Sign up UNITED KINGDOM
Proactive Investors - Run By Investors For Investors

Full steam ahead says Frontier Mining as 2011 promises "key decisions"

Despite the fall in its share price recently, AIM-listed miner Frontier, which is focused on Kazakhstan and Russia, shows no sign of being downhearted. Indeed it has lots to look forward to in 2011, as CEO Erlan Sagadiev told Proactive Investors.
Full steam ahead says Frontier Mining as 2011 promises "key decisions"

These are uncertain times for investors. They are plagued by doubts about the scale and strength of recovery and haunted by what could unfold if the powder-keg that is the Middle East explodes.

Against this backdrop the performance of the FTSE 100 has been remarkably resilient.

Where things become a little more difficult is when we drop down a couple of divisions to the small-caps.

Here the worries seem to have sparked irrational bouts of selling. Okay, the AIM 100 Index of growth stocks is down just over 5 per cent in the past three months.

But this tells only half the story, and there have been some huge swings in between that have taken it below the 3,900 level and back above 4,200.

And the pain is being felt most acutely in the mining sector, which has been hit by a double whammy.

Glencore’s £39 billion float has sucked out a lot of cash that might normally trickle down to the minnows, while there is also the nagging doubt that the boom times might be over for the diggers.

One such victim of the investor exodus is the Kazakhstan-focused Frontier Mining (LON:FML), which has seen its share price drop significantly since the beginning of the year - from around 7.5 pence at the beginning of February now at the 4 pence mark.

But with a positive recent report about the company's flagship Benkala copper project and a buzz of progression about the firm, has the market got the vibe right?

Indeed, CEO Erlan Sagadiev said the firm had been forwarded a list of more than 30 companies which had lost more than 45 percent of their value between early January and early May.

"It was a trend in the market which has nothing to do with Frontier Mining or any of these companies," he assured Proactive Investors.

"I hope the markets are coming back and will appreciate the progress we have made this year so far.”
However Sagadiev is not ruling out a share buy-back programme if the price remains stubbornly low.

But he added that if the group had any spare cash, Frontier should ideally be pumping it into its projects rather than back to investors.

"This cash can come from the sale of the assets or raising long term debt," he said.
Frontier, which operates in Kazakhstan and Russia, this month released a highly positive pit study for the "potentially transformational" Benkala copper project.

Initial copper production at Benkala in the north-west of the country is planned for the third quarter of 2011.

A recent open pit study estimated the mineable oxide reserve and stated that the total proven and probable ore was 30,506 kilotonnes with total copper ore at 159,153 tonnes. The overall grade of the proven and probable ore was 0.52 percent.

Based on these reserves, Benkala has a mine life of seven years, with appropriate ramp-up in production in the first two years.

The study targeted full operational capacity of 18,000 tonnes of copper each year.

Sagadiev said Benkala was definitely the company's main priority at the moment: "We will focus on starting up Benkala production.
 
“Once it is up and running we will worry about other deposits.

“The gold production comes along the schedule, so things are fine," he said on the company's progress.”

He did say that additional funds would be needed to finish and expand the Benkala plant and that the firm already had sources - which were 'non-dilutive' -  at least not at the current share price.

Sagadiev envisages the Benkala mine starting with 10,000 tons per capacity and growing it to 20,000 or 30,000 tons per year using the cash that the project will generate. It would take up to 2013-2014 to achieve that, he said.
An added bonus is that Frontier has recently seized full control of Benkala by merging with its partner Coville Intercorp.
It is a move which the CEO Sagadiev said had eliminated the risk of the partnership.
"It is always better to own 100 percent," he added.

"From the management standpoint we will be having the Coville mining team work Baitemir and other deposits which is very good for Frontier."

The other operation in Kazakhastan is Naimanjal, a copper-gold project.

Baitemir is one of the four areas the company is pursuing in Naimanjal in the north east of Kazakhstan and it is a developing copper project.

Here the firm also has the gold producing mine Koskuduk, Beschoku - a copper/gold prospect and Yubileiny - a copper/gold prospect.

As Benkala heads towards potential production, Sagadiev said that a key decision this year will be made on the future of the firm's gold assets.

The company owns the Maminskoye prospect in the southern Ural region of Russia, which is open pittable, with recoveries of up 90 per cent and which carries a net present value of US$110 million.

"We can sell it, we can spin it into another company or we can develop it inside Frontier Mining," he said.

"We do understand that we will probably not get a fair valuation for gold assts or operations being in Frontier Mining. But the gold prices are high and we will be making some good money operating those. I believe in 2011 we will make some key decisions."

He added that he was confident about Frontier's progress and revealed that talks were going well with potential off-take agreement partners for the copper from Benkala and th associated gold

Sagadiev said: "It is all very advanced. We will not to undersell it. But you will be hearing very soon.”

View full FML profile View Profile

Frontier Mining Timeline

Newswire
January 23 2015

Related Articles

AuKing Mining: Access latest PPT from Proactive's CEO Sessions
June 18 2017
Paul Williams talked gold-silver potential of Mexico with investors.
Asiamet
February 07 2018
Asiamet's house broker Optiva has doubled its price target to 19p
picture of gold and dollars
June 27 2017
“We believe the planned development of the Miraflores gold mine will provide the backbone for transforming the company"

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use