Frontera Copper Corporation

Frontera Copper Corporation

August 11, 2005 11:31 ET

Frontera Copper Reports Second Quarter 2005 Results

TORONTO, ONTARIO--(CCNMatthews - Aug. 11, 2005) -

(All dollar amounts are expressed in United States currency unless otherwise noted)

Frontera Copper Corporation (TSX:FCC)(TSX:FCC.NT)(TSX:FCC.WT) is pleased to announce results for the three and six month periods ending June 30, 2005.

Financial Results

Frontera reported a net loss of $562,741 ($0.013 per share) for the second quarter of 2005 as compared to a loss of $316,952 ($0.029 per share) for the second quarter of 2004. For the six months ended June 30, 2005, Frontera reported a net loss of $962,611 ($0.023 per share) as compared to a loss of $722,618 ($0.069 per share) for the six months ended June 30, 2004. The increases in net losses were primarily due to higher administrative expenditures related to an intensified level of corporate activity and development activity at the Company's wholly-owned Piedras Verdes project in Sonora state, Mexico and interest expense on notes issued during the second quarter of 2005. The administrative expenditures and the interest expense were partially offset by higher interest income earned from the investment of the company's excess cash balances.

At June 30, 2005, Frontera had a working capital surplus of $80,784,943 as compared to $46,736,685 at December 31, 2004. At June 30, 2005, $44,163,186 of working capital and $2,448,000 of long-term assets were represented by cash which has been placed in escrow and restricted for project purposes and future interest payments associated with the notes issued during the quarter ended June 30, 2005.

The company had capitalized mineral property, plant and equipment, and deferred exploration and development expenditures as of June 30, 2005 totalling $10,001,131, an increase of $5,156,402 from December 31, 2004. Significant expenditures during the six month period included plant and equipment - $2,086,183, option and advance royalty payments - $1,560,000 and surface land agreements and home site relocation- $1,097,459.

Frontera's consolidated financial statements for the three and six months ended June 30, 2005 and related management discussion and analysis are available on the System for Electronic Document Analysis and Retrieval (SEDAR) at

Company Developments

Frontera continued to advance the development of the Piedras Verdes project during the quarter. M3 Engineering & Technology Corporation was appointed to provide engineering, procurement and construction management services to the project. In its 19 year history, M3 has designed 6,000 projects, including a number in Mexico, and has considerable expertise in optimal layout, detailing and safe operation of SX-EW facilities. M3 was chosen for this experience and, as authors of Frontera's feasibility study and technical report, for their knowledge of the Piedras Verdes project. Working with M3, the company has moved aggressively to procure critical infrastructure items and long lead time equipment for the SX-EW processing facility to ensure it meets its second half 2006 target for production.

Construction of the necessary infrastructure for new home sites for the Ejido Piedras Verdes, including utilities for the homes (power, water, sewage disposal system and roads), a kindergarten, a primary school, a secondary school, playgrounds, plaza area, health clinic and school masters' houses, continued during the quarter. All 49 homeowners in the current village have selected the lots they will occupy at the new home sites location. Homeowners who are relocating are constructing their new homes.

Frontera announced two important additions to its team during the quarter. Richard (Dick) Rice joined the company as Project Director Engineering/Construction. Dick is a former Vice President of Engineering at Phelps Dodge Corporation. During his 32-year career with Phelps Dodge, Dick led and managed several major capital projects involving engineering, procurement and construction in Latin America. After serving as an advisor to the company, Jesus Gutierrez Bastida joined Frontera as Director of Operations and is responsible for overseeing the design, start up and commencement of copper production at the Piedras Verdes project. Jesus has an extensive background in mining and processing operations and management. He has held positions of varying responsibility, including Director of Operations for Grupo Mexico's Cananea operations and President and CEO of Empresas Frisco.

During the quarter, Frontera announced encouraging exploration trenching results in the Cerro Chato area, 1.5 kilometres to the west of the Piedras Verdes project. These initial results confirm the potential for extensive near-surface copper oxide mineralization. Frontera believes that this potential, if proven, could add low stripping ore to the mine plan early in the mine life and thus significantly improve the economics of the Piedras Verdes project. The company is planning to carry out additional trenching to further delineate this area of mineralization.

On June 10, 2005, Frontera closed a public offering of units consisting of notes and common shares for gross proceeds of Cdn$60,000,000. Subsequent to June 30, 2005, the underwriters exercised their over-allotment option resulting in total gross proceeds to Frontera of Cdn$69,000,000. The company issued in total 69,000 units and at closing each unit separated into a Cdn$1,000 principal amount senior unsecured note and 100 common shares of Frontera. The notes are not convertible, mature on June 15, 2010 and pay interest semi-annually at a rate of 10% per annum.

Subsequent to June 30, 2005, the company signed an agreement with PEAL Mexico, S.A. de C.V., a wholly-owned subsidiary of PEAL OP, S.A., for the provision of contract mining services at the Piedras Verdes project. Under the terms of the agreement, PEAL will provide mining services at the Piedras Verdes project for a six month pre-production period followed by a contract period of five years. Subject to the Company receiving all necessary permits, PEAL will mobilize its existing fleet to the Piedras Verdes project and commence mining in the fourth quarter of 2005.

About Frontera Copper

Frontera was incorporated in March 2002 to purchase and bring into production the Piedras Verdes open pit, run-of-mine, heap leach, SX-EW copper project in Sonora, Mexico. Subject to Frontera receiving all necessary permits, the company plans to begin construction activities in the third quarter of 2005. Copper production is expected to commence in the second half of 2006 at an annual rate of 70 million pounds per year of LME Grade A cathode at an average life-of-mine cash operating cost of $0.58 per pound. A total of 942 million pounds of copper is projected to be produced during the 18 year life of the project. Existing resources and prospective exploration targets adjacent to the proposed open pit have the potential to improve the economics and extend the life of the project.

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