SOURCE: Frontera Copper Corporation

October 09, 2008 08:00 ET

Frontera Copper Announces Higher Copper Production and Lower Cash Costs for the Third Quarter of 2008; Reaches Agreement With Its Primary Acid Supplier on Contractual Delivery Volumes and Pricing for 2008

TORONTO and PHOENIX, AZ--(Marketwire - October 9, 2008) - Frontera Copper Corporation (TSX: FCC) (TSX: FCC.NT) (TSX: FCC.NT.A) today provided an update on the Piedras Verdes operations.

Third Quarter 2008 Highlights

--  Copper cathode production of 11.5 million pounds
--  Average cash cost of $1.65 per pound
--  Closing cash balance of $23.5 million
--  Extended safety record to 2.3 million consecutive man-hours without a
    lost time accident
--  Reached agreement with its primary acid supplier regarding contractual
    delivery volumes and pricing for remainder of 2008
    

Copper cathode production totaled 11.5 million pounds for the quarter ended September 30, 2008, an increase of 1.7 million pounds compared to the second quarter of 2008. Preliminary cash costs for the quarter were approximately $1.65 per pound, compared to cash costs of $2.36 per pound in the second quarter. The higher production and lower cash costs reflect the initial benefits of the new operating plan adopted early in the third quarter, and were achieved despite heavy rainfall during the quarter, particularly resulting from the effects of Tropical Depression Lowell in September.

A key component of the new operating plan involves the accelerated advance to the eastern areas of the mine, where higher grade ores, with improved leaching characteristics in terms of acid consumption and percolation characteristics, are located. These ores represent approximately 70% of the remaining ore reserves of the mine. The advance into the eastern areas of the mine will further support the revised leaching and ore cutoff strategies implemented during the second quarter, which are designed to reduce acid consumption through improved acid utilization and thereby maximize the use of sulfuric acid it receives from its primary acid supplier.

The Company's cash balance on September 30, 2008 was $23.5 million, an increase of $4.1 million during the third quarter. In early September, the Company received a $6.4 million refund of taxes paid in respect of the 2007 tax year. During the early part of 2009, the Company also expects to receive a refund of 2008 tax installments of approximately $9 million, since it is not expected to be in a cash taxable position in Mexico for the 2008 fiscal year.

The Company's remaining hedge program consisting of 10.3 million pounds sold forward at an average price of $2.54 per pound is scheduled to be completed in the first quarter of 2009.

As a result of the Company's continued commitment to safety, the Piedras Verdes operations and its contractors have now accumulated 2.3 million man-hours without a lost time accident, dating back to April 2007.

The Company and its primary acid supplier reached an agreement regarding the volumes and pricing of acid deliveries for the fourth quarter of 2008. Under the agreement, reduced quantities of acid will be delivered at contract prices while the labor disruption at one of the supplier's mines continues. Additional quantities of acid will continue to be available to the Piedras Verdes operations, but at prices higher than those contained in the original acid supply agreement. Discussions on deliveries and pricing for 2009 are continuing and a final agreement is expected in the near future. The Company anticipates that the recent and ongoing discussions with its primary acid supplier will result in higher average acid costs than set forth in the original agreement until production resumes at the supplier's operation affected by the labor disruption.

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.

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.

Contact Information

  • For further information, please see Frontera Copper's website at
    www.fronteracopper.com or contact:

    Rod Prokop
    Vice President, Investor Relations
    (602) 424-5483
    Email Contact

    Alan Edwards
    President and Chief Executive Officer
    (602) 424-5488