Fronteer Gold Inc. (formerly "Fronteer Development Group") (TSX:
FRG)(NYSE Amex: FRG) announces financial results and company
highlights for the three months ended March 31, 2010 and provides a
brief update on project development and corporate activities. All
amounts are in Canadian dollars, unless otherwise stated.
"We continued our steady progress during the first quarter in
advancing our pipeline of gold projects towards production," says
Fronteer Gold President and CEO Mark O'Dea. "We remain firmly
focused on building an enduring gold growth business and made
several key advances in the first quarter of 2010. Development work
progressed at each of our three key Nevada gold projects, and we
continued to see promising results from exploration activities at
our Halilaga copper-gold project in Turkey. At the same time, we
maintain a strong financial position from which to fund the growth
and development of Fronteer Gold."
HIGHLIGHTS
-- Cash and short-term deposits at March 31, 2010, totaled $170.3 million,
up 15% from $147.9 million at Dec. 31, 2009, while long term investments
increased to $22.7 million or 36% from $16.6 million at December 31,
2009.
-- Recorded net income of $9.8 million or $0.08 per share for the quarter
ended March 31, 2010, compared to a net loss of $5.5 million or $0.06
per share for the quarter ended March 31, 2009.
-- Completed the sale of our 40% interest in the Agi Dagi and Kirazli gold
deposits in Turkey, to Alamos Gold Inc. for US$16.0 million and
1,600,000 common shares of Alamos (valued at $12.76 per share),
recording a net gain of $18.4 million on the sale.
-- Continued advancing our three key gold projects in Nevada, with the
following highlights:
-- Extended domains of near surface high-grade gold mineralization at
Northumberland. Metallurgical results indicate that sulfide gold can
be processed with good recoveries (up to 87%) using proven treatment
methods.
-- Step-out drilling intersected high-grade, oxide gold mineralization
at Long Canyon, demonstrating the deposit's potential for resource
growth and enhanced project scope.
-- Intersected additional high-grade, near-surface oxide gold at
Sandman. Newmont USA continue to meet earn-in obligations.
-- Strengthened our development and operations team with the hire of a
General Manager for Long Canyon and a Manager of Environmental
Permitting for Nevada.
-- Reported that drilling continues to intersect significant widths of
copper-gold mineralization at our Halilaga porphyry project in Turkey.
In addition, metallurgical test work indicates that the mineralization
responds consistently well to flotation and produced a high-grade
concentrate.
-- Subsequent to March 31, 2010, Fronteer Gold acquired Nevada Eagle
Resources LLC, adding 52 properties in total including 44 gold
properties to our large Nevada growth pipeline.
UPDATE ON DEVELOPMENT PROJECTS
Fronteer Gold continued to make progress on its key gold
development projects in the first quarter of 2010.
Northumberland, Nevada, USA
For the first quarter of 2010, we spent $0.8 million at
Northumberland as compared to a revised budget of $5.2 million
(US$4.9 million) for Northumberland in 2010. The budget was
increased in Q1 to provide for US$756,000 for drilling of
additional high-grade targets. During first quarter we announced
Northumberland sulphide gold mineralization can be processed with
good recoveries using proven treatment methods. We also reported
that drilling has further defined and extended high-grade gold
mineralization, clearly demonstrating the presence of high-grade
gold domains. Work will focus on metallurgical testing to optimize
gold recoveries and minimize capital and operating costs; and
approximately 2,500 metres of drilling to further define and expand
high-grade zones. Engineering and mining studies are also to be
completed.
Long Canyon, Nevada, USA
Our 51% share of project expenditures (including non-cash
expenses, net of joint venture recoveries) for the first quarter of
2010 were $0.4 million. Our share of planned project expenditures
for 2010 is $10.1 million. Drilling resumed in April with two core
rigs and two reverse circulation rigs. We expect to complete
approximately 45,000 metres of drilling in 2010. An updated
independent resource estimate, incorporating approximately 30,000
metres of infill and step-out drilling completed in 2009, is
expected by the end of Q2. In first quarter, we reported that
400-metre step-out drilling continues to intersect high-grade,
oxide gold mineralization, clearly demonstrating the deposit's
potential for resource growth and enhanced project scope. We
continue to optimize the project economics through the evaluation
and completion of a number of other studies for the project
including pit slope evaluations, and an opportunities and risk
analysis. Our objective is to advance the project through to
pre-feasibility as soon as possible.
Sandman, Nevada, USA
During the first quarter of 2010, Newmont USA expended
approximately US$450,000 at Sandman, including the commencement of
a 19-hole drill program on the Silica Ridge deposit. Newmont's
planned expenditure for 2010 is US$3 million. We continue to report
exceptionally high-grade, near-surface gold intercepts at Sandman.
Approval for an expanded Plan of Operations was received in May
2010, which will allow Newmont USA to complete exploration drilling
to test up to eight new targets. Ongoing development drilling and
additional geotechnical and metallurgical work are also expected in
2010. As of March 31, 2010, Newmont USA has spent approximately
US$9.25 million at Sandman out of US$14 million (or 66%) of the
required amount to earn an initial 51% interest. To earn its 51%
interest, in addition to its expenditures, Newmont USA must make a
production decision supported by a bankable feasibility study by
June 2011.
