December 22, 2008 / 2:45 PM / 10 years ago

UPDATE 1-Frontera Copper amends mining agreement with contractor

Dec 22 (Reuters) - Frontera Copper Corp FCC.TO said it amended a mining agreement with contractor Peal Mexico SA de CV, following a suspension of mining activities at its Piedras Verdes mine in Mexico last month.

The Canadian miner said the amendment will release about $1.7 million from an escrow account, funded when the contract was initially executed, to cover costs related to the demobilization of Peal’s mining equipment from the Piedras Verdes operation.

Frontera had temporarily suspended mining at Piedras Verdes in mid-November, hit by lower copper prices, affecting about 100 jobs.

The company expects fourth-quarter copper production at about 10 million pounds. Actual cash costs per pound of copper produced during the period are expected between $1.85 per pound and $1.95 per pound, excluding inventory accounting adjustments.

Including inventory accounting adjustments, the company expects reported cash costs per pound of $1.55 per pound to $1.65 per pound.

Frontera sees its year-end 2008 cash balance at about $10 million, down $13 million since September 30, due to lower copper prices and one-time costs associated with the suspension of mining activities.

Shares of the company closed at C$0.50 Friday on the Toronto Stock Exchange. (Reporting by Adveith Nair in Bangalore; Editing by Ratul Ray Chaudhuri)

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