08-18
Fronteer
Development Group Inc. ("Fronteer" or the "Company")
(FRG - TSX/AMEX) reports its financial and operating results for the three
months ended June 30, 2008. Details of the Company's financial
results are described in the unaudited consolidated financial statements
and Management's Discussion and Analysis for the three and six months ended
June 30, 2008. Further details on each of Fronteer's projects and
activities can be found on the Company's website: http://www.fronteergroup.com and on SEDAR at http://www.sedar.com. All amounts are presented in Canadian
dollars unless otherwise stated.
OVERVIEW
The Company is a gold-focused
exploration and development company committed to discovering and advancing
deposits with strong production potential. The company's vision is to
become a multi-billion-dollar, gold-growth Company advancing a pipeline of
projects stretching from exploration through to production.
The Company has an interest in several major gold and copper-gold
projects throughout Nevada, USA and northwest Turkey. Fronteer is also a
founder and largest shareholder at 42.2% of Aurora Energy Resources Inc. ("Aurora"),
a company focused on advancing a pipeline of growing uranium deposits in
Labrador, Canada. Aurora is listed on the Toronto Stock Exchange
under the symbol AXU.
The Company's shares are listed on the Toronto Stock Exchange and
the American Stock Exchange under the symbol FRG.
Significant
events for the six months ending June 30, 2008 through the date of this
report are:
- Signing of a joint venture agreement with
Newmont where Newmont may earn up to a 60% interest in the Sandman
gold project in Nevada.
- Fronteer retains a 100% interest in the
Northumberland gold project, and through the above mentioned Sandman
deal, will gain access to Newmont's N2TEC flotation technology for
Northumberland. The Company has also completed a new resource estimate
for its 100%-owned Northumberland gold project, increasing the
deposit's overall gold-equivalent resource size by 23.5%.
- Ongoing drilling also continues to underline
the promise of Long Canyon, an important new gold deposit. Initial
results from Long Canyon's 2008 work program include grades as high as
17.63 grams per tonne gold over 4.6 metres (see press release dated
July 29, 2008).
- The Nunatsiavut government in Labrador voted
eight to seven in favour of implementing a three-year moratorium on
the working, production, mining and development of uranium on Labrador
Inuit lands. The amendment to the Labrador Inuit Lands Act requires
the issue to be revisited after March 31, 2011. Exploration
for uranium on Labrador Inuit Lands during the moratorium is still
permitted.
EXPLORATION PROJECTS
Exploration and acquisition
expenditures, net of recoveries but including stock based compensation, for
the six months ended June 30, 2008 and 2007 totalled $121,508 and $325,611
in Turkey, $77,480 and $1,577,829, the Yukon, Canada, and $6,803,049 and $nil,
in Nevada, USA, respectively. The properties in the USA were acquired
with the purchase of NewWest in September 2007, and thus there are no
expenditures for the corresponding six months ended June 30,
2007.
At Northumberland, the 2008 Summer Drill program commenced in
mid-May 2008, with two rigs currently focused on expanding the near surface
oxide resource in the vicinity of the Main Pit and the deeper Rockwell /
Zanzibar sulphide resource. As of June 30, 2008, a total of 2,986
metres have been drilled in 12 drill holes (10 completed and 2 partial),
out of a planned 14,705 metres, with drill results pending.
During the six months ended June 30, 2008, the Company and Newmont
signed a joint venture agreement whereby Newmont may earn an initial 51%
interest in Sandman within 36 months by contributing mineral interests to
the joint-venture, spending a minimum US$14,000,000 on exploration ($3
million, $5 million, $6 million spent in years one, two, and three
respectively, with regional exploration not completed in year 1 allowed to
carryover to year two) and making a production decision supported by a
bankable feasibility study. Newmont may earn an additional 9% in
Sandman by spending a further US$9,000,000 on development. Fronteer
retains a 2% net smelter royalty on production of the first 310,000 ounces
at Sandman. Fronteer can also elect to have Newmont arrange financing for
its 40% of development costs. It is anticipated that Newmont will
complete a gradient array resistivity survey and commence drilling at
Sandman with two rigs in the third quarter. Newmont is currently
updating road infrastructure and building core handling facilities in
anticipation of the start of drilling in late August.
For the first six months of 2008, the
Company has incurred costs totalling $1,944,568 at Long Canyon and has
drilled a total of 4,827 metres in 28 completed and two partial drill holes
since May. The Company should complete its initial earn-in at Long
Canyon before the end of the year.
Additional plans for 2008 also include
district-scale exploration throughout the remaining land holdings within
the Eastern Great Basin. Mapping, ground geophysics, soil
geochemistry and target generation on these properties continues. A
drill program is being planned for KB to commence later in late
August.
At the Halilaga project in Turkey,
drilling is underway at the large and untested Kumlugedik Tepe and Bakirlik
Tepe geochemical/geophysical targets, located approximately 4 kilometres
southeast of the Kestane zone.
