Kazakhstan operating gold producer and copper developer Frontier Mining (AIM: FML) has decided to shift attention to the Koskuduk and Beschoku projects from Naimanjal and said assay results from the Benkala project would likely be in line with expectations.
The mining fleet has been relocated from Naimanjal to Koskuduk in keeping with Frontier’s decision to shift resources to Koskuduk and Beschoku from Naimanjal, where further mining was halted for an initial period of six months, while processing of existing mined and stacked ore will continue in 2010. The decision had to do with the low grades averaging just 1.1 g/t (grammes per tonne) at the deposit, which also has a more challenging mining environment as compared to Koskuduk and Beschoku, which have higher gold grades and larger and more solid ore bodies.
Naimanjal has produced US$2.6 million worth of metals in the year to date with 2,442 oz of gold and 8,896 oz of silver sold from the deposit with 158,247 tonnes of ore containing approximately 4,335 oz of gold and 72,000 oz of silver are currently stacked. The project is expected to produce 1,500 oz of gold at Naimanjal in 2010.
Frontier has budgeted an expenditure of US$2.8 million for Koskuduk for 2010 after spending US$0.8 million in the year to date, expecting it to provide 10,000 oz (ounces) of gold from 500,000 tonnes of ore in 2010. The mining and stacking operations at Kuskuduk are set to commence in April next year.
Production of 3,000 oz of gold or gold equivalent is targeted at Beschoku for the second half of 2010.
“The company's initial gold production commenced at Naimanjal due to the fact that that deposit was the most readily exploitable from a regulatory perspective. It is now clear that Koskuduk and Beschoku are superior deposits and therefore a much better use of company resources and so that is where we will focus in 2010. The company will recommence stacking of existing mined ore and leaching of existing stacked ore at Naimanjal in spring 2010, and the Company will keep the licence in good standing to allow decisions to be made later in the year.,” said Chief Executive of Frontier Erlan Sagadiev.
The company has also updated the market on its operations at the Benkala copper-molybdenum-gold deposit, where the ongoing infill drilling programme is nearing completion with 54 holes for a total 6,700m (metres) have been drilled with another 1,000m set to be completed before the end of February.
Independent sampling checks are yet to be carried out by the Alex Stewart laboratory in Kyrgyzstan, but the company said initial indications were that the results were in line with company expectations and confirmed the original drilling results obtained during Soviet times. A JORC compliant resource statement is expected in the second quarter of 2010. The company is aiming to achieve further savings after paying roughly half of the US$13.5 million initially budgeted for equipment purchase. The capital expenditure for the initial production plan is expected to be in the region of US$7-10 million.
Production from Benkala, in which Frontier owns a 50% interest in KazCopper LLP, the joint venture (JV) company that owns the deposit, is expected in 2011.
On the financial front, the company has now repaid in full the convertible loan note to Coville Intercorp Ltd, which has invested the majority of the funds into the Benkala JV.