier Mining Ltd29 September 2006 Frontier Mining Ltd ("Frontier" or "the Company") Interim Results (Unaudited) to 30 June 2006 Projects Update to 24 September 2006 Naimanjal Gold Mine and Satellites • Identification of over 100 new exploration targets • Recommendation received from State Reserve Committee for Pilot Production at Baritovy satellite deposit • Revised gold production target for 2006 of 10,000 ounces Other Gold Exploration Highlights • Koskoduk exploration programme results to be used in updated resource estimate• Baltemir exploration programme identified potential resource of narrow high grade vein material Copper Highlights • Beschoki breccia pipe trench intercepted 28 metres grading 4.87 g/t gold and 0.66% oxide copper • Baitimir - reprocessed magnetic data indicates copper mineralisation is closely associated with a 1.2 kilometre long and up to 400 metre wide magnetic high • Yubileiny - all phases of core drilling have intercepted economic oxide copper grades over mineable widths Corporate Highlights • Debt free with US$6.1 million of cash at 30 June 2006 • In discussions with international banks for project finance Post Period Highlights • Naimanjal operations became cash flow positive as of August 2006 • Stacked 9,650 ounces of gold to 24 September 2006 Brian Savage, CEO of Frontier commented, "We continue to make good explorationprogress across our project portfolio and I am delighted to report thatNaimanjal, the first gold project we have brought into production, is now cashflow positive. We have worked hard to mitigate the delays we have encounteredand look forward to reporting on successful developments in due course." Enquiries: Frontier Mining Ltd Brian Savage +44 (0) 20 7898 9019Parkgreen Communications Cathy Malins / Annabel Leather +44 (0) 20 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 2006. I amdelighted to report that we became cash flow positive from operations atNaimanjal during August 2006. Since listing on AIM on 2 September 2004, justover two years ago, we have brought the Naimanjal gold mine into production,become cash flow positive, and have received approval for four commercialdiscoveries We are very happy with the progress we have made to date which hasbeen achieved through the hard work, dedication, and enthusiasm of our employeesand consultants. Behre Dolbear & Company, (USA) Inc. ("Behre Dolbear") and SRK ExplorationServices Ltd. ("SRKES") have provided oversight and advised on our explorationprogrammes. We have implemented a Quality Assurance / Quality Control ("QA/QC)protocol for our exploration programmes that was developed by SRKES. Thisquality control programme is independent of the assay laboratories internal QA/QC and involves the insertion of certified reference standards, quality controlblanks and staged duplicates into each batch of samples. SRKES have reviewedthe assay results for the samples taken during the 2006 exploration programmeand confirm that sample preparation and assaying has been of a high standard. Iam pleased to report continued encouraging results across all of our projects. Naimanjal gold mine We recommenced operations at Naimanjal in mid-April 2006, following a harshwinter, using a combination of contractor and company owned equipment due todelays in the arrival of our new fleet of mining equipment. Unfortunately themining boom globally has caused severe shortages of equipment and we are notexempt from the supply delays which continue to beset the entire industry. Bythe end of the second quarter 2006 our new fleet had arrived, we hadcommissioned a 225 tonne per hour ("tph") crushing circuit and installed anadditional 150 tph screening circuit. By the end of June, mining and stackingoperations reached about 65% of our target rate of 4,000 tonnes per day ("tpd"). From 1 September through 24 September, mining operations averaged 95% of ourtarget rate and stacking operations averaged 80% of our target rate. Bothmining and stacking operations continue to increase on a daily basis and haveexceeded our target rate on a number of occasions. Due to the issues outlined below, we have revised our gold production target for2006 and now expect to stack 550,000 tonnes of ore containing 20,000 ounces ofgold of which 15,000 ounces are recoverable and produce 10,000 ounces of gold.Our previously stated objective was to produce 25,000 ounces of gold in 2006.The remaining 5,000 ounces of recoverable gold will be produced during the firstquarter 2007. We are implementing our winter programme and plan to continuemining and leaching during the winter months. We have been working with BehreDolbear and believe these forecasts are achievable. The revised productiontarget is the result of lower ore tonnage stacked, lower grade, and lowerprecipitation of gold and silver from the Merrill Crowe circuit than initiallyforecast. The shortfall in tonnage is due primarily to procurement and customsdelays that held up the delivery of our equipment fleet, crusher, certaincritical consumables, and spare parts. The shortfall in grade is due to lowerthan forecast grades in the near surface saprolite clays at Naimanjal and wehave not been able to blend higher grade ore from the Baritovy satellite depositas we are still waiting for final