Frontera to Defer Paying December 15 Interest; Restructuring Proposal Imminent

MEXICO CITY, MEXICO -- (Marketwire - Dec. 15, 2009) - Frontera Copper Corporation ("Frontera" or the "Company") (TSX: FCC.NT) (TSX: FCC.NT.A) today announced through its CEO Steve Vanry, that it is unable to make the interest payment due December 15, 2009, on its Series One (2010) Senior Notes. The Company's inability to make the payment is the result of a covenant contained in a Credit Agreement with its Mexican commercial banker.


Background

In order to fund mine restart activities, the Company's Mexican subsidiaries, Cobre del Mayo, S.A. de C.V. ("CDM") and Frontera Cobre del Mayo Inc. together with Frontera, entered into a previously disclosed US$93 million credit agreement ("Credit Agreement") with Banco Azteca, (the "Bank") a Mexican commercial bank, on August 7, 2009. Pursuant to the Credit Agreement, CDM granted a security interest in newly acquired mining equipment as well as other mine assets and Frontera granted the Bank a security interest and option in the shares of CDM. The Credit Agreement has enabled CDM to substantially complete the restart of mining operations at its Piedras Verdes property. To date an aggregate of approximately US$37 million has been drawn under the Credit Agreement.

Section 19 of the Credit Agreement contains a covenant under which Frontera and CDM are in default of their obligations to the Bank because Frontera did not effect a satisfactory restructuring of its 2010 and 2011 senior unsecured notes ("Notes") by December 11, 2010. Frontera's planned restructuring proposal is now nearing completion in principle. The Bank required the early restructuring covenant in order to protect its position for loans and capital leases by having restructuring certainty well in advance of the Notes maturity date. Because Frontera has not yet been able to formally propose and solicit approval for its planned restructuring offer, the Bank has no obligation to make further advances under the credit facility and it has been unwilling to allow CDM to advance additional funds to Frontera for Note interest until a restructuring is achieved. The Bank has however agreed, subject to negotiation of definitive documentation, to a standstill until February 3, 2010 with respect to any other enforcement of Frontera's default of the restructuring covenant.

Frontera intends to issue a comprehensive press release within one week containing the material elements of its proposal to restructure the Notes. The restructuring plan is expected to be considered by Note holders at a meeting to be convened in early 2010. The restructuring proposal will provide for the delinquent interest to be brought current upon its approval. Frontera also expects to file a National Instrument 43-101 technical report updating Piedras Verdes mine activities this month.


Cautionary Statement on Forward Looking Information

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 financing, debt restructuring proposals and future status of the Piedras Verdes mine, 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.


Steve Vanry
Chief Executive Officer



Contact Information

Frontera Copper Corporation
Mark Distler
CFO
(480) 477-6789