Frontera Copper Provides Update on Operations
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Toronto and Phoenix, AZ - July 21, 2008 - Frontera Copper Corporation
(FCC: TSX, FCC.NT, FCC. NT.A: TSX) today provided an update on the Piedras
Verdes operations.
Second Quarter
2008 Operating Highlights
- Copper cathode sales of 9.9
million pounds
- Average cash cost of $2.36
per pound
- Closing cash balance of
$19.4 million
During the second quarter of 2008, the Piedras Verdes
operations produced 9.8 million pounds and sold 9.9 million pounds of
"LME Grade A" quality copper cathode compared to production and
sales of 9.9 million pounds of copper during the first quarter of 2008.
Preliminary 2008 second quarter cash costs were $2.36 per pound, a decrease
of $0.78 per pound from the 2008 first quarter cash costs of $3.14 per pound
reflecting lower acid costs.
New operating plans have been developed that project production in the second
half of 2008 will be above the first half of 2008 levels, gradually
increasing to full production during the third quarter of 2009. A key
component of these mine plans involves accessing higher grade ores, with
improved leaching characteristics, in the eastern areas of the mine.
Opportunities exist for near term production increases. During the first half
of July, as a result of improved recoveries, an average of 55 TPD of copper
cathode have been plated compared to the average of 49 TPD in the second
quarter of 2008.
The Company's cash balance on June 30, 2008 was $19.4 million. During the
quarter, cash decreased by $10 million primarily reflecting the payment of $9
million of 2008 Mexican tax installments. Consistent with Mexican tax laws,
the Company expects to receive a refund of these 2008 installments during the
early part of 2009, since it is not expected to be in cash taxable position
in Mexico for the 2008 fiscal year. The Company also expects to receive a
refund of taxes paid in respect of the 2007 tax year of approximately $6
million in the second half of 2008.
The Company is currently generating positive cash flows and expects that
based on its current operating plans and at current copper prices it should
be generating positive cash flows for the remainder of the 2008. The
Company's current remaining hedge program consisting of 16.6 million pounds
sold forward at an average price of $2.58 is scheduled to be completed in the
first quarter of 2009. Completion of the hedge program will allow the Company
to fully participate in the robust copper market that we are currently
experiencing.
The Piedras Verdes operation is continuing to receive acid from its primary
supplier at contracted prices, despite the ongoing labor strike at the
supplier's major mining operation, however, it is receiving less than optimum
levels of acid for its current operating situation. Previously-announced ore
cutoff and leaching strategies have enabled the operation to minimize acid
consumption and avoid purchasing high cost sulfuric acid in the spot market
during second quarter of 2008.
The rate of copper recovery from the leach pads continues to be slower than
originally expected. The slower recovery is largely due to sub-optimal leach
solution chemistry, stemming from shortfalls in acid supplies, which started
in the second half of 2007. Consequently, while the acid-soluble copper is
recovering well, a portion of the copper contained in the leach pad requires
more balanced solution chemistry over a longer period of time, in order to be
liberated. Once acid deliveries return to required levels, the Company
believes that the expected improvements in copper transferred to solution
will require one or two quarters to be achieved.
The Company is very pleased to report that the workforce at Piedras Verdes
recently accomplished two million man hours without a lost time accident.
ABOUT FRONTERA COPPER CORPORATION
Frontera Copper is a Canadian mining, development and exploration company
whose principal activity is the production of copper cathode from the Piedras
Verdes run-of-mine heap-leach copper operation in Sonora, Mexico. Based on
the January 1, 2008 ore reserves and the estimated recoverable copper
contained on the leach pads at December 31, 2007, approximately 1 billion
pounds of copper is projected to be produced over the remaining 17-year life
of the operation.
For further information, please see Frontera Copper's website at
www.fronteracopper.com or contact:
Rod Prokop
Vice President, Investor Relations
(602) 424-5483
ir@fronteracopper.com
Alan Edwards
President and Chief Executive Officer
(602) 424-5488
Information in this news release that
is not current or historical factual information may constitute
forward-looking information or statements within the meaning of applicable
securities laws. Implicit in this information, particularly in respect of
statements as to future operating results and economic performance of the
Company, and resources and reserves at the Piedras Verdes operations, are
assumptions regarding projected revenue and expense, copper prices and mining
costs. These assumptions, although considered reasonable by the Company at
the time of preparation, may prove to be incorrect. Readers are cautioned
that actual results are subject to a number of risks and uncertainties,
including risks relating to general economic conditions and mining
operations, and could differ materially from what is currently expected. 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.
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