Frontier Mining acquired a 50% interest in Benkala in November 2007 for US$21million; $18.5 million cash and convertible note and 6,250,000 of Frontier shares.

Along with the relevant mineral and exploration rights, Benkala is owned and managed by a joint-venture company called KazCopper LLP. This in turn is owned by US Megatech BVI, the shareholding of which is split 50:50 between Frontier Mining Ltd and Coville Intercorp Ltd, a Kazakhstani company with local private shareholders.

The project is an Oxide/Sulphide Copper deposit located within the Urals Copper/Gold ore belt in north west Kazakhstan, approximately 450km East of Aktobe.

Soviet C2 estimates from the 1970's inferred a resource of 2,037,750 tonnes of contained Copper and associated Gold & Molybdenum. However, a lack of infrastructure at that time prohibited profitable extraction, and further development was abandoned.

 
Benkala: Section Line #116

 

Infrastructure is no longer a concern; International airports at Kostanai (150km) and Aktobe (450km) now provide easy access to the region. A new highway has been built less than 5km away, there is now a railroad within 6km and a railway station within 16km.

A power line (30Kv) runs along the railroad, there is a major sub-station and a 220Kv line within 20km and a 550Kv line is currently under construction - to run within 2.5km of the site.

The area presents favourable geography; the water table is within 25m of the surface and the flat landscape is ideal for heap leach processing, also allowing for low cost construction of a processing plant and facilities.

Management assumptions suggest an average operating cost of $4.32/ton (SX-EW/Flotation), initially mining 7Mt per year, ramping up to 30Mt per year:

  • SX-EW copper recoveries of 70%
    (depletion expected after 8 years)
  • Sulphide Copper flotation recoveries of 85%
    (following depletion of SX-EW amenable ore).

SX-EW presents low cost development of the Oxide Cap for the early stages of mining.

Wardell Armstrong estimate a conceptual NPV for Benkala (100%) of $490 million:

  • 10% discount rate
  • $1.50/lb copper
  • 2,793,148 tonnes contained Copper
  • 47.8 million tonnes @ 0.36% Copper in Oxide
  • 874 million tonnes @ 0.30% Copper in Sulphide.

A mobile field camp designed for 30 people was established at Benkala in September 2008, followed by an infill drilling programme that has completed 49 holes totalling over 7,000m.

Presently, Frontier aim to establish a JORC compliant resource assessment and compile a feasibility study before the second quarter of 2010.

Civil engineering work on the project has recently commenced, connecting the site to the mains electricity supply, the construction of a camp for 120 people and initiation of foundation works for the planned SX-EW copper cathode plant. Permission has been received from the local authorities for overburden stripping to commence in 2010 and a total of 3 million cubic metres has been approved for initial removal. This approval will enable the Benkala pit construction to start as scheduled in the summer of 2010.

Frontier expects production to commence in the last quarter of 2011.