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Jbay76 (< 20)

Mining Merger

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6

February 03, 2011 – Comments (2) | RELATED TICKERS: FRG.DL2 , NEM , GLD

Newmont Mining and Fronteer Gold have enetered into an agreement whereby Newmont Mining will aqcuire Fronteer Gold and create a new company called Pilot Gold that will own certain exploration assets of Fronteer Gold for $14 CAD ($13.84 USD) and one share of the new company per share of Fronteer Gold.  There is no indication what those exploration assets will be, but  several months ago Fronteer indicated that they had found more gold in other areas of their drilling project than originally expected. This leads me to beleive that what Pilot Gold gets will prove lucrative.  Also,  Fronteer recently sold their uranium assetts to Paladin Energy Ltd several days ago.  Coincidental......I don't know.

This news of Newmont Mining taking over Fronteer Gold has resulted in a current increase in share price by 38%. From a personal persepctive, that will result in a net gain of 21.5% for my real investment in FRG, not including shares in the new company.  I felt good about FRG's future prospects without this buyout due to their exploration findings.  While the specifics of this deal are not known, and therefore I have no clue what assets Pilot Gold will get from Fronteer, I am faily certain that this would end up being a good deal.

I wonder, however, what happens to the other exploration assets that Fronteer currently has and that do not go to Pilot Gold?  Do those assets become property of Newmont Mining?

Sinch, if your out there, any thoughts on the matter?  Anyone else want to chime in?  Personally, if the deal goes down, I'm gonna take the $ and the shares and ride this one out for a while.  

 

All in all, a nice find.  Thanks Sinch for turning me onto FRG!

J

2 Comments – Post Your Own

#1) On February 03, 2011 at 4:17 PM, silverminer (30.58) wrote:

Jbay,

Look for my write-up tomorrow. In short, yes, Newmont will acquire Northumberland and Sandman as well as Long Canyon.

Personally, I'm disappointed. I had hoped to eke substantially more value out of those assets than just $14.40/share. Newmont is far too large for me to "chase the asset", and so I just have to kiss the asset goodbye. I may hold onto Pilot Gold just for fun, but I'm frankly not too crazy about Turkey as a jurisdiction, and Haligaga would apparently be Pilot's principal asset.

Sure, I'm happy to have acquired Fronteer shares for between $4 and $6 back in 2006, but when I initiated the position I imagined I would hold through at least $25 (i.e. Long Canyon through to production, a more lucrative monetization of the uranium asset, and follow-on development of Northumberland and Sandman). Being among my top holdings, I was more bullish on FRG's prospects than many of its fellow explorers/developers.In that context, the gains I've just realized feel underwhelming. I think Newmont just walked away with a crazy good deal. 

 

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#2) On February 04, 2011 at 12:12 PM, Jbay76 (< 20) wrote:

I look forward to your write-up.  i tried looking up Pilot Gold (PG) but found no information on them via Google or on Newmont's website.  How did you find out about Turkey being the jurisdiction of PG.  I have to go back and look at Haligaga project from FRG to se if its worth hanging on to.  You did make out like a bandit, but I understand your dissapiontment.  However, while I assuemd yesterday that it was a done deal, don't we as shareholders have to agree on this take over?

 

In any case, I look forward to your write up on this.  

Thanks Chris!

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