SOURCE: Frontera Copper Corporation

November 12, 2008 06:00 ET

Frontera Copper Reports on Financial Results and Operational Performance for the Third Quarter of 2008

TORONTO and PHOENIX, AZ--(Marketwire - November 12, 2008) - Frontera Copper Corporation (TSX: FCC) (TSX: FCC.NT) (TSX: FCC.NT.A) today reported financial results and operational performance for the quarter ended September 30, 2008.

Third Quarter Summary

--  Net earnings of $8.5 million ($0.13 per share basic and diluted)
--  Copper cathode production of 11.5 million pounds
--  Copper cathode sales of 11.4 million pounds
--  Average cash cost of sales of $1.65 per pound
--  Closing cash balance of $23.5 million
--  Reached 2.3 million consecutive man hours without a lost time accident
--  Subsequent event: Temporarily suspended mining activities to ensure
    the Company remains cash flow positive with copper recovered from ores
    previously placed on the leach pads
    

Financial Results
(millions of dollars, except per share)

                                      3Q08   2Q08    1Q08    4Q07     3Q07
                                     ------ ------  ------  ------  -------
Revenues                               31.5   29.9    31.9    37.5     50.1
Net earnings/(loss)                     8.5   (0.9)   (1.2)    6.7     10.3
Net earnings/(loss) per share - basic  0.13  (0.01)  (0.02)   0.11     0.16
Cash flows from operating activities    5.6   (8.9)  (18.5)   (3.1)    23.6
Closing cash balances                  23.5   19.4    29.5    54.5     58.8
                                     ------ ------  ------  ------  -------

Alan Edwards, President and Chief Executive Officer, said, "We are quite pleased with our operational performance during the third quarter. The results clearly demonstrate that the initiatives that were implemented in the past several months would have, under normal circumstances, put us on course to reach full production by the middle of next year. However, our response to the recent decline in copper prices by temporarily suspending mining activities will enable us to generate cash while we await an improvement in copper prices and an eventual return to full production."

For the three months ended September 30, 2008, Frontera Copper reported net earnings of $8.5 million ($0.13 per share basic and diluted), compared to $10.3 million ($0.16 per share basic and diluted) for the three months ended September 30, 2007. Revenues of $31.5 million in the third quarter of 2008 and $50.1 million in the third quarter of 2007 were reduced by $3.7 million and $4.8 million, respectively, due to the effect of the company's copper hedging program. This hedging program is scheduled to be completed during the first quarter of 2009.

Results from Operations

                                          3Q08   2Q08   1Q08   4Q07   3Q07
                                         ------ ------ ------ ------ ------
"LME Grade A" quality copper cathode
 (millions of lbs.):
      Produced                             11.5    9.8    9.9   12.3   15.1
      Sold                                 11.4    9.9    9.9   12.6   15.7

Cash costs per pound sold ($)              1.65   2.36   3.14   1.46   1.21

Revenue ($ millions)                       31.5   29.9   31.9   37.5   50.1

Average price per pound:
      Realized ($)                         2.76   3.02   3.21   2.97   3.20
      COMEX ($)                            3.45   3.80   3.53   3.26   3.48
                                         ------ ------ ------ ------ ------

For the three months ended September 30, 2008, the Piedras Verdes Operations produced 11.5 million pounds and sold 11.4 million pounds of "LME Grade A" quality copper compared to production of 15.1 million pounds and sales of 15.7 million pounds of copper for the three months ended September 30, 2007. For the nine months ended September 30, 2008, the Piedras Verdes Operations produced 31.1 million pounds and sold 31.2 million pounds of copper compared to production of 41.3 million pounds and sales of 41.5 million pounds of copper for the nine months ended September 30, 2007. Average cash costs of sales during the third quarter of 2008 were $1.65 per pound compared to $2.36 during the second quarter of 2008 and $1.21 per pound during the third quarter of 2007. Cash costs during the first nine months of 2008 were $2.35 per pound compared to $1.25 per pound during the first nine months of 2007.

