VANCOUVER, BRITISH COLUMBIA (TSX: FRG)(AMEX: FRG) reports its
financial and operating results for the year ended December 31,
2007. Details of the Company's financial results are described in
the audited consolidated financial statements and Management's
Discussion and Analysis for the year ended December 31, 2007.
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. Fronteer will be hosting
its annual general meeting on May 6, 2008 in Toronto, Ontario.
Overview
Fronteer is a gold-focused exploration and development company
committed to discovering and advancing big deposits with strong
production potential. The Company has an interest in several major
gold and copper-gold projects throughout Nevada and northwest
Turkey. Among its large portfolio of precious metal mineral rights
in Nevada, the company's key projects include Northumberland, one
of the largest undeveloped Carlin-style gold deposits in the
region; Long Canyon, a discovery defining an entirely new gold
trend; and, Sandman, a property which Newmont Mining Corporation
has agreed to advance to a production decision within 36 months. In
Turkey, Fronteer has built and retained a 40% interest in a new
mineral belt that includes two robust gold deposits and a third
deposit boasting all the hallmarks of a world-class copper-gold
porphyry in terms of size and grade. Fronteer also has a 42.3%
interest in Aurora Energy Resources Inc. ("Aurora") (TSX: AXU), a
Canadian uranium company.
Highlights of the year include:
- In December 2007, the Company granted Teck Cominco's Turkish
subsidiary ("TCAM"), an extension to December 31, 2008 on its
election whether to earn an additional 10% interest in the Halilaga
property. To earn the additional 10% interest in Halilaga, TCAM
must notify Fronteer before December 31, 2008, that it intends to
complete a feasibility study within four years of the notification
date. If a production decision is made, TCAM will use its best
efforts to arrange project debt financing for at least 60% of the
capital costs and offer to loan Fronteer the remaining equity
component of project financing at commercial lending rates. If TCAM
fails to complete a feasibility study within four years from the
notification date, its ownership percentage in Halilaga will remain
at 60%. TCAM has agreed to solely fund a US$3,000,000 exploration
program on Halilaga in 2008, in exchange for the extension.
- On September 24, 2007, the Company completed the acquisition
of NewWest Gold Corporation ("NewWest"). The Company issued
15,181,920 Common Shares with a value of $160,017,437 in exchange
for 100% of the issued and outstanding shares of NewWest. NewWest
has one of the most strategic precious metal exploration portfolios
assembled in Nevada with a pipeline of 19 projects covering
approximately 620,000 acres. The Company believes that there is
significant potential for further discovery and resource expansion
and future production potential on these projects. This transaction
provides an excellent fit with Fronteer's business model of
providing the opportunity of high returns by making large
discoveries and growing organically.
- In July and August 2007, TCAM completed the earn back on the
Company's Kirazli, Agi Dagi and Halilaga gold and copper-gold
deposits in northwest Turkey. As a result, the Company now owns 40%
of each of these properties. The Company will develop Agi Dagi and
Kirazli together with TCAM, on a 40%/60% basis, while the Company
awaits TCAM's decision in December 2008, regarding earning back on
an additional 10% of Halilaga.
- On March 15, 2007, the Company closed a short-form prospectus
offering (the "Offering") to sell 4,498,000 common shares
(including overallotment) at a price of $14.75 per share, raising
gross proceeds of $66,345,500.
- During the second quarter of 2007, Fronteer made two
additional investments in Latin American Minerals Inc. ("LAT"). The
Company acquired 900,000 common shares from an existing shareholder
at a price of $0.45 per share in April 2007. In May 2007, Fronteer
purchased 2,000,000 units offered by LAT at a price of $1.00 per
unit. Each unit was comprised of one common share and one-half of a
common share purchase warrant. Each whole warrant entitles Fronteer
to acquire one common share of LAT at a price of $1.25 for a period
of 12 months. As at December 31, 2007, Fronteer owned 17.4% of the
issued and outstanding common shares of LAT. Subsequent to year
end, Fronteer sold its common share investment in LAT for gross
proceeds of $5,336,500 resulting in an overall cash profit of
$1,562,950.
Exploration Projects
Exploration and acquisition expenditures, net of recoveries for
the year ended December 31, 2007 and 2006 totalled $907,559 and
$4,266,412 in Turkey, $480,827 and $1,267,475 in Mexico, and
$5,246,273 and $2,624,285 in the Yukon, Canada, respectively. The
Company has also expended $1,781,905 on its properties in the USA
from the date of acquisition of NewWest on September 24, 2007 up to
December 31, 2007.
Operations
Selected Financial Data
This summary of selected financial data should be read in
conjunction with the Management Discussion and Analysis
("MD&A") of the financial position and operating results of the
company for the twelve months ended December 31, 2007 and 2006 and
the audited consolidated financial statements and related notes for
the same period.
