Frontera Copper Reports on Financial Results and
Operational Performance for the First Quarter of 2008
View News
Release in PDF Format
TORONTO and PHOENIX, AZ--(Marketwire - May 15, 2008) - Frontera Copper
Corporation (TSX: FCC) (TSX: FCC.NT) (TSX: FCC.NT.A) today reported financial
results and operational performance for the quarter ended March 31, 2008.
First Quarter
Summary
- Net
loss of $1.2 million ($0.02 per share basic and diluted)
- Copper
cathode production and sales of 9.9 million pounds
- Average
cash cost of $3.14 per pound
- Cash
flow from operating activities of negative $18.5 million
- Closing cash balance of
$29.5 million
- 1.5
million man hours and one calendar year without a lost time accident
? ????????????????????????????????????????? Financial Results ?????????????????????????????? (millions of dollars, except per share) ?????????????????????????????1Q08????? 4Q07?????? 3Q07????? 2Q07???? 1Q07 ????????????????????????? --------? --------? --------- --------- -------- Revenues????????????????????? 31.9????? 37.5?????? 50.1????? 50.8???? 28.9 Net earnings/(loss)?????????? (1.2)????? 6.7????? ?10.3?????? 9.8????? 4.9 Net earnings/(loss) per share - basic?????????????? (0.02)???? 0.11?????? 0.16????? 0.15???? 0.08 Cash flows from operating activities??????? (18.5)???? (3.1)????? 23.6????? 36.3???? (1.3) Closing cash balances???????? 29.5????? 54.5?????? 58.8????? 48.7???? 24.4 ????????????????????????? --------? --------? --------- --------- --------
For the three months ended March 31, 2008, Frontera
Copper reported a net loss of $1.2 million ($0.02 per share basic and
diluted), compared to net income of $4.9 million ($0.08 per share basic and
diluted) for the three months ended March 31, 2007. Revenues of $31.9 million
in the first quarter of 2008 and $28.9 million in the first quarter of 2007
were reduced by $5.8 million and $0.9 million, respectively, due to the
effect of the company's copper hedging program.
Alan Edwards, President and Chief Executive Officer, said, "Our first
quarter performance was negatively impacted by slower copper recoveries
stemming from sulfuric acid supply issues that began in the second half of
last year. We believe that the modifications in our operating strategy which
are now being implemented will better enable us to maximize the effectiveness
of the acid that is available to us at economical prices. Looking ahead,
given continuing strength in the copper market, our operating cash flow
should become positive again as our acid costs are reduced, our 2008 Mexican
tax installments are completed and our copper hedging program winds down
early next year."
????????? ??????????????????????????????Results from Operations ??????????????????????????--------------------------------------- --------- ??????????????????????????????1Q08????? 4Q07????? 3Q07????? 2Q07????? 1Q07 ????????????????????????? --------- --------- --------- --------- --------- "LME Grade A" quality copper cathode (millions of lbs.): ??? Produced??????????????????? 9.9????? 12.3????? 15.1????? 15.9????? 10.4 ??? Sold??????????????????????? 9.9????? 12.6????? 15.7????? 15.7????? 10.1 Cash costs per pound sold ($): ??? (Excluding prepaid ???? royalties)??????????????? 3.14????? 1.39????? 1.13????? 1.10????? 1.37 ??? (Including prepaid ???? royalties)??????????????? 3.14????? 1.46????? 1.21????? 1.18????? 1.43 Revenue ($ millions)?????????? 31.9?? ???37.5????? 50.1????? 50.8????? 28.9 Average price per pound: ??? Realized ($)?????????????? 3.21????? 2.97????? 3.20????? 3.23????? 2.87 ??? COMEX ($)????????????????? 3.53????? 3.26????? 3.48????? 3.46????? 2.71 ????????????????????????? --------- --------- --------- --------- ---------
The
company's Piedras Verdes operation in Mexico produced and sold 9.9 million
pounds of "LME Grade A" quality copper during the first quarter of
2008, compared to production of 12.3 million pounds and sales of 12.6 million
pounds of copper in the fourth quarter of 2007. Cash operating costs for the
2008 first quarter were $3.14 per pound compared to $1.46 per pound in the
2007 fourth quarter, reflecting higher acid consumption and prices combined
with lower production. The higher acid costs were principally due to
purchases of expensive acid on the spot market to supplement supply shortages
caused by the continuing labor dispute at the operation's primary supplier.
As previously announced, leach solution chemistry was negatively impacted
during the second half of 2007 due to inadequate supplies of sulfuric acid. The
unfavorable changes in solution chemistry resulted in slower than expected
rates of copper recoveries, culminating in reduced levels of copper
production in the fourth quarter of 2007. In order to improve the leach pad
solution chemistry, the mining rate was temporarily reduced early in the
first quarter of 2008 and substantial quantities of higher-priced acid were
purchased in the spot market to supplement the reduced level of acid
deliveries from the primary supplier. As solution chemistry improved during
the course of the quarter, the mining rate was accelerated. However, during March the
operation encountered unusually high acid-consuming ores, which resulted in
lower copper production.
