Frontier Mining (LON:FML) has begun the construction of the open pit mine at its Benkala copper project in Kazakhstan. The company is permitted to remove a total of 3 million cubic metres in 2010, and the initial stripping operations are now underway. Frontier is targeting initial production in the first half of 2011.
"Development of our flagship Benkala copper project is now well underway. The commencement of stripping at the pit is a significant step forward for Frontier,” Frontier chief executive Erlan Sagadiev commented. “After many years of hard work by the team at KazCopper we are delighted that mine pit construction has now begun and that we are in a position where we can see the finish line."
Frontier is developing the Benkala project through its KazCopper subsidiary in a 50:50% joint venture with Colville Intercorp. The JV partners are currently working towards the completion of a merger, which is set to complete in the third quarter of 2010. The merger sees Frontier take full control of Benkala and also adds another key development project to the portfolio, the Maminskoye gold project in Russia.
The open pit will be 272 metres wide, 952 metres long and 27 metres deep, in total 4.3 million cubic metres of waste will be removed, along with 50,200 tonnes of ore. The waste rock will be stored in a dump located 1.5km from the pit, and the ore stockpile will be located adjacent to the processing facilities which are now under construction approximately 1.5km from the pit.
The materials will be extracted by 3 hydraulic excavators and transported by 45 tonne trucks made by BelAZ in Belarus. Also, the company plans to build the second electrical power line to the Benkala mine after the first one was built in 2009.
Frontier plans to follow-up last year's 6,000 meter, 54 hole drilling programme, which confirmed prior resource base estimates. Now in 2010, the company plans to carry out further confirmation testing in H2, with Alex Stuart Laboratories, and complete a JORC compliant resource estimate by year-end 2010.
The mine development has been progressing well over the past few weeks, with the contracting of the technical design work for the proposed SX-EW (Solvent extraction/electrowinning) plant to Calder Maloney Pty Ltd.
The company also noted that it has identified key vendors for plant equipment and construction work for site infrastructure.
The proposed SX-EW process plant will be developed in two stages. It is intended that Phase 1 will have a production capacity of 25 tonnes per day, equating to 7,000 tonnes per year. Once the plant has been successfully commissioned, and has been operating and producing at that rate, the Phase 2 development will commence.
In Phase 2, the plant will be expanded to 75 tonnes per day, or 21,000 tonnes per year. The company highlighted that the design of the SX-EW plant will allow easy expansion through Phase 2, without any major effect on the operability and capital cost of phase 1.
Also, last week, Frontier announced the results of independent technical reviews and preliminary economic assessments.
The assessments, carried out by Wardell Armstrong International (WAI), envisage a 5 million tonne per annum (Mtpa) copper open-pit mining operation at Benkala. 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.