26th Apr 2005 07:00
Frontier Mining Ltd26 April 2005 Frontier Mining Ltd First Quarter 2005 Projects Update Gold Highlights • Kappes Cassidy and Associates ("KCA") were advisors on the final report titled Naimanjal Gold Project Heap Leach Operation Project Design & Cost Estimate which concludes "the Naimanjal Project is a relatively low-risk investment proposition with upside potential in both the metallurgical recovery and further expansion of the resource" • Naimanjal gold mine in northeastern Kazakhstan remains on schedule (and within budget) to begin gold and silver production in June 2005. • Koskuduk gold project: nine additional core holes were completed and a revised reserve estimate is expected in May. A metallurgical test programme is underway examining the leach characteristics of the oxide ore. • Baltemir gold project: two-year license extension has been approved and a nine core hole drilling programme over Koskia, the new mineralised target area, is in progress Copper Highlights • Beschoku copper project: 18 core hole discovery drilling programme has commenced to confirm that geochemical and geophysical anomalies are related to sulphide mineralisation over potential VMS-type and porphyry copper target • Beschoku copper project: first four confirmed the presence of sulphide mineralisation, both copper and molybdenite have been identified in borehole logs assay information is awaited Beschoku copper project: expanded geochemical survey commenced to study the continuation of mineralization • Yubileiny copper project: 24 core hole drilling program commenced for resource definition of VMS-type oxide copper mineralization • Yubileiny copper project: expanded geophysical survey commenced to study the continuation of known mineralised zone to the northwest Other Highlights • Frontier continues to review uranium exploration and development projects within the CIS countries and has retained Behre Dolbear as independent consultant to complete technical due diligence and valuation Corporate Developments • To date, 9,552,240 warrants have been exercised at 16.5p providing £1,576,119.62 additional proceeds to the company • Robin Young resigned from the board of directors in order to become Chief Executive Officer of an exploration company. Robin remains supportive of Frontier Mining and will continue to act as an independent consultant to the Company. Brian Savage, CEO of Frontier Mining, comments, "We have been very busy duringthe first quarter as we move ever closer to first gold production at Naimanjalin May. We have also made significant progress on our other gold and copperprojects and are excited by the potential of the uranium projects under review." Naimanajal Gold Mine Development The Naimanjal gold mine in northeastern Kazakhstan remains on schedule to begingold and silver production in May 2005 with stacking ore in early May andpouring the first gold bar in June 2005. Frontier has executed a contract withTrud LLP, an experienced local contract mining company, for earth work includingconstruction of the heap leach pads and mining ore and waste. Trud LLP hasmobilised a fleet of equipment to Naimanjal and is currently constructing theheap leach pads which will be ready for stacking ore in early May. An existingore stockpile containing 17,000 tonnes of ore with a gold grade of 2.05 gramsper tonne will be the first ore stacked on the heap leach pads. KCA were advisors on the final report entitled "Naimanjal Gold Project HeapLeach Operation Project Design & Cost Estimate." The conclusions of the reportcovering the first three years of the project are: • The Naimanjal resource comprises multiple sub-parallel gold mineralisation zones, traced approximately 2,000 metres along strike to a depth of at least 150 metres, and with five defined mining areas. Mineralisation within the orebodies is associated with the basaltic conglomerate on the contact with sandstone/greywacke. Based on a 0.5 gram per tonne ("gpt") gold cut-off grade, the resource comprises 2.01 million tonnes grading 1.33 gpt gold and 25 gpt silver. Similar saprolite-hosted gold deposits are being successfully mined within the region and, as a consequence, the reserve estimation above is considered well founded and technically conservative. • The Naimanjal Heap Leach Project ("NHLP") will process crushed ore mined by standard open pit drill and blast mining techniques. Ore will be crushed through a three-stage