For the six months ended June 30, 2008,
approximately US$738,000 has been expended by Teck Cominco's Turkish
subsidiary ("TCAM") on the property. Assay results from
drilling are pending.
SELECTED FINANCIAL DATA
This summary of selected financial data should be read
in conjunction with the Management Discussion and Analysis
("MD&A") and the unaudited consolidated financial statements
and related notes thereto for the periods indicated.
|
(Unaudited) For the
three months ended
|
(Unaudited) For the
six months ended
|
|
June 30, 2008
|
June 30, 2007
|
June 30, 2008
|
June 30, 2007
|
Net loss
|
$1,360,015
|
$9,488,197
|
$7,583,428
|
$10,630,874
|
Total comprehensive
loss
|
$1,360,015
|
$8,868,487
|
$12,371,916
|
$8,665,079
|
Basic and diluted loss
per share
|
$0.02
|
$0.14
|
$0.09
|
$0.16
|
Cash invested in
mineral properties
|
$3,503,375
|
$1,924,706
|
$5,761,038
|
$2,718,484
|
Cash generated by
financing activities
|
$32,000
|
$5,749,197
|
$129,800
|
$68,435,554
|
|
As at
|
|
June 30, 2008
(Unaudited)
|
December 31, 2007
|
Cash
|
$93,860,876
|
$99,039,334
|
Working capital
|
$93,122,283
|
$96,903,057
|
Total assets
|
$418,957,382
|
$426,437,437
|
Investment in Aurora
Energy Resources Inc.(1)
|
$75,922,481
|
$76,696,684
|
Shareholders' equity
|
$360,486,280
|
$366,849,777
|
|
|
|
(1) Fronteer accounts for its investment
in Aurora using the equity method of accounting. At June 30, 2008,
the Company owned 42.2% of Aurora compared to 42.3% at December 31,
2007. Aurora's market capitalization at June 30, 2008, was
approximately $310 million.
The Company's
net loss for the three months ended June 30, 2008 was $1,360,015 or $0.02
per share compared to a net loss of $9,488,197 or $0.14 for three months
ended June 30, 2007. The Company's net loss for the six months
ended June 30, 2008 was $7,583,428 or $0.09 per share compared to a net
loss of $10,630,874 or $0.16 for six months ended June 30, 2007.
Contributing to the period-over- period differences was the recognition of
increased operating expenses such as, wages and benefits, property
investigation, office and general, legal expenses and accounting and audit
fees. A significant decrease was noted in stock-based compensation
expense year over year. Also the Company recognized a gain on the
sale of its investment in Latin American Minerals Inc. ("LAT").
LIQUIDITY
At
June 30, 2008, the Company had cash on its balance sheet of $93,860,876 and
working capital of $93,122,283 as compared to cash of $99,039,334 and
working capital of $96,903,057 at December 31, 2007. The change in
cash and working capital of $5,178,458 and $3,780,774, respectively, is
primarily due to sale of the Company's investment in LAT for which the
Company received proceeds of $5,295,450, offset by cash exploration
expenditures of $5,761,038, the placement of additional reclamation bonds
of $697,208, and cash used in operations of $3,340,022.
The Company currently has
no operating revenues other than interest income and relies primarily on
equity financing as well as the exercise of options to fund its exploration
and administrative costs.
ABOUT FRONTEER
Fronteer
is an exploration and development company with a track record of making big
discoveries. Fronteer has a 40% interest in three gold and copper-gold
projects in western Turkey, an extensive portfolio of advanced stage gold
projects in Nevada, and a 42.2% interest in Aurora Energy Resources (TSX - AXU),
a leading Canadian uranium company. For further information on
Fronteer visit www.fronteergroup.com or contact:
Mark O'Dea, Ph.D, P.Geo President and CEO
Richard Moritz, Director, Investor Relations
PH) 604-632-4677 or Toll Free 1-877-632-4677
info@fronteergroup.com
Except for the statements of historical fact contained herein,
certain information presented constitutes "forward-looking
statements" within the meaning of the United States Private Securities
Litigation Reform Act of 1995. Such forward-looking statements, including
but not limited to, those with respect to potential expansion of
mineralization, potential size of mineralized zone, timing of resource
calculation and size of exploration program involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievement of Fronteer to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, risks
related to international operations and joint ventures , the actual results
of current exploration activities, conclusions of economic evaluations,
uncertainty in the estimation of ore reserves and mineral resources,
changes in project parameters as plans continue to be refined, future
prices of gold and silver, environmental risks and hazards, increased
infrastructure and/or operating costs, labor and employment matters, and
government regulation and permitting requirements as well as those factors
discussed in the section entitled "Risk Factors" in Fronteer's
Annual Information form and Fronteer's latest Form 40-F on file with the
United States Securities and Exchange Commission in Washington, D.C.
Although Fronteer has attempted to identify important factors that could
cause actual results to differ materially, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can be no
assurance that such statements will prove to be accurate as actual results
and future events could differ materially from those anticipated in such
statements. Fronteer disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Accordingly, readers should not
place undue reliance on forward-looking statements.
|