DENVER - Newmont Mining has agreed to purchase all the outstanding common shares of Vancouver's Fronteer Gold for $14.00 in cash and one common share of a new company called Pilot Gold. The price represents a premium of 37% over Feb. 2, 2011, share price of Fronteer, making the deal worth $2.3 billion.
Fronteer Gold owns a 100% interest in the development-stage Long Canyon project located 160 km from Newmont's existing infrastructure in Nevada. The proximity of the project to Newmont's operations provides the potential for significant development and operating synergies. Fronteer Gold also owns a 100% interest in the Northumberland project and a joint venture interest with Newmont in the Sandman project in Nevada, among other assets. Fronteer Gold has total attributable measured and indicated gold resources of 4.2 million ounces and Inferred resources of 1.7 million ounces at Long Canyon, Northumberland and Sandman.
Pilot Gold will own a portfolio of Fronteer's exploration properties in Nevada, Turkey and Peru. The company will be capitalized at closing with $10 million of cash. Upon closing of the transaction, Fronteer Gold shareholders will hold an aggregate 80.1% interest in Pilot Gold, and Newmont will hold the remaining 19.9% interest.
"The acquisition of Fronteer Gold will contribute significantly to our anticipated growth profile in North America," stated Richard O'Brien, Newmont's president and CEO. "Based on the work conducted to date by Fronteer Gold, as well as our own due diligence, we believe that Long Canyon holds the potential to grow beyond three to four times Fronteer Gold's current stated resource estimate, with an attractive average gold grade of approximately 2.3 grams per tonne."
The detailed plan of arrangement will be filed with Canadian securities regulators (www.SEDAR.com) and the US Securities and Exchange Commission (www.SEC.gov).
(Faithful readers of CMJ's Daily Headline News will remember that Fronteer announced earlier this week that it is selling its Aurora Energy subsidary and its uranium interests to Paladin Energy of Australia.)
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