The Kazakhstan operating firm has achieved its daily mining target of 8,000 tonnes of ore at Benkala and remains on track to produce between 3,500 and 5,000 tonnes of copper this year with the plant operating at its normal capacity of 7,500 tonnes per annum.

The company plans to increase production to 20,000 tonnes by the 2014/15 fiscal year.

Frontier added that copper cathode production from Benkala, which the company says is a key milestone for the project, remains on target to begin in June this year.

In the meantime, the company’s Baitemir deposit in the north east of the country continues to show significant potential with the first results from the ongoing drill programme having met expectations.

Drilling will continue ahead of the preparation of a preliminary resource estimate, which is expected to be released in the fourth quarter of the year.

- adds broker comment

Kazakh copper miner Frontier Mining’s (LON:FML) potential at both its Benkala and Baitemir is not recognised in the current share price, broker Westhouse suggests.

Frontier today confirmed that the production milestone of its first copper cathode from Benkala is expected in June.

Mining at Benkala is currently on-going at a daily rate of 1,500 tonnes per day of ore.

Production is targeted at 3.5kt to 5kt of copper in 2012 and expected to increase to around 20kt annually by 2014/2015. 

Frontier also has off-take agreements in place with ore currently stockpiled totalling approximately 25,000 tonnes. 

Westhouse, which is Frontier’s house broker, has trimmed its target price to 8 pence from 8.5 pence to take account of higher cash costs from an initial $2,300/t estimate but argues the market has yet to fully price in its move from development into production. 

Equally significant, says Westhouse, is that Frontier has a number of ways to add more value. 

Baitemir, its most advanced copper project in the Naimanjal licence area in north east Kazakhstan,  is expected to have a maiden independent estimated resource this year.

In addition, the current life of mine schedule at Benkala is based solely on the 183kt of oxide resource, while there are additional 1.38 Mt of JORC compliant copper resources in the sulphides.

Independent estimates have suggested the sulphide resource could be as high as 2.62Mt. 

“Further development of the sulphide deposit is likely to, therefore, increase its value significantly,” says Westhouse. 

Frontier Mining (LON:FML) today confirmed that production has begun at its Benkala copper project in Kazakhstan, with the milestone of its first copper cathode expected in June.

Mining is currently at an on-going daily rate of 1,500 tonnes per day of ore, which will ramp up to 8,000 tonnes per day as normal operations are established. Current stockpiled ore totals approximately 25,000 tonnes.

Frontier added that its first 660 tonne shipment of sulphuric acid has also arrived, which will enable it to begin leaching operations while the railway storage complex has been connected to the main railway line along with on-site acid storage facilities.

The leaching process is expected to begin 30 days after the crushing operation has settled down to normal capacity. 

First production in June 2012 would be as as previously scheduled. 

The 2012 target production level is expected between 3,500 to 5,000 tonnes compared to the plants operating capacity of 7,000 tonnes per annum.

Erlan Sagadiev, Frontier’s chief executive said: "With the first copper cathode production at Benkala fast approaching, we are advancing towards a key milestone in Frontier's history. 

The company's construction and operations teams are working at full capacity to ensure the smooth start of production as quickly as possible, accelerating towards our goal of establishing Frontier as a premier mid-tier copper producer."

Frontier has a 100 per cent interest in Benkala through its subsidiary KazCopper. It also owns Baitemir, a potential copper gold porphyry deposit in North East Kazakhstan.

Frontier Mining (LON:FML) told investors that it can now commission all the equipment in the plant at the Benkala copper mine development.

This morning the company reported that all construction approvals and permits have now been received. It will now commission all the equipment on site.

“This represents for Frontier the completion of another key milestone in the Benkala project timeline,” said chief executive Erlan Sagadiev.

“Progress at the site continues at pace as we enter the next stage of commissioning prior to the commencement of production."

Earlier this month Frontier unveiled a new US$29 million financing arrangement that will help support the development of the Benkala mine.

Once the mine is established Frontier plans to expand production, taking it from 7,000 to 10,000 tonnes a year, and later expanding to 20,000 tonnes a year.

The land hosts the South Benkala deposit which is estimated to contain 609,600 tonnes of copper.

The deal was originally agreed in May last year. Today Frontier confirmed that it has now been approved by the Kazakh authorities.

Frontier has now paid US$2.5 million to the vendor PromSnab2030 LLP and the acquisition is now complete.

South Benkala is located 10 kilometres south of the existing Benkala operation. 

Frontier plans to incorporate South Benkala’s copper reserve into its current Benkala project development. This will see the life of the mine’s SX-EW plant, which is currently being built,  extend from seven to eleven years.

Or alternatively South Benkala’s oxide resources may expand Benkala’s production capacity from 20,000 to 30,000 tonnes of cathode copper per year.

Earlier this month Frontier unveiled a new US$29 million financing arrangement that will help support the development of the Benkala mine.

Plant commission work began at Benkala last month following an official opening ceremony. The final approval on all construction and infrastructure is expected shortly.

Once the mine is established Frontier plans to expand production, taking it from 7,000 to 10,000 tonnes a year, and later expanding to 20,000 tonnes a year.