approval for Pilot Production. The shortfallin ounces produced is due to the above issues and lower than forecastprecipitation of gold and silver from solution in the Merrill Crowe circuit.While we have not fully resolved this issue to date, we are working with BehreDolbear to achieve forecast recoveries from the Merrill Crowe circuit. Inaddition, we are installing a carbon circuit that should be online by the end ofOctober and we anticipate that this will increase gold production. We arecurrently reviewing our gold production targets for next year, and anticipatemining and stacking 1,000,000 tonnes of ore, compared to our initial 2006 mineplan of 896,000 tonnes of ore. Behre Dolbear reviewed the mining equipment fleet and confirmed that this wouldhave been sufficient for the mining requirements of 2006 had it been deliveredon schedule. We have been actively working with our suppliers to ensure theprompt delivery of critical consumables and spare parts and will continue toclosely monitor and improve our supply chain management. Behre Dolbear believethat during the process of saprolitisation, oxidation has freed most of the goldin the Naimanjal deposit, causing the re-distribution of gold in the saproliteprofile. Generally, gold is depleted at the surface and forms a significantenrichment zone at a depth of 15 to 20 metres from the surface. As mentioned, we are still waiting for the final approval of Pilot Production atBaritovy, one of the six satellite deposits located within the Naimanjal licencearea. We have received the recommendation of the State Reserve Committee forPilot Production and expect this approval very shortly. 2006 Naimanjal and Satellite Deposits Exploration Behre Dolbear is overseeing and advising on the 2006 exploration programme forNaimanjal and its satellite deposits. To date, this programme has focused onareas where previous drilling or trenching had identified significantmineralisation, which lead to trenching along strike of known mineralisation,particularly where gold or silver in soil anomalies were present. Finally, themost recent trenching and Reverse Circulation ("RC") drilling has beenundertaken in areas where gold or silver were identified in soil geochemistryand/or geophysical anomalies representing entirely new potential zones ofmineralisation. As a result of this exploration programme we have identifiedover 100 exploration targets at Naimanjal and the satellite deposits. The 2006 Naimanjal and satellite deposits exploration programme is ambitious andincludes the following: • 1,805 metres of core drilling at Naimanjal in 39 holes • 6,112 metres of RC drilling at Naimanjal in 144 holes • 282 metres of RC drilling at Jal in 7 holes • 14,824 metres of trenching in 94 trenches at Naimanjal and Naiman • 2,276 metres of trenching in 27 trenches at Baritovy, Jal, and Gypsovy (a newly discovered prospective anomaly) • Induced Polarisation ("IP") / Resisitivity and magnetic surveys at Naimanjal, Baritovy, and Jal • 1,453 soil samples collected at Naimanjal and Baritovy Core drilling during April returned ore-grade and thickness intercepts fromnorthwest of Naimanjal Pit 3, southeast of Naimanjal Pit 4, between NaimanjalPits 1 and 2, Pits 2 and 3, and Pits 4 and 5, and immediately south of NaimanjalPit 1. RC drilling during August returned ore-grade and thickness interceptsfrom Naimanjal Pit 6. The only hole drilled significantly west of Naimanjal Pit6 also returned ore grades and thicknesses. RC drilling also returned ore-gradeand thickness intercepts west of Naimanjal Pit 3. While we have not receivedassay results from the entire core and RC drilling programme, we are veryencouraged that the initial results indicate the potential to expand ourultimate pit limits well beyond the initial pit boundaries. Trench sampling from 18 exploration trenches scattered throughout the Naimanjalarea returned strong anomalous gold, gold and silver, or silver assays. 13trenches at Naimanjal have returned ore-grade assays. IP anomalies were discovered over two kilometres south-southeast of NaimanjalPit 4 and another IP anomaly was discovered approximately two kilometresnortheast of Naimanjal Pit 1. An IP/ Resistivity anomaly approximately 2,800metres long was also identified at the Jal satellite, about ten kilometresnorthwest of Naimanjal. Anomalous gold was returned from RC drilling. The IPanomaly related to the Baritovy satellite deposit, also about ten kilometresfrom Naimanjal, was traced hundreds of metres to the north and over onekilometre to the south. Another new anomaly, called Gypsovy, was discovered tothe west of the Baritovy satellite deposit. Trenching at Gypsovy uncoveredstrong manganese/gypsum veins and returned three anomalous gold samples, butmore work will be undertaken. Due to poor turnaround time on assay results, again a problem affecting many ofour peers, an updated resource/reserve statement for Naimanjal is being delayeduntil the first quarter of next year to allow the incorporation of these assaysin the updated resource/reserve statement. Koskuduk Gold Deposit SRKES are providing oversight and advising on the 2006 Koskuduk gold depositexploration programme. To date, SRKES has verified and re-compiled theexisting data set, re-logged the half-cut