Fronteer Realigns Newmont Partnership to Fast-Track Development of Sandman, Regains 100% of Northumberland
VANCOUVER, BRITISH COLUMBIA, Feb 06, 2008 (MARKET WIRE via COMTEX) -- Fronteer Development Group Inc. ("Fronteer" or the "Company") (CA:FRG) (FRG: fronteer dev group inc com) is pleased to announce that it has signed a Letter of Intent ("LOI") with its senior Nevada partner, Newmont Mining Corporation ("Newmont"), to rapidly advance the Company's Sandman gold project to a production decision within 36 months. As part of this agreement, Fronteer also regains an undivided 100% interest in Northumberland, one of the largest undeveloped Carlin-style gold deposits in Nevada.
The LOI gives Fronteer immediate exposure to near-term production in Nevada and increases its attributable gold resource base at Northumberland by 60%. Fronteer now assumes full ownership of Northumberland with a NI 43-101 resource estimate of 2.06 million ounces of gold (measured and indicated), 0.40 million ounces of gold (inferred), and 5.11 million ounces silver (inferred).
"As a result of this new partnership, Fronteer will have potential near-term production funded and operated by one of the world's best gold mining companies, while retaining 100% ownership of Northumberland and its gold ounces," says Fronteer President and CEO, Mark O'Dea. "In turn, Newmont is provided the quickest access to low-cost gold production and reserve replenishment from a project that has good synergies with its nearby infrastructure."
The LOI reflects Fronteer's dual growth platform: growth through resource expansion and discovery; and growth through future production. While Newmont advances Sandman toward a production decision, Fronteer can focus on an aggressive drill program at Northumberland and the Company's 17 other Nevada gold projects.
Sandman currently includes a group of five closely spaced gold deposits, four of which contribute to a combined NI 43-101 resource estimate of 271,900 ounces (measured and indicated) and 38,000 ounces (inferred) gold. The deposits are near-surface and open-pit mineable, with significant resource expansion and exploration upside potential.
Under the terms of the LOI, Newmont may earn an initial 51% interest in Sandman within 36 months by:
1. Spending a minimum US$14 million on exploration;
2. Making a production decision supported by a bankable feasibility study;
3. Reporting reserves;
4. Making a commitment to fund and construct a mine;
5. Advancing the necessary permits; and
6. Contributing adjacent mineral interest to the joint venture.
Newmont may earn an additional 9% interest in Sandman by spending a further US$9 million on development. Fronteer retains a 2% NSR on production of the first 310,000 ounces at Sandman. Fronteer can also elect to have Newmont arrange financing for its 40% of development costs.
In addition to regaining a 100% interest in Northumberland, Fronteer has been granted a free license for the use of Newmont's patented N2TEC flotation process technology. In return, Fronteer has granted Newmont preferential ore processing rights for any ore developed from Northumberland. Fronteer will invest approximately US$4M in Northumberland exploration for 2008, including plans to update the project's NI 43-101 resource estimate to include the previous three year's worth of drill results.
About Fronteer
Fronteer is an exploration and development company with a track record of making big discoveries. Fronteer has a 40% interest in three excellent gold and copper-gold projects in western Turkey, an extensive portfolio of advanced stage gold projects in Nevada, and a 42.3% interest in Aurora Energy Resources (CA:AXU: news, chart, profile) , a leading Canadian uranium company.
Mineral resources are not mineral reserves and do not have demonstrated economic viability, and there is no guarantee that any resource will become a reserve. Michael Gustin, Ph.D., of Mine Development Associates ("MDA"), Reno, Nevada, is designated as a Qualified Person for the Northumberland and Sandman resource estimates, with the ability and authority to verify the authenticity of, and validity of, this data. Mineral resources have been estimated by MDA in accordance with the standards adopted by the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") Council in August 2000, as amended, and prescribed by the Canadian Securities Administrators' National Instrument 43-101 Standards of Disclosure for Mineral Projects. The Northumberland resource estimate is from the 43-101 Compliant Report; Technical Report, Northumberland Project, Nye County, Nevada, USA, July 15, 2006 by Mine Development Assoc. for NewWest Gold Corp. The gold cut-off grades (expressed in ounces of gold per ton) for the Northumberland Project measured, indicated and inferred resources are 0.01 for oxide material, 0.04 for shallow sulfide material and 0.10 for deep sulfide material. The inferred silver resource includes only silver lying within the modeled gold zones and within blocks that exceed the gold cut-off grades; no silver cut-off is applied. The Sandman mineral resource expressed is based on the technical report prepared by MDA as of May 31, 2007. The cut-off grade (expressed in ounces of gold per ton) for Sandman Project measured, indicated and inferred resources is 0.01 oz Au/ton for all of the shallow deposits and 0.02 oz Au/ton for the deeper zones at the Southeast Pediment deposit.