UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 40-F
(Check One)
[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF
THE SECURITIES EXCHANGE ACT OF 1934
OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended
December 31,
2007
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Commission File Number
001-32557
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FRONTEER DEVELOPMENT GROUP
INC.
(Exact name of Registrant as specified in its
charter)
Ontario, Canada
(Province or other
jurisdiction of incorporation or organization)
1040
(Primary Standard Industrial
Classification Code Number (if applicable))
98-0489614
(I.R.S. Employer
Identification Number (if applicable))
1650-1055 West Hastings Street
Vancouver, British
Columbia
Canada V6E 2E9
(604) 632-4677
(Address and telephone number of Registrants principal executive
offices)
Troutman Sanders LLP
222 Central Park Avenue, Suite
2000
Virginia Beach, VA 23462
(757) 687-7715
(Name,
address (including zip code) and telephone number (including area code)
of
agent for service in the United States)
Securities registered or to be registered pursuant to Section
12(b) of the Act:
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Name of each exchange
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Title of Each Class
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on which registered
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Common Shares (no par value)
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American Stock Exchange
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Securities registered or to be registered pursuant to Section
12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act:
None
(Title of Class)
For annual reports, indicate by check mark the information filed
with this Form:
[X] Annual information
form
[X] Audited annual financial statements
At December 31, 2007, the Registrant had outstanding 83,176,050
Common Shares (no par value).
Indicate by check mark whether the Registrant by filing the information
contained in this Form is also thereby furnishing the information to the Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934, as amended
(the Exchange Act). If Yes is marked, indicate the file
number assigned to the Registrant in connection with such Rule.
YES [ ] NO [X]
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing requirements
for the past 90 days.
YES [X] NO [ ]
The Science of Discovery
EXPLANATORY NOTE
Fronteer Development Group Inc. (the Corporation) is a
Canadian issuer eligible to file its annual report pursuant to Section 13(a) of
the Securities Exchange Act of 1934, as amended (the Exchange Act), on Form
40-F. The Corporation is a foreign private issuer as defined in Rule 3b-4
under the Exchange Act and Rule 405 under the Securities Act of 1933, as amended
(the Securities Act). Equity securities of the Corporation are accordingly
under the Exchange Act exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of
the Exchange Act pursuant to Rule 3a12-3.
The Corporation prepares its consolidated financial statements
in accordance with Canadian generally accepted accounting principles (GAAP)
and reconciles such statements to U.S. GAAP. Unless otherwise indicated, all
dollar amounts in this report are in Canadian dollars. The exchange rate of
Canadian dollars into United States dollars, on December 31, 2007, based upon
the noon buying rate in New York City for cable transfers payable in Canadian
dollars as certified for customs purposes by the Federal Reserve Bank of New
York, was U.S.$1.00 = CDN$0.9981.
FORWARD-LOOKING STATEMENTS
This annual report and the exhibits attached hereto contain
forward-looking statements concerning the Corporations plans at its properties,
plans related to its business and other matters. These statements relate to
analyses and other information that are based on forecasts of future results,
estimates of amounts not yet determinable and assumptions of management.
Statements concerning reserves and mineral resource estimates
may also be deemed to constitute forward-looking statements to the extent that
they involve estimates of the mineralization that will be encountered if the
property is developed, and in the case of mineral reserves, such statements
reflect the conclusion based on certain assumptions that the mineral deposit can
be economically exploited. Any statements that express or involve discussions
with respect to predictions, expectations, beliefs, plans, projections,
objectives, assumptions or future events or performance (often, but not always,
using words or phrases such as expects, anticipates, plans, estimates or
intends, or the negative or other variations of these words or other
comparable words or phrases or stating that certain actions, events or results
may, could, would, might or will be taken, occur or be achieved) are
not statements of historical fact and may be forward-looking statements.
