SOURCE: Frontera Copper Corporation

March 20, 2008 08:30 ET

Frontera Copper Reports Annual and Fourth Quarter 2007 Results

(All Dollar Amounts Are Expressed in United States Currency Unless Otherwise Noted)

TORONTO--(Marketwire - March 20, 2008) - Frontera Copper Corporation (TSX: FCC) (TSX: FCC.NT) (TSX: FCC.NT.A) today reports financial and operating results for the year and quarter ended December 31, 2007.

2007 Highlights

--  Cash flow from operating activities of $55.7 million
--  Cash and cash equivalents increased by $20.9 million to $54.5 million
--  Earnings of $31.8 million
--  Copper cathode production of 53.7 million pounds
--  Copper cathode sales of 54.1 million pounds
--  Average cash cost per pound of $1.30
--  C$8.9 million paid to repurchase outstanding notes payable
--  Phase II Construction project completed and Phase III leach pad
    construction initiated
--  One million man hours without a time lost accident
    

Alan Edwards, President and Chief Executive Officer, said, "2007 was our first full year of operations at Piedras Verdes and I am pleased to say that we produced and sold approximately 54 million pounds of 'LME Grade A' quality copper cathode at an average cash cost of $1.30 per pound."

Financial Results

(millions of dollars, except per share)


                            2007 Quarters                      Years
                  Dec       Sept      June     March      2007      2006
                --------  --------- --------- --------  --------- --------
Revenues (1)        37.5       50.1      50.8     29.0      167.4     24.6
Net earnings         6.7       10.3       9.8      5.0       31.8     (2.6)
Net earnings
 per share -
 basic              0.11       0.16      0.15     0.08       0.50    (0.05)
Cash flows from
 operating
 activities         (3.1)      23.6      36.3     (1.1)      55.7    (12.1)
Closing cash
 balances           54.5       58.8      48.7     24.4       54.5     33.5
                --------  --------- --------- --------  --------- --------


(1) The Piedras Verdes operations commenced production in October 2006.

Capital expenditures for property, plant and equipment totaled $29.8 million for the 2007 year and $1.3 million in the fourth quarter of 2007, compared to $83.2 million for the 2006 year and $10.2 million in the fourth quarter of 2006.

Results from Operations


                                             2007 Quarters           Year
                                      Dec    Sept    June    March   2007
                                    ------- ------- ------- ------- -------
"LME Grade A" quality
 copper
 cathode (millions of lbs.):
  Produced                             12.3    15.1    15.9    10.4    53.7
  Sold                                 12.6    15.7    15.7    10.1    54.1

Cash costs per pound sold ($):
  (Excluding prepaid royalties)        1.39    1.13    1.10    1.37    1.22
  (Including prepaid royalties)        1.46    1.21    1.18    1.43    1.30

Revenue ($ millions)                   37.5    50.1    50.8    29.0   167.4

Average price per pound:
  Realized ($)                         2.97    3.20    3.23    2.87    3.09
  COMEX ($)                            3.26    3.48    3.46    2.70    3.23
                                    ------- ------- ------- ------- -------

For the year ended December 31, 2007, the Piedras Verdes operations produced 53.7 million pounds of "LME Grade A" quality copper cathode and sold 54.1 million pounds of copper cathode. Average cash costs per pound for 2007, including prepaid royalties, were $1.30. During the fourth quarter of 2007, the Piedras Verdes operations produced 12.3 million pounds of copper cathode and sold 12.6 million pounds of copper cathode. The lower production is primarily the result of the continuing strike at the Company's major supplier of sulfuric acid, which limited the operation to receiving only 75% to 80% of its normal acid requirements during the fourth quarter of 2007. Average cash costs per pound for the fourth quarter of 2007, including prepaid royalties, were $1.46. The higher than planned unit operating costs reflect the lower production levels and the higher cost of acid that was purchased from alternate sources.

Cash and cash equivalents were $54.5 million at December 31, 2007. During the year ended December 31, 2007, cash and cash equivalents increased by $20.9 million and during the fourth quarter of 2007, cash and cash equivalents decreased by $4.4 million. During the year and quarter ended December 31, 2006 cash and cash equivalents decreased by $1.3 million and increased by $26.6 million, respectively.

For the year ended December 31, 2007, cash flows from operating activities were $55.7 million compared to a negative $12.1 million for the year ended December 31, 2006.

The Company will continue to evaluate its operating plans in light of the availability of reasonably priced acid. At current copper prices, the Company's current operating plan indicates positive earnings and cash flows for 2008. This plan is predicated on receiving sufficient acid at acceptable prices to enable the operation to achieve full production.

