Edison Investment Research starts coverage of Frontier Mining
May 6. Proactive Investors
Edison Investment Research has initiated coverage of Frontier Mining Ltd, calling the group an “undiscovered Kazakhstan-focused mining junior with a world class copper project at Benkala and five lesser but nevertheless significant gold/copper projects”.
Development work at the Benkala copper-molybdenum-gold deposit is well underway with production scheduled to commence in the second half of 2011. Benkala is expected to be a low-cost, long-life operation capable of generating cash flow in excess of US$100 million annually after 2012. The current market capitalisation is under 1x potential cash flow, the research house said.
According to Edison, Frontier has heavy near-term funding commitments, but it regards these as well underpinned by the US$10 million credit line extended by the Zere Group, the master company of the largest shareholder Erlan Sagadiev, and a ?5 million Yorkville standby equity facility.
Apart from Benkala, Frontier also has five exploration and development projects in the Naimanjal Licence area in northeastern Kazakhstan. Currently the main focus of development activity here is the Koskuduk project, a gold-silver project based on an open-cut mine, heap leach facility and metallurgical plant where the commencement of production is imminent.
There is also a later stage heap leach gold project at Beschoku. Overall in 2010, gold production could be around 11,500 ozs. Management believes that the gold resource base at Naimanjal may be about 1 million ozs, Edison added.
Edison is Europe’s leading independent investment research company, and winner or runner-up of “Best Research” at the AIM Awards 2006, 2007 and 2008. With a team of 50 including over 30 analysts supported by a department of supervisory analysts, editors and assistants, Edison writes on more than 250 companies across every sector.
Working directly with corporates, investment banks and fund managers, Edison’s research is read by every major institutional investor in the UK, as well as by the private client broker and international investor communities. Edison was founded in 2003 and is authorised and regulated by the Financial Services Authority.