Forward-looking statements are subject to a variety of risks and uncertainties
which could cause actual events or results to differ from those reflected in the
forward-looking statements, including, without limitation:
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risks and uncertainties relating to the exploration, and development of
gold, copper and uranium mines;
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development risks, including risks related to accidents, equipment
breakdowns, labor disputes or other unanticipated difficulties with or
interruptions in operations, which may or may not be insured;
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uncertainties in the estimation of ore reserves and mineral reserves;
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need for additional reserves and additional capital to fund the
processing, development and exploration of certain mining operations;
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commodity prices, commodity hedging and exchange rate fluctuations;
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risks related to environmental regulation and liability;
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foreign political, economic and regulatory risks associated with mining
and exploration;
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risks associated with inadequate infrastructure to support sustainable
mining operations;
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uncertainty of title;
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risks associated with foreign operations;
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risks associated with conducting operations through foreign subsidiaries;
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risks associated with joint ventures entered into by the Corporation, in
particular with the Corporations Turkish gold properties, the Sandman
property and the Wernecke Breccia properties;
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risks associated with labor relations and other employment matters;
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competition;
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the Corporations acquisition strategy and integration of new acquisitions
into the Corporations operations;
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the volatility of the market price of the Corporations common shares;
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managements limited experience placing projects into production;
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risks associated with certain legal proceedings;
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risks related to foreign currency fluctuations;
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risks related to the possibility that the Corporation is a passive foreign
investment company;
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risks related to the Corporation being a foreign private issuer
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risks related to the Investment Company Act of 1940, as amended
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risks related to the remediation action at the Zaca Project property being
conducted by the United States Forest Service under the Comprehensive
Environmental Response, compensation and Liability Act;
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risks of international operations; and
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other risks and uncertainties related to the Corporations prospects,
properties and business strategy.
Some of the important risks and uncertainties that could affect
the Corporations forward-looking statements are described further in the
Corporations Annual Information Form for the year ended December 31, 2007, a
copy of which is filed as an exhibit hereto, under the heading Risk Factors.
Should one or more of these risks and uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described in forward-looking statements. Forward-looking statements are
made based on managements beliefs, estimates and opinions on the date the
statements are made and the Corporation undertakes no obligation to update
forward-looking statements if these beliefs, estimates and opinions or other
circumstances should change. Investors are cautioned against attributing undue
certainty to forward-looking statements.
NOTE TO UNITED STATES READERS -
DIFFERENCES IN
UNITED STATES AND CANADIAN REPORTING PRACTICES
The Corporation is permitted, under a multijurisdictional
disclosure system adopted by the United States, to prepare this annual report in
accordance with Canadian disclosure requirements, which are different from those
of the United States. The Corporation prepares its financial statements, which
are filed with this report on Form 40-F, in accordance with Canadian GAAP, and
they may be subject to Canadian auditing and auditor independence standards.
They may not be comparable to financial statements of United States companies.
Significant differences between Canadian GAAP and United States GAAP are
described in Note 18 of the audited consolidated financial statements of the
Corporation.
RESOURCE AND RESERVE ESTIMATES
The terms mineral reserve, proven mineral reserve and
probable mineral reserve used in the Corporations disclosure are Canadian
mining terms that are defined in accordance with National Instrument 43-101
Standards of Disclosure for Mineral Projects (NI 43-101) under the guidelines
set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the
CIM) Best Practice Guidelines for the Estimation of Mineral Resource and
Mineral Reserves (the CIM Standards), adopted by the CIM Council on November
23, 2003. These definitions differ from the definitions in the United States
Securities and Exchange Commission (the Commission) Industry Guide 7 under the
Securities Act. Under Industry Guide 7 standards, a final or bankable
feasibility study is required to report reserves, the three-year historical
average price is used in any reserve or cash flow analysis to designate reserves
and the primary environmental analysis or report must be filed with the
appropriate governmental authority.
The terms mineral resource, measured mineral resource,
indicated mineral resource and inferred mineral resource used in the
Corporations disclosure are Canadian mining terms that are defined in
accordance with NI 43-101 under the guidelines set out in the CIM Standards;
however, these terms are not defined terms under Industry Guide 7 and are
normally not permitted to be used in reports and registration statements filed
with the Commission. Investors are cautioned not to assume that any part or all
of mineral deposits in these categories will ever be converted into reserves.
Inferred mineral resources have a great amount of uncertainty as to their
existence, and great uncertainty as to their economic and legal feasibility. It
cannot be assumed that all or any part of an inferred mineral resource will ever
be upgraded to a higher category. Under Canadian rules, estimates of inferred
mineral resources may not form the basis of feasibility or pre-feasibility
studies. Investors are cautioned not to assume that all or any part of an
inferred mineral resource exists or is economically or legally mineable.
Accordingly, information contained in this report and the
documents incorporated by reference herein containing descriptions of the
Corporations mineral deposits may not be comparable to similar information made
public by U.S. companies subject to the reporting and disclosure requirements
under the United States federal securities laws and the rules and regulations
thereunder.