Given the uncertain availability and unfavorable economics of purchasing
higher-priced acid from alternate sources and recognizing that the ongoing
strike at the Company's primary acid supplier may not be resolved in the near
term, Piedras Verdes has modified its operating strategy in order to maximize
the recovery of copper with the available acid from its primary supplier.
Commencing in April 2008, the operation instituted a revised cutoff grade
strategy, which will ensure that only higher-grade, low acid-consuming ores
are placed on the leach pads. Lower-grade ores and ores with higher acid
consumption levels will be placed in stockpiles for future processing.
In addition, a leaching technique has been implemented which utilizes
individual leach cell characteristics to define the cure amount and leach
sequence in accordance with copper content and acid consumption estimates.
The key to the strategy is to develop a leach cycle that circulates a certain
amount of raffinate to each cell based on copper content. This strategy has
been under development since the beginning of the year and has the potential
to minimize acid consumption without negatively impacting copper recoveries.
The Company plans to purchase significantly less acid in the second quarter
than in the first quarter and at a lower average cost. Copper production for
the second quarter is projected at approximately the same level as the first
quarter. In addition, the benefits of lower acid costs are expected to result
in lower cash costs for the second quarter compared to the first quarter. The
Company anticipates a return to profitability assuming it is able to obtain
sufficient quantities of economically-priced sulfuric acid on a sustained
basis to support its new operating strategy. However, given the dynamic acid
market conditions and ongoing labor dispute at the operation's primary acid
supplier, the Company is unable to provide more specific guidance for
expected levels of copper production or operating costs for the balance of
2008.
The Company's cash balance as at March 31, 2008 was $29.5 million, a decrease
of $25.0 million during the first quarter. The primary uses of cash during
the quarter were for the payment of approximately $14 million of Mexican income
tax installments related to the 2007 earnings of the Piedras Verdes
operations, higher than normal operating costs due to the higher volumes and
unit prices of acid, and capital expenditures of approximately $6.8 million.
The Company currently expects its cash balance to decrease in the second
quarter, primarily due to the payment of 2008 Mexican income tax installments
totaling approximately $8 million. These installments are calculated based on
2007 profitability as required under Mexican tax regulations. Based on
current projections, the Company believes it has sufficient cash to meet its
operating needs for the foreseeable future.
Frontera Copper is also pleased to announce that Orlando Bernal has joined
the Piedras Verdes operating team. Orlando has accepted the position of
Processing Manager, and brings to the Company valuable experience with Phelps
Dodge Corporation and Cyprus Mining at the Cerro Verde mine in Peru. Orlando
is a welcome complement to the already strong management team at Piedras
Verdes, which includes Jesus Gutierrez and Joseph Campbell.
CONFERENCE CALL
Frontera Copper Corporation (TSX: FCC) (TSX: FCC.NT) (TSX: FCC.NT.A) will
hold a conference call at 11:00 a.m. EDT today to report on first quarter
2008 results. The conference call will be hosted by Alan Edwards, President
and Chief Executive Officer. He will be joined by Dave Peat, Vice President
and Chief Financial Officer; Tim Swendseid, Vice President of Engineering and
Rod Prokop, Vice President, Investor Relations.
Those wishing to participate should dial 416-695-9745 or toll free 800-766-6630. A replay of the
call will also be available through Thursday, May 29, by dialing 416-695-5800
or toll free 800-408-3053 and entering passcode 3260517.
The Company's March 31, 2008 Financial Statements and Management's Discussion
and Analysis have been filed on SEDAR and are available on the Company's
website.
ABOUT FRONTERA COPPER CORPORATION
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.
For further information, please see Frontera Copper's website at
www.fronteracopper.com.
CONTACT INFORMATION:
Rodney Prokop
Vice President, Investor Relations
(602) 424-5483
ir@fronteracopper.com
or
Alan Edwards
President and Chief Executive Officer
(602) 424-5488
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.