Subsequent event - Nevada, USA
Subsequent to March 31, 2010, we acquired 100% of Nevada Eagle
LLC which owned various mineral interests in Nevada, for US$4.75
million. Through this transaction, we added 44 gold properties to
our large Nevada growth pipeline, reinforcing a commitment to
creating value in a jurisdiction that is at the very heart of the
company's operations. The portfolio currently generates positive
cash-flow from existing lease and option payments. Estimated cash
flow from the portfolio in 2010 is US$437,000, in addition to
shares in certain partner companies.
GLOBAL PROJECTS
Halilaga, Turkey
Beyond Nevada, our top exploration property is Halilaga in
Turkey. In the first quarter, we announced mineralized samples
responded consistently well to flotation and produced a high-grade
concentrate. We also announced significant widths of copper-gold
from recent drilling that extended mineralization over a strike
length of 1,200 metres and a width of 400 metres, with thicknesses
ranging up to 400 metres. A $2.7 million drill program has been
planned for 2010 at Halilaga. Drilling is expected to commence in
May. We also anticipate completing a project first resource
estimate by year-end. Our 40% share of the Phase I costs are
approximately $1.1 million.
Michelin Uranium Project
During the first quarter of 2010, we spent at total of $0.6
million on the Michelin project. In January, the Nunatsiavut
government released its draft LUP for public comment. The LUP
outlines a mechanism for the approval of major mining projects,
including uranium, on Nunatsiavut land. The LUP indicates that the
Michelin and Jacques Lake deposits are within areas that can be
designated for mining. In 2010, we have a development budget of
$3.3 million which will focus on finalizing tailings management
options, infrastructure design studies, ongoing environmental
baseline studies and continuing community consultation.
SELECTED FINANCIAL DATA
The following selected financial data are derived from our
financial statements for the three months ended March 31, 2010 and
2009.
---------------------------------------------------------------------------
(Expressed in thousands of Canadian Three months ended March 31,
dollars, except per share amounts) 2010 2009
---------------------------------------------------------------------------
Net income (loss) for the period $9,758 $(5,452)
Basic and diluted earnings (loss) per
share $0.08; $0.08 ($0.06); ($0.06)
Cash invested in mineral properties,
net of joint venture recoveries $1,591 $1,427
Cash provided (used) by financing
activities $503 ($146)
---------------------------------------------------------------------------
(Expressed in thousands of Canadian As at
dollars) March 31, 2010 December 31, 2009
---------------------------------------------------------------------------
Cash, cash equivalents and short-term
deposits 170,294 147,901
Working capital 167,765 144,493
Total assets 538,790 521,184
Long term liabilities 54,163 51,438
Shareholders' equity 480,727 464,927
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For year three months ended March 31, 2010, we earned $9.8
million, or $0.08 per share, while for the three months ended March
31, 2009, we lost $5.5 million, or $0.06 per share. Contributing to
the change year over year was an $18.4 million gain on the sale of
the Agi Dagi and Kirazli projects, a loss of $3.7 million on the
sale of certain portfolio investments, an increase in stock based
compensation expense, wages and benefits and property investigation
costs and the write-down of mineral property costs. In addition, we
realized a foreign exchange gain of $1.1 million as a result of a
weakening US dollar compared to a foreign exchange loss of $1.3
million in the prior year.
This press release should be read in conjunction with our
unaudited consolidated financial statements and Management's
Discussion and Analysis as at March 31, 2010. These documents can
be found on the Company's website (http://www.fronteergold.com) and
on SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar.shtml.
Shareholders may receive a copy of the complete unaudited financial
statements free of charge upon request.
SHAREHOLDERS APPROVE NAME CHANGE
Subsequent to March 31, 2010, the Company filed articles of
amendment under the Business Corporations Act (Ontario) to change
its name to "Fronteer Gold Inc." The name change was approved by
our shareholders at an annual and special meeting held on May 7,
2010 and took effect on May 10, 2010 following the filing of
articles of amendment. We believe the name change better reflects
our strategic vision and business goal of becoming a gold
producer.
At the opening of business on Thursday, May 13, 2010, trading
will continue in the common shares on both the TSX and NYSE-Amex
under the new name. There will be no change to the stock symbol.
The new CUSIP number is 359032 10 9 and the new ISIN is
CA3590321095.
ABOUT FRONTEER GOLD
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 Gold visit www.fronteergold.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 Gold 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 Gold's Annual
Information form and Fronteer Gold's latest Form 40-F on file with
the United States Securities and Exchange Commission in Washington,
D.C. Although Fronteer Gold 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 Gold 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 Gold Inc. Mark O'Dea President & CEO
604-632-4677 or Toll Free: 1-877-632-4677? Fronteer Gold Inc. Troy
Fierro COO 604-632-4677 or Toll Free: 1-877-632-4677? Fronteer Gold
Inc. Sean Tetzlaff CFO 604-632-4677 or Toll Free: 1-877-632-4677?
Fronteer Gold Inc. John Dorward VP, Business Development
604-632-4677 or Toll Free: 1-877-632-4677? Fronteer Gold Inc. Glen
Edwards Director, Communications 604-632-4677 or Toll Free:
1-877-632-4677? www.fronteergold.com
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