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« Newmont Mining Corporation: A readers question | Main | Gold and silver prices look to have bottomed »

Newmont takes out the Fronteer Gold Incorporation

FRG Chart 04 Feb 2011.JPG

The hot news today is that Newmont Mining Corporation (NYSE: NEM) (and Fronteer Gold Incorporation (FRG) have announced that they have entered into an agreement by which Newmont will acquire all of the outstanding common shares of Fronteer Gold by way of a Plan of Arrangement.
Under the Plan of Arrangement, shareholders of FRG will receive Cdn $14.00 in cash and one  common share in a new company ("Pilot Gold"), which will own certain exploration assets of Fronteer Gold, for each common share of Fronteer Gold.  The cash consideration represents a premium of approximately 37% to the closing price of the common shares of Fronteer Gold on the TSX as of February 2, 2011 and equates to a value of approximately Cdn $2.3 billion for Fronteer Gold (excluding Pilot Gold). 

We draw your attention to the premium paid which around is 37% above the stock price and wonder will this serve as a bench mark by which other target companies will set the floor for any negotiations regarding the takeover of their organization. There are any number of candidates out there which no doubt appeal to the bigger players who are finding it enormously difficult to grow the resources organically and must therefore hit the acquisitions trail in earnest.

No doubt the rumour mill will go into over drive and names will be forthcoming with almost certainty that they are the next one to be devoured at a spectacular premium. The news should give a boost to the mining sector in general and especially to those companies who are sitting on substantial reserves. On the down side the danger is that we get sucked in by the chatter or white noise and chase prices higher of certain companies, who are not on the wanted list, so take care out there.

Fronteer Gold owns a 100% interest in the development-stage Long Canyon project, which is located approximately one hundred miles from Newmont's existing infrastructure in Nevada.  The proximity of Long Canyon to Newmont's Nevada 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.

Good bye FRG, we wonder who will be next.....


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sk chart Jan 2011.JPG

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Reader Comments (4)

As Chico Esquela would say. FRG been berry berry good to me.

Sorry to lose an old friend and a very prospective poece of property, but at least NEM paod a decent premium.

This is gonna happen over and over and over again.

Lots of small and medium size fish out there that look pretty appealing to the behemoths.

MFN jumps out. AUY, EXK, AAU with its portfolio of properties...just to name a few. The list is long.

February 4, 2011 | Unregistered Commenterfallingman

OK, so now that FRG is part of NEM, shouldn't we be looking for appreciation in the Newmont price? I don't own any right now, so would like to know what is the general consensus. Any of us buying yet.
Also, what about a short term option play? What do you say Gold-Prices? Thanks folks.

February 4, 2011 | Unregistered CommenterJohn Ell


We'll get back to this question, but we would not be buyers of Newmont.

February 4, 2011 | Unregistered CommenterGold Prices

You guys should check out if you have access to ASX listed stocks.
These guys are rumpred to have Newmont,Semafo,Barrick and goldfields all having a look in a just created data room for DD. Check it out.

April 12, 2012 | Unregistered CommenterLe Gouche

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