Frontier Resources Limited (FNT) surged 300% in early trading, jumping
36c to $0.48 after announcing the acquisition of a 100% stake in the
Kodu Deposit in Papua New Guinea. The small cap gold miner said that
the JORC compliant inferred resource at Kodu contains approximately
340,000 tonnes of copper and 51 tonnes of gold with a significant but
unquantified amount of Molybdenum.
Frontier Resources reported that a preliminary desktop economic study
by an independent consultant of a hypothetical reserve of 120 million
tonnes, similar to the Kodu Deposit, suggests the Kodu Project could
be financially attractive if the present inferred resource can be
converted/ upgraded to the hypothetical reserve.
The desktop study showed that at the project has the potential to
achieve an internal rate of return (IRR) of 55%, with a cumulative
cash flow to shareholders of US$1,300,000,000 and an estimated net
present value (NPV) of US$515,700,000.
The junior minerals explorer advised that there is scope to
significantly increase the inferred resource at Kodu after only 16
drill holes have been completed to date for approximately 5,530m, with
11 holes being terminated in mineralisation.
The company said advantages of any potential mining operation at the
Kodu Deposit include the near surface nature of the copper/gold
deposit as well as the possibility of a starter pit in the southern
higher-grade near surface gold zone for more rapid capital payback.
Frontier also noted that the potential operation was in a logistically
simple and `cheaper’ location for development, being only 55km NE of
The group explained that its strategy forward is to concentrate
exploration on the most advanced projects in PNG and progress them
rapidly and cost effectively into the development phase.
To achieve this, Frontier intends to confirm and extend the limits of
the known Kodu Deposit inferred resource, with approximately 10,000m
of drilling, planned to commence in the last quarter of 2006.
The company reported that it would initiate a pre-feasibility study at
Kodu to assess requirements and possible paths forward, followed by a
3D-Induced polarisation survey at the large Elo porphyry copper/gold/
molybdenum prospect, then drill testing it and other porphyry
prospects near Kodu.
The group said that it would concurrently fast track evaluation of the
Komsen gold Prospect at Andewa in New Britain, with the view to
defining on and near surface, moderate grade, vat leachable gold
resources for possible `near term’ development.
The company also announced that it has acquired a 100% interest in a
7,500 square kilometre portfolio of gold properties, positioning
itself to become a major explorer in mineral rich PNG.
At the end of the days trading, shares in Frontier Resources were up
36c to $0.48.