Capital expenditures for the three and nine months ended September 30, 2008 were $1.2 million and $9.2 million, respectively. Capital expenditures for the three and nine months ended September 30, 2008 include $0.7 million and $5.5 million for the Phase 3 leach pad expansion, and $0.5 million and $3.7 million for the purchase of certain land and other projects at the Piedras Verdes Operations, respectively.

Cash and cash equivalents increased by $4.1 million during the three months ended September 30, 2008, primarily reflecting the receipt of a $6.4 million Mexican income tax refund in respect of the 2007 tax year. The Company expects to receive a $7.4 million refund of its 2008 Mexican tax installments in the early part of 2009. The Company has been informed by Mexican tax authorities that it will not be required to pay any additional tax installments during 2008.

As more fully discussed in the Company's Suspension of Mining Activities announcement released earlier this week, the Company is responding to the recent downturn in copper prices by temporarily suspending mining activities at its Piedras Verdes Operations in Mexico. This action will result in the near-term reduction of approximately 100 employees at Piedras Verdes, not including people who are employed by the Company's mining and engineering contractors. Copper production will continue on a gradually declining basis while leaching operations will proceed on an uninterrupted basis to recover copper from ores previously placed on the leach pads.

Copper production for the fourth quarter of 2008 is estimated to range from 9 million to 11 million pounds, based on the temporary cessation of mining activities scheduled to be completed during the next several days. Copper production for the first quarter of 2009 is estimated at approximately 6 million to 8 million pounds, assuming the suspension of mining activities continues for the duration of the quarter. Since all copper will be recovered from existing leach pad inventories while mining activities are suspended during the first quarter of 2009, actual cash costs per pound of copper produced are expected to range from $0.85 to $1.10 per pound. Non- cash expenses related to previously-incurred and inventoried mining costs of approximately $0.60 per pound will bring total reported cash costs to an estimated $1.45 to $1.70 per pound.

CONFERENCE CALL

Frontera Copper Corporation will hold a conference call at 11:00 a.m. ET tomorrow, November 13 to report on third quarter 2008 results. The conference call will be hosted by Alan Edwards, President and Chief Executive Officer. He will be joined by Dave Peat, Vice President and Chief Financial Officer; Tim Swendseid, Vice President, Engineering and Rod Prokop, Vice President, Investor Relations.

Those wishing to participate should dial 612-332-0725 or toll free 800-288- 8968. A replay of the call will also be available through Thursday, November 27, by dialing 320-365-3844 or toll free 800-475-6701 and entering access code 968643.

The Company's September 30, 2008 Financial Statements and Management's Discussion and Analysis have been filed on SEDAR and are available on the Company's website.

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 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
AS AT

(Expressed in United States Dollars; tabular          September  December
 dollar amounts in thousands)                            30,        31,
                                                        2008       2007
                                                          $          $
                                                      =========  =========

                           ASSETS
CURRENT
   Cash and cash equivalents                             23,536     54,479
   Accounts receivable                                      173        705
   Income taxes recoverable                               8,029          -
   Commodity taxes recoverable                            3,854      4,181
   Inventory                                             27,962     24,918
   Prepaid expenses and deposits                          1,944      6,440
   Future tax asset                                         843      2,883
   Deferred loss on derivative instruments                1,133          -
                                                      ---------  ---------
                                                         67,474     93,606

RESTRICTED CASH                                           1,825      1,825
LONG TERM INVENTORY                                      43,529     20,912
LONG TERM DEPOSITS                                          354      1,854
MINERAL PROPERTIES AND PROPERTY, PLANT AND EQUIPMENT    137,316    136,036
                                                      ---------  ---------
TOTAL ASSETS                                            250,498    254,233
                                                      =========  =========

                         LIABILITIES
CURRENT
   Accounts payable and accrued liabilities              19,991     17,547
   Deferred revenue                                           -        326
   Income taxes payable                                       -     14,501
   Derivative instruments                                 3,547      8,143
   Current portion of notes payable                       5,853      6,915
                                                      ---------  ---------
                                                         29,391     47,432

