One of the world's leading gold producers Newmont Mining Corporation has agreed to buy Canadian gold developer Fronteer Gold Inc for approximately $2.3 billion in a cash-and-stock deal, expanding further the miner's resource base in North America.
Under the terms of the deal, Fronteer Gold shareholders will get C$14 in cash, and one common share in a newly formed gold mining company 'Pilot Gold' for each of their shares. Pilot Gold will own certain assets of Fronteer Gold in Nevada, Turkey and Peru.
The cash price of C$14 per Fronteer Gold share represents a 37-per cent premium to the closing price of Frontier Gold on the Toronto Stock Exchange Wednesday, prior to the announcement of the deal.
Vancouver, British Columbia-based Fronteer Gold's flagship operation is the Long Canyon project in Nevada, which is located only about 160 km from Newmont's Nevada operations. Newmont expects the proximity could result in significant development and operating synergies for the company.
In addition, Fronteer Gold owns the Northumberland project, and also another joint venture project in Sandman, both in Nevada.
Gold reserves in these three properties are estimated at approximately 4.2 million ounces in the measured and indicated categories, with additional inferred resources of around 1.7 million ounces.