Fronteer Development Group Inc. (TSX: FRG)(NYSE Amex: FRG) today
disclosed financial and operating results for the three and six
months ended June 30, 2009. Details are described in the unaudited
consolidated financial statements and Management's Discussion and
Analysis for the same periods, available on SEDAR at
http://www.sedar.com. Further details on each of Fronteer's
projects and activities can also be found on the Company's website:
http://www.fronteergroup.com. All amounts are presented in Canadian
dollars unless otherwise stated.
First half 2009 highlights
- Cash, cash equivalents and short term deposits at June 30,
2009 totaled $159.1 million
- Increased measured and indicated gold resources by 5%
- Increased inferred gold resources by 16%
- Promising drill results from two priority US gold projects
- Completed a share-exchange acquisition of Aurora Energy
Resources Inc.
Liquidity
At June 30, 2009, we had cash, cash equivalents and short-term
deposits on our balance sheet of $159.1 million and working capital
of $158.0 million as compared to cash, cash equivalents and
short-term deposits of $81.0 million and working capital of $78.4
million at December 31, 2008. The change in cash, cash equivalents
and short-term deposits and working capital of $78.1 million and
$79.6 million, respectively, is primarily due to our acquisition of
and commencement of consolidation of Aurora and its financial
results since March 3, 2009, offset by cash exploration
expenditures of $5.0 million (net of $2.5 million in recoveries)
and cash used in operations of $8.0 million.
Resource increase
During the first half of 2009, our measured and indicated gold
resources increased 5% to 3.7 million ounces, and our inferred gold
resources increased 16% to 1.7 million ounces. The increases were
entirely attributable to an initial resource estimate for the Long
Canyon project in Nevada, in which we have a 51% interest.
The initial Long Canyon resource estimate is summarized in the
following table. Michael Gustin, Ph D, P. Geo, Senior Geologist
with Mine Development Associates of Reno, Nevada, is the qualified
person responsible for the NI 43-101-compliant resource estimate.
We disclosed details of the estimate by news release dated March
13, 2009 and in a technical report dated April 24, 2009, both of
which are filed on SEDAR.
Summary of initial resource estimate: Long Canyon(1)
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Contained
Tonnes g Au/tonne oz Au/ton gold (oz)
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Indicated 4,808,000 2.35 0.069 363,000
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Inferred 8,780,000 1.63 0.048 459,000
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(1) The estimate is quoted at a cut-off grade of 0.30 grams per
tonne gold.
Outlook
Our three priority US gold projects are Long Canyon, Sandman
(100%-owned), and Northumberland (100%-owned), all in Nevada.
Through Aurora, we have the Michelin uranium project (100%-owned)
in Labrador. We operate of all of these projects except
Sandman.
We expect to disclose a preliminary economic assessment for Long
Canyon by year end 2009 and an updated resource estimates in 2010
for Long Canyon and Sandman. For Northumberland, we have tentative
plans to complete a scoping study in 2011 that would provide
initial estimates for project economics. For the Michelin uranium
project, before the end of 2009 we expect to disclose a preliminary
economic assessment with initial estimates for project
economics.
At present, we have no revenue-producing operations. At the end
of 2009, absent an acquisition or other initiatives, we expect to
have approximately $141.4 million in cash, cash equivalents and
short term deposits, compared with $159.1 million as at June 30,
2009. For the second half of 2009, we expect to spend approximately
$17.7 million, absent new initiatives. This includes planned
exploration and related project spending by Fronteer of
approximately $15 million for all projects (net of contributions by
joint venture partners) and approximately $2.7 million on other
expenses and asset acquisitions, net of interest income.
Priority gold project review
At Long Canyon, our 51% share of project expenditures (which
includes non-cash expenses) totaled $2.4 million in the first half
of 2009, mainly for 7,000 metres of exploration and infill
drilling, and metallurgical testing. For the second half of 2009,
we expect our share of project cash expenditures will total $8.5
million, including 30,000 metres of additional drilling and the
acquisition of additional surface and water rights. During the
first half we disclosed results from column leach testing of bulk
samples from Long Canyon road cuts. The results further confirmed
that the oxidized gold mineralization at Long Canyon is amenable to
low-cost, conventional, heap-leach processing. Exploration drilling
encountered an additional gold zone, called the Syncline Zone,
while the infill drilling intersected more wide intervals of
high-grade mineralization in the Discovery Zone where the
established resource is located. The metallurgical holes have been
very encouraging and continue to demonstrate the strong continuity
and high-grade nature of gold mineralization.