core from key Frontier drill holes andreprocessed the existing regional IP / Resistivity data. The reprocessed IPdata indicates a well defined zone of chargeability which occurs coincident withthe some of the better gold intercepts in existing drill holes. This isconsistent with evidence from diamond drill core, which clearly indicates anassociation between gold mineralisation and pyrite and arsenical pyrite. On the basis of existing data SRKES assisted Frontier with the design of the2006 exploration programme which included: • 2,792 metres of core drilling in 38 holes • 5,024 metres of Reverse C drilling in 96 holes • 3,105 metres of trenching in 23 trenches • Detailed IP / Resistivity and magnetic surveys The core drilling programme was designed to test grade continuity in areas whereprevious drilling intercepted significant gold mineralisation (>1 g/t Au). Coreholes were drilled at a dip of -60 degrees at 40 metre intervals on lines spaced80 to 160 metres apart. The deepest hole was 100 metres. RC was used as a reconnaissance tool to test potential strike extensions ofknown mineralisation. Holes were drilled as fences of 'post-holes' normal tothe strike of mineralisation. Each hole was drilled at a dip of -50 degrees toa depth of 20 metres to provide bedrock geochemical samples. Trenches were designed to target areas of known mineralisation in order toprovide information of the width and grade of the oxide gold zone at surface andalso to test the strike extensions of potential mineralisation. All assay results are pending. Once available SRKES will compile and interpretall data in order to design the next stage of exploration. This will likelycomprise infill drilling to provide additional information on grade continuity,ore type, and metallurgical test work on both oxide and sulphide ores. Baltemir Gold Deposit The 2006 Baltemir gold deposit exploration programme consisted of an internalreview of all of the available data on the Baltemir project, an IP / Resistivitysurvey, a review of the available data and a site visit by Behre Dolbear. Based on the available data, Behre Dolbear believe a small resource of narrowhigh grade vein material may be present at West Baltemir and have recommended alimited three phase exploration programme to test the potential of two targets.The exploration programme includes 990 metres of RC drilling in 33 holes,followed by a reserve driven core and RC drilling programme and additionaltrenching, and finally, metallurgical test work. Beschoki Copper/Gold Deposit The 2006 Beschoki copper/gold deposit exploration programme was designed to testthe down dip and strike extension potential of the mineralised breccia pipewhich was intercepted in four core holes drilled in 2005. The 2006 explorationprogramme comprised 15 angled core holes for a total of 1,743 metres and an 85metre long trench. The trench was excavated to the strike of mineralisation and was designed toprovide geological and geochemical information on the near surface expression ofthe breccia body. Samples were collected at either one or two metre intervalsin bedrock. The trench intercepted 28 metres at 4.87 g/t Au and 0.66 % Cuassociated with a zone of oxidised breccia. Assay results have only been received for two of the 2006 core drill holes.Hole BCH-42 tested the strike extension 50 metres to the northwest of thepreviously defined margin of the breccia pipe and intercepted 32 metres at 0.4 g/t Au and 0.60% Cu from a downhole depth of 68 metres. Hole BCH-46 was a 30metre step-back of the 2005 hole BCH-22 and intercepted 4.0 metres at 3.0 g/t Auand 0.71% Cu and 10 metres at 0.26 g/t Au and 0.18% Cu from a downhole depth of84 metres. The results from all other core holes are pending. Baitimir Copper Deposit A review of the Baitimir dataset was completed by SRKES during 2006 with the aimof better focusing ongoing exploration. IP and magnetic field data werereprocessed using different threshold values in order to create geophysical basemaps on which soil geochemistry and drill hole results were overlaid. Thereprocessed data indicates that copper mineralisation is closely associated withan elongated northwest-southeast trending magnetic high which is approximately1.2 kilometres long and up to 400 metres wide. The magnetic high is peripheralto a large chargeability anomaly that probably represents a pyritic haloassociated with the emplacement of an early stage intrusive. The recognition that copper-gold mineralisation is associated with theemplacement of a porphyry at the southern margin of the chargeability which hasresulted in a coincident magnetic high, is a significant step towards targettingfuture drill holes at Baitimir better. Holes drilled into the magnetic anomalyby the Company in 2005 indicated that the porphyry contains coppermineralisation. Yubileiny Copper Deposit 12 diamond drill holes totalling 1,296 metres of NQ core were drilled atYubileiny in 2006 as part of an infill programme designed to test the gradecontinuity of mineralisation intercepted by drilling carried out in 2004 and2005. Holes were drilled on a grid pattern at a dip of -60 degrees on linesspaced 100 metres apart to a maximum depth of 106.9 metres. Core recovery wastypically greater than 96% in mineralised