VANCOUVER, BRITISH COLUMBIA (TSX: FRG)(AMEX: FRG) reports its
financial and operating results for the three and nine months ended
September 30, 2007. Details of the Company's financial results are
described in the unaudited consolidated financial statements and
Management's Discussion and Analysis ("MDA") for the nine months
ended September 30, 2007, available on the Company's website at
www.fronteergroup.com or on SEDAR at www.sedar.com. All amounts
presented are in Canadian dollars unless otherwise stated.
Selected Financial Data
This summary of selected unaudited financial data should be read
in conjunction with the MDA and the unaudited consolidated
financial statements and related notes thereto for the periods
indicated.
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For the three months ended For the nine months ended
September 30, September 30,
2007 2006 2007 2006
--------------------------------------------------------
Net income (loss) $ (3,868,201) $ (585,003) $ (14,499,061) $ 7,617,871
Total
comprehensive
income $ (6,210,294) $ (585,003) $ (14,875,359) $ 7,617,871
Basic and diluted
earnings (loss)
per share $ (0.06) $ (0.01) $ (0.22) $ 0.14; $0.13
Cash invested in
mineral
properties $ 2,998,105 $ 1,618,132 $ 5,716,590 $ 4,604,057
Cash generated
by financing
activities $ - $ 1,383,269 $ 66,435,554 $ 45,681,904
----------------------------
As at
September 30, December 31,
2007 2006
----------------------------
Cash $ 101,830,868 $ 40,391,913
Working capital $ 102,106,445 $ 43,338,290
Investment in Aurora Energy Resources
Inc.(1) $ 34,968,438 $ 37,508,155
Investment in Turkish Properties $ 12,243,199 $ -
Reclamation bonds $ 1,780,343 $ -
Total assets $ 378,891,486 $ 102,311,386
Asset retirement obligations - Current $ 503,268 $ -
Asset retirement obligations - Non
current $ 746,450 $ -
Shareholders' equity $ 325,475,071 $ 99,364,065
(1)Fronteer accounts for its investment in Aurora Energy Resources Inc.
("Aurora") using the equity method of accounting. At September 30, 2007,
the Company owned 46.8% of Aurora compared to 47.2% at December 31,
2006. Subsequent to September 30, 2007, Aurora announced that it has
entered into an agreement to sell an aggregate of 5,312,500 Common
Shares in the capital of Aurora at a price of $16.00 per Common Share
and an aggregate of 750,000 Flow-Through Shares at a price of $20.50 per
Flow-Through Share for aggregate gross proceeds to Aurora of
approximately $100,000,000 on a bought deal basis. The underwriters also
have an option (the "Overallotment Option") to purchase an additional
796,875 Common Shares of Aurora at a price of $16.00 per Common Share
for a period of 30 days from closing. Upon conclusion of this financing,
the Company's ownership in Aurora will be reduced to approximately
42.8%, not including exercise of the Overallotment Option. The financing
is expected to close November 20, 2007.
The Company's net loss for the three months ended September 30,
2007 was $3,868,201 or $0.06 per share compared to a net loss of
$585,003 for the three months ended September 30, 2006. The
Company's net loss for the nine months ended September 30, 2007 was
$14,499,061 or $0.22 per share as compared to net income of
$7,617,871 for the nine months ended September 30, 2006.
Contributing to the period-over-period differences were increased
operating expenses in 2007 versus 2006, such as the recognition of
increased stock-based compensation expense (a non-cash expense),
property investigation costs, wages and benefits and the write-down
of exploration properties in Mexico. Also contributing to the
difference was the recognition of smaller dilution gain on the
Company's investment in Aurora in 2007 versus 2006 and the
recognition of a loss on the Company's financial instruments in
2007.
The Company has also recognized its share of the operating loss
of Aurora for the three months ended September 30, 2007 which
totaled $644,478 as compared to $1,093,132 for the three months
ended September 30, 2006. For the nine months ended September 30,
2007, the Company has recognized its share of the loss, totalling
$3,330,044 as compared to $4,357,749 for the nine months ended
September 30, 2006. The difference primarily relates to the timing
of stock based compensation expense of Aurora.
Business Acquisition
On September 24, 2007, the Company completed the acquisition of
100% of the issued and outstanding shares of Newwest Gold
Corporation on the basis of 0.26 shares of the Company for each
share of Newwest. The transaction has been accounted for as an
acquisition of assets and has resulted in the Company acquiring 19
precious metals exploration properties primarily located in the
state of Nevada of the United States.
The transaction was accounted for as an asset purchase and the
cost of each item of property, plant and equipment acquired as part
of the group of assets acquired was determined by allocating the
price paid for the group of assets to each item based on its
relative fair value at the time of acquisition. The Company will
continue to review the information and perform further analysis
with respect to these assets prior to finalizing the allocation of
the purchase price by year end. The summarized results of the
allocation are indicated in the table below:
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Purchase price: $
15,181,920 common shares of Fronteer 160,017,437
518,050 stock options of Fronteer 1,615,416
Acquisition costs 2,889,781
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164,522,634
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Net assets acquired:
Current assets 3,356,579
Other assets 2,353,343
Exploration properties and deferred exploration expenditures 211,020,431
Current liabilities (1,515,400)
Other liabilities (746,450)
Future income tax liability (49,945,869)
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164,522,634
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As a result of the acquisition of Newwest, the Company has
recorded reclamation bonds of $1,780,343 and recognized an asset
retirement obligation of $1,249,718, both of which relate primarily
to the Northumberland deposit.