ANNUAL INFORMATION FORM
The Corporations Annual Information Form for the year ended
December 31, 2007 is filed as Document 1 and incorporated by reference in this
annual report on Form 40-F.
AUDITED ANNUAL FINANCIAL STATEMENTS AND
MANAGEMENTS
DISCUSSION AND ANALYSIS
Audited Annual Financial Statements
The audited consolidated financial statements of the
Corporation for the years ended December 31, 2007, 2006 and 2005, including the
report of the Independent Registered Chartered Accountants with respect thereto,
are filed as Document 2 and incorporated by reference in this annual report on
Form 40-F. For a reconciliation of important differences between Canadian and
U.S. GAAP, see Note 18 of the Corporations audited consolidated financial
statements.
Managements Discussion and Analysis
Managements Discussion and Analysis of Financial Condition and
Results of Operations is filed as Document 3 and incorporated by reference in
this annual report on Form 40-F.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
At the end of the period covered by this report, an evaluation
of the effectiveness of the design and operations of the Corporations
disclosure controls and procedures (as such term is defined in Rule 13a-15(e)
of the Exchange Act) was carried out by the Corporations principal executive
officer and principal financial officer. Based upon that evaluation, the
Corporations principal executive officer and principal financial officer have
concluded as of the end of the period covered by this report that the design and
operation of the Corporations disclosure controls and procedures are effective
at the reasonable assurance level to ensure that information required to be
disclosed by the Corporation in reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in Commission rules and forms, and is accumulated and
communicated to management, including the Corporations principal executive
officer and principal financial officer, to allow timely decisions regarding
required disclosures.
Notwithstanding the foregoing, because of the inherent
limitations in all control systems, no evaluation of controls can provide
absolute assurance that the Corporations disclosure controls and procedures
will detect or uncover every situation involving the failure of persons within
the Corporation and its subsidiaries to disclose material information otherwise
required to be set forth in the Corporations periodic reports. The
Corporations disclosure controls and procedures are designed to provide
reasonable assurance of achieving their objective of ensuring that information
required to be disclosed in the reports that the Corporation files or submits
under the Exchange Act is communicated to management to allow timely decisions
regarding required disclosure.
Management Report on Internal Control Over Financial
Reporting
Management of the Corporation is responsible for establishing
and maintaining adequate internal control over financial reporting, and has
designed such internal control over financial reporting to provide reasonable
assurance regarding the reliability of financial reporting and preparation of
financial statements for external purposes in accordance with Canadian GAAP,
including a reconciliation to U.S. GAAP.
Management has used the Internal Control Integrated Framework
to evaluate the effectiveness of internal control over financial reporting,
which is a recognized and suitable framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
Because of the inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Corporations internal control over
financial reporting as of December 31, 2007, excluding NewWest Gold Corporation
because it was acquired by the Company during 2007. NewWest Gold Corporations
total assets and total net income represent $217.3 million or 50.9% of the
consolidated total assets and less than 1% of consolidated net income of the
Company, respectively as at and for the year ended December 31, 2007.
Registrants are permitted to exclude acquisitions from their assessment of
internal control over financial reporting during the first year if, among other
circumstances and factors, there is not adequate time between the consummation
date of the acquisition and the assessment date for assessing internal controls.
As a result, management concluded that the Corporations internal control over
financial reporting were effective as at that date.
The Corporations independent registered public accounting
firm, PricewaterhouseCoopers LLP, has issued an opinion on the effectiveness of
the Corporations internal control over financial reporting as of December 31,
2007. The report can be found in the Independent Auditors Report included in
the Corporations financial statements for the years ended December 31, 2007 and
2006 and is incorporated herein by reference.
Mark ODea, Chief Executive Officer
Sean Tetzlaff, Chief
Financial Officer
Changes in Internal Control Over Financial Reporting
During the period covered by this report, no changes occurred
in the Corporations internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the
Corporations internal control over financial reporting.
NOTICES PURSUANT TO REGULATION BTR
There were no notices required by Rule 104 of Regulation BTR
that the Corporation sent during the year ended December 31, 2007 concerning any
equity security subject to a blackout period under Rule 101 of Regulation BTR.
The Corporations Board of Directors is responsible for the
Corporations corporate governance policies and has separately designated
standing Compensation, Governance and Nominating and Audit Committees. The
Corporations Board of Directors has determined that all the members of the
Compensation, Governance and Nominating and Audit Committees are independent,
based on the criteria for independence and unrelatedness prescribed by Section
10A(m)(3) under the Exchange Act and Section 121 of the AMEX Company Guide.