zones. Several holes intercepted significant oxide copper mineralisation including:YBC-38 with 20 metres of 0.54 % copper from surface, YBC-41 with 8 metres of0.77% Cu from a downhole depth of 38.0 metres; and YBC-44 with 26 metres of0.38% Cu from a downhole depth of 82 metres. All phases of diamond drillinghave intercepted economic oxide copper grades over mineable widths. Future Prospects I would like to take this opportunity to thank our shareholders for theircontinued support. This year has been a challenging one for the Company inparts, but I am confident that we have dealt with the issues that have arisen.Our exploration and development programmes continue to excite and confirm ourconviction that we have assembled a quality portfolio of gold and copperprospects. We believe that the markets for both commodities remain strong andthat your company is well placed to grow and achieve good returns forshareholders going forward. Brian Savage, Chairman 29 September 2006 Interim Summarised Consolidated Financial Statements CONSOLIDATED STATEMENTS OF OPERATIONS For period ended June 30, 2006 (unaudited) (in US Dollars) Period ends Period ends Year Ended 31 June 30, 2006 June 30, 2005 Dec 2005 Administrative expenses 1,213,659 1,650,795 3,383,264 Foreign exchange loss, net (1,990,536) 468,056 886,431Other Income (105,418) (1,648) (270,372)Other expenses 146,180 2,875 348,918Loss before taxation Taxation - - Consolidated Net income (736,115) 2,120,078 4,348,241 CONSOLIDATED BALANCE SHEETS For period ended June 30, 2006 (unaudited) (in US Dollars) Period ends Period ends Year Ended 31 June 30, 2006 June 30, 2005 Dec 2005 ASSETS TotalNon-current assetsProperty Plant and equipment 7,889,710 1,913,498 5,049,560Exploration and Development costs 9,919,725 5,744,373 6,883,607Value-added-tax receivable 626,512 330,648 400,622Cash restricted for restoration expenses 112,000 112,000 112,000Total Non-current assets 18,547,947 8,100,519 12,445,789Current assetsTrade receivables 414,610 1,443,399 142,445Other receivables 953,565 172,077 531,880Inventory 2,095,283 5,775 934,835Cash and cash equivalents 6,103,890 5,452,003 13,958,038Total Current assets 9,567,348 7,073,254 15,567,198 TOTAL ASSETS 28,115,295 15,173,773 28,012,987 SHAREHOLDERS' EQUITY AND LIABILITIESShareholders' equityShare capital 1,325,816 887,522 1,325,816Additional paid-in-capital 36,440,425 22,954,985 36,440,425Accumulated deficit (12,729,233) (10,501,070) (12,729,233)Net income 736,115 25,773,123 13,341,437 25,037,008 Non-current liabilitiesHistoric information cost 821,751 - 821,751Site restoration provision 119,187 114,875 119,187 Current liabilitiesShort term debt 340,000 340,000 340,000Trade accounts payable 95,382 459,519 863,287Other current liabilities 965,852 917,942 831,754 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 28,115,295 15,173,773 28,012,987 CONSOLIDATED STATEMENT OF CASH FLOWS For Period Ended June 30, 2006 (In US Dollars) Period ended Period ended June 30, 2006 June 30, 2005 Cash flows from operating activities:Loss before income tax 736,115 (2,120,078)Adjustments for:Depreciation and amortisation 32,096 42,053Finance costs - 2,875Increase in provision for tax liabilities - 198,383Operating loss before working capital changes 768,211 (1,876,767)Changes in operating assets and liabilities:Increase in trade and other receivables (693,850) (145,974)Decrease in advances prepaid - (1,369,256)Increase in VAT receivable (225,890) (330,648)Increase in inventory (1,160,448) (5,775)Decrease/Increase in site restoration provision - -Increase in trade accounts payable (767,905) 258,179Increase in other current liabilities 134,098 (37,136)Net cash flows used in operating activities (1,945,784) (3,507,377) Cash flows from investing activities:Exploration and development assets (3,036,118) (2,533,647)Purchase of property and equipment and intangible assets (2,872,246) (1,725,666)Net cash flows used in investing activities (5,908,364) (4,259,313) Cash flows from financing activities:Capital contributions - 10,815,043Proceeds from issuance of common stock - 277,013Repayment of short term debts - (412,106)Net cash flows from financing activities - 10,679,950 Net increase/(decrease) in cash and cash equivalents (7,854,148) 2,913,260 Cash and cash equivalents at the beginning of year* 14,070,038 2,650,743Cash and cash equivalents at the end of year* 6,215,890 5,564,003 * - includes $112,000 restricted cash About Frontier Frontier Mining Ltd. is a mineral exploration and development company that wasincorporated in the state of Delaware, USA, on August 5, 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 owned by its wholly owned subsidiaries in Kazakhstan.They are the Naimanjal exploration and mining licence, held by FML Kazakhstan,and the Baltemir exploration licence, held by Baltemir LLP. Frontier has oneproducing gold mine, Naimanjal; one pre-feasibility stage gold project,Koskuduk; and one exploration stage gold prospect, 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. Frontier shares are traded on the AIM market of the London Stock Exchange.Frontier has 132,648,563 ordinary shares issued and 6,197,091 outstandingoptions and warrants, giving 138,845,654 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