crushing circuit. The crushed ore will be processed using conventional, cyanide heap leach technology. Precious metals will be recovered using Merrill Crowe technology to produce a dore product for export. • Run of mine ore will be crushed to a P80 of 15mm before cement agglomeration and conveyor stacking into two lifts of eight metres each. The ore will be stacked over an impermeable liner and the final leach pad area will be approximately 110,000 m2. Cyanide solution will be sprayed over the ore for up to a 120-day leach cycle, leaching the precious metal content before recovery from the leach solution using a Merrill Crowe (MC) based recovery system. The precious metals will be recovered in the MC presses and smelted to produce dore bullion for export. • NHLP ore is amenable to processing using heap leach technology and the operating projections outlined in the report are robust and conservative. • Heap leach technology is ideal for this form of gold mining project. The low capital requirement and short lead times allow a comparatively low-risk entry to the Project with an early cash flow and short time to breakeven. • Heap leach processing can confidently be expected to achieve 74 per cent. or better gold recovery and 44 per cent. or better silver recovery from the oxide ore. There is potential for upside in recovery rate at the longer field leach times. Reagent consumption and Project metallurgy are based on conservative design parameters well founded in test work and based on proven scale-up techniques. • The physical characteristics of the oxide ore are well defined and it is unlikely that the percolation problems that can hinder other heap leach operations will occur at Naimanjal. Conveyor stacking allows much tighter control of stacking placement and ensures that design parametres can be achieved at all times. Conveyor stacking also allows some flexibility in choice of heap height, allowing percolation problems to be overcome through reduced lift height, albeit at marginally increased cost. • The operating cost parameters are robust and realistically based on similar projects in Kazakhstan. In the event the ore reserve is increased, on-going processing can be achieved with minimal additional capital expenditure. There is considerable upside to the Project if the sulphide ore or parts of it can be added to the reserve. If this occurs, the incremental capital cost will be low. • The Project capex is low at $3.64 million and the overall Project is comparatively in-sensitive to capital costs. It is, however, sensitive to operating costs and this is the area where overall Project profitability will be determined. • Operating costs including mining have been determined at US$6.81 per tonne ore or US$181 per ounce. • FML expects to be able to commence stacking in May with the first bar poured in June. The simple nature of the project and the low capital cost should allow the schedule to be met. • The project is comparatively insensitive to the capital investment level but is very sensitive to operating costs and revenue. This is a common investment profile for gold heap leach operations and the FML management team are well versed in the management of these important issues. The six Naimanjal satellite deposits The six Naimanjal satellites include Baritvoy, Naiman, Ergozy, Toksanbay, Jal,and Jantilak. At Baritovy ore stockpiled from historical trenching was sampled to contain4,870 tonnes of ore assaying 4.64 gpt gold containing 22.6 kilograms (726ounces) of gold. We intend to stack this on the Naimanjal heap leach pad in thenear future. A preliminary resource estimate incorporating the results from the 2004drilling, trenching, geochemical, and geophysical data contains 530,000 tonnesof ore at 1.04 gpt gold using a 0.5 gpt cut off or 271,000 tonnes of ore at 1.97gpt gold using a 1.0 gpt cut off. The deposit is open in all directions. Fourcore holes totaling 345 metres were drilled at Baritovy during the first quarterto extend the known resource. The assay results of these core holes are pendingand will be incorporated into the resource model when available. At Naiman, five core holes were drilled in 2004 totaling 439 metres and did notintersect significant mineralisation. During the first quarter 2005, four coreholes were drilled at 50o angle totaling 345 metres to follow up on a newgeochemical anomaly. The assay results of these core holes are pending. At Ergozy, two