BUY RECMENDATION $0.80Thursday, May 18, 2006
Frontier Pacific Mining Corporation (FRP-V: $0.41) Rating: BUY
Fair First Results from Macusani — Best Still to Come Target: $0.80
Andrew Mikitchook, P.ENG., CFA 416.815.1622 amikitchook@westwindpartners.ca
Philip Williams 416.815.1548 pwilliams@westwindpartners.ca
Insight or Development: Frontier Pacific reported results from the first eight
holes into the Sayana target on the Macusani uranium project in Peru.
Mineralization was intersected in widths up to 50 m, with three intercepts over 10
m grading about 0.02% uranium. Four higher-grade intercepts were reported at
0.1% uranium or better over 1 m–6 m.
Analysis: These results came in below our expectation of 5 m–10 m+ of near
surface mineralization grading 0.1–0.5% U3O8. However, as a first drill program
on a new area, there are still positives to be taken away. Uranium mineralization
extends to depth below surface exposures. Drilling suggests that the
mineralization is associated with coarser-grained ignimbrite units, identified to the
south in thicknesses of up to 100 m. Assay results from the Calvario I target
(which boasts extensive surface expression of uranium mineralization), are
expected in the next several weeks. The ongoing drill program is designed to test
four large targets by a total of about 100 shallow holes. Drill permits are being
prepared for additional targets including the southern area at Sayana.
Conclusion: Frontier Pacific is focused on two assets: 1) uranium exploration of
Macusani in Peru; and 2) development of the Perama Hill gold deposit in Greece
(subject to permitting). Our valuation assigns a conservative 50% probability of
success on both these assets, which we continue to see as an appropriate discount
in the face of these below expectation initial uranium results. As such, we
maintain our BUY rating and $0.80 target ahead of the next batch of results,
Sources: Company Reports, FactSet, Westwind Partners which will be a key milestone.
All figures in C$ unless otherwise noted
$53.7
95%
Project Start-up H2 2008
Tonnes Mined tpd 3,500
Production tpy 1,250,000
oz/gold year 135,000
oz/silver year 200,000
Market Cap (MM)
Total Potential Return
Conceptual Capacity - Perama Hill gold project
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
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9151
280
Volume in Thousands (max/avg)
Frontier Pacific Mining Corp. (FRP-CA)
17-May-2005 to 17-May-2006 (Daily) High: 0.880
Canadian Dollar Low: 0.155
Last: 0.410