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VANCOUVER, BRITISH COLUMBIA – Sept. 8, 2009 – Fronteer Development Group Inc. (TSX:FRG)(NYSE Amex:FRG) is pleased to announce a positive Preliminary Economic Assessment (PEA) for the proposed Michelin Uranium Project located in the Central Mineral Belt of Labrador, Canada. The Project is held by Aurora Energy Resources Inc., a wholly owned subsidiary of Fronteer.(A Web conference will be held for investors and analysts on Thursday, Sept. 10, 10:30-11:10 a.m. EST to provide further details. Information on accessing this presentation is provided below.)
The study, prepared by AMEC Americas Limited, supports a financially robust open-pit and underground uranium mining operation at the Michelin and Jacques Lake deposits, and a milling facility at the Michelin site capable of processing 10,000 tonnes of mineralization per day, which will produce up to 7.3 million pounds of U3O8 per annum. Direct cash costs are stated at US$28.57 per pound of U3O8 over the 17-year mine life. At an 8% discount rate, the Project’s pre-tax net present value is US$914 million with a pre-tax internal rate of return of 19.4% on an unlevered 100% equity basis, and a pay-back period of 4.7 years.
“The PEA confirms our view that the Michelin Project is a large-scale, high rate of production project with robust economics,” said Mark O’Dea, Fronteer President and CEO. “It is expected to generate significant cash flow over a long mine life, while providing economic benefits and growth opportunities for the local and provincial economies. New uranium production of this magnitude is sought by major utilities worldwide.”
The PEA results now provide Fronteer with a context for examining all project development and financing options.
The Nunatsiavut Government is currently in the process of developing its environmental legislation and the Land Administration System for Labrador Inuit Lands, which are well underway and on schedule. The Land Use Planning process, which is a joint process between Nunatsiavut Government and the Government of Newfoundland and Labrador, is underway and is expected to be completed on schedule. The Nunatsiavut Government requires these instruments to be in place ahead of large-scale resource development projects, and they are expected to be completed on or before March 2011. March 2011 is also when the current moratorium on mining, milling and production of uranium on Labrador Inuit Lands shall be reviewed by the Nunatsiavut Government Assembly.
“The Nunatsiavut Government is on track with building our regulatory framework, including the land use plan,” said Tony Andersen, First Minister, Nunatsiavut Government. “We are open to discussing development and establishing partnerships, and are committed to sustainable long-term growth and stability.”
“We acknowledge that Aurora has done and continues to do some fine work in the communities and people are gradually getting a better understanding of the nature of the proposed Project,” added Andersen.
All dollar amounts in this release are stated in US currency. The disclosure set forth below is derived from the PEA unless otherwise expressly noted or found under the headings Marketing, Environment and Permitting, Labrador Community and Government Relations, and Next Steps.
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