Fronteer (TSX: FRG)(NYSE Amex: FRG) announces financial results and
company highlights for the year ended December 31, 2009, and
provides a brief update on project development and corporate
activities.
"Fronteer finished 2009 in a very strong position" says Fronteer
President and CEO Mark O'Dea. "We have built the required operating
capability, management structure and financial strength to advance
our three gold projects in Nevada towards production. The necessary
building blocks are in place to achieve our goals. Our 2010 global
budget - including exploration and development activities, and
capital, general and administrative costs - represents less than
20% of our available liquid assets. We are well-funded to advance
our gold development projects and maintain flexibility to pursue
other value opportunities that may arise."
2009 HIGHLIGHTS
- Earned $15.4 million or $0.14 per share for 2009 including $7.4 million or
$0.07 per share for the quarter ended December 31, 2009.
- Cash and short term deposits at December 31, 2009 totaled $147.3 million,
up 81.9% from $81.0 million in the prior year (Current cash and short-term
deposits as of March 29, 2010 is $168.1 million, in addition to available
for sale securities with a fair value of approximately $22.9 million).
- Sold our 40% interest in the Agi Dagi and Kirazli gold deposits in Turkey,
to Alamos Gold Inc. ("Alamos") for US$16.0 million and 1,600,000 common
shares of Alamos (The transaction was completed in January 2010).
- Recognized a significant gain on an equity portfolio investment, resulting
in cash proceeds of $11.8 million on the sale of shares. Subsequent to
year-end, we recognized further net proceeds of $9.8 million on the
exercise of warrants and sale of shares of the same company.
- Hired a Chief Operating Officer and a Vice President, Business
Development.
- Completed an initial resource estimate and positive preliminary economic
assessment for the Long Canyon gold deposit.
- Delineated high-grade gold domains and received positive metallurgical
results at Northumberland gold deposit.
- Continued to report exceptionally high-grade, near-surface gold intercepts
from ongoing drilling by Newmont USA at Sandman.
- Completed a positive preliminary economic assessment for the Michelin
Project that supports a financially robust open-pit and underground
uranium mining operation.
- Completed a share-exchange acquisition to increase our ownership of Aurora
Energy Resources Inc. to 100%.
UPDATE ON DEVELOPMENT PROJECTS
Fronteer made progress on its key gold development projects in
2009 and will be making further significant steps in 2010.
Northumberland, Nevada, USA
In 2009, we invested $3.8 million at Northumberland to delineate
high-grade domains and conduct key metallurgical work. Results
indicated that Northumberland mineralization can be processed with
good recoveries using proven treatment methods. An initial budget
of $4.4 million has been allocated for 2010. Work will focus on:
metallurgical testing to optimize gold recoveries and minimize
capital and operating costs; ongoing drilling to further define and
expand additional high-grade zones; and engineering and mining
studies. Once these activities are completed, we plan to complete a
preliminary economic assessment.
Long Canyon, Nevada, USA
At Long Canyon, Fronteer's project expenditures (including
non-cash expenses) for 2009 totaled $8.4 million mainly for 30,000
metres of exploration and infill drilling, metallurgical testing,
and the purchase of surface and water rights for the project. A
$19.8 million development and exploration program (funded 49% by
our joint venture partner) is planned for 2010 to move the project
to the pre-feasibility stage. The 2010 work-program will include
detailed mining and engineering studies, as well as approximately
45,000 metres of infill and exploration drilling. An updated
resource estimate, incorporating 2009 drill results, will also be
completed by the end of the second quarter.
Sandman, Nevada, USA
During 2009, Fronteer's joint venture partner Newmont USA spent
approximately US$5.8 million on the project for development,
exploration and land acquisitions. Newmont USA completed 9,000
metres of drilling, with results continuing to highlight
near-surface, high-grade oxide gold mineralization. Newmont USA
also conducted metallurgical work, and hydrological and
geotechnical studies. Our joint venture partner continues to meet
earn-in obligations and can elect to make a positive production
decision by June 2011.
Beyond Nevada, our top exploration priority is Halilaga in
Turkey, where our joint-venture partner plans a $2.7-million drill
program to expand and define a copper-gold porphyry deposit. We
believe that drilling to date demonstrates that Halilaga has many
of the hallmarks of a significant copper-gold system in terms of
its size and grade potential.
In April 2009, Fronteer completed the acquisition of 100% of the
common shares of Aurora, and in September Aurora completed a
preliminary economic assessment that supports a financially robust
open-pit and underground mining operation at Aurora's Michelin
Project in Labrador. In December, we announced an independent
Economic Impact Assessment indicating the project would generate,
in part, benefits of $2.9 billion in income, $1.82 billion in tax
revenues and 31,200 person years of employment to the communities
and governments of Nunatsiavut and Newfoundland and Labrador. In
2010, Aurora will continue to work with communities and groups in
Labrador, advance environmental baseline studies, and update
project registration documents for the Michelin project.
Our 2010 global budget, inclusive of exploration, development,
capital and general and administrative costs, calls for
expenditures by Fronteer of approximately $38.1 million, which
represents less than 20% of our current cash, short term deposits
and available for sale securities balance. We do not anticipate any
problems in funding our budgeted expenditures. The budget does not
include expenditures for acquisitions or opportunities, currently
unforeseen that may arise during the year.
