Frontier Mining Ltd AGM Statement & Operations Update (2147V)

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RNS Number : 2147V

Frontier Mining Ltd

11 December 2013

FRONTIER MINING LTD

("Frontier" or "the Company")

AGM Statement and Operations Update

Frontier Mining (AIM:FML), the AIM listed copper production, exploration and development company focused on Kazakhstan, provides the following operational and corporate updates ahead of its AGM later today.

Operational Update

Highlights:

   --   1,386 tonnes produced from 01 January 2013 to 31 October 2013 at Benkala 
   --   Average preliminary cash cost of $3,724 per tonne 
   --   Average sales price of $6,979 per tonne 
   --   Sales revenue now sufficient to cover Benkala production costs and Company overheads 
   --   Exploration programs continue at Benkala, South Benkala and Baitemir

Update

Since the interim results were published, production rates at Benkala have steadily improved as the operational enhancements and refinements identified, have subsequently been implemented by the Kazcopper operational team.

Crushing and stacking is now occurring at a record rate with Pad 3 now providing Pregnant Leach Solution (PLS) for processing in the SX-EW plant, and Pad 4 is being stacked to 6 meters with irrigation underway.

Issues affecting percolation of the pads have now been identified and in some cases rectified via the mixing of different permeability ores, with further enhancements to take effect on an on-going basis. Sections of Pad 4 have been fitted with a forced aeration circuit which should further enhance the effectiveness of the ferric bacterial agents and should improve the overall recovery of the pad. A final improvement in the agglomeration step with the introduction of an organic agent will be implemented in 2014 to allow peak permeability of future pads. Construction work has begun on the bases for Pads 5 and 6 and further updates will be made in 2014 as the work progresses.

919 tonnes of LME Grade A copper cathode have been produced between 01 July 2013 and 31 October 2013, with 780 tonnes shipped, bringing the total production up to 31 October 2013 to 1,386 tonnes and on target to meet 2013 forecasts.

With more than $10 million cash generated from copper cathode sales in 2013, revenue at Benkala is currently covering both operational and fixed costs. Further operational parameters for the period to 30 November 2013 are included below.

Table 1 - 2013 Benkala Operational Figures

 
                         01.01.13 - 30.06.13    01.07.13 - 30.11.13 
----------------------  ---------------------  --------------------- 
                                     Average                Average 
                         Quantity      grade    Quantity      grade 
----------------------  -----------  --------  -----------  -------- 
  Mined ore (t)           16 124      0.73%      280 296     1.05% 
----------------------  -----------  --------  -----------  -------- 
  Contained Copper 
   (t)                     118.3        -        2942.3        - 
----------------------  -----------  --------  -----------  -------- 
  Stripping completed 
   (m(3) )                400 689       -        262 732       - 
----------------------  -----------  --------  -----------  -------- 
  Stacked ore (t)         16 642      0.76%      337 059     0.91% 
----------------------  -----------  --------  -----------  -------- 
  Contained Copper 
   (t)                     127.0        -        3069.8        - 
----------------------  -----------  --------  -----------  -------- 
  Stockpile (t)           116 398     1.21%      59 635      0.85% 
----------------------  -----------  --------  -----------  --------

The exploration programs continue at all of the Company's projects, with more than 6,100 meters drilled and 19 061 m(3) of trenching completed in 2013. Recent geophysical studies completed at Benkala and South Benkala confirmed previous estimates and indicated potential growth in South Benkala resources. Additional progress was made at Baitemir-Beschoku gold-copper prospect, with drilling grid narrowed to 100x50 and 100x25 meters, and separate assays from certain sections of Beschoku show significant levels of other minerals including gold. Findings of Frontier exploration team are currently being formalized into reports that will be submitted for approval to the Kazakhstan State Commission on Mineral Reserves.

Adam Moroney has spent much of the last three months identifying best practice for freezing weather heap leaching, from around the world and has now compiled an operational guide that has been translated and is being ratified for use on site. Included in this guide will be methods for continuous mining and stacking operations, best method of application of leach solution to heaps in extremely low temperatures and the necessary measuring and monitoring to successfully implement and optimise forced aeration during this period. Previous experiments in stacking the pads to six metres have been successful and will now contribute to optimising performance and heat retention during winter.

Adam Moroney, Consultant of Cu Ni Co hydrometallurgy, stated: "It will be necessary for Benkala to implement the best-practice operating procedures that are being provided for the freezing conditions that prevail during their wintertime. I see the 2013/2014 winter season as probably the most important production-testing period for Benkala; the opportunities to learn from this season can be taken to optimise ongoing year-round operating practices."

Corporate Update

Highlights:

   --   Cost management at Benkala allows for optimized cash flow from operations

o Staff headcount at Benkala reduced by 27% in 2013

o Electricity supply for 2014 secured at 20% cost reduction

   --   Sberbank agree the  deferral of capital repayments until Autumn 2014 
   --   Educational Funds signed agreements for the rollover of Loan Notes until Q2 2014

-- Red Kite agrees to a scheduled repayment of its Loan Note until the end of 2014 as operations progressively improve

Update

This year Frontier Mining has been going through a number of cost management initiatives, including sulphuric acid supplies at less than 75% of the pricing levels of 2012, reduction in number of employees by 27% since the beginning of 2013 and securing electricity supply for 2014 at 20% reduced price per kW. As a result of these cost savings and with more than $10 million cash generated from copper cathode sales in 2013, copper production at Benkala is now cash generative to a point that allows self-sufficiency of operations for the first time in the company's history.

Frontier has been in discussions with its lenders which have resulted in the certain variations and deferments of the original agreements. Sberbank has agreed to defer the commencement of capital repayments on its debt facility to September 2014. In addition, the Educational Funds (CAES and NNEF) and EXP T1 RK Mine Finance Trust 1, part of the Red Kite Group of Investment Funds, have agreed to extend the term of their Loan Notes.

While working on re-negotiation of the Company's existing debts, Frontier Mining continues its efforts to find longer term financing options, as well as increasing production and removing bottlenecks from production, as discussed above.

As announced on 29 November 2013 dealings in the Company's shares commenced on the Kazakhstan Stock Exchange satisfying the demands of the regulatory requirements of the National Bank of Kazakhstan Rules 2012.

-END-

For further details please contact:

 
 Frontier Mining 
  Ltd                    Yerlan Minavar       +44 (0) 20 7898 9019 
 
 Libertas Capital        Sandy Jamieson 
  (NOMAD)                 Richard Morrison    +44 (0) 20 3697 9495 
 
                         John Harrison 
 RFC Ambrian (Broker)     Jen Boorer          +44 (0) 20 3440 6800 
 Walbrook PR and         Paul Cornelius 
  IR                      Guy McDougall       +44 (0) 20 7933 8780

This information is provided by RNS

The company news service from the London Stock Exchange

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