Full Article21 Jun 2012 10:53
June 19, 2012
Frontier Mining Is Now Just Days Away From First Copper Production At Benkala
By Alastair Ford
“We haven’t produced our first copper yet”, says George Cole of Frontier Mining, “but we’re talking days. We’re mining and very very close to producing.”
The latest official update from the company’s copper project in Kazakhstan was put out to market on 8th May and emphasised the successful ramp up of mining operations to a targeted 8,000 tonnes of ore per day. Mining at that rate will support a plant capable of producing 7,000 tonnes of copper per year, and which is likely to produce between 3,000 and 5,000 tonnes this year. “Obviously we’re hoping for the latter”, says George.
Traditionally, a company’s share price will enjoy something of a re-rating when production starts, and although some companies have struggled to gain traction in the current depressed equities market, there’s no reason to suppose that Frontier won’t benefit from a further uptick when the first copper cathodes emerge from the plant in a few days time.
Unlike most mining juniors this year, Frontier’s Aim-traded shares have been going up, not down, having risen from 2.6p in January to the current 4.925p, an increase of around 90 per cent. That’s not bad going in a depressed market, and shows that investors believe in the story, and like it.
And why wouldn’t they? Copper is the one base metal that analysts are consistently bullish on. And Frontier’s London-listed peer Central Asia Metals has just underlined Kazakhstan’s attractiveness as a jurisdiction in which to produce copper with the successful commissioning of its Kounrad project in the south-west of the country. Benkala is some way away, up in the north west, but the key ingredients remain the same – copper that can be produced at good margin, and a strong local partner to smooth the way.
In Central Asia’s case, a local investment consortium is currently converting its interest in Kounrad into equity in Central Asia itself. In Frontier’s case, all the key players, aside from George himself, are Kazakh.
As chief financial officer, George runs the accounts. But the chief executive is Erlan Sagadiev, a Kazakh national who brought a cheque book of some considerable size with him when he rescued the company from the parlous state it had been left in by previous, non-Kazakh management a couple of years ago. He currently speaks for 23 per cent of the shares. The major shareholder, Coville Intercorp, with 46 per cent, is also based out of Kazakhstan, and brings considerable mining expertise to the table. “You can’t operate in this part of the world without a good local player”, says George. “And this company is 70 per cent owned by Kazakhs.”
So far so good. London is a sophisticated market that likes companies to cut locals in
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