Newmont Mining buys Fronteer Gold for CDN$2.3B.

Newmont Mining Corp. is spending CDN$2.3 billion – just over US$2.3 billion – to wrest control of Fronteer Gold Inc.'s key holdings in Nevada and spinning off the rest, the companies said today.

At the heart of the acquisition of Vancouver-based Fronteer (NYSE Amex: FRG) is the company's Long Canyon gold project in northeastern Nevada. Greenwood Village, Colo.-based Newmont (NYSE: NEM) will add as much as 2.2 million ounces of gold with the addition of Long Canyon alone, according to estimates.

“The acquisition of Fronteer Gold will contribute significantly to our anticipated growth profile in North America,” Newmont President and CEO Richard O'Brien said in a statement. “The Long Canyon project, with its Carlin trend-like metallurgical and geological characteristics, complements our existing project pipeline in Nevada.

“This combination of assets will allow Newmont to leverage our expertise and extensive infrastructure in the region. ... 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. Additionally, we believe that Fronteer Gold's wider portfolio of assets offers further upside potential for our portfolio.”

Newmont will also retain two other Nevada properties: Fronteer's wholly-owned Northumberland project and the Sandman project, which Fronteer co-owned with Newmont. Fronteer's other holdings in Nevada and its exploration properties in Turkey and Peru will be spun off into a new company, Pilot Gold.

Fronteer Gold's shareholders will hold 80.1 per cent of Pilot Gold, while Newmont will keep the remaining 19.9 per cent. Pilot will also be handed $10 million in capital.

“Newmont shares our view that Long Canyon, our flagship project, is a 'best-in-class' asset with excellent production attributes and significant growth potential,” Fronteer Gold President and CEO Mark O'Dea said. “Importantly, this transaction continues to expose Fronteer Gold shareholders to our ongoing exploration and development success through Pilot Gold.

“Pilot will have an ideal new company structure, an experienced board of directors and management team, and sufficient financial resources to immediately undertake active exploration programs in both Turkey and Nevada.”