Teck Cominco backs in on Fronteer’s Turkish projects

Vancouver – Teck Cominco (TEK.SV.B-T) has elected to exercise its back in option on Fronteer Development Group’s (FRG-T, FRG-X) Agi Dagi and Kirazli gold projects in western Turkey.

The deal will have Teck Cominco’s Turkish subsidiary spend a total of US$15 million over the next two years on advanced exploration (US$10 million at Agi Dagi and US$5 million at Kirazli) to earn a 60% interest. A further 10% can be attained by the major through fulfillment of additional back-in terms.

Teck Cominco’s earn-back is non-incremental and vests only upon completion of full expenditures, half of which much be spent within 12 months. The senior will assume operatorship of the projects.

Fronteer Development originally optioned the projects from Teck Cominco in early-2004, completing its 100% earn-in in two years by spending US$7.5 million. The junior’s exploration effort produced significant resource calculations on both projects.

At Agi Dagi, an indicated resource of 7.8 million tonnes grading 0.86 gram gold per tonne (217,000 indicated oz. of gold) and 1.7 grams silver per tonne (425,000 oz. of silver) was reviewed. Further inferred resources of 34.8 million tonnes averaging 0.93 gram gold (1 million inferred oz.) and 4.2 grams silver (4.7 million oz. of contained silver) were also tabled.

Kirazli indicated resources are 5.43 million tonnes at 1.4 grams gold (244,000 contained oz.) and 9.7 grams silver (1.7 million oz. of contained silver). Additional inferred resources of 17.8 million tonnes at 0.98 gram gold (563,000 contained oz.) and 6.7 grams silver (3.9 million oz. of contained silver) were estimated.

Fronteer also holds the Biga regional projects in western Turkey under option from Teck Cominco but covered by a separate back-in by the senior. The prospective gold area is in the vicinity of Agi Dagi and Kirazli, and creates a large land package of prospective geology. Accelerated work programs are planned to test a number of targets in the epithermal gold camp.

In addition to its Turkish projects, Fronteer has the Clara and San Pedro gold project in Mexico that are also under option from Teck Cominco. Recent drilling on Clara returned high grade silver values and significant gold mineralization.

Earlier this year, the junior successfully spun out its Labrador uranium projects into the new company Aurora Energy Resources (AXU-T, AUEGF-O) through an initial public offering. Fronteer retains a 49.3% interest in Aurora.

Shares of Fronteer closed around the $6.70 per share level following Teck Cominco’s back-in announcement. The company posts a $330-million market capitalization based on its 49.1 million shares outstanding.