Frontera Copper Corporation - News Releases - Frontera Copper Reports First Quarter 2007 Results

	Tue May 15, 2007 Frontera Copper Reports First Quarter 2007 Results
	Toronto, ON -- May 15, 2007 -- Frontera Copper Corporation (FCC: TSX, FCC.NT, FCC. NT.A: TSX) today reports financial results for the quarter ending March 31, 2007. Financial Results For the three months ended March 31, 2007, Frontera Copper reported net income of $4.9 million ($0.08 per share basic and diluted) compared to a net loss of $2.9 million ($0.06 per share basic and diluted) for the three months ended March 31, 2006. Revenue from the sale of copper cathodes amounted to $28.9 million, compared to no sales in the first quarter of 2006. Capital expenditures for property, plant and equipment totaled $9.3 million in first quarter of 2007 compared to $26.8 million in the first quarter of 2006. At March 31, 2007 the Company had working capital of $37.8 million compared to $40.3 million at December 31, 2006. Results from Operations During the first quarter of 2007, the operation produced 10.4 million pounds of "LME Grade A" quality cathode copper and sold 10.1 million pounds of cathode copper pursuant to an off-take agreement with Gerald Metals, Inc. Copper production improved considerably towards the end of the first quarter, and during the month of April, 5.1 million pounds of copper cathode were produced and 4.7 million pounds were sold. Cost of sales during the first quarter of 2007 totaled $14.4 million. Total cash costs per pound were $1.37 ($1.43 including prepaid royalties). The two largest factors for the high level of unit costs are higher acid use for the pre-soak treatment and the lower production levels resulting in higher unit costs. Since a significant portion of the operations costs do not fluctuate with production volumes, the lower production results in higher unit costs. As the operation sustains full production and begins to access the areas of the ore body which will consume less acid, the Company estimates that unit costs will begin to approach the mine life average of less than $1.00 per pound. Revenue from the sale of copper cathodes during the three months ended March 31, 2007 totaled $28.9 million. The Company sells 100% of its copper cathode Free Carrier (FCA) mine site to Gerald Metals. In addition, the Company has entered into a limited hedging program to hedge the revenue from sale of the first 50% of forecasted monthly copper cathode sales for the March 2007 to February 2009 period by entering into forward sales contracts. The price the Company receives for its copper cathode sales to Gerald Metals is based on the average COMEX price for the month following the month of shipment, plus or minus an adjustment to account for a premium over the COMEX price, and freight, insurance, and financing costs incurred by Gerald Metals. During the first quarter of 2007, the Company's average realized price was $2.87 per pound compared to the average COMEX price of $3.01 per pound for the February through April 2007 period. The first quarter of 2007 revenue includes 3,274,000 pounds of March 2007 sales, which were priced based on the average COMEX price for April 2007 of $3.51 per pound, and 1,047,000 pounds of March 2007 sales, which were priced based on the average price the Company received under its forward sales hedging program for March 2007 sales of $2.68 per pound. Cash and cash equivalents decreased by $9.1 million during the first quarter of 2007 compared to an increase of $2.4 million during the first quarter of 2006. The two largest reasons for the decrease in cash and cash equivalents during the current quarter were the capital expenditures during the quarter of $9.3 million and an increase in non-cash working capital balances of $13 million. The increase in non-cash working capital balances primarily reflects a property payment made to Phelps Dodge of $4.0 million, which had been accrued during 2006, and increases in inventory of $3.4 million and commodity taxes recoverable of $3.1 million. While the Company expects inventory balances to continue to increase throughout the remainder of the year, as the rate of placing ore on the leach pads outpaces the production rate, it is expected that the commodity tax recoverable balance of $8.9 million will decrease as the Mexican authorities bring the processing of the Company's IVA returns up to date. Project Status The Company is pleased to report that on April 19th, the day of the inauguration of the Piedras Verdes Operation, a 24-hour copper cathode plating rate of 91.8 metric tons (104% of the plant's design plating capacity) was achieved. Also during the latter half of April, the copper content of the leach solutions reporting from the leach pad to the PLS pond met or exceeded the plating capacity of the plant. These improved performance levels are the result of the adjustments made in the heap leaching process and the regular placement of fresh ore under leach. To accelerate copper dissolution and improve solution grade, ore is being placed on the heap leach pad in lifts of five meters (previously 10 meter lifts), plus approximately two thirds of the ultimate acid application is being applied by pre-soaking the ore with a strong solution of sulfuric acid prior to rinsing it with normal raffinate solutions. By April 30, 2007, more than 13.4 million tonnes of ore containing over 64 million pounds of recoverable copper had been placed on the leach pads since mining operations commenced last year. Flow rates of raffinate solution to the ore on the heap leach pads, and PLS solution from the heap leach pads to the SXEW plant, were in excess of 1,900 cubic meters per hour. The copper content in the PLS solution is currently ranging between 2.00 and 2.05 grams per liter and consequently with the increased solution flows through the plant, the production of copper has reached the design capacity of 70 million pounds per year. Startup and operation of the SXEW plant has progressed very smoothly and to date, plant availability has averaged in excess of 98%. Phase 2A of