Newmont Plans C$2.3 Billion Offer For Canada's Fronteer Gold

Newmont Mining Corp. (NEM) is aiming to expand its Nevada holdings through the acquisition of Canada's Fronteer Gold Inc. (FRG), which has three gold projects in the state, including its flagship Long Canyon project.

The companies said Thursday that Fronteer shareholders will get C$14 in cash and one share of a new company for each share held, and that the deal values Fronteer at C$2.3 billion (US$2.33 billion), excluding the new company. The new entity, Pilot Gold, will own certain Fronteer exploration assets.

The cash offer of C$14 a share is a 37% premium to the C$10.25 that Fronteer closed at Wednesday in Toronto. Fronteer's board will recommend shareholders accept the deal.

Long Canyon is about 100 miles from Newmont's Nevada infrastructure, creating the potential for "significant development and operating synergies," the companies said. Fronteer has total attributable measured and indicated gold resources of 4.2 million ounces and inferred resources of 1.7 million ounces at its three Nevada projects.

Fronteer gained full ownership of Long Canyon late last year after acquiring AuEx Ventures Inc.

The mining-friendly state of Nevada is one of the world's largest sources of gold.

Newmont said that, based on work conducted to date by Fronteer, as well as its own due diligence, it believes Long Canyon has the potential to grow beyond three-to-four times Fronteer's current stated resource estimate, and that the Canadian company's wider portfolio of assets "offers further upside potential for our portfolio."

Pilot Gold, meanwhile, will own a portfolio of Fronteer's exploration properties in Nevada, Turkey, and Peru and will be capitalized at closing with C$10 million of cash. Fronteer shareholders will hold an 80.1% stake in Pilot Gold, and Newmont will hold the remaining 19.9%.

-By Carolyn King, Dow Jones Newswires; 416-306-2100; [e-mail]