Frontera Copper Reduces Hedging Program
(All dollar amounts are expressed in United States currency unless
otherwise noted.)
Toronto, ON - January 22, 2007 - Frontera Copper Corporation (FCC:
TSX, FCC.NT, FCC.NT.A: TSX) today reported that it had reduced its
outstanding hedge position by approximately 30%.
During December 2007 and January 2008, the Company repurchased 2.8 million
and 10.2 million pounds, respectively, of its outstanding forward copper
sales positions. The approximate $2 million cost associated with these
repurchases will be deferred and recorded in income based on the original
maturities of the positions.
Frontera originally entered into the limited hedging program to help ensure
that it would generate sufficient revenues from its copper cathode sales
during the two-year period March 2007 through February 2009 to cover certain
known financial obligations. The financial obligations included the repayment of the outstanding
Notes Payable and deferred and sustaining capital expenditures. Since the
time that the hedging program was initiated through December 31, 2007,
Frontera has funded approximately $21 million of capital expenditures and has
repurchased approximately C$8.9 million of the Notes Payable.
Alan Edwards, President and Chief Executive Officer said, "In light of
the improved copper forward market curve and the current lower production
levels resulting from shortages of sulphuric acid, we believe that reducing
our hedge position at this time is prudent and in the Company's best
interest."
As at January 21, 2008, the Company had the following copper forward sales
contracts outstanding with a major financial institution:
?????????? ???????????????????Pounds????? Average ??????????????????????????????? Sold??????? Sales ???????????????????????????? Forward??????? Price ????????????????? Year??????? (000's)?? per Pound ????????????????? -------------------------------- ??????????????? ??2008??????? 21,494??????? $2.65 ????????????????? 2009???????? 6,118???????? 2.52 ????????????????? -------------------------------- ????????????????? Total?????? 27,612??????? $2.62
The
remaining copper forward sales contracts represent about 3% of the recoverable
copper contained in the remaining 17-year project life. The Company has no
plans to further reduce its hedge book at this time.
About Frontera Copper
Frontera Copper is a Canadian mining, development and exploration company
whose principal activity is the production of copper cathode from the Piedras
Verdes run-of-mine heap-leach copper operation in Sonora, Mexico. Based on
the January 1, 2008 ore reserves and the estimated recoverable copper
contained on the leach pads at December 31, 2007, approximately 1 billion
pounds of copper is projected to be produced over the remaining 17-year life
of the operation. Existing resources and prospective exploration targets
adjacent to the main open-pit have the potential to extend the life of the
operation.
For further information, please see Frontera Copper's website at
www.fronteracopper.com or contact:
Dave Peat
Vice President and Chief Financial Officer
Tel.: 602 424-5484
Email: dave.peat@fronteracopper.com
Information in this news release that
is not current or historical factual information may constitute
forward-looking information or statements within the meaning of applicable
securities laws. Implicit in this information, particularly in respect of
statements as to future operating results and economic performance of the
Company, and resources and reserves at the Piedras Verdes operations, are
assumptions regarding projected revenue and expense, copper prices and mining
costs. These assumptions, although considered reasonable by the Company at the
time of preparation, may prove to be incorrect. Readers are cautioned that
actual results are subject to a number of risks and uncertainties, including
risks relating to general economic conditions and mining operations, and
could differ materially from what is currently expected. The Company
disclaims any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.
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