Additionally, only independent members of the Board participate in the
nomination of individuals for election to the Board. Finally, the Board of
Directors has determined that a majority of its members are independent
directors under Section 121 of the AMEX Company Guide. Such independent
directors are Oliver Lennox-King, George Bell, Jo Mark Zurel, Donald McInnes,
Scott Hand and Lyle Hepburn.
AUDIT COMMITTEE AND FINANCIAL EXPERTS
The Corporations Board of Directors has a
separately-designated standing Audit Committee for the purpose of overseeing the
accounting and financial reporting processes of the Corporation and audits of
the Corporations annual financial statements. As of the date of this annual
report on Form 40-F, the members of the Audit Committee are Messrs. Zurel, Bell
and McInnes.
The Corporations Board of Directors has determined that the
Corporation has more than one audit committee financial expert, as defined in
Form 40-F. The Corporations Board of Directors has determined that its audit
committee financial expert, Jo Mark Zurel, is independent within the meaning
of corporate governance standards of the American Stock Exchange (AMEX)
applicable to the Corporation.
The Corporations Audit Committee complies with the corporate
governance requirements as prescribed by the Toronto Stock Exchange (the TSX).
The TSX requirement is that the Audit Committee be composed only of directors
who are independent under Multilateral Instrument 52-110 Audit Committees (MI
52-110), being directors who are free of any material relationship with the
Corporation. The Corporations Board of Directors has determined that all of the
members of the Corporations Audit Committee are independent pursuant to MI
52-110.
CODE OF ETHICS
The Corporation has adopted written codes of ethics for its
directors and employees and entitled Directors Code of Ethics, Code of
Business Conduct and Ethics and Code of Ethics for Senior Financial Officers
(collectively, the Codes) The Codes include, among other things, written
standards for the Corporations principal executive officer, principal financial
officer and principal accounting officer or controller, or persons performing
similar functions that are required by the Commission for a code of ethics
applicable to such officers. A copy of the Codes are posted on the Corporations
website at
www.fronteergroup.com
under
Investor Centre / Corporate Governance.
No amendments to the Codes were adopted during the year ended
December 31, 2007. No waiver or implicit waiver, as such terms are defined
in the Form 40-F, were granted relating to any provision of the Codes during the
year ended December 31, 2007.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
PricewaterhouseCoopers LLP has served as the Corporations
auditing firm since June 8, 2004. Aggregate fees billed to the Corporation for
professional services rendered by PricewaterhouseCoopers LLP and its affiliates
during the fiscal years ended December 31, 2007 and 2006 are detailed below
(stated in Canadian dollars):
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Fiscal 2007
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Fiscal 2006
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Audit Fees
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$185,314
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$68,387
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Audit-Related Fees
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$ Nil
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$ Nil
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Tax Fees
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$34,703
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$ 29,955
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All Other Fees
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$13,728
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$ 21,696
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Total Fees
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$233,745
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$120,038
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The nature of each category of fees is as follows:
Audit Fees
:
Audit fees were paid for professional services rendered by the
auditors for the audit of the Corporations annual consolidated financial
statements, reviews of the Corporations interim financial statements and
attestation services provided in connection with statutory and regulatory
filings or engagements, including the Corporations filing of a short-form
prospectus offering of units in 2007 and 2006.
Audit-Related Fees
:
Audit-related fees were paid for assurance and related services
that are reasonably related to the performance of the audit or review of the
Corporations financial statements and are not reported under the Audit Fees
item above. During the fiscal years ended December 31, 2007 and 2006, there were
no audit-related fees.
Tax Fees
:
Tax fees were paid for tax compliance, tax advice and tax
planning professional services. During the fiscal years ended December 31, 2007
and 2006, the services provided in this category included the tax structuring of
acquisitions and tax compliance, including the preparation of original tax
returns, assistance with completing routine tax schedules and calculations, and
tax planning and advisory services relating to common forms of domestic and
international taxation.
All Other Fees
:
Other fees were paid for accounting, advisory and consulting
services primarily related to due diligence reviews of potential acquisitions
and training with respect to the Sarbanes-Oxley Act of 2002 requirements and
fees paid with respect to work on the Newwest Gold Corporation (Newwest)
management information circular sent to the shareholders of Newwest.
