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Fronteer Gold (FRG - TSX/NYSE Amex) announces
financial results, company milestones and project highlights for the year
ended, and months subsequent to, December 31, 2010.
MILESTONES
- On
February 3, 2011, we announced that Fronteer
Gold and its wholly owned subsidiary Pilot Gold Inc., entered into an
agreement with Newmont Mining Corporation, pursuant to which Newmont
will indirectly acquire, by way of a court approved plan of
arrangement (the "Arrangement"), all of the issued and
outstanding shares of Fronteer. Under
the Arrangement, each Fronteer Gold
shareholder will receive $14.00 in cash and 0.25 of a common share of
Pilot Gold (after a one-for-four share consolidation of Pilot Gold)
for each common share of Fronteer Gold.
Following completion of the Arrangement, former Fronteer
Gold shareholders will own approximately 80.1% of Pilot Gold. The remaining
19.9% will be owned by Newmont.
Pursuant
to the Arrangement, Newmont will acquire all of Fronteer
Gold's mineral property interests in Nevada with the exception of eleven
exploration properties which will be owned by Pilot Gold. In addition,
Pilot Gold will own Fronteer Gold's assets and
operations in Turkey and Fronteer Gold's
investment in common shares and share purchase warrants of Rae Wallace
Mining Company and an option to acquire an interest in two Peruvian
properties owned by Rae Wallace. In addition Pilot Gold will be capitalized
with approximately $9,640,000 in funding (representing $10,000,000 less any
cash payments anticipated to be made by Fronteer
Gold for the Turkish joint venture operations from the date the Arrangement
was announced to the effective date of the Arrangement).
The Arrangement has been
approved by the Board of Directors of Fronteer
Gold and is subject to approval by two-thirds of the votes cast by holders
of Fronteer Gold common shares and Fronteer Gold options, voting as a single class, at a
special meeting of Fronteer Gold Securityholders scheduled for March 30, 2011.
- In
2010, Fronteer Gold solidified its gold
focus through three milestone transactions:
o Completed the sale of our 40%
interest in the Agi Dagi
and Kirazli projects in Turkey to Alamos Gold
Inc. in January 2010.
o Completed the acquisition of AuEx Ventures Inc., consolidating 100% ownership of our
flagship Long Canyon project, a high-quality gold asset, and creating a
dominant position in the Pequop Gold District.
o Entered into an Asset Sale Agreement
under which Paladin Energy Ltd. agreed to acquire 100% of the uranium
assets of Aurora Energy Resources Inc., crystallizing significant value and
establishing a well-funded pathway to gold production. This
transaction closed February
1, 2011.
PROJECT HIGHLIGHTS
- Throughout
2010, we continued to advance our three key gold projects in Nevada
toward production, with the following highlights:
- At Long Canyon, completed
a 70,000-metre drill program and, subsequent to year-end, announced
an interim resource that increased the Measured and Indicated
(M&I) resource by 700,000 ounces at 38% higher grade, and
increased the Inferred resource by 250,000 ounces at 36% higher
grade. We also completed the purchase of the Big Springs Ranch
("BSR") which secured additional surface and water rights
and should help speed up the completion of development activities.
o At Northumberland, metallurgical work
demonstrated mineralization can be processed with good recoveries using
proven treatment methods, while drilling further defined and extended
near-surface high-grade gold mineralization. We also commenced construction
of a 280-metre long decline to access high-grade mineralization within the
deposit.
o At Sandman, activities were extended
well beyond Southeast Pediment and Silica Ridge deposits to the North Hill
deposit and a property-wide exploration program. Newmont continued to meet
all earn-in obligations in advance of a potential production decision by
June 2011.
- Demonstrated
significant potential at our Halilaga
porphyry project in Turkey, including one hole returning 646.5-metres
of continuous copper-gold mineralization, the longest interval to
date.
- Refined
our early-stage portfolio, creating value through several
joint-venture agreements and property sales.
SELECTED
FINANCIAL DATA
The following selected financial data are derived
from our financial statements for the fiscal years ended December 31, 2010
and 2009.
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(Expressed in
thousands of Canadian dollars, except per share amounts)
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Year Ended December 31
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2010
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2009
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Earnings (loss)
for year
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(19,894)
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$15,361
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Basic and diluted
earnings (loss) per share
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($0.16);($0.16)
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$0.14; $0.13
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Cash invested in
mineral properties
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$33,597
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$23,925
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Cash generated by
financing activities
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$4,808
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$1,549
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Cash, cash
equivalents and short-term deposits
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$105,084
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$147,312
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Working capital
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$97,878
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$144,493
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Equity investment in
Turkish Properties
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$3,087
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$13,530
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Total assets
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$886,283
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$521,184
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Shareholders' equity
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$704,367
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$464,927
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For the year ended December 31, 2010, we incurred
a net loss of $19.9 million, or $0.16 per share, while for the year ended
December 31, 2009, we had net income of $15.4 million, or $0.14 per
share. Contributing to the change year over year was a large increase
in operating expenses due to a write-down on the Corporation's Zaca property of $33.6 million, offset by a gain
recognized on the sale of the Company's Agi Dagi and Kirazli properties
in Turkey of $18.7 million.
Operating expenses totaled $59.3 million for 2010,
up 116.28%, as compared to $27.4 million for 2009. Increases in
property write-downs, wages and benefits, stock-based compensation and
investor relations, promotion and advertising expenses as compared to 2009,
offset by decreases in professional fees and property investigation costs
accounted for the difference.
At December 31, 2010, we had cash and short-term
deposits on our balance sheet of $105.1 million and working capital of
$97.9 million as compared to cash and short-term deposits of $147.3 million
and working capital of $144.5 million at December 31, 2009. The
decrease in cash and short-term deposits and working capital of $42.2
million and $46.6 million, respectively, is primarily due to cash outflows
for our acquisitions of AuEx and Nevada Eagle
Resources Ltd. totaling $35.2 million, cash outflows for the purchase of
common share and warrant investments of $36.8 million, cash outflows for
the purchase of land, property and equipment of $7.6 million, cash outflows
for exploration expenditures (net of recoveries) of $25.8 million and cash
used in operations of $14.8 million. These outflows
were offset by cash received on the exercise of employee stock options of
$4.8 million and on the sale of Turkish properties and other investments of
$37.0 million and $37.4 million respectively.
On February 1, 2011, we closed a transaction under
which Paladin acquired 100% of the uranium assets of Aurora. Under the
terms of the Agreement, Fronteer Gold received
52.1 million common shares of Paladin, valued at approximately $261
million.
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, 2010. These documents can be found on the Company's
website (http://www.fronteergroup.com) and on SEDAR and EDGAR. Further
information on the Company can be obtained from our Annual Information Form
("AIF") for the year ended December 31, 2010, available on SEDAR
at www.sedar.com. 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.
For further information on Fronteer Gold, visit www.fronteergold.com or contact:
Mark
O'Dea, President & CEO
Sean Tetzlaff, CFO, VP Finance & Corporate
Secretary
Patrick Reid, Senior Director, Institutional Marketing
Phone 604-632-4677 or Toll Free 1-877-632-4677
info@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, potential type of mining operation and timing and size of
exploration and development programs 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 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.
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