At Sandman, project operator Newmont USA spent approximately
US$3.1 million, completing 62 drill holes totaling 6,700 metres and
conducting preliminary metallurgical work. The budget for the
second half of 2009 is US$1.9 million and includes an additional 20
to 25 holes, or approximately 2,500 metres. We disclosed during the
second quarter the results from Newmont's first 37 drill holes in
the 2009 program. Drilling encountered encouraging mineralization
and established good grades and continuity in two deposits,
approximately six kilometres apart. Newmont USA has the right to
earn an initial 51% interest in Sandman by June 2011 by spending a
minimum US$14.0 million on exploration, making a production
decision supported by a bankable feasibility study, and other
conditions. As at June 30, 2009, Newmont USA has spent US$6.5
million on the property, or 46% of the required amount to earn its
initial interest.
At Northumberland, our first half of 2009 project expenses
totaled $1.5 million and were focused on acquiring adjacent rights,
preparing an application to build a 280-metre decline, and other
activities, including environmental testing and metallurgical
testing as part of a multi-phase metallurgical program. The budget
for the second half of 2009 is $2.6 million, mainly for permitting
and engineering expenses related to the decline, further
metallurgical work, identifying preferred mine development options,
regional target generation and minor reclamation.
Acquisition of Aurora
On March 2, 2009, we acquired control of 92.1% of the issued and
outstanding shares of Aurora by issuing 30,134,229 common shares at
a price of $2.90. As a result of our significant shareholding in
Aurora, we began to consolidate 100% of the financial results of
Aurora. In a second step transaction, we acquired the remaining
issued and outstanding shares of Aurora on April 21, 2009 in return
for a further 4,806,661 of our shares.
For May and June, the first two months that we owned 100% of
Aurora, it spent approximately $1.7 million on exploration and
development on the Michelin uranium project. For the second half of
2009, we expect that Aurora will spend a further $1.2 million
before allowing for the $1.5 million in performance bonds that will
be refunded to us either in the fourth quarter of 2009 or the first
quarter of 2010. Aurora's pilot plant leaching and resin-in-pulp
extraction tests at the Michelin project produced promising
results, as disclosed during the second quarter of 2009. The
results strongly support the project's viability and production
potential, including a predicted yield averaging 87.5% uranium
recovery from the project's two mineralized deposits. Tailings test
results meet Canadian environmental standards.
Selected financial data
This summary of selected financial data should be read in
conjunction with the Management Discussion and Analysis
("MD&A") and the unaudited consolidated financial statements
and related notes thereto for the periods indicated.
--------------------------------------------------
(Unaudited) For the (Unaudited) For the
three months ended six months ended
In millions, except June 30, June 30, June 30, June 30,
per share 2009 2008 2009 2008
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Net income (loss) $1.5 ($1.4) ($4.0) ($7.6)
Total comprehensive
income (loss) $3.5 ($1.4) ($2.0) ($12.4)
Basic and diluted
earnings (loss)
per share $0.01 ($0.02) ($0.04) ($0.09)
Weighted average
shares outstanding
(basic/diluted) 117.6/122.3 83.2/83.2 105.5/105.5 83.2/83.2
Cash invested in
mineral properties $5.3 $3.5 $7.6 $5.8
Cash generated by
financing activities $0.2 - $0.1 $0.1
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For the three months ended June 30, 2009, we earned $1.5 million
or $0.01 per share compared with a loss of $1.4 million or $0.02
per share a year earlier. For the six months ended June 30, 2009,
we lost $4.0 million or $0.04 per share, compared with a loss of
$7.6 million or $0.09 per share a year earlier.
We have no revenue producing operations. The Company had net
income of $1.5M for the three months ended June 30, 2009 due to a
future income tax recovery of $1.5M (a non-cash item). Operating
expenditures incurred by the Company were offset by other income
earned by the Company, which consists of foreign exchange gains or
losses, interest income, equity income from equity investments and
changes in fair value of financial instruments. In prior periods,
operating expenditures have exceeded other income earned by the
Company and any future income tax recoveries.
About Fronteer
Fronteer is an exploration and development company with three
key gold projects in Nevada forming its platform for future gold
production. Fronteer also has a 40% interest in three gold and
copper-gold projects in western Turkey, and 100% ownership of
Aurora Energy Resources, a private subsidiary advancing a
world-class uranium district in Labrador, Canada.
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
size of exploration budgets and timing of exploration programs,
potential sale of Turkish assets, timing of bond recovery,
potential size of mineralized zone, and size of exploration program
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 and joint ventures, 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 and silver,
environmental risks and hazards, increased infrastructure and/or
operating costs, labor and employment matters, and government
regulation and permitting requirements 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.
NEWS RELEASE 09-26
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. Richard Moritz Director, Investor
Relations 604-632-4677 or Toll Free 1-877-632-4677 Fronteer
Development Group Inc. Glen Edwards Director, Communications
604-632-4677 or Toll Free 1-877-632-4677 info@fronteergroup.com
www.fronteergroup.com
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