Frontier Mining (LON:FML) has now begun continuous leaching operations at the Koskuduk deposit on the Naimanjal licence in northeast Kazakhstan, after completing its second gold pour, for 329oz of gold and 1,000oz of silver. The company plans to leach 500,000 tons of ore in 2010, it has already extracted 135,000 tons, and 75,000 tons is currently on the leach pads.
"We have now begun continuous leaching operations at Koskuduk and plan to reach our daily production targets within a few weeks, as scheduled,” Frontier chief executive Erlan Sagadiev commented. “Grades and recovery rates are within our expected range and we are firmly on track to achieve our production target of 10,000 ounces of gold for 2010."
At Koskuduk, the current ore crushing rate is 2,500tpd (tons per day) and it will increase to 6,000tpd as the all the recently commissioned equipment ramps up to operating capacity.
On the Naimanjal licence, Frontier’s focus turned to production at the Koskuduk deposit, with the company’s mining operations being relocated from the Naimanjal complex, to access the Koskuduk resource.
The total resource on the Naimanjal license - which hosts the Koskuduk, Baitimir, Naimanjal, Beschoku deposits – currently stands at approximately 1Moz (million ounces), with the Koskuduk deposit hosting 180,000oz of gold at an average grade of approximately 2 grams per tonne (g/t).
At Koskuduk in 2009, a new gold leach plant was built along with the installation of crushing equipment, and pit excavation began during the winter.
Frontier has been growing its profile as a gold mining and mine development company, with an ever-growing footprint in Kazakhstan. Aside from its operations on the Naimanjal license, the company is currently working on a major development project at Benkala, on the Urals copper/gold ore belt in northwest Kazakhstan.
Frontier is developing the Benkala project through its KazCopper subsidiary in a 50:50% joint venture with Colville Intercorp. The JV partners are currently working towards the completion of a merger, which is set to complete in the third quarter of 2010.
The merger sees Frontier take full control of Benkala and it also adds another key development project to the portfolio, the Maminskoye gold project in Russia. In June, Frontier announced the results of independent technical reviews and preliminary economic assessments at Benkala and Maminskoye.
The assessments, carried out by Wardell Armstrong International (WAI), envisage a 5 million tonne per annum (Mtpa) copper open-pit mining operation at Benkala. The economic assessment estimates that Benkala has an US$191m NPV, using a 10% discount rate and an internal rate of return (NYSE:IRR) of 116% based on initial CAPEX of US$55m and a US$6,000/mt copper price.
The WAI preliminary economic assessment is based on 5Mtpa ore mining rate, average grade of 0.36% copper and 63% overall recovery.
At Maminskoye, MAI’s a preliminary model contemplates the development of an open-pit mine, operating at an initial mining rate of 700ktpa for the first three years, and increasing to 1Mtpa for a 14 year project life.
Frontier noted that WAI sees Maminskoye as an "attractive project" with the NPV estimated at US$110.9m, using a 10% discount rate and IRR of 48% with a 3 year payback. The assessment is based on an estimated capital cost of US$75M and a US$950/oz gold price.