Frontera Copper Corporation Consolidated Balance Sheet US$ (in thousands)????????????????????????????????????? (unaudited) ????????? ?????????????????????????????????????????March 31,?? December 31, ????????????????????????????????????????????????????? 2008???????? 2007 ????????????????????????????????????????????????? -----------? ----------- ????????????????????? Assets Current ?? Cash and cash equivalents?????????????????????????? 29,475?????? 54,479 ?? Accounts receivable????????????????????????????????? 1,190????????? 705 ?? Commodity taxes recoverable????????????????????????? 6,937??????? 4,181 ?? Inventory???????????????????????? ??????????????????27,748?????? 24,918 ?? Prepaid expenses and deposits??????????????????????? 3,661??????? 6,440 ?? Future tax asset???????????????????????????????????? 7,965??????? 2,883 ?? Deferred loss on derivative instruments????????????? 2,135?????? ?????- ????????????????????????????????????????????????? -----------? ----------- ?????????????????????????????????????????????????????? 79,111?????? 93,606 Restricted cash???????????????????????????????????????? 1,825??????? 1,825 Long term inventory?? ?????????????????????????????????23,967?????? 20,912 Long term deposits????????????????????????????????????? 1,861??????? 1,854 Mineral properties and property, plant and equipment??????????????????????????????????????????? 139,893????? 136,036 ????????? ????????????????????????????????????????-----------? ----------- ??????????????????????????????????????????????????????246,657????? 254,233 ????????????????????????????????????????????????? ===========? =========== ?????????????????? Liabilities Current ?? Accounts payable and accrued liabilities??????????? 24,221?????? 17,547 ?? Deferred revenue???????????????????????????????????????? -????????? 326 ?? Income taxes payable?????????????????????????????????? 323?????? 14,501 ?? Derivative instruments????? ????????????????????????25,828??????? 8,143 ?? Current portion of notes payable???????????????????? 6,104??????? 6,915 ????????????????????????????????????????????????? -----------? ----------- ?????????????????????????????????????????????????????? 56,476 ??????47,432 Accounts payable and accrued liabilities??????????????? 3,028??????? 3,197 Notes payable????????????????????????????????????????? 71,872?????? 73,446 Asset retirement obligation???????????????????????????? 4,999??????? 4,907 Derivative instruments????????????????????????????????????? -??????? 3,440 Future income taxes???????????????????????????????????? 7,965??????? 7,849 ????????????????????????????????????????????????? -----------? ----------- ?????????????????????????????????????????????? ???????144,340????? 140,271 ????????????????????????????????????????????????? -----------? ----------- ?????????????? Shareholders' Equity Capital stock???????????????????????????????????????? 103,276????? 102,807 Contributed surplus???????????????????? ??????????????????988??????? 1,174 Accumulated other comprehensive loss????????????????? (18,129)????? (7,388) Retained earnings????????????????????????????????????? 16,182?????? 17,369 ????????????????????????????????????????????????? -----------? ----------- ????????????????????????????????????????????????????? 102,317????? 113,962 ????????????????????????????????????????????????? -----------? ----------- ??????????????????????????????????????????????????????246,657????? 254,233 ??????????????????????? ??????????????????????????===========? ===========
Frontera Copper Corporation Consolidated Statements of Operations US$ (in thousands except per share amounts)????????????? (unaudited) ???????????????????????????????????????????????????????? 1st Quarter ????????????????????????????????????????????????? ------------------------ ????????????????????????????????????????????????????? 2008???????? 2007 ????????????????????????????????????????????????? -----------? ----------- ? Revenue???????????????????? ???????????????????????????31,944?????? 28,950 Cost of sales and expenses ?? Cost of sales?????????????????????????????????????? 31,246?????? 14,432 ?? Depreciation, depletion and amortization???????????? 2,191??????? 1,923 ?? Exploration??????????????? ?????????????????????????????26????????? 103 ?? Administration?????????????????????????????????????? 1,509??????? 1,344 ????????????????????????????????????????????????? -----------? ----------- ?????????????????????????????????????????????????????? 34,972?????? 17,802 ????????????????????????????????????????????????? -----------? ----------- Other (income) and expenses ?? Interest income?????????????????????????????????????? (416)??????? (254) ?? Long-term interest and accretion???????????????????? 2,950??????? 2,828 ?? Foreign exchange (gain) loss??????????????????????? (3,001)???????? 646 ?? Unrealized (gain) loss on derivatives ??? contracts??????????????????????????????????????????? (673)?????????? 8 ????????????????????????????????????????????????? -----------? ----------- ?????????????????????????????????????????????????????? (1,140)?????? 3,228 ????????????????????????????????????????????????? -----------? ----------- Income (loss) before income taxes????????????????????? (1,888)?????? 7,920 Income taxes????????????????????????????????????????????? 701?????? (2,990) ????????????????????????????????????????????????? -----------? ----------- Net income (loss) for the period?????????????????????? (1,187)?????? 4,930 ???????????????????????????????? ?????????????????===========? =========== ? Income (loss) per share - Basic???????????????????????? (0.02)??????? 0.08 ??????????????????????? - Diluted?????????????????????? (0.02)??????? 