This morning the Kazakh focused miner unveiled a new US$29 million financing arrangement that will help support the development of the Benkala copper mine.

The firm’s subsidiary KazCopper has agreed the loan with Russia’s Sberbank. Through the arrangements it will receive a US$20 million investment loan and a US$9 million working capital credit facility.

Frontier has already used some of the cash to pay off its debt to HSBC and the rest is being earmarked for the expansion of the Benkala mine, once production is in full swing.

“Today's announcement is significant for Frontier in that not only will the refinancing of the existing HSBC loans marginally reduce the current interest expense but demonstrates the progress the company has made at the Benkala project with the SX-EW plant currently in the final stages of construction,” said XCap analyst Sam Brindle.

“Securing debt financing is a major obstacle for most junior mining companies, particularly in the current economic climate. 

“We believe this financing demonstrates both the robustness of the project and provides equity investors with some comfort that additional cash calls will not be required in the short term.”

The loan will last for 48 months and it carries an interest rate of 9%. Meanwhile the working capital credit facility lasts 36 months and its interest rate varies from 7.5 to 8.5%.  

Frontier said that the loan has already been partially drawn on to fully repay the company's US$8 million loan with HSBC.  

The rest of the funds will be put towards the Benkala project's expansion, in particular to help pay for the ongoing drilling programs at Benkala and South Benkala.  

Plant commission work began at Benkala last month following an official opening ceremony. The final approval on all construction and infrastructure is expected shortly.

Once the mine is established Frontier plans to expand production, taking it up to 7,000 to 10,000 tonnes a year, and later expanding to 20,000 tonnes a year.

"In spite of the worsening credit markets we have been able to significantly increase the credit available to the company and improve its terms,” said chief executive Erlan Sagadiev.

“We believe these new facilities reflect the progress achieved in construction to date; as well as in the financial and technical robustness of the Benkala project and represent an excellent start to 2012."

Frontier Mining (LON:FML) today unveiled a new US$29 million financing arrangement that will help support the development of the Benkala copper mine in Kazakhstan.

The firm’s subsidiary KazCopper has agreed the loan with Russia’s Sberbank. Through the arrangements it will receive a US$20 million investment loan and a US$9 million working capital credit facility.

"In spite of the worsening credit markets we have been able to significantly increase the credit available to the company and improve its terms,” said chief executive Erlan Sagadiev.

“We believe these new facilities reflect the progress achieved in construction to date; as well as in the financial and technical robustness of the Benkala project and represent an excellent start to 2012."

Frontier said that the loan has already been partially drawn on to fully repay the company's US$8 million loan with HSBC.  

The rest of the funds will be put towards the Benkala project's expansion, in particular to help pay for the ongoing drilling programs at Benkala and South Benkala.  

The loan will last for 48 months and it carries an interest rate of 9%. Meanwhile the working capital credit facility lasts 36 months and its interest rate varies from 7.5 to 8.5%.  

Plant commission work began at Benkala last month following an official opening ceremony. The final approval on all construction and infrastructure is expected shortly.

Once the mine is established Frontier plans to expand production, taking it up to 7,000 to 10,000 tonnes a year, and later expanding to 20,000 tonnes a year.

Construction activities are well advanced, it said. 

All the major equipment has been delivered to the site and Frontier is in the final stages of assembly. Additionally many of the plant systems are now operational.  

The group’s mining activities will continue throughout the winter months, it said.

The company explained that it will start loading the leach pads as soon as weather permits in 2012. Cathode production will begin shortly thereafter, it said.

"We are excited to begin commissioning our SX/EW plant,” said chief executive Erlan Sagadiev.

“Although we had hoped to see our first copper in 2011, delaying the commencement of the leaching cycle until spring of 2012 is a prudent step in the face of the risks associated with the weather. 

“It will also enable comprehensive testing of all plant systems and facilitate a smooth start up, advancing our goal of establishing Frontier as a premier mid-tier copper producer."

Frontier said that once Benkala is in production it plans to immediately move to expand the annual capacity from 7,000 to 10,000 tonnes, and subsequently to 20,000 tonnes.

Kazakhstan-focused copper and gold explorer and producer Frontier Mining (LON:FML) said today that it had received the second US$5 million tranche of the US$10 million funding it announced in mid-June.

The funding deal is part of a copper off-take agreement with Red KiteMine Finance. The agreement is for four years from the commencement of production at Frontier’s Benkala copper oxide project.

Benkala is a 32.6 million tonne copper oxide resource, grading at 0.54 per cent copper. It is located in north-west Kazakhstan, closer to the Russian border, in an area that the company says presents favourable geography. The water table is within 25 metres of the surface and the flat landscape makes it ideal for heap leach processing.

In May 2010 Frontier commissioned an engineering firm to create a detailed design of a 20,000 metric tonne per year production facility. Pre-stripping of the mine and the commencement of site works also began last year.

Frontier reported recently that as of the beginning of June, construction for entire project was approximately 65 per cent complete. First production is expected in late 2011.

“Having already secured full funding for the Benkala project, these additional funds will further strengthen Frontier's balance sheet and enhance our ability to operate,” said Erlan Sagadiev, Frontier’s chief executive officer.