Liquidity
At September 30, 2007, the Company had cash on its balance sheet
of $101,830,868 and working capital of $102,106,445 as compared to
cash of $40,391,913 and working capital of $43,338,290 at December
31, 2006. The change in cash and working capital of $61,438,955 and
$58,768,155 respectively is primarily due to the receipt of gross
proceeds of $72,164,308 from the March 2007 financing and exercise
of stock options and warrants, offset by exploration expenditures
of $5,716,590 and cash used in operations of $1,149,817 during the
period.
Exploration Projects
Exploration and acquisition expenditures, net of recoveries for
the nine months ended September 30, 2007 and 2006 totalled $635,558
and $2,237,524 in Turkey, $480,578 and $843,936 in Mexico, and
$4,036,353 and $2,326,157 in the Yukon, Canada respectively.
Teck Cominco Limited, through its wholly-owned Turkish
subsidiary ("TCAM") has conducted all exploration activities on the
Agi Dagi, Kirazli, Halilaga and Pirentepe projects, located in the
Biga Peninsula of Northwest Turkey, in 2007. In July and August
2007, TCAM notified the Company that it had completed its earn-back
expenditures on Kirazli, Agi Dagi and Halilaga, therefore earning a
60% interest in each project. The Company and TCAM now operate each
of these projects as a 40/60 joint venture. TCAM may elect to earn
an additional 10% interest in each of Agi Dagi and Halilaga, by
taking each project to feasibility and carrying Fronteer to
production. TCAM must notify the Company of its decision to earn
the additional 10% in November, 2007. TCAM has elected not to earn
the additional 10% on Kirazli.
As a result of this ownership change, the Company now accounts
for its investments in these Turkish assets as equity investments.
All costs incurred by the Company on these projects and any related
future income tax liability are now netted and recorded on the
balance sheet as Investment in Turkish Properties.
The Company and TCAM continue to search for and examine
additional properties in the Biga region of Turkey (within a
defined area of interest ("AOI")). This agreement will see costs
shared on a 60% TCAM, 40% Fronteer basis going forward through
November 2008. An airborne geophysical survey has recently been
flown over the area, with results now being analyzed. Any new
properties identified from this survey for acquisition, if
acquired, will immediately be subject to a 60% TCAM 40% Fronteer
joint venture.
The Company is also conducting project generative exploration
outside of the AOI, in an attempt to identify other properties for
acquisition in Turkey. The Company is conducting sampling and
geological mapping as well as flying an airborne geophysical survey
with an estimated cost of US$476,000, as the means of identifying
new properties for acquisition. Costs associated with this program
have been expensed to operations during the period.
The Company is completing its 2007, planned 10,000 metre drill
exploration program for the Wernecke properties. To September 30,
2007, the Company has incurred expenditures of $4,046,353, net of
recoveries from Rimfire Minerals Corporation. A total of 6,520
metres of drilling in 28 holes has been completed to the end of
September, over seven different target areas, with assay results
pending. The Company completed de-mobilization of its exploration
camp in October. Weather issues resulted in drilling delays
resulting in fewer metres drilled than planned.
Over the next couple of months, the Company will be analyzing
the data from its 2007 exploration programs and will develop its
exploration budgets for its newly acquired gold properties in
Nevada and its ongoing program in the Yukon. The Company will also
work with TCAM to further advance the exploration and development
of Agi Dagi, Kirazli and Halilaga.
About Fronteer
Fronteer is an exploration and development company with a track
record of making big discoveries. Fronteer has a 40% interest in
three world-class gold and copper-gold projects in Turkey, an
extensive portfolio of advanced stage gold projects in Nevada, and
a 46.8% interest in Aurora Energy Resources (TSX: AXU), a leading
Canadian uranium company.
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, size of future exploration
budgets and exploration potential, timing of future exploration and
timing of TCAM earn-back, 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, 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, silver, copper and uranium,
economic and political stability in Turkey, Mexico and Canada,
environmental risks and hazards, increased infrastructure and/or
operating costs, labor and employment matters, and government
regulation 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.
Contacts: Fronteer Development Group Inc. Dr. Mark O'Dea
President and CEO (604) 632-4677 or Toll Free: 1-877-632-4677
Fronteer Development Group Inc. Sean Tetzlaff C.A. CFO and
Corporate Secretary (604) 632-4677 or Toll Free: 1-877-632-4677
Fronteer Development Group Inc. Glen Edwards Media Relations (604)
632-4677 or Toll Free: 1-877-632-4677 Email: info@fronteergroup.com
Website: www.fronteergroup.com
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