www.frontiermining.com
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.
Frontier Mining has overcome a major obstacle, says broker
In securing new debt financing Frontier Mining (LON:FML) has overcome a major obstacle that faces most junior mining companies, according to XCap Securities.
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."
