Frontier Mining shares rise on release of Benkala copper project JORC report

Frontier Mining (LON:FML) announced the completion of a JORC resource estimate for its Benkala copper deposit in Kazakhstan, making the company “even more confident” that the project will be a success.
The completion of the estimate is very good news for Frontier, as it had been long awaited by brokers and investors and regarded as a major milestone that will boost its share price.  The stock was trading up 7.8 percent at 6.88 pence in early deals.
The report met the company’s expectations, as it is generally in line with Soviet estimates, showing almost 1.5 million tonnes (Mt) of copper.
Now there is yet more to look forward to.
Frontier expects to increase this resource, categorisation and quality, having submitted additional infill drilling data to engineering consultancy Wardell Armstrong International (WAI).
“On sulphides, we are moving forward with our plans to complete exploration and fully define the deposit. We are now even more confident that our Benkala project will be a great success for the company,” said chief executive of Frontier Erlan Sagadiev.
The gross attributable measured resource stands at 2.5 Mt grading 0.55% copper containing 14,000 tonnes. Indicated resource amounts to 94.5 Mt grating 0.45% copper for 425,130 tonnes contained and 66.76 Mt at 0.42 copper for 282,450 tonnes of copper in the inferred category.
The gross attributable resource stands at 194.15 Mt at 0.45% copper for 878,400 tonnes of copper contained in the measured and indicated category and 133.52 Mt at 0.42% for 564,900 tonnes inferred.
“We are pleased that this key deliverable of a resource estimate to JORC standards has been completed.
“Most importantly it largely supports our oxide estimates and quality for our ongoing SX/EW project,” said Sagadiev.
The JORC report marks the continuation of the rapid progress Frontier has been making with Benkala development.
Just a little over a week ago, the company signed a US$4 million loan with HSBC (LON:HSBA) to fund the Benkala development.
Furthermore, HSBC has indicated it is ready to provide a further US$15 million to develop Benkala, provided Frontier meets certain unspecified conditions.
In June Frontier said it had begun the construction of the open pit mine at Benkala, with initial production set to begin in the first half of next year.
Frontier plans to build the second electrical power line to the Benkala mine after the first one was built in 2009.
Frontier currently has a 50% indirect interest in the Benkala Copper Project which is managed by a joint-venture company, KazCopper.  The other 50% of Benkala is owned by Coville Intercorp, a private Kazakh mining group.
The company is set to take full ownership of Benkala, after it agreed a US$86.3 million paper deal with Colville Intercorp.
According to Edison, the deal is valued at US$61.8 per tonne of copper, which is a 9.9 percent discount to FML’s pre-deal enterprise value per tonne.