Pre-Approval Policies and Procedures
:
All services to be performed by the Corporations auditor must
be approved in advance by the Audit Committee. The Audit Committee has
considered whether the provision of services other than audit services is
compatible with maintaining the auditors independence and has adopted a policy
governing the provision of these services. This policy requires the pre-approval
by the Audit Committee of all audit and non-audit services provided by the
external auditor, other than any
de minimis
non-audit services allowed by
applicable law or regulation.
Pre-approval from the Audit Committee can be sought for planned
engagements based on budgeted or committed fees. No further approval is required
to pay pre-approved fees. Additional pre-approval is required for any increase
in scope or in final fees.
Of the total aggregate fees paid by the Corporation to its
accountants during the fiscal year ended December 31, 2007, $nil, or 0% of the
aggregate fees, were approved by the Audit Committee pursuant to the
de
minimis
exception provided by Section (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X.
OFF-BALANCE SHEET ARRANGEMENTS
The Corporation has approximately $1,700,000 in standby Letters
of Credit for the completion of reclamation on its mineral properties in the
USA. These standby letters of credit are backed, in the most part by
Certificates of Deposits.
The Corporation has no other off-balance sheet
arrangements.
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
Contractual obligations of the Corporation are filed as
Document 4 and incorporated by reference in this annual report on Form 40-F.
AMEX CORPORATE GOVERNANCE
The Corporations common shares are listed on AMEX. Section 110
of the AMEX Company Guide permits AMEX to consider the laws, customs and
practices of the foreign issuers country of domicile in relaxing certain AMEX
listing criteria, and to grant exemptions from AMEX listing criteria based on
these considerations. A Corporation seeking relief under these provisions is
required to provide written certification from independent local counsel that
the non-complying practice is not prohibited by home country law. A description
of the significant ways in which the Corporations governance practices differ
from those followed by domestic companies pursuant to AMEX standards is as
follows:
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Shareholder Meeting Quorum Requirement
: The AMEX minimum quorum
requirement for a shareholder meeting is one-third of the outstanding common
shares. In addition, a Corporation listed on AMEX is required to state its
quorum requirement in its bylaws. The Corporations quorum requirement as set
forth in its bylaws is two persons entitled to vote at a meeting of
shareholders whether present in person or represented by proxy.
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Proxy Delivery Requirement
: AMEX requires the solicitation of
proxies and delivery of proxy statements for all shareholder meetings, and
requires that these proxies shall be solicited pursuant to a proxy statement
that conforms to Commission proxy rules. The Corporation is a foreign private
issuer as defined in Rule 3b-4 under the Exchange Act and Rule 405 under the
Securities Act, and the equity securities of the Corporation are accordingly
exempt from the proxy rules set forth in Sections 14(a), 14(b), 14(c) and
14(f) of the Exchange Act. The Corporation solicits proxies in accordance with
applicable rules and regulations in Canada.
The foregoing are consistent with the laws, customs and
practices in Canada.
UNDERTAKING
The Corporation undertakes to make available, in person or by
telephone, representatives to respond to inquires made by the Commission staff,
and to furnish promptly, when requested to do so by Commission staff,
information relating to: the securities registered pursuant to Form 40-F; the
securities in relation to which the obligation to file an annual report on Form
40-F arises; or transactions in said securities.
CONSENT TO SERVICE OF PROCESS
The Corporation filed an Appointment of Agent for Service of
Process and Undertaking on Form F-X on March 27, 2007, with respect to the class
of securities in relation to which the obligation to file this annual report on
Form 40-F arises. The Form F-X is incorporated herein by reference.
Any further change to the name or address of the agent for
service of process of the Corporation shall be communicated promptly to the
Commission by an amendment to the Form F-X referencing the file number of the
Corporation.
DOCUMENTS FILED AS PART OF THIS ANNUAL REPORT
EXHIBIT INDEX
SIGNATURES
Pursuant to the requirements of the Exchange Act, the
Registrant certifies that it meets all of the requirements for filing on Form
40-F and has duly caused this annual report on Form 40-F to be signed on its
behalf by the undersigned, thereunto duly authorized.
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FRONTEER DEVELOPMENT GROUP
INC.
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By:
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/s/ Mark ODea
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Name: Mark ODea
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Title: President and Chief
Executive Officer
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By:
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/s/ Sean Tetzlaff
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Name: Sean Tetzlaff
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Title: Chief Financial Officer
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Date: March 27, 2008
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