The Company's December 31, 2007 Financial Statements and Management's Discussion and Analysis have been filed on SEDAR and are available on the Company's website.

On February 25, 2008, Frontera Copper provided an update on operations. The Company will provide a further operations update following completion of the 2008 first quarter. The Company also plans to hold a conference call after it releases its 2008 first quarter results in mid-May.

The Company will be filing an updated Technical Report and its 2007 Annual Information Form on SEDAR later this month.

About Frontera Copper

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.


Frontera Copper Corporation
Consolidated Balance Sheet
US$ (in thousands)

                                                  December 31, December 31,
                                                      2007         2006
                                                   ----------   ----------
                      Assets
Current
     Cash and cash equivalents                         54,479       33,547
     Restricted cash                                        -        1,233
     Accounts receivable                                  705        1,645
     Commodity taxes recoverable                        4,181        5,817
     Inventory                                         24,918       19,511
     Prepaid expenses and deposits                      6,440        5,741
     Future tax asset                                   2,883            -
                                                   ----------   ----------
                                                       93,606       67,494

Restricted cash                                         1,825        1,825
Long-term inventory                                    20,912          813
Long-term deposits                                      1,854            -
Deferred finance charges                                    -          653
Property, plant and equipment                         136,036      118,927
                                                   ----------   ----------

                                                      254,233      189,712
                                                   ==========   ==========
                   Liabilities
Current
     Accounts payable and accrued liabilities          17,547       21,325
     Deferred revenue                                     326            -
     Income taxes payable                              14,501            -
     Derivative instruments                             8,143            -
     Current portion of notes payable                   6,915        6,704
                                                   ----------   ----------
                                                       47,432       28,029

Accounts payable and accrued liabilities                3,197        1,825
Notes payable                                          73,446       65,663
Asset retirement obligation                             4,907        5,235
Derivative instruments                                  3,440            -
Future income taxes                                     7,849          288
                                                   ----------   ----------
                                                      140,271      101,040
                                                   ----------   ----------
              Shareholders' Equity

Capital stock                                         102,807      101,412
Contributed surplus                                     1,174        1,734
Accumulated other comprehensive income                 (7,388)           -
Retained earnings (deficit)                            17,369      (14,474)
                                                   ----------   ----------
                                                      113,962       88,672
                                                   ----------   ----------

                                                      254,233      189,712
                                                   ==========   ==========


Frontera Copper Corporation
Consolidated Statements of Operations
US$ (in thousands except per share amounts)

                                           4th Quarter          Year
                                        ----------------  ----------------
                                          2007     2006     2007     2006
                                        -------  -------  -------  -------
                                           (unaudited)

Revenue                                  37,471   24,639  167,382   24,639

Cost of sales and expenses
     Cost of sales                       18,355   11,237   70,297   11,237
     Depreciation, depletion and
      amortization                        2,530    1,706   10,785    1,706
     Exploration                            191      154      550      154
     Administration                       2,360      278    6,995    8,115
                                        -------  -------  -------  -------
                                         23,436   13,375   88,627   21,212
                                        -------  -------  -------  -------

Other (income) and expenses
     Interest income                       (772)    (159)  (2,180)  (1,627)
     Long-term interest and accretion     3,042    2,958   12,462   10,664
     Foreign exchange loss                  297   (2,588)  11,443      525
     Loss on repurchase of notes
      payable                                 -        -      944        -
     Unrealized losses on derivatives
      contracts                            (406)       -    1,322        -
                                        -------  -------  -------  -------
                                          2,161      211   23,991    9,562
                                        -------  -------  -------  -------

Income (loss) before income taxes        11,874   11,053   54,764   (6,135)
Income taxes                             (5,142)   3,504  (22,921)   3,504
                                        -------  -------  -------  -------
Net income (loss) for the period          6,732   14,557   31,843   (2,631)
                                        =======  =======  =======  =======


Income (loss) per share - Basic            0.11     0.28     0.50    (0.05)
                        - Diluted          0.10     0.27     0.49    (0.05)

Weighted average common shares
    outstanding - Basic                  64,238   52,554   63,976   49,327
                - Diluted                64,963   53,594   64,657   49,327



Frontera Copper Corporation
Consolidated Statements of Retained Earnings (Deficit)
US$ (in thousands)

                                  4th Quarter                Year
                            ----------------------- ----------------------
                               2007        2006        2007        2006
                            ----------- ----------  ----------  ----------
                                  (unaudited)

Retained earnings (deficit),
 beginning of period             10,637    (29,031)    (14,474)    (11,843)

