Frontier hibernation

PAPUA New Guinea explorer Frontier Resources says the $A500,000 final payment from Newcrest Mining, which recently abandoned a farm-in agreement over its Andewa project, will provide “adequate hibernation income” for the rest of 2013.
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Newcrest's exit from Frontier's flagship copper-gold project will take effect from June 21.

In the meantime, the explorer has slashed hours for its management, cut $60,000 per annum of director fees, demobilised its Andewa camp and equipment plus locally leased out its excavator, bulldozer and 24m catamaran to provide some cash flow.

"No fieldwork is planned for the remainder of 2013 unless the general 'market' sentiment improves," Frontier said.

There are further plans to reduce its areas held under licence, based on a data review over the coming months to produce "optimal" future exploration programs.

The cash-mindful junior expects to restart its PNG exploration in 2014 after receiving various payments associated with its Torque Mining (Frontier 16%) spin-off in Tasmania.

Torque and BCD Resources' proposed Stormont feasibility study in Tasmania is on track, with no environmental objections expected.

Frontier said it would receive about $200,000 once processing starts plus another $550,000 for its drill rigs and capital equipment at the project around this time.

Frontier will also have a direct 5% stake in the proposed gold mine which could trigger another cash payment.

If such payments aren't likely to be received in time, Frontier said a small capital raising might be required later in 2013.

While Ok Tedi Mining Limited could potentially pay a total of $US60 million for major stakes in two of its joint ventures with Frontier over five exploration licences (in PNG's Highlands and New Britain), the explorer said OTML was yet to unveil its exploration programs and budgets for 2013.

Frontier also has a 10% stake in fellow PNG explorer Quintessential Resources and they share a 50:50 partnership over three ELs and two exploration licence applications in New Britain.

Two of these tenements require exploration to keep them in good standing but Frontier said commitment variations would be requested from PNG's Mineral Resource Authority.

Frontier said all of its other PNG tenements did not require expenditure or exploration until 2014.

Frontier's shares did not respond well to the hibernation announcement and closed down 20%, or A0.2c, to 0.8c yesterday.

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