core holes 100 metres long at a 50o angle were drilled during2004. One hole did not contain significant mineralisation and 1 core holeintercepted mineralisation from 65 metres to 87.5 metres assaying 1.9 gpt gold.During the first quarter, 1 core hole 120 metres long at a 50o angle wasdrilled. The assay results are pending, but the character of mineralisation issimilar to the mineralised hole. Toksanbay, Jal, and Jantilak satellites have not had any work performed on themduring the first quarter other than reviewing the results of the 2004geochemical surveys. Additional exploration is planned during 2005. Exploration update for Koskuduk and Baltemir Gold Projects Koskuduk To date nine core holes have been drilled by FML to provide infill confirmationof already known East and West Koskuduk mineralised zones. A revised reserveevaluation is expected to be completed in May 2005. Preliminary results of thereserve evaluation suggest an increase from the current 180,000 ounces of C2category reserves to add 70,000 ounces of C1 category reserves. Eight oxide mineralisation samples are being studied at Alex Stewart laboratoryin Kyrgyzstan. The bottle roll tests are designed to determine recovery of goldfrom oxide mineralisation. Baltemir CenterKazNedra, the regional government agency responsible for exploration andmining, has agreed to extend the Baltemir license for another two years. Theextension is being formalised and is expected by the end of May. To date 25 core holes have been drilled at various locations along the sevenkilometre long quartz vein system. While there are areas of high-grade, we arestill working on establishing geological control of the mineralisation.Exploration on the seven kilometre long quartz vein system will continue. A nine core hole drilling programme at Koskia, the new mineralised target (15kmby 8km) identified in the northern part of the license area about six kilometresfrom the known quartz vein system, is in progress. This is a complex mafic/ultramafic Koskia pluton with explosive breccia in vein zones and smallerrhyolitic intrusives. Gold values of 0.5 gpt have been encountered in outcropswith 0.5 per cent. lead and 0.5 per cent. arsenic. The first hole BK-1 has been drilled at an outcrop of a basalt-hosted "brecciapipe" with a diametre of 50 metres. Picritic basalts and ultramafic rocks occuras breccia fragments with up to 3 per cent. pyrite, arsenopyrite, and what iscurrently believed to be pentlandite occurring in the matrix of the breccia.The drill hole went out of the breccia pipe at 60 metres depth and wasterminated at 97 metres. Assays are pending. Drill hole KOS-2 to test an arsenic-gold geochemical anomaly, which is locatedat Koskia Hills, has been drilled to 136 metres and encountered the sulfidemineralisation up to 5 per cent. and thick silicification zones. Drill hole KOS-3, also at Koskia Hills, is in progress, it tests the sameanomaly 500 metres to the south of KOS-2. Beschoku Our best copper exploration results were achieved at Beschoku. Geological andgeophysical results to date have identified two large mineralised systems withinthe Beschoku area, a copper/gold VMS deposit including oxide mineralisation, anda copper/molybdenum porphyry deposit. The copper and molybdenum mineralsinclude malachite, azurite, chrysocolla, chalcopyrite, bornite and molybdenite. Based on alteration zoning, geochemistry, and geophysics, to a depth of 200metres, using 10 per cent. sulphide content and a specific gravity of 2.7 tonnesper cubic metre, management estimate a preliminary inferred geologic resource(P1) for the VMS type deposit of 810,000 tonnes of contained copper with 1 percent. grade and 1.67 million tonnes of contained copper with 1 per cent. gradefor the porphyry copper with skarn type deposit. The first phase drilling program started in mid-March consists of 18 core holestargeted to discover and confirm the 2.48 million tones of contained copperresources reported previously. Nine core holes are targeted in geophysicalanomalies and nine core holes are targeted in geochemical anomalies in bothVMS-type and porphyry-type deposits. The geophysical targets are based on work performed by GaiaScan Geophysics Ltd.,and included Induced Polarization ("IP") and resistivity profiling, as well as amagnetic survey. The IP anomalies totaled six square kilometres. The anomalousIP zones range from 900 metres to 1,200 metres wide and four kilometres longwith