Net income (loss) for the
 period                           6,732     14,557      31,843      (2,631)
                            ----------- ----------  ----------  ----------

Retained earnings
 (deficit), end of period        17,369    (14,474)     17,369     (14,474)
                            =========== ==========  ==========  ==========





Consolidated Statements of Comprehensive Income (Loss)
US$ (in thousands)

                                  4th Quarter                Year
                            ----------------------- ----------------------
                               2007        2006        2007        2006
                            ----------- ----------  ----------  ----------
                                  (unaudited)

Net income (loss) for the
 period                           6,732     14,557      31,843      (2,631)

Unrealized gain (loss) on
 derivatives designated as
 cash flow hedges, (net of
 tax of $(6,571) and $2,873)     16,895          -      (7,388)          -

Tax valuation allowance           9,444          -           -           -
                            ----------- ----------  ----------  ----------
                                 26,339          -      (7,388)          -
                            ----------- ----------  ----------  ----------
Comprehensive income (loss)
 for the period                  33,071     14,557      24,455      (2,631)
                            =========== ==========  ==========  ==========




Frontera Copper Corporation
Consolidated Statements of Cash Flows
US$ (in thousands)

                                    4th Quarter               Year
                                --------------------  --------------------
                                   2007       2006       2007       2006
                                ---------  ---------  ---------  ---------
                                     (unaudited)
Cash flows from operating activities
Net income (loss) for the period    6,732     14,557     31,843     (2,631)
   Items not involving cash:
      Stock-based compensation          -         30          -        121
      Future income taxes             (55)    (3,504)     7,551     (3,504)
      Unrealized foreign exchange     273     (3,137)    11,752       (462)
      Depreciation, depletion and
       amortization                 4,098      1,838     15,011      1,838
      Accretion                       685        938      3,166      2,540
      Write-off of deferred
       finance costs                    -          -        522          -
      Unrealized (gains) losses
       on derivative contracts       (406)         -      1,322          -
      Long term inventory         (16,099)      (813)   (20,099)      (813)
      Long term deposits           (1,854)         -     (1,854)         -
      Loss on note repurchase           -          -        944          -
                                ---------  ---------  ---------  ---------
                                   (6,626)     9,909     50,158     (2,911)

Changes in non-cash working
 capital balances                   3,521     (3,854)     5,581     (9,164)
                                ---------  ---------  ---------  ---------
Cash flows from operating
 activities                        (3,105)     6,055     55,739    (12,075)
                                ---------  ---------  ---------  ---------

Cash flows from investing
 activities
     Property, plant and
      equipment                    (1,344)   (10,241)   (29,765)   (83,209)
     Decrease in restricted
      cash                              -      3,487      1,233     32,555
                                ---------  ---------  ---------  ---------
Cash flows from investing
 activities                        (1,344)    (6,754)   (28,532)   (50,654)
                                ---------  ---------  ---------  ---------

Cash flows from financing
 activities
     Issuance (repurchase) of
      notes                             -          -     (8,385)    22,085
     Exercise of warrants               -     38,438          -     39,815
     Exercise of options               69        145        835        317
     Loan proceeds, net                 -    (11,034)         -       (753)
                                ---------  ---------  ---------  ---------
Cash flows from financing
 activities                            69     27,549     (7,550)    61,464
                                ---------  ---------  ---------  ---------

Effect of exchange rate changes
 on cash                               15       (204)     1,275          4
                                ---------  ---------  ---------  ---------

Change in cash and cash
 equivalents during the period     (4,365)    26,646     20,932     (1,261)

Cash and cash equivalents,
 beginning of period               58,844      6,901     33,547     34,808
                                ---------  ---------  ---------  ---------

Cash and cash equivalents, end
 of period                         54,479     33,547     54,479     33,547
                                =========  =========  =========  =========

Cash and cash equivalents
 consist of:
     Cash                           9,771      6,907      9,771      6,907
     Cash equivalents              44,708     26,640     44,708     26,640
                                ---------  ---------  ---------  ---------

                                   54,479     33,547     54,479     33,547
                                =========  =========  =========  =========

Supplemental information:
     Interest paid                  3,259      4,215      9,164      8,673
     Income taxes paid              1,209          -      1,209          -

Contact Information

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

    Alan Edwards
    President and Chief Executive Officer
    Tel.: 602-424-5488
    Toll-free: 888-323-0973
    Email: Email Contact

    Dave Peat
    Vice President and Chief Financial Officer
    Tel.: 602-424-5484
    Toll-free: 888-323-0973
    Email: Email Contact