Frontier Mining (LON:FML) shares could be re-rated early in 2011 with the completion of the final resources estimates, according to Edison Investment Research.
Edison analyst Charles Gibson is expecting Frontier to announce a more definitive JORC resource estimate for the Benkala gold project in Kazakhstan.
The company just reported an initial JORC resource earlier this month, which compared favourably against historic non-JORC estimates.
The estimate was carried out by Wardell Armstrong International (WAI).
“WAI has indicated to FML that there is the potential for the resource estimates to increase slightly,” Gibson said.
“The results of any improvement will be seen when the company releases a more definitive resource statement in early 2011,”
“This will also include a revised economic study of the project.”
Gibson believes it will be appropriate to re-visit his 12 pence per share valuation at this point.
“As long as the company continues to reach its development milestones and there is no collapse in the commodity price below our base case assumption of US$7,000 per tonne (which we see as unlikely due to continuing supply-side concerns), a positive re-rating of FML should emerge in early 2011,” Gibson added.