Fronteer Gold Inc. (TSX: FRG)(NYSE Amex: FRG) announces financial
results for the three and six months ended June 30, 2010 and
provides a brief update on our gold projects and corporate
activities. All amounts are in Canadian dollars, unless otherwise
stated.
"We continue to reach new milestones as we advance our gold
projects in Nevada toward our production goal," says Fronteer Gold
President and CEO Mark O'Dea. "In the second quarter, we have
further strengthened our development team; added new high-grade
gold intercepts at all three of our key Nevada gold projects;
reported a significant increase in the resource at Long Canyon;
accelerated development activities; and increased our growth
pipeline with the acquisition of Nevada Eagle Resources. At the
same time, we have maintained our strong financial position. We are
also optimistic about the value yet to be fully realized at our
Halilaga copper-gold porphyry in Turkey and Michelin uranium
project in Labrador that will further fuel our gold growth."
HIGHLIGHTS
-- Cash and short-term deposits at June 30, 2010, totaled $182.0 million,
up 23.6% from $147.3 million at December 31, 2009, while long term
investments decreased to $5.8 million or 65.3% from $16.7 million at
December 31, 2009;
-- Recorded net income of $8.3 million or $0.07 per share for the six
months ended June 30, 2010, compared to a net loss of $4.0 million or
$0.04 per share for the six months ended June 30, 2009;
-- Continued advancing our three key gold projects in Nevada, with the
following highlights:
-- At Northumberland, drilling has further defined and extended near-
surface high-grade gold mineralization. Work is on schedule to begin
construction in the third quarter of a 280-metre long decline to
access high-grade mineralization within the deposit, with completion
targeted for early 2011;
-- At Long Canyon, a new resource estimate shows an 81% increase in
Measured and Indicated ounces and a 17% increase in Inferred ounces
compared to the 2009 resource. Drilling continues to intersect wide
intervals of high-grade oxide gold to the northeast extension of the
deposit.
-- At Sandman, a new Exploration Plan of Operations has been approved,
significantly increasing the area permitted for exploration and
development work to 39 square miles. Newmont continues to intersect
high-grade, near-surface oxide gold, and has begun to drill test up
to eight new high-priority targets;
-- Strengthened our development and operations team with the hire of a
Director of Mineral Resources to help oversee our gold and copper-gold
projects in Nevada and Turkey;
-- Acquired Nevada Eagle Resources LLC, adding interests in 52 properties
in total, including 44 gold properties to our sizeable gold-growth
platform in Nevada;
-- Reported that drilling continues to intersect significant widths of
copper-gold mineralization at our Halilaga porphyry project in Turkey.
Additional drilling to expand and better define this early-stage
porphyry deposit is underway with results to be reported in the third
quarter;
-- Completed a local survey in Labrador in 2010 that indicates the majority
of residents support moving the Michelin uranium project to the formal
regulatory process. Discussions continue with potential partners for the
financing and development of the Michelin project.
UPDATE ON NEVADA DEVELOPMENT PROJECTS
Fronteer Gold continued to make progress on its key gold
development projects in the first quarter of 2010.
Northumberland, Nevada, USA
Northumberland is a large Carlin-type gold deposit located on
private lands owned by Fronteer Gold. For the second quarter of
2010, we spent $1.6 million at Northumberland. The original budget
has been increased by $4.0 million to $8.4 million to fund the
construction of a decline and accelerate the project timeline.
Metallurgical work is also continuing to optimize recoveries and
minimize projected capital and operating costs. Engineering and
mining studies also are underway. Additional drilling on
near-surface high-grade targets proximal to the existing resource
has returned some of the highest grade gold intervals ever
intersected at this project. A decline to access high-grade
mineralization within the deposit is also scheduled to begin in the
third quarter, with completion targeted for early 2011. Once these
activities are completed, we plan to complete a preliminary
economic assessment.
Long Canyon, Nevada, USA
Long Canyon is a high-grade gold deposit that remains open in
multiple directions. A $19.8 million development and exploration
program is underway to move the project to the pre-feasibility
stage as soon as possible. Project expenditures for the first half
of 2010 were $7.2 million. Our share of these expenditures, net of
joint venture recoveries of $3.4 million, was $3.8 million. During
the second quarter, we announced an updated independent resource
estimate consisting of a Measured and Indicated (M&I) resource
of 672,000 ounces at an average grade of 1.71 g/t gold (12,240,000
tonnes) and, an additional Inferred resource of 552,000 ounces at
an average grade of 1.65 g/t gold (10,394,000 tonnes). The 2010
work-program includes detailed mining and engineering studies,
environmental baseline monitoring, as well as approximately 45,000
metres of infill and exploration drilling.
