Fronteer Gold Inc.

Fronteer Gold Inc.

November 13, 2007 16:43 ET

Fronteer Reports Third Quarter 2007 Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 13, 2007) - Fronteer Development Group Inc. (the "Company" or "Fronteer") (TSX:FRG)(AMEX:FRG) reports its financial and operating results for the three and nine months ended September 30, 2007. Details of the Company's financial results are described in the unaudited consolidated financial statements and Management's Discussion and Analysis ("MDA") for the nine months ended September 30, 2007, available on the Company's website at or on SEDAR at All amounts presented are in Canadian dollars unless otherwise stated.

Selected Financial Data

This summary of selected unaudited financial data should be read in conjunction with the MDA and the unaudited consolidated financial statements and related notes thereto for the periods indicated.

For the three months ended For the nine months ended
September 30, September 30,
2007 2006 2007 2006
Net income (loss) $ (3,868,201) $ (585,003) $ (14,499,061) $ 7,617,871
income $ (6,210,294) $ (585,003) $ (14,875,359) $ 7,617,871
Basic and diluted
earnings (loss)
per share $ (0.06) $ (0.01) $ (0.22) $ 0.14; $0.13
Cash invested in
properties $ 2,998,105 $ 1,618,132 $ 5,716,590 $ 4,604,057
Cash generated
by financing
activities $ - $ 1,383,269 $ 66,435,554 $ 45,681,904

As at
September 30, December 31,
2007 2006
Cash $ 101,830,868 $ 40,391,913
Working capital $ 102,106,445 $ 43,338,290
Investment in Aurora Energy Resources
Inc.(1) $ 34,968,438 $ 37,508,155
Investment in Turkish Properties $ 12,243,199 $ -
Reclamation bonds $ 1,780,343 $ -
Total assets $ 378,891,486 $ 102,311,386
Asset retirement obligations - Current $ 503,268 $ -
Asset retirement obligations - Non
current $ 746,450 $ -
Shareholders' equity $ 325,475,071 $ 99,364,065

(1)Fronteer accounts for its investment in Aurora Energy Resources Inc.
("Aurora") using the equity method of accounting. At September 30, 2007,
the Company owned 46.8% of Aurora compared to 47.2% at December 31,
2006. Subsequent to September 30, 2007, Aurora announced that it has
entered into an agreement to sell an aggregate of 5,312,500 Common
Shares in the capital of Aurora at a price of $16.00 per Common Share
and an aggregate of 750,000 Flow-Through Shares at a price of $20.50 per
Flow-Through Share for aggregate gross proceeds to Aurora of
approximately $100,000,000 on a bought deal basis. The underwriters also
have an option (the "Overallotment Option") to purchase an additional
796,875 Common Shares of Aurora at a price of $16.00 per Common Share
for a period of 30 days from closing. Upon conclusion of this financing,
the Company's ownership in Aurora will be reduced to approximately
42.8%, not including exercise of the Overallotment Option. The financing
is expected to close November 20, 2007.

The Company's net loss for the three months ended September 30, 2007 was $3,868,201 or $0.06 per share compared to a net loss of $585,003 for the three months ended September 30, 2006. The Company's net loss for the nine months ended September 30, 2007 was $14,499,061 or $0.22 per share as compared to net income of $7,617,871 for the nine months ended September 30, 2006. Contributing to the period-over-period differences were increased operating expenses in 2007 versus 2006, such as the recognition of increased stock-based compensation expense (a non-cash expense), property investigation costs, wages and benefits and the write-down of exploration properties in Mexico. Also contributing to the difference was the recognition of smaller dilution gain on the Company's investment in Aurora in 2007 versus 2006 and the recognition of a loss on the Company's financial instruments in 2007.

The Company has also recognized its share of the operating loss of Aurora for the three months ended September 30, 2007 which totaled $644,478 as compared to $1,093,132 for the three months ended September 30, 2006. For the nine months ended September 30, 2007, the Company has recognized its share of the loss, totalling $3,330,044 as compared to $4,357,749 for the nine months ended September 30, 2006. The difference primarily relates to the timing of stock based compensation expense of Aurora.

Business Acquisition

On September 24, 2007, the Company completed the acquisition of 100% of the issued and outstanding shares of Newwest Gold Corporation on the basis of 0.26 shares of the Company for each share of Newwest. The transaction has been accounted for as an acquisition of assets and has resulted in the Company acquiring 19 precious metals exploration properties primarily located in the state of Nevada of the United States.

