fnt gets the mother load

Formerly TasGold Ltd
ABN 96 095 684 389
ADDRESS PHONE EMAIL
PO Box 7996 +61 (07) 5592 2274 [email protected]
Gold Coast Mail Centre FAX WEBSITE
Qld 9726 Australia +61 (07) 5592 2275 www.frontierresources.com.au
13th July 2006
Australian Stock Exchange
Company Announcements Office
Announcement
FRONTIER ACQUIRES 100% OF A 340,000 TONNE COPPER
PLUS 51 TONNE GOLD INFERRED RESOURCE
Frontier Resources (formerly TasGold Ltd) has finalised the acquisition of a 100% interest in the
substantial Kodu Deposit in Papua New Guinea, which will be evaluated for possible early
development and copper/ gold/ molybdenum production.
The JORC compliant Inferred Resource at Kodu is 85 million tonnes grading 0.4% Cu plus 0.6g/t
gold, containing an in-ground total of ~340,000 tonnes of copper, plus ~51 tonnes of gold.
Molybdenum content is presently unquantified, but significant.
Resource definition/expansion drilling and pre-feasibility studies will commence in the fourth
quarter at the Kodu copper/gold/molybdenum Deposit, plus initial evaluation, exploration and
drilling of the 2km long Andewa epithermal, gold mineralised vein system and other projects.
A preliminary desktop economic study by an independent consultant of a 120 million tonne
hypothetical reserve (with parameters relevant to the Kodu Deposit), suggests the Kodu Project
could be very financially attractive if the present Inferred Resource can be converted/ upgraded to
the hypothetical reserve.
Copper grades utilised in the hypothetical reserve were ~10% lower than the Inferred Resource and gold
grades were ~20% lower. The Kodu deposit is open at depth, along strike and around the annulus of the
intrusion and is considered to have good potential to increase resources and convert resources to
reserves.
The desktop study showed that at a production rate of 39,000t of copper and 127,000 oz gold/year
for 10 years, capital cost of US$235,000,000, an assumed copper price of $US2.80/lb and a gold
price of US$640/oz:
�� IRR is 55%.
�� Cumulative cash flow to shareholders is US$1,300,000,000.
�� NPV is US$515,700,000.
Note that the copper price on 7/7/2006 is $US3.60/lb (www.kitco.com) or ~30% higher than the
$US2.80 assumed above.
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12.0 mtpa 12.0 mtpa 20.0 mtpa 20.0 mtpa
Current Long Term Current Long Term
Prices Prices Prices Prices
Operating Assumptions: Unit
Project Life years 10 10 10 10
Copper Sales Price US$/lb $2.80 $1.30 $2.80 $1.30
Gold Sales Price US$/oz $640 $500 $640 $500
Average Cash Operating costs (after gold credits) US$/lb $0.57 $0.54 $0.16 $0.13
Tax rate % 30% 30% 30% 30%
Tax Holiday years - 0 - -
Ore Reserve:
Ore Tonnes t 120,000,000 120,000,000 200,000,000 200,000,000
Copper Grade %Cu 0.36% 0.36% 0.36% 0.36%
Gold Grade g/tAu 0.47 0.47 0.47 0.47
Contained Copper tCu 432,000 432,000 720,000 720,000
Contained Gold ozAu 1,813,301 1,813,301 3,022,168 3,022,168
Waste Tonnes: t 120,000,000 120000000 160,000,000 160,000,000
Strip Ratio t:t 1.0 1.0 0.8 0.8
Production:
Ore Mined tpa 12,000,000 12,000,000 20,000,000 20,000,000
Average Copper Grade %Cu 0.36% 0.36% 0.36% 0.36%
Average Gold Grade g/tAu 0.47 0.47 0.47 0.47
Copper Recovery % 90% 90% 90% 90%
Gold Recovery % 70% 70% 70% 70%
Concentrate Copper Grade % 25% 25% 25% 25%
Concentrate Gold Grade g/tAu 25.4 25.4 25.4 25.4
Annual Concentrate Production dt 155,520 155,520 259,200 259,200
Annual Copper Production tpa 38,880 38,880 64,800 64,800
Annual Gold Production ozpa 126,931 126,931 211,552 211,552
Project Cost/Funding:
Capital Expenditure US$ 235,000,000 235,000,000 483,000,000 483,000,000
Total Project Funding Required US$ 235,000,000 235,000,000 483,000,000 483,000,000
Debt/Equity Ratio % 0% 0% 0% 0%
100% Project Evaluation (excludes Feasibility Study costs)
IRR (after tax and before finance) % 55.1% 16.3% 53.3% 22.3%
NPV @ 10% (after tax and before finance) US$ 515,711,856 57,406,420 1,015,352,904 251,510,512
Cumulative Cashflow - available to shareholders US$ 1,301,382,830 480,924,741 2,597,300,551 1,229,870,401
If much lower metal prices of US$1.30/lb for copper and US$500/oz for gold are used the project is still
robust:
�� IRR is 16.3%.