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES                  2,006      3,197
NOTES PAYABLE                                            71,302     73,446
ASSET RETIREMENT OBLIGATION                               5,554      4,907
DERIVATIVE INSTRUMENTS                                        -      3,440
FUTURE INCOME TAXES                                      16,365      7,849
                                                      ---------  ---------
                                                        124,618    140,271
                                                      ---------  ---------
                     SHAREHOLDERS' EQUITY

CAPITAL STOCK                                           103,276    102,807
CONTRIBUTED SURPLUS                                         988      1,174
ACCUMULATED OTHER COMPREHENSIVE LOSS                     (2,092)    (7,388)
RETAINED EARNINGS                                        23,708     17,369
                                                      ---------  ---------
                                                        125,880    113,962
                                                      ---------  ---------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY              250,498    254,233
                                                      =========  =========




FRONTERA COPPER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS ENDED SEPTEMBER 30


(Expressed in United States Dollars;
 tabular dollar amounts in thousands,     Three Months      Nine Months
 except per share)                            Ended             Ended
                                        ----------------  ----------------
                                          2008     2007     2008     2007
                                           $        $        $        $
                                        =======  =======  =======  =======

REVENUE
   Copper cathode sales                  31,471   50,143   93,312  129,911

COST OF SALES AND EXPENSES
   Cost of sales                         18,770   18,943   73,327   51,942
   Depreciation, depletion and
    amortization                          1,955    3,452    5,952    8,255
   Exploration                               77      113      252      359
   Administration                           181    1,407    1,773    4,635
                                        -------  -------  -------  -------
                                         20,983   23,915   81,304   65,191
                                        -------  -------  -------  -------

OTHER (INCOME) AND EXPENSES
   Interest income                         (246)    (683)    (826)  (1,408)
   Long-term interest and accretion       2,931    3,025    8,876    9,420
   Foreign exchange (gain) loss          (2,942)   4,869   (4,863)  11,146
   Unrealized (gain) loss on
    derivatives contracts                  (634)     172     (680)   1,728
   Loss on repurchase of notes
    payable                                   -      944        -      944
                                        -------  -------  -------  -------
                                           (891)   8,327    2,507   21,830
                                        -------  -------  -------  -------

Income before income taxes               11,379   17,901    9,501   42,890
Income taxes                             (2,912)  (7,554)  (3,162) (17,779)
                                        -------  -------  -------  -------

NET INCOME FOR THE PERIOD                 8,467   10,347    6,339   25,111
                                        =======  =======  =======  =======


INCOME PER SHARE
   - Basic                                 0.13     0.16     0.10     0.39
   - Diluted                               0.13     0.16     0.10     0.39

WEIGHTED AVERAGE COMMON SHARES
 OUTSTANDING
   - Basic                               64,518   64,179   64,516   63,888
   - Diluted                             64,577   64,924   64,858   64,587




FRONTERA COPPER CORPORATION
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (DEFICIT)
FOR THE PERIODS ENDED SEPTEMBER 30


                                    Three Months Ended  Nine Months Ended
(Expressed in United States         ------------------  ------------------
 Dollars; tabular dollar amounts in   2008      2007      2008      2007
 thousands)                             $         $         $         $
                                    ========  ========  ========  ========

RETAINED EARNINGS (DEFICIT)
   Beginning of period                15,241       290    17,369   (14,474)

   Net income for the period           8,467    10,347     6,339    25,111
                                    --------  --------  --------  --------

RETAINED EARNINGS, END OF PERIOD      23,708    10,637    23,708    10,637
                                    ========  ========  ========  ========




FRONTERA COPPER CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE PERIODS ENDED SEPTEMBER 30


                                    Three Months Ended   Nine Months Ended
(Expressed in United States         ------------------  ------------------
 Dollars; tabular dollar amounts in   2008      2007      2008      2007
 thousands)                             $         $         $         $
                                    ========  ========  ========  ========

NET INCOME FOR THE PERIOD              8,467    10,347     6,339    25,111
                                    --------  --------  --------  --------