0.08 Weighted average common shares outstanding - Basic?????? ????????????????????????????64,512?????? 63,549 ???????????? - Diluted???????????????????????????????? 64,963?????? 64,573 ? ? Frontera Copper Corporation Consolidated Statements of Retained Earnings (Deficit) US$ (in thousands) ???????????????????????? ???????????????????????????????(unaudited) ??????????????????????????????????????????????????????? 1st Quarter ????????????????????????????????????????????????? ------------------------ ????????????????????????????????????????????????????? 2008???????? 2007 ????????????????????????????????????????????????? -----------? ----------- Retained earnings (deficit), beginning of period?????? 17,369????? (14,474) Net income (loss) for the period?????????????????????? (1,187)?????? 4,930 ??????????????????????? ??????????????????????????-----------? ----------- Retained earnings (deficit), end of period???????????? 16,182?????? (9,544) ????????????????????????????????????????????????? ===========? =========== ? ? Consolidated Statements of Comprehensive Income (Loss) US$ (in thousands) ??????????????????????????????????????????????????????? (unaudited) ??????????????????????????????????????????????????????? 1st Quarter ????????????????????????????????????????????????? ------------------------ ???????????????? ?????????????????????????????????????2008???????? 2007 ????????????????????????????????????????????????? -----------? ----------- Net income (loss) for the period?????????????????????? (1,187)?????? 4,930 Unrealized loss on derivatives designated as cash flow hedges, (net of tax of $4,177,000 and $3,278,000)????????????????????????????????????????? (10,741)????? (9,550) Tax valuation allowance???????????????????????????????????? -?????? (3,278) ??????????????????????????????????????????????????-----------? ----------- Other comprehensive loss for the period?????????????? (10,741)???? (12,828) ????????????????????????????????????????????????? -----------? ----------- Comprehensive loss for the period ????????????????????(11,928)????? (7,898) ????????????????????????????????????????????????? ===========? ===========
Frontera Copper Corporation Consolidated Statements of Cash Flows US$ (in thousands)????????????????????????????????????? (unaudited) ? ??????????????????????????????????????????????????????1st Quarter ????????????????????????????????????????????????? ------------------------ ????????????????????????????????????????????????????? 2008???????? 2007 ?????????????????????????????????????????? ???????-----------? ----------- Cash flows from operating activities Net income (loss) for the period?????????????????????? (1,187)?????? 4,930 ?? Items not involving cash: ????? Future income taxes??????????????????????????????? (869)?????? 2,990 ????? Unrealized foreign exchange????????????????????? (3,073)???????? 446 ????? Depreciation, depletion and amortization????????? 2,888??????? 2,798 ????? Accretion?????????????????????????????????????????? 828????????? 786 ????? Unrealized (gains) losses on derivative contracts???????????????????????????????????????? (673)?????????? 8 ????? Long term inventory????????????????????????????? (3,055)??????? (181) ????? Long term deposits?????????????????????????????????? (7)?????????? - ??????????????????????????? ??????????????????????-----------? ----------- ?????????????????????????????????????????????????????? (5,148)????? 11,777 Changes in non-cash working capital balances????????? (13,366)???? (13,062) ????????????????????????????????????????????????? -----------? ----------- Cash flows used in operating activities?????????????? (18,514)????? (1,285) ????????????????????????????????????????????????? -----------? ----------- Cash flows from investing activities ?? Property, plant and equipment?????????????? ????????(6,760)????? (9,302) ?? Decrease in restricted cash????????????????????????????? -??????? 1,233 ????????????????????????????????????????????????? -----------? ----------- Cash flows used in investing activities??????????????? (6,760)????? (8,069) ?????????????????????????????????????????????????-----------? ----------- Cash flows from financing activities ?? Exercise of options??????????????????????????????????? 283?????????? 97 ????????????????????????????????????????????????? -----------? ----------- Cash flows from financing activities????????????????????? 283?????????? 97 ????????????????????????????????????????????????? -----------? ----------- Effect of exchange rate changes on cash?????????????????? (13)???????? 157 ????????????????????? ????????????????????????????-----------? ----------- Decrease in cash and cash equivalents during the period?????????????????????????????????????????????? (25,004)????? (9,100) Cash and cash equivalents, beginning of period???????? 54,479?????? 33,547 ????????????????????????????????????????????????? -----------? ----------- Cash and cash equivalents, end of period?????????????? 29,475?????? 24,447 ????????????????????????????????????????????????? ===========? =========== Cash and cash equivalents consist of: ?? Cash???????????????????????????????????????????????? 5,788??????? 6,608 ?? Cash equivalents??????????????????????????????????? 23,687?????? 17,839 ????????????????????????????????????????????????? -----------? ----------- ???????????????????????????????????????????????????????29,475?????? 24,447 ????????????????????????????????????????????????? ===========? =========== Supplemental information: ?? Interest paid??????????????????????????????????????? 1,232??????? 1,223 ?? Income taxes paid?????????????????????????????????? 14,346??????????? -
|