�� Cumulative cash flow to shareholders is US$481,000,000.
�� NPV is US$57,000,000.
If a reserve of 200Mt at the same grades as the Inferred Resource can be proven and a copper price of
US$2.80/lb and gold price of US $640/oz are used:
�� IRR is 53.3%.
�� Cumulative cash flow to shareholders is US$2,597,300,000.
�� NPV is US$1,015,000,000.
NB: Shareholders / investors are cautioned that the above desktop study is theoretical and based on an assumed reserve, capital and operating costs.
These figures must be verified in a feasibility study before they can be relied on. All assumptions used are shown in the table below.
There is excellent scope to significantly increase the Inferred Resource at Kodu.
�� The current resource is estimated down to ~650m RL (above sea level) and copper/gold
mineralisation was drilled to ~100m deeper than that last year.
�� The mineralisation is open:
�� At depth.
�� Around the annulus of the composite intrusion (magnetic signal anomalies).
�� Along strike to the SW and possibly fault offset in the north.
�� To the east contained within the host wallrock.
�� Only 16 drill holes have been completed to date for ~5,530m, with 11 holes being terminated
in mineralisation.
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Some advantages of any potential mining operation at the Kodu Deposit include:
�� The on/near surface nature of the copper/gold deposit.
�� The possibility of a starter pit in the southern higher-grade near surface gold zone for more
rapid capital payback.
�� Moderate possible stripping ratio.
�� Logistically simple and ‘cheaper’ location for development, being only ~55km NE of Port
Moresby.
�� No known environmental or social issues.
�� PNG’s competitive tax regime that is in the top quartile for copper deposits.
�� There are four additional copper/gold molybdenum mineralised porphyries known in the Kodu
district that provide additional potential.
The strategy forward for Frontier is to concentrate exploration on the most advanced projects in
PNG and progress them rapidly and cost effectively to and into the development phase, including:
�� Confirm and extend the limits of the known Kodu Deposit Inferred Resource, with
~10,000m of drilling (planned to commence last quarter 2006).
�� Initiate a pre-feasibility study at Kodu to assess requirements/possible paths forward.
�� Undertake a 3D-Induced polarisation survey at the large Elo porphyry copper/gold/
molybdenum prospect, then drill test it and other porphyry prospects near Kodu.
�� 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 has also acquired a 100% interest in a ~7,500km2 portfolio of quality gold properties,
many of which have high-grade gold in rock, trenches & drill hole and has positioned itself to
become a major explorer in mineral rich PNG.
The licences offer excellent mineral deposit potential, with primary targets being major copper/gold/
molybdenum, gold/silver and polymetallic (zinc/lead/silver) deposits. The projects all have high-grade
exploration results and are in the same or similar geological terranes as existing World Class and/or
major mines.
The Company is an ASX, Berlin and Munich listed, junior mineral explorer that operates with a
general policy of ‘DRILLING’ our quality projects using our 3 cost effective, environmentally friendly,
man-portable diamond core rigs. Frontier’s Management team have more than 80 years combined
experience in PNG and are highly motivated.
Frontier have refocused exploration priority to the highly mineralised ‘Rim of Fire’, Papua New
Guinea and the advanced Kodu and Andewa Projects, but will continue exploring in Tasmania
and/or arrange joint ventures for all non-core properties.
For additional information relating to the Company and its projects please visit our website at
www.frontierresources.com.au or feel free call me on +61 (0) 8 9295 0388.
Frontier Resources Ltd
P.A.McNeil, M.Sc.
Managing Director
The information in this report that relates to Exploration Results is based on information compiled by Mr Peter McNeil of Exploration and Management
Consultants Pty Ltd, who is a Member of the Australian Institute of Geoscientists. Mr McNeil has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004
Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.’ Mr McNeil consents to the inclusion in this
report of the matters based on his information in the form and context in which it appears.