Sandman, Nevada, USA
Sandman is a high-grade epithermal gold system under option to
Newmont USA Ltd. During the second quarter of 2010, Newmont USA,
expended approximately US$750,000 at Sandman. Newmont's planned
expenditure for 2010 is US$3 million, with an additional $3 million
remaining to be spent by June 2011 in order to fulfill their
earn-in obligations. As of June 30, 2010, Newmont USA has spent
approximately US$10 million at Sandman. 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.
During the second quarter, the Winnemucca Bureau of Land Management
approved an expanded Exploration Plan of Operations for the Sandman
property, significantly increasing the area permitted for
exploration and development work from two square miles to 39 square
miles. Drill results reported in second quarter continue to
highlight near-surface, high-grade oxide gold mineralization,
demonstrating the strength of this mineralized system. Newmont has
also begun drill testing up to eight new targets. The exploration
and development program for 2010 focuses on the Silica Ridge and
North Hill deposits, and includes geotechnical and metallurgical
work.
ACQUISITION OF NEVADA EAGLE RESOURCES
In the second quarter, we acquired 100% of Nevada Eagle
Resources, LLC for $4.8 million. Through this transaction, we add
an additional 52 property interests (44 in Nevada), either wholly
owned, subject to lease or joint venture or royalty interests.
These properties have added significantly 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 inflows from the
portfolio in 2010 are US$437,000, in addition to shares in certain
partner companies. Plans to explore certain of these projects are
being developed.
GLOBAL PROJECTS
Halilaga, Turkey
Beyond Nevada, our top exploration priority is Halilaga in
Turkey. Drilling to date shows that Halilaga is a significant
copper-gold porphyry system. The project is proximal to excellent
infrastructure and located in an active mining jurisdiction. A $2.7
million drill program is currently underway. The program includes
10,000 metres of core drilling, with 8,500 metres of drilling
planned for the Central zone in 17 holes, and the remainder planned
for targets outside the Central zone. Assuming sufficient drilling
has been completed, 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. We expect initial drill results
from the 2010 work-program will be reported in the third
quarter.
TV Tower, a new high-sulphidation gold system located adjacent
to Fronteer's previously owned Kirazli gold project, will also be
drilled in the third quarter of this year.
Michelin Uranium Project
For the six months ended June 30, 2010, we spent at total of
$0.9 million on the Michelin project. For 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. Project staff has undertaken an extensive community
engagement initiative to build understanding around mining and the
benefits communities can expect to derive from the Michelin
Project. Responses to these community initiatives have been very
positive, with high attendance and growing interest. A survey of a
representative sample of residents from the two towns closest to
the project site was completed in 2010. The survey indicates the
majority of residents support moving the Michelin Project to the
formal regulatory process. In January 2010, the Nunatsiavut
government released its draft Land Use Plan (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. A project registration
document for the Michelin Project continues to be updated in order
to ensure it is ready to be filed with the Federal, Provincial and
Nunatsiavut regulators. Discussions continue with potential
partners for the financing and development of the Michelin
Project.
SELECTED FINANCIAL DATA
The following selected financial data are derived from our
financial statements for the six months ended June 30, 2010 and
2009.
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(Expressed in thousands of Canadian dollars, Six months ended June 30,
except per share amounts) 2010 2009
----------------------------------------------------------------------------
Net income (loss) for the period $8,304 ($3,966)
Basic and diluted earnings (loss) per share $0.07; $0.07 ($0.04); ($0.04)
Cash invested in mineral properties, net of
joint venture recoveries $6,758 $5,028
Cash provided by financing activities $2,544 $75
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(Expressed in thousands of Canadian As at
dollars) June 30, 2010 December 31, 2009
----------------------------------------------------------------------------
Cash, cash equivalents and short-term
deposits 182,006 147,901
Working capital 177,659 144,493
Total assets 544,298 521,184
Long term liabilities 55,450 51,438
Shareholders' equity 483,044 464,927
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For the three and six months ended June 30, 2010, we lost $1.5
million or $0.01 per share and earned $8.3 million, or $0.07 per
share, respectively. For the three and six months ended June 30,
2009, we earned $1.5 million or $0.01 per share and lost $4.0
million, or $0.04 per share, respectively. Contributing to the
change year over year was a net $18.8 million gain on the sale of
the Agi Dagi and Kirazli projects in the first quarter of 2010, a
loss of $1.5 million on the sale of certain portfolio investments,
a modest increase in certain operating expenses, such as stock
based compensation expense, office and general costs, property
investigation costs and the write-down of mineral property costs,
offset by small decreases in wages and benefits expenses and
investor relations, promotion and advertising costs. In addition,
we realized a foreign exchange gain of $0.1 million in 2010
compared to a foreign exchange gain of $2.8 million in 2009.
This press release should be read in conjunction with our
unaudited consolidated financial statements and Management's
Discussion and Analysis as at June 30, 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.
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, timing of exploration and development programs
and size of exploration, development and general and administrative
budgets 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.
NEWS RELEASE 10-26
Contacts: Fronteer Gold Inc. Mark O'Dea President & CEO
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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