Frontier Mining reports positive economic assessment of Benkala and Maminskoye projects
Frontier Mining’s (LON:FML) has unveiled the positive findings of independent technical reviews and preliminary economic assessments, carried out by Wardell Armstrong International (WAI), at the company’s Benkala Copper project in Kazakhstan and the Maminskoye gold project in Russia. Collectively, the economic assessment values the two projects at over US$300m.
Collectively, the reports envision a 5 million tonne per annum (Mtpa) copper open-pit mining operation at Benkala, and a 1Mtpa open-pit gold mining operation at Maminskoye. “We are extremely pleased with the positive tone of Wardell Armstrong’s technical review of Benkala and Maminskoye,” Frontier Mining chief executive Erlan Sagadiev said.
“Wardell’s work confirms our belief in the quality of the Benkala deposit and reaffirms our decision to focus on this oxide resource and bring it into production.” WAI described Benkala as “robust” and confirmed Frontier’s contemplated development steps to advance the project into production.
The economic assessment estimates that Benkala has an US$191m NPV, using a 10% discount rate and an internal rate of return (IRR) of 116% based on initial CAPEX of US$55m and a US$6,000/mt copper price.
The WAI preliminary economic assessment is based on 5Mtpa ore mining rate, average grade of 0.36% copper and 63% overall recovery.
At Maminskoye, MAI’s a preliminary model contemplates the development of an open-pit mine, operating at an initial mining rate of 700ktpa for the first three years, and increasing to 1Mtpa for a 14 year project life.
Frontier noted that WAI sees Maminskoye as an “attractive project” with the NPV estimated at US$110.9m, using a 10% discount rate and IRR of 48% with a 3 year payback. The assessment is based on an estimated capital cost of $75M and a $950/oz gold price.
In Kazakhstan, Frontier currently own a 50% interest in Benkala, through the KazCopper LLP joint venture with Colville Intercorp – a private Kazakh mining group. The partners are currently working towards the completion of a merger, which is set to complete in the third quarter of 2010. To this end the company singed a memorandum of understanding (MoU) earlier this year.
Benkala, set in the Ural Mountains, has been the subject of considerable exploration and evaluation, dating from the Soviet era. “Based on historical Soviet data and the available assay results from the current drilling programme, WAI has reviewed and confirmed its 2007 estimates for Benkala copper oxide and sulphide resources,”Frontier stated.
The company also noted that analysis of recent assay samples, which were sent to Geoplasma Kazakhstan and Alex Stewart Laboratories, show good correlation with previous drilling. The majority of the assays have now been received, and Frontier said that the results will be published in due course.
Frontier plans to carry out further work on the Benkala oxide resource in 2010, with the aim of issuing a JORC compliant resource estimate by the year’s end.
As part of the report, WAI reviewed Frontier’s plans initially to develop the Benkala oxide copper resource with construction of an open-pit mine, a leach facility and a solvent extraction-electro winning (SX-EW) facility.
According to Frontier, it intends to start trial mining this summer. The company plans to use the production platform of the SX-EW project (solvent extraction and electrowinning) to finance further evaluation and the potential development of Benkala’s significant sulphide resource.
The company also noted that further metallurgical testing is underway, to build on the 2007 metalurgical tests undertaken by VNIITsvetmet, and to improve the technical parameters of the project.
WAI has confirmed earlier resource estimates, prepared in the Soviet era, as well as the work conducted by Coville. The mineralized zone is currently understood to be some 300m wide, 650m long and is known to a depth of over 250m, although the full extent of the deposit has not yet been fully delineated in any direction.
Frontier intends to report an updated JORC resource estimate for Maminskoye by the end of the year.
Once the company has received full State Reserve Approval in Russia, expected within 3 months, Coville will continue the development of Maminskoye deposit into production. Coville also noted that exploration on the highly prospective Gabiyevskaya zone – a satellite of the Maminskoye deposit – is continuing.
“The Maminskoye ores have been subjected to extensive metallurgical analysis and pilot plant test work. These studies have confirmed that the ore is non-refractory and a standard CIL process has been developed for ore treatment. Gold recoveries are estimated at 93.5% for the oxide ore and 92.5% for the primary ore”, Frontier stated.
Additionally, the company highlighted that the WAI report addresses a number of minor environmental issues, and Frontier said it will undertake appropriate ecological studies on both Benkala and Maminskoye, to comply with local and international regulations.
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Frontier Mining Ltd is a mineral exploration and development Company focussed on gold and copper deposits in the Republic of Kazakhstan. Through its subsidiaries and affiliates, Frontier locates, evaluates, acquires, explores and develops mineral properties. Frontier currently operates two licenses in Kazakhstan, Naimanjal (100% owned) and Benkala (50% owned). Naimanjal operations currently consist of five projects; a producing gold mine, a test stage gold production project, a potential copper porphyry deposit with associated gold and molybdenum, and copper/gold prospects along a 25km trend including both VMS and porphyry types. Benkala is a copper-molybdenum-gold deposit located in north-western Kazakhstan, within the Urals gold/copper ore belt.