Company Presentation: Resources Investment Symposium
Tuesday 26th May 4.00pm, Broken Hill
Frontier Resources Ltd is an innovative and socially responsible Australian Stock Exchange listed (ASX:FNT) mineral exploration company; focus is on discovering and developing copper-gold-molybdenum porphyry, high grade and bulk mineable gold/silver epithermal, gold + base metal skarn, tungsten skarn and polymetallic VHMS zinc-lead-silver-gold deposits in the highly mineralised Pacific 'Rim of Fire'.
The Company is very pleased to note our focus has moved further east in Melanesia to be on the Gold Ridge Mine/Project on Guadalcanal Island in the Solomon Islands; Frontier has signed a Heads of Agreement with new partner and Solomon Islands Landowner company GoldRidge Community Investment Limited (GCIL), to acquire an 80% interest in their (suspended) Gold Ridge Mine/Project (GCIL purchased it from ASX listed mid-tier gold producer St Barbara Ltd on May 1st 2015).
Consideration to GCIL is a 20% deferred carried interest into production, repayable from 50% of their pro-rata share of future profit, plus the issuance of 19.9% share equity in Frontier, plus the deferred issuance of 4.98% share equity in Frontier one year from the Commencement of the Joint Venture Venture (provided that GCIL’s interest does not exceed 19.9% of the issued capital of the Company).
Landowner ownership of the project and increased transparency will create trust and certainty for all stakeholders, including the Company, landowners, Solomon lsland Government and investors. This new model puts 100% responsibility on the landowners and community for their full assistance to ensure a smooth and potentially profitable mining operation. Importantly this new landowner resource ownership model resolves that Frontier will not be responsible for community support and ‘necessities’ as this is/will be the responsibility of GCIL.
The Gold Ridge Mine is logistically well located in the highly mineralised Charivunga Valley, only 50 minutes drive to the SE of Honiara, connected by an all-weather gravel road scheduled to be upgraded by the Solomon Islands Government; it is a low strip ratio gold mine with multiple open pits and a 2.5 million tonne per annum Carbon in Leach processing plant, with pits all located in close proximity (incl. Kupers, Dawsons, Namachamata and Valehaichichi).
Total Mineral Resources were estimated to contain 3.18 million ounces of gold, within 64.2 million tonnes grading 1.5 g/t gold (St Barbara Limited Gold Ridge Resources and Reserve Statements dated June 30th 2014 and issued to the ASX on August 27th 2014).
Total Ore Reserves were estimated to contain 0.67 million ounces of gold, within 14.6 million tonnes grading 1.4 g/t gold and were reported to the ASX by St Barbara Ltd (August 2014 - with the qualification that they are economic based on the on-going mine plan, but the operation was suspended).
The CIL plant and infrastructure is intact, but requires new electrical power generators, conveyor rebuild, laboratory and office equipment etc. Some mining equipment remains onsite, including 5 haul trucks and a 114,000 tonne excavator. The mess and accommodation block is in good condition, powered and readily habitable and significant quantities of various spare parts and other consumables / items remain onsite. All new houses for displaced landowners have been completed. The Solomon Islands Government is responsible for associated infrastructure such as schools and medical aid posts.
The Tailings Storage Facility is the major issue with the project that needs to be resolved. Cyclonic rainfall on April 2nd 2014 caused extensive damage to the mine site access and a loss of storage volume in the Tailings Storage Facility, prompting the suspension of mining operations.
St Barbara Ltd is providing GCIL with a water treatment facility for the Tailings Dam (by the end of August 2015), to allow pumping of the water to reduce its level. The Solomon Islands Government gave permission last week to Gold Ridge Mining Ltd (GCIL's operating subsidiary) to build a large, new spillway to help protect the integrity of the Tailings Storage Facility from future major rain events.
Mr Peter McNeil has resigned as Managing Director to concentrate on the roles of Chairman and Chief Geologist. Ms Paige McNeil has been appointed Managing Director and was previously Executive Director - Corporate. Mr Peter Swiridiuk has been appointed Executive Director - Technical and was previously Non Executive Director.
GCIL will appoint Mr Walton Naezon as an Executive Director to the board of FNT. Mr Naezon is GCIL Chairman and Paramount Chief of the Gold Ridge Landowners, who successfully negotiated GCIL's purchase of the Gold Ridge Mine from St Barbara Ltd. Walton was Mining & Energy Minister (1997- 2001), Minister of State Government (2001 - 2003) and Minister for Commerce (2003 - 2005) in the Solomon Islands Government.
Additional capital will be required and raised by Frontier to complete a Feasibility Study to evaluate re-opening the mine as soon as possible, including to investigate repairing the CIL processing plant, conveyor, electrical systems, laboratory and mine offices (Frontier's initial due diligence determined that the order of magnitude cost for this is approximately A$30 million, plus required operating capital).
The Mines' future power and mining fleet requirements will be addressed and the addition of a refractory gold processing/concentrating circuit to significantly increase the gold recovery will be invetsigated. Increasing plant throughput to the Mine's nameplate capacity (through plant optimisation), plus specific cost reduction opportunities such as better determining the metallurgical characteristics of the ore types/increasing mill recoveries, blending/ ROM management and improved grade control/mine planning measures will be evaluated to reduce operating costs.
Frontier will undertake diamond core drilling at the Gold Ridge Mine and Project area as soon as possible to attempt to increase the Total gold Resources and Reserves, to ensure an enhanced and more economically robust mine with a significantly longer life.
The Company retains the Bulago Exploration Licence (under renewal) and 2 EL applications in Papua New Guinea. The projects have very good exploration results in rock, trenches, drill hole and are in the same or similar geological terranes as existing World Class and/or major mines.
Please see the ASX Announcements page for all exploration results.