Frontier Mining Ltd AGM Statement & Operations Update (2147V)
11 December 2013 - 6:00PM
UK Regulatory
TIDMFML
RNS Number : 2147V
Frontier Mining Ltd
11 December 2013
FRONTIER MINING LTD
("Frontier" or "the Company")
AGM Statement and Operations Update
Frontier Mining (AIM:FML), the AIM listed copper production,
exploration and development company focused on Kazakhstan, provides
the following operational and corporate updates ahead of its AGM
later today.
Operational Update
Highlights:
-- 1,386 tonnes produced from 01 January 2013 to 31 October 2013 at Benkala
-- Average preliminary cash cost of $3,724 per tonne
-- Average sales price of $6,979 per tonne
-- Sales revenue now sufficient to cover Benkala production costs and Company overheads
-- Exploration programs continue at Benkala, South Benkala and Baitemir
Update
Since the interim results were published, production rates at
Benkala have steadily improved as the operational enhancements and
refinements identified, have subsequently been implemented by the
Kazcopper operational team.
Crushing and stacking is now occurring at a record rate with Pad
3 now providing Pregnant Leach Solution (PLS) for processing in the
SX-EW plant, and Pad 4 is being stacked to 6 meters with irrigation
underway.
Issues affecting percolation of the pads have now been
identified and in some cases rectified via the mixing of different
permeability ores, with further enhancements to take effect on an
on-going basis. Sections of Pad 4 have been fitted with a forced
aeration circuit which should further enhance the effectiveness of
the ferric bacterial agents and should improve the overall recovery
of the pad. A final improvement in the agglomeration step with the
introduction of an organic agent will be implemented in 2014 to
allow peak permeability of future pads. Construction work has begun
on the bases for Pads 5 and 6 and further updates will be made in
2014 as the work progresses.
919 tonnes of LME Grade A copper cathode have been produced
between 01 July 2013 and 31 October 2013, with 780 tonnes shipped,
bringing the total production up to 31 October 2013 to 1,386 tonnes
and on target to meet 2013 forecasts.
With more than $10 million cash generated from copper cathode
sales in 2013, revenue at Benkala is currently covering both
operational and fixed costs. Further operational parameters for the
period to 30 November 2013 are included below.
Table 1 - 2013 Benkala Operational Figures
01.01.13 - 30.06.13 01.07.13 - 30.11.13
---------------------- --------------------- ---------------------
Average Average
Quantity grade Quantity grade
---------------------- ----------- -------- ----------- --------
Mined ore (t) 16 124 0.73% 280 296 1.05%
---------------------- ----------- -------- ----------- --------
Contained Copper
(t) 118.3 - 2942.3 -
---------------------- ----------- -------- ----------- --------
Stripping completed
(m(3) ) 400 689 - 262 732 -
---------------------- ----------- -------- ----------- --------
Stacked ore (t) 16 642 0.76% 337 059 0.91%
---------------------- ----------- -------- ----------- --------
Contained Copper
(t) 127.0 - 3069.8 -
---------------------- ----------- -------- ----------- --------
Stockpile (t) 116 398 1.21% 59 635 0.85%
---------------------- ----------- -------- ----------- --------
The exploration programs continue at all of the Company's
projects, with more than 6,100 meters drilled and 19 061 m(3) of
trenching completed in 2013. Recent geophysical studies completed
at Benkala and South Benkala confirmed previous estimates and
indicated potential growth in South Benkala resources. Additional
progress was made at Baitemir-Beschoku gold-copper prospect, with
drilling grid narrowed to 100x50 and 100x25 meters, and separate
assays from certain sections of Beschoku show significant levels of
other minerals including gold. Findings of Frontier exploration
team are currently being formalized into reports that will be
submitted for approval to the Kazakhstan State Commission on
Mineral Reserves.
Adam Moroney has spent much of the last three months identifying
best practice for freezing weather heap leaching, from around the
world and has now compiled an operational guide that has been
translated and is being ratified for use on site. Included in this
guide will be methods for continuous mining and stacking
operations, best method of application of leach solution to heaps
in extremely low temperatures and the necessary measuring and
monitoring to successfully implement and optimise forced aeration
during this period. Previous experiments in stacking the pads to
six metres have been successful and will now contribute to
optimising performance and heat retention during winter.
Adam Moroney, Consultant of Cu Ni Co hydrometallurgy, stated:
"It will be necessary for Benkala to implement the best-practice
operating procedures that are being provided for the freezing
conditions that prevail during their wintertime. I see the
2013/2014 winter season as probably the most important
production-testing period for Benkala; the opportunities to learn
from this season can be taken to optimise ongoing year-round
operating practices."
Corporate Update
Highlights:
-- Cost management at Benkala allows for optimized cash flow from operations
o Staff headcount at Benkala reduced by 27% in 2013
o Electricity supply for 2014 secured at 20% cost reduction
-- Sberbank agree the deferral of capital repayments until Autumn 2014
-- Educational Funds signed agreements for the rollover of Loan Notes until Q2 2014
-- Red Kite agrees to a scheduled repayment of its Loan Note
until the end of 2014 as operations progressively improve
Update
This year Frontier Mining has been going through a number of
cost management initiatives, including sulphuric acid supplies at
less than 75% of the pricing levels of 2012, reduction in number of
employees by 27% since the beginning of 2013 and securing
electricity supply for 2014 at 20% reduced price per kW. As a
result of these cost savings and with more than $10 million cash
generated from copper cathode sales in 2013, copper production at
Benkala is now cash generative to a point that allows
self-sufficiency of operations for the first time in the company's
history.
Frontier has been in discussions with its lenders which have
resulted in the certain variations and deferments of the original
agreements. Sberbank has agreed to defer the commencement of
capital repayments on its debt facility to September 2014. In
addition, the Educational Funds (CAES and NNEF) and EXP T1 RK Mine
Finance Trust 1, part of the Red Kite Group of Investment Funds,
have agreed to extend the term of their Loan Notes.
While working on re-negotiation of the Company's existing debts,
Frontier Mining continues its efforts to find longer term financing
options, as well as increasing production and removing bottlenecks
from production, as discussed above.
As announced on 29 November 2013 dealings in the Company's
shares commenced on the Kazakhstan Stock Exchange satisfying the
demands of the regulatory requirements of the National Bank of
Kazakhstan Rules 2012.
-END-
For further details please contact:
Frontier Mining
Ltd Yerlan Minavar +44 (0) 20 7898 9019
Libertas Capital Sandy Jamieson
(NOMAD) Richard Morrison +44 (0) 20 3697 9495
John Harrison
RFC Ambrian (Broker) Jen Boorer +44 (0) 20 3440 6800
Walbrook PR and Paul Cornelius
IR Guy McDougall +44 (0) 20 7933 8780
This information is provided by RNS
The company news service from the London Stock Exchange
END
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