The transaction was accounted for as an asset purchase and the cost of each item of property, plant and equipment acquired as part of the group of assets acquired was determined by allocating the price paid for the group of assets to each item based on its relative fair value at the time of acquisition. The Company will continue to review the information and perform further analysis with respect to these assets prior to finalizing the allocation of the purchase price by year end. The summarized results of the allocation are indicated in the table below:


Purchase price: $
15,181,920 common shares of Fronteer 160,017,437
518,050 stock options of Fronteer 1,615,416
Acquisition costs 2,889,781

Net assets acquired:
Current assets 3,356,579
Other assets 2,353,343
Exploration properties and deferred exploration expenditures 211,020,431
Current liabilities (1,515,400)
Other liabilities (746,450)
Future income tax liability (49,945,869)

As a result of the acquisition of Newwest, the Company has recorded reclamation bonds of $1,780,343 and recognized an asset retirement obligation of $1,249,718, both of which relate primarily to the Northumberland deposit.


At September 30, 2007, the Company had cash on its balance sheet of $101,830,868 and working capital of $102,106,445 as compared to cash of $40,391,913 and working capital of $43,338,290 at December 31, 2006. The change in cash and working capital of $61,438,955 and $58,768,155 respectively is primarily due to the receipt of gross proceeds of $72,164,308 from the March 2007 financing and exercise of stock options and warrants, offset by exploration expenditures of $5,716,590 and cash used in operations of $1,149,817 during the period.

Exploration Projects

Exploration and acquisition expenditures, net of recoveries for the nine months ended September 30, 2007 and 2006 totalled $635,558 and $2,237,524 in Turkey, $480,578 and $843,936 in Mexico, and $4,036,353 and $2,326,157 in the Yukon, Canada respectively.

Teck Cominco Limited, through its wholly-owned Turkish subsidiary ("TCAM") has conducted all exploration activities on the Agi Dagi, Kirazli, Halilaga and Pirentepe projects, located in the Biga Peninsula of Northwest Turkey, in 2007. In July and August 2007, TCAM notified the Company that it had completed its earn-back expenditures on Kirazli, Agi Dagi and Halilaga, therefore earning a 60% interest in each project. The Company and TCAM now operate each of these projects as a 40/60 joint venture. TCAM may elect to earn an additional 10% interest in each of Agi Dagi and Halilaga, by taking each project to feasibility and carrying Fronteer to production. TCAM must notify the Company of its decision to earn the additional 10% in November, 2007. TCAM has elected not to earn the additional 10% on Kirazli.

As a result of this ownership change, the Company now accounts for its investments in these Turkish assets as equity investments. All costs incurred by the Company on these projects and any related future income tax liability are now netted and recorded on the balance sheet as Investment in Turkish Properties.

The Company and TCAM continue to search for and examine additional properties in the Biga region of Turkey (within a defined area of interest ("AOI")). This agreement will see costs shared on a 60% TCAM, 40% Fronteer basis going forward through November 2008. An airborne geophysical survey has recently been flown over the area, with results now being analyzed. Any new properties identified from this survey for acquisition, if acquired, will immediately be subject to a 60% TCAM 40% Fronteer joint venture.

The Company is also conducting project generative exploration outside of the AOI, in an attempt to identify other properties for acquisition in Turkey. The Company is conducting sampling and geological mapping as well as flying an airborne geophysical survey with an estimated cost of US$476,000, as the means of identifying new properties for acquisition. Costs associated with this program have been expensed to operations during the period.

The Company is completing its 2007, planned 10,000 metre drill exploration program for the Wernecke properties. To September 30, 2007, the Company has incurred expenditures of $4,046,353, net of recoveries from Rimfire Minerals Corporation. A total of 6,520 metres of drilling in 28 holes has been completed to the end of September, over seven different target areas, with assay results pending. The Company completed de-mobilization of its exploration camp in October. Weather issues resulted in drilling delays resulting in fewer metres drilled than planned.

Over the next couple of months, the Company will be analyzing the data from its 2007 exploration programs and will develop its exploration budgets for its newly acquired gold properties in Nevada and its ongoing program in the Yukon. The Company will also work with TCAM to further advance the exploration and development of Agi Dagi, Kirazli and Halilaga.

About Fronteer

Fronteer is an exploration and development company with a track record of making big discoveries. Fronteer has a 40% interest in three world-class gold and copper-gold projects in Turkey, an extensive portfolio of advanced stage gold projects in Nevada, and a 46.8% interest in Aurora Energy Resources (TSX:AXU), a leading Canadian uranium company.

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, size of future exploration budgets and exploration potential, timing of future exploration and timing of TCAM earn-back, 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, 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, silver, copper and uranium, economic and political stability in Turkey, Mexico and Canada, environmental risks and hazards, increased infrastructure and/or operating costs, labor and employment matters, and government regulation 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.

Contact Information

  • Fronteer Development Group Inc.
    Dr. Mark O'Dea
    President and CEO
    (604) 632-4677 or Toll Free: 1-877-632-4677
    Fronteer Development Group Inc.
    Sean Tetzlaff C.A.
    CFO and Corporate Secretary
    (604) 632-4677 or Toll Free: 1-877-632-4677
    Fronteer Development Group Inc.
    Glen Edwards
    Media Relations
    (604) 632-4677 or Toll Free: 1-877-632-4677