chargeability values reaching 45 mv/v. The geochemical anomalies include copper content above 500 parts per million ("ppm") within a one square kilometre area. The most significant geochemicalanomaly, Kotansor, contained up to 3,230 ppm (0.3 per cent.) copper with goldvalues reaching one gpt. Two mid-19th century oxide copper mines, Beschoku andKotansor, are located within this anomalous area. Drill holes BCH-1, BCH-6, BCH-9, BCH-10, and BCH-14 were drilled at Beschokuwithin the last two weeks and BCH-18 is currently being drilled. These holesintersected expected mineralisation and interpreted structures at predicteddepths with the following results; • BCH-1 was 206.3 metres long at a 60o angle. Sulphide mineralisation consisting of pyrite, chalcopyrite, arsenopyrite, and molybdenite occurred from 103 metres to 200 metres; • BCH-6 was 100 metres long and drilled at a 60o angle. Sulphide mineralisation, mainly chalcopyrite, occurred from 60 metres to 95 metres; • BCH-9 was a 106.5 metres long vertical hole with disseminated sulphide mineralisation; • BCH-10 was 201.5 metres long at a 60o angle to test the Kotansor geochemical anomaly with 0.3% Cu values. This hole contains chalcopyrite, arsenopyrite, and minor molybdenite; and • BCH-14 was 123.6 metres long and drilled at a 60 angle. It contains zones of chalcocite, and covelite, transitioning to pyrite, and chalcopyrite. Future plans An expanded geochemical and geophysical programme has been initiated to pursuethe above mentioned anomalies to the northwest and southeast of theabove-mentioned anomalies. The first phase of the 18-hole drilling programme will be completed by the endof June. If assay results are good and confirm a discovery, then we willproceed immediately with the second phase of the drilling programme that will beused to establish ore reserves as part of a pre-feasibility study. Yubileiny We have upgraded the inferred geologic (P1) resource of 30,000 tonnes ofcontained copper to a C2 category resource with a grade of 1per cent. We havealso defined an additional inferred geologic (P1) resource of 80,000 tonnes ofcontained copper to the north of the C2 area. A continuous and well defined IP anomaly of 150 metres to 170 metres wide with astrike length of over 700 metres was delineated. Excellent correlation withhistoric mine workings and recent drilling suggests that copper mineralisationis the causative source of the delineated IP anomaly. The IP anomaly is open atdepth and along strike past the extent of the IP survey grid. We currently have three core drill rigs drilling at Yubileiny that will includea 24 core hole program that will be used to upgrade the inferred geologicresource. This programme is expected to be completed by the end of May. Baitimir The geophysical survey planned for April 2005 has postponed in order to completethe expanded geophysical survey at Beschoku and Yubileiny. The four RC holes to a depth of 100 metres that were planned to be drilled inJanuary in the most intensely altered areas near historic mine workings, havebeen postponed until June when drilling is completed at Yubileiny. Enquiries Frontier Mining Ltd Brian Savage 020 7849 6530Parkgreen Communications Cathy Malins / Annabel Leather 020 7493 3713 Notes To Editors: About FML FML is a mineral exploration and development company that was incorporated inthe state of Delaware, USA, on 5 August 1998 for the purpose of exploring anddeveloping gold and copper deposits in the Republic of Kazakhstan and othercountries of the Commonwealth of Independent States. Through its subsidiariesand affiliates, FML locates, evaluates, acquires, explores and develops mineralproperties. FML has two licenses, over a total area of 4,326 km2, owned by its wholly ownedsubsidiaries in Kazakhstan. They are the Naimanjal exploration and mininglicense, held by FML Kazakhstan, and the Baltemir exploration license, held byBaltemir LLP. FML is currently focused on three gold projects with more thantwo million ounces of oxide gold resource and two copper/gold projects with morethan 5 billion pounds of contained copper (P1) resource. FML was admitted to the AIM Market of the London Stock Exchange on 2 September2004. FML has 88,196,461 ordinary shares issued and 11,777,217 outstandingoptions and warrants, giving 99,973,678 fully diluted ordinary shares. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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