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Year Ended December 31
2007 2006
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Earnings for year $ 20,374,741 $ 15,011,639
Basic and diluted earnings per share $ 0.29; $0.28 $ 0.27; $0.25
Cash invested in mineral properties $ 8,309,527 $ 6,298,162
Cash generated by financing activities $ 68,909,573 $ 48,003,046
Cash and cash equivalents $ 99,039,334 $ 40,391,913
Marketable securities (at cost) (1) -- $ 3,536,397
Working capital $ 96,903,057 $ 43,338,290
Investment in Aurora (2) $ 76,696,684 $ 37,508,155
Investment in Turkish Properties (3) $ 12,957,378 --
Total assets $ 426,437,437 $ 102,311,386
Shareholders' equity $ 366,849,777 $ 99,364,065
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(1) The market value for marketable securities at December 31, 2006, was
$4,177,285.
(2) The Company accounts for its investment in Aurora using the equity
method of accounting. At December 31, 2007, the Company owns 42.3%
(2006-47.2%) of Aurora. Total market capitalization of Aurora at
December 31, 2007, was approximately $989.7 million (2006 - $887.5
million).
(3) The Company began to account for its investments in the Agi Dagi,
Kirazli and Halilaga projects as an equity accounted investment in
2007. The Company owns 40% of three TCAM subsidiaries. All exploration
properties and deferred exploration expenditures relating to these
properties have been re-classed to Investment in Turkish Properties
during the year.
The Company's net income before discontinued operations for the
year ended December 31, 2007 was $20,374,741 or $0.29 per share
compared to net income before discontinued operations of
$15,015,635 or $0.27 for year ended December 31, 2006. Contributing
to the year-over-year differences was the recognition of increased
dilution gains on the Company's investment in Aurora, and an
increase in interest income earned on cash reserves. Offsetting the
increases in other income were year over year increases in
operating expenses such as stock-based compensation expense,
property investigation costs, wages and benefits expense, investor
relations and promotion expenses, office and general expenses,
legal fees, listing and filing fees and accounting and audit
fees.
The Company recognized a dilution gain of $43,039,000 for the
year ended December 31, 2007 as compared to a dilution gain of
$26,489,773 for the year ended December 31, 2006. The Company
recognizes a dilution gain when its interest in Aurora is reduced
as Aurora issues additional shares. It represents the fair value of
the Company's share of the consideration paid by new investors in
Aurora, in excess of the amount that the carrying value of the
Company's investment in Aurora is reduced. In 2007, Aurora raised
gross funds of $111,672,000 by way of a bought deal financing at
prices in excess of those raised in 2006, resulting in an increase
in the dilution gain realized.
Stock-based compensation expense for the year ended December 31,
2007 increased to $8,732,286 from $3,035,209 for the year ended
December 31, 2006. Stock-based compensation expense is comprised of
the fair value of stock options granted to employees, directors and
consultants that vest in the period. The increase is directly
attributable to approval by shareholders of new option grants at
the May 2, 2007, annual general meeting in conjunction with
approval of a new option plan.
On September 24, 2007, the Company completed the acquisition of
100% of the issued and outstanding shares of NewWest 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. Based upon the September 24, 2007, balance sheet
of NewWest, the allocation of the purchase price, is summarized in
the table below:
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 212,052,383
Asset retirement obligations - current (503,268)
Asset retirement obligations - long term (746,450)
Other liabilities (1,012,132)
Future income tax liability (50,977,821)
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164,522,634
---------------------------------------------------------
Liquidity
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.
The Company has no debt. The only long-term lease commitments
are the operating leases for the Company's office premises and
equipment totaling $2,220,996 over the next four years. The Company
also has long term reclamation obligations recorded totaling
$765,479.
At December 31, 2007, the Company had cash on its balance sheet
of $99,039,334 and working capital of $96,903,057 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 $58,647,421 and
$53,564,767, respectively, is primarily due to the receipt of gross
proceeds of $66,345,500 from the March 2007 prospectus financing
and the exercise of stock options and warrants during 2007, offset
by cash exploration expenditures of $8,309,527 and cash used in
operations of $3,371,807 during the year.
ABOUT FRONTEER
Fronteer is an exploration and development company with a track
record of making big discoveries. Fronteer has a 40% interest in
three excellent gold and copper-gold projects in western Turkey, an
extensive portfolio of advanced stage gold projects in Nevada, and
a 42.3% 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. The above contains
forward-looking statements that are subject to a number of known
and unknown risks, uncertainties and other factors that may cause
actual results to differ materially from those anticipated in our
forward-looking statements. Such factors include, among others,
risks related to international operations, the actual results of
current exploration activities, changes in project parameters as
plans continue to be refined, future prices of metals, economic and
political instability in Turkey and Mexico, 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 the
Company's latest Annual Information Form and Form 20-F on file with
the Canadian Securities Commissions and United States Securities
and Exchange Commission. Although the Company 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. 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.
Accordingly, readers should not place undue reliance on
forward-looking statements.
NEWS RELEASE 08-10
Contacts: Fronteer Development Group Inc. Mark O'Dea, Ph.D,
P.Geo President and CEO (604) 632-4677 or Toll Free: 1-877-632-4677
Fronteer Development Group Inc. Glen Edwards Director of
Communications (604) 632-4677 or Toll Free: 1-877-632-4677 Fronteer
Development Group Inc. Sean Tetzlaff Chief Financial Officer (604)
632-4677 or Toll Free: 1-877-632-4677 Email: info@fronteergroup.com
Website: www.fronteergroup.com
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