the new leach pad area is nearly complete and ore placement has begun. Pre-soaking with acid will begin in the latter half of May, once the construction of the second PLS pond and pumping station has been completed. Phase 2B will be completed later in the year. The Company currently controls the land required for the Piedras Verdes operations through multiple renewable 30-year leases negotiated with several Ejido Communities that are located in the vicinity of the mine. Negotiations began last year to purchase most of the lands currently being leased in order to provide greater security for the operation. In February 2007, and during on-going negotiations, access to the Piedras Verdes operations was interrupted for approximately 8 days, due to a blockade by three of the local Ejido communities that were pressuring for a higher price per hectare. While the plant continued to operate normally, the blockade did have a negative impact on first quarter production, as the operation was unable to place fresh ore under leach according to the regular mining schedule. Through successful discussions, which were supported by the Government of the State of Sonora, the blockade was lifted and the Company resumed the negotiations. The Company has now reached an agreement in principle with these Ejidos and other private land owners in the immediate area of the Piedras Verdes operations to convert the current lease arrangements into a direct ownership of the lands. It is expected that the legal documents will be executed shortly and that the land purchases will be completed over the coming months. Outlook for 2007 The Company continues to forecast that it will maintain its full production rate of 70 million pounds per year, which was achieved in late April, and realize production in the range of 60 million to 63 million pounds of "LME Grade A" quality copper cathode during 2007. The Company currently estimates that the full year's cash production cost will be in the range of approximately $1.12/lb to $1.20/lb sold ($1.19/lb to $1.27/lb including prepaid royalties). This is an increase from the prior guidance for 2007 and is primarily related to the decision taken to increase the mining rate, in order to advance the development of Phase 8 of the mine plan. The development of Phase 8 will provide early access to the chalcocite mineralization, which is a lower acid consuming ore. It is also expected that the ore in Phase 8 will be an additional source of competent, low-clay ore, which will be used to form most of the initial lift or bottom layer of ore of the Phase 2 leach pad. Additionally, over the last few weeks, solution flows have been increased to nearly 2,000 cubic meters per hour from approximately 1,500 cubic meters per hour in order to transition solutions onto the Phase 2 leach pad when it is complete, without starving the Phase 1 leach pad for solutions. The increased solution flows have temporarily increased power and reagent costs. The additional area created by the Phase 2 leach pad will allow the operation to increase the leaching time on the initial leach cycle, vary solution application rates and commence curing. As a result of these actions, operations management expects PLS grades to increase and solution flows to decrease, thus maintaining the plant at the maximum plating rate while achieving lower overall cash costs. Capital expenditures are forecast at $30 million. In addition to the Phase 2A and 2B leach pad extensions, the Company is undertaking the construction of several items which were deferred from initial capital expenditures, including a large truck repair shop, flood water diversion structures, a column leach test facility and an acid curing system. Management continues to review all aspects of the operating processes and will make appropriate adjustments to improve efficiencies in order to safely reduce costs. The Board and Management believe there is significant scope for consolidation amongst small to mid-tier copper producers and is evaluating opportunities to grow the business through mergers, acquisitions, joint ventures and exploration. The Company has concentrated on opportunities in Canada, United States, Mexico, Peru and Chile with the focus on copper projects, given the highly prospective nature of those regions and the considerable experience which management has in these countries and in the copper industry. During the past year, the Company evaluated 16 projects, of which 7 were copper projects in Mexico. Conference Call Frontera Copper will hold a conference call to report first quarter 2007 results on Tuesday, May 15, 2007 at 11:00 a.m. ET. The conference call will be chaired by Mr. Gary Loving, President and Chief Executive Officer. Mr. Loving will be joined by Mr. Dave Peat, Vice President and Chief Financial Officer. If you wish to participate, please dial 416-695-5259 or Toll-Free 1-877-888-3855. The call will be available for replay until May 29, 2007. Please dial 416-695-5275 or Toll-Free 1-888-509-0081 and enter Passcode: 644474. About Frontera Copper Frontera Copper is a Canadian mining, development and exploration company whose principle activity is the production of copper cathode from the Piedras Verdes run-of-mine heap-leach copper operation in Sonora, Mexico. Production commenced in October, 2006 and reached the operations' full annual production capacity of 70 million pounds of copper cathode in April 2007. A total of 942 million pounds of copper is projected to be produced during the 18-year life of the operation. Existing resources and prospective exploration targets adjacent to the main open-pit have the potential to extend the life of the project. For further information, please see Frontera Copper's website at www.fronteracopper.com or contact: Ann Gibbs Manager of Investor Relations Tel.: 416 350-5132 Toll-free: 888 323-0973 Email: ann@fronteracopper.com Dave Peat Chief Financial Officer Tel.: 602 667-3202 Ext. 25 Email: dave.peat@fronteracopper.com 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.

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