For our material gold projects, 2009 actual and 2010 anticipated
cash exploration and development expenditures are summarized in the
following table:
Fronteer's share of 2009 actual expenditures and anticipated 2010 cash
expenditures for priority gold projects
---------------------------------------------------------------------------
Actual Budgeted
expenditures expenditures
for 2009 for 2010 Fronteer
Project Minerals ($ millions) ($ millions)(4) ownership%
---------------------------------------------------------------------------
Northumberland, NV Gold 3.8 4.4 100%
---------------------------------------------------------------------------
Long Canyon, NV (1) Gold 8.4 10.1 51%
---------------------------------------------------------------------------
Sandman, NV (2) Gold 0.3 0.3 95%
---------------------------------------------------------------------------
Halilaga, Turkey (3) gold,
copper 0.0 1.1 40%
---------------------------------------------------------------------------
Total 12.5 15.9
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1. For Long Canyon, the 2010 budget amount excludes amounts for possible
additional surface and water right acquisitions.
2. For Sandman, Fronteer's share of the exploration expense is
insignificant because of a funding agreement with Newmont Mining Company
("Newmont"). The amount listed as Fronteer's share is for activities
such as joint venture monitoring, attending joint venture meetings and
legal expenses. Newmont has not yet advised us of their budget for
Sandman in 2010.
3. For Halilaga, our actual 2009 costs are insignificant because of a
funding agreement with our joint venture partner, a subsidiary of Teck
Resources Ltd.
4. Actual budget amounts in US$ converted to CDN$ at an exchange rate of
$1.06. Planned expenditures do not include potential acquisition of land
and water rights.
SELECTED FINANCIAL DATA
The following selected financial data are derived from our
financial statements for the fiscal years ended December 31, 2009
and 2008.
---------------------------------------------------------------------------
(Expressed in thousands of Canadian dollars, Year Ended December 31
except per share amounts) 2009 2008
---------------------------------------------------------------------------
Earnings (loss) for year $15,361 $(31,709)
Basic and diluted earnings (loss) per share $0.14; $0.13 ($0.38);($0.38)
Cash invested in mineral properties $23,925 $17,077
Cash generated by financing activities $1,549 $407
Cash, cash equivalents and short-term deposits $147,312 $81,035
Working capital $144,493 $78,419
Equity investment in Aurora $- $74,946
Equity investment in Turkish Properties $13,530 $13,255
Total assets $521,184 $403,519
Shareholders' equity $464,927 $338,535
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At December 31, 2009, we had cash and short-term deposits on our
balance sheet of $147.3 million and working capital of $144.5
million as compared to cash and short-term deposits of $81.0
million and working capital of $78.4 million at December 31, 2008.
The change in cash and short-term deposits and working capital of
$66.3 million and $66.1 million, respectively, is primarily due to
our acquisition of and consolidation of Aurora and its financial
results since March 3, 2009, offset by cash exploration
expenditures (net of recoveries) $17.1 million and cash used in
operations of $13.1 million. At March 29, 2010, we have cash and
short term deposits of approximately $168.1 million and available
for sale securities with a fair value of approximately $22.9
million.
For year ended December 31, 2009, Fronteer earned $15.4 million
or $0.14 per share while for the year ended December 31, 2008, it
lost $31.7 million or $0.38 per share. For the quarter ended
December 31, 2009, Fronteer earned $7.4 million or $0.07 per share,
compared to a loss of $19.0 million or $0.23 per share during the
same quarter in 2008.
Contributing to the change year over year was a foreign exchange
gain in 2009 due to the weakening US$ compared to a large foreign
exchange loss in 2008, a larger future income tax recovery in 2009
and the realization of gains on the revaluation of financial
instruments and the sale of long term investments. Offsetting these
gains was an increase in operating expenses due mainly to the
acquisition of Aurora.
Operating expenses totaled $27.4 million for 2009 up 3.0% as
compared to $26.6 million for 2008. The reasons for the overall
increase was an increase in wages and benefits costs, office and
general expenses, professional fees and investor relations expense,
offset by a reduction in write-downs of exploration properties and
deferred exploration expenditures, stock-based compensation expense
and property investigation expense.
This press release should be read in conjunction with Fronteer's
audited consolidated financial statements and Management's
Discussion and Analysis for the year ended December 31, 2009. These
documents can be found on the Company's website
(http://www.fronteergroup.com) and on SEDAR and EDGAR. The
company's 40-F has been filed with the SEC and is also available on
the company's website. Shareholders may receive a hard copy of the
complete audited financial statements free of charge upon request.
All amounts are presented in Canadian dollars unless otherwise
stated. Fronteer will be hosting its annual general meeting on May
7, 2010, in Toronto, Ontario.
ABOUT FRONTEER
We intend to become a significant gold producer. Our solid
financial position and strong operational team give us the ability
to advance our key gold projects through to production. Our future
potential production platform includes our Long Canyon, Sandman and
Northumberland projects - all located in Nevada, one of the
friendliest gold-mining jurisdictions in the world. For further
information on Fronteer visit www.fronteergroup.com.
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, 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 10-12
Contacts: Fronteer Mark O'Dea, Ph.D, P.Geo President and CEO
604-632-4677 or Toll Free 1-877-632-4677 Fronteer Troy Fierro COO
604-632-4677 or Toll Free 1-877-632-4677 Fronteer Glen Edwards
Director, Communications 604-632-4677 or Toll Free 1-877-632-4677
info@fronteergroup.com www.fronteergroup.com
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