Reclassification of loss on cash
 flow hedges to revenues               3,651     4,834    17,100     8,794

Change in loss on derivatives
 designated as cash flow hedges       12,874   (16,078)   (9,745)  (42,521)
                                    --------  --------  --------  --------

Unrealized gain (loss) on
 derivatives designated as cash
 flow hedges                          16,525   (11,244)    7,355   (33,727)

Income tax on derivatives
 designated as cash flow hedges       (4,627)    3,149    (2,059)    9,444

Tax valuation allowance                    -    (3,149)        -    (9,444)

                                    --------  --------  --------  --------
Other comprehensive income (loss)
 for the period                       11,898   (11,244)    5,296   (33,727)
                                    --------  --------  --------  --------


COMPREHENSIVE INCOME (LOSS) FOR THE
 PERIOD                               20,365      (897)   11,635    (8,616)
                                    ========  ========  ========  ========



FRONTERA COPPER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS ENDED SEPTEMBER 30



                                    Three Months Ended  Nine Months Ended
(Expressed in United States         ------------------  ------------------
 Dollars; tabular dollar amounts      2008      2007      2008      2007
 in thousands)                          $         $         $         $
                                    ========  ========  ========  ========

CASH FLOWS FROM OPERATING
 ACTIVITIES
Net income for the period              8,467    10,347     6,339    25,111
  Items not involving cash:
    Future income taxes                2,578         -     8,444     7,606
    Unrealized foreign exchange       (3,193)    5,278    (5,352)   11,479
    Depreciation, depletion and
     amortization                      2,295     3,975     7,961    10,913
    Accretion                            881       832     2,633     2,481
    Unrealized (gain) loss on
     derivative contracts               (634)      172      (680)    1,728
    Long term inventory               (6,718)   (3,561)  (15,753)   (4,000)
    Long term deposits                    19         -     1,500         -
    Write-off of deferred finance
     costs                                 -         -         -       522
    Loss on note repurchase                -       944         -       944
                                    --------  --------  --------  --------
                                       3,695    17,987     5,092    56,784
Changes in non-cash working capital
 balances                              1,922     5,665   (26,888)    2,060
                                    --------  --------  --------  --------

Cash flows from operating
 activities                            5,617    23,652   (21,796)   58,844
                                    --------  --------  --------  --------

CASH FLOWS FROM INVESTING ACTIVITIES
    Property, plant and equipment     (1,250)   (5,416)   (9,167)  (28,421)
    Decrease in restricted cash            -         -         -     1,233
                                    --------  --------  --------  --------

Cash flows used in investing
 activities                           (1,250)   (5,416)   (9,167)  (27,188)
                                    --------  --------  --------  --------

CASH FLOWS FROM FINANCING ACTIVITIES
    Exercise of options                    -       165       283       766
    Repurchase of notes                    -    (8,385)        -    (8,385)
                                    --------  --------  --------  --------
Cash flows provided by (used in)
 financing activities                      -    (8,220)      283    (7,619)
                                    --------  --------  --------  --------

    Effect of exchange rate changes
     on cash                            (248)      101      (263)    1,260
                                    --------  --------  --------  --------

Increase (decrease) in cash and
 cash equivalents during the period    4,119    10,117   (30,943)   25,297

CASH AND CASH EQUIVALENTS
    Beginning of period               19,417    48,727    54,479    33,547
                                    --------  --------  --------  --------
    End of period                     23,536    58,844    23,536    58,844
                                    ========  ========  ========  ========


CASH AND CASH EQUIVALENTS CONSIST
 OF:
    Cash                               4,213     6,789     4,213     6,789
    Cash equivalents                  19,323    52,055    19,323    52,055
                                    --------  --------  --------  --------

                                      23,536    58,844    23,536    58,844
                                    ========  ========  ========  ========

SUPPLEMENTAL INFORMATION:
    Interest paid                      1,129     1,449     5,531     5,905
    Income taxes paid                 (5,932)        -    17,515         -

Contact Information

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

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

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