VANCOUVER, BRITISH COLUMBIA (TSX: FRG)(AMEX: FRG) is pleased to
announce that it has finalized an option and joint-venture
agreement with its senior Nevada partner, Newmont Mining
Corporation ("Newmont"), to advance the Company's Sandman gold
project to a production decision within 36 months.
The final terms give Fronteer exposure to potential, near-term
U.S. production in partnership with one of the world's largest gold
producers. Newmont may earn up to a 60% interest in Sandman by
investing $23 million in advancing the project.
Infrastructure surrounding Fronteer's Sandman project is
excellent. The property is close to Newmont's Twin Creeks mine,
eliminating the need for a stand-alone milling facility and other
significant capital expenditures if the project were to proceed to
production.
"This deal is important to Fronteer because it maximizes
Sandman's near-term production potential by leveraging Newmont's
proven experience, expertise and nearby infrastructure," says
Fronteer President and CEO Dr. Mark O'Dea. "The agreement also
frees up both our human resources and financial capital to focus on
advancing our other high-priority Nevada gold projects."
Sandman, currently includes a group of five closely spaced
resource areas, 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.
As part of the agreement, Newmont has also contributed over
eight new sections (approximately 5,440 acres) of adjacent mineral
interests to the Sandman Property, many of which have untested
drill targets. To view a map of Sandman's enhanced land package and
other project images, please visit the Sandman Project Page online
at: http://www.fronteergroup.com/?q=content/sandman
Under the terms of the two-phase agreement, Newmont may earn an
initial 51% interest in Sandman within 36 months by:
- spending an initial US$14 million on exploration ($3 million,
$5 million and $6 million spent in years one, two and three,
respectively);
- making a production decision supported by a bankable
feasibility study;
- making a commitment to fund and construct a mine; and
- reporting reserves.
As part of Phase 2, Newmont may then earn an additional 9%
interest in Sandman by spending a further US$9 million on
development. Fronteer can elect to have Newmont arrange financing
for its 40% of ongoing development costs at the lesser of: (i) the
London Interbank Offered Rate (LIBOR) plus 4%; or (ii) Fronteer's
then current borrowing rate. Newmont shall obtain repayment of the
amount advanced, plus interest, solely from up to 80% of Fronteer's
share of production, less production costs.
Provided that Newmont completes its Phase 2 earn-in
requirements, Newmont shall be entitled to recover an additional
sum of US$3,750,000 from 90% of the Company's share of production
(net of costs) until that amount is recovered in full.
Fronteer retains a 2% Net Smelter Return on production of the
first 310,000 ounces at Sandman.
This formal agreement follows Fronteer's recent announcement
that a new resource estimate for its 100%-owned Northumberland gold
project has increased the deposit's size and advanced its
production potential on multiple fronts (See June 5, 2008, press
release). Northumberland, Sandman and Long Canyon are currently
Fronteer's leading properties among its large, relatively untapped
portfolio of gold projects in Nevada.
LIQUIDITY
Fronteer is not invested in any short term commercial paper or
asset-backed securities. Fronteer has approximately C$95 million in
cash that is fully liquid and held with a large commercial
bank.
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 42.2% interest in Aurora Energy Resources (TSX: AXU), 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 Sandman resource estimate, 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 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. For further details on how the
Sandman resource was calculated, please view the technical report
on SEDAR at http://www.sedar.com/. Detailed resource tables for
Fronteer's Nevada projects, including Sandman, can also be found
at:
http://www.fronteergroup.com/?q=content/nevada-resource-estimate-tables.
Except for the statements of historical fact contained herein,
certain information presented constitutes "forward-looking
statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements, including but not limited to, those with respect to
potential expansion of mineralization, potential for production and
size of mineralized zone, and size of exploration program involve
known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievement of Fronteer to
be materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. Such factors include, among others, risks related to
international operations and joint ventures, the actual results of
current exploration activities, conclusions of economic
evaluations, uncertainty in the estimation of ore reserves and
mineral resources, changes in project parameters as plans continue
to be refined, future prices of gold and silver, environmental
risks and hazards, increased infrastructure and/or operating costs,
labor and employment matters, and government regulation as well as
those factors discussed in the section entitled "Risk Factors" in
Fronteer's Annual Information form and Fronteer's latest Form 40-F
on file with the United States Securities and Exchange Commission
in Washington, D.C. Although Fronteer has attempted to identify
important factors that could cause actual results to differ
materially, there may be other factors that cause results not to be
as anticipated, estimated or intended. There can be no assurance
that such statements will prove to be accurate as actual results
and future events could differ materially from those anticipated in
such statements. Fronteer disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. Accordingly,
readers should not place undue reliance on forward-looking
statements.
NEWS RELEASE 08-15
Contacts: Fronteer Development Group Inc. Mark O'Dea, Ph.D,
P.Geo President and CEO (604) 632-4677 or Toll Free: 1-877-632-4677
Fronteer Development Group Inc. Glen Edwards Director,
Communications (604) 632-4677 or Toll Free: 1-877-632-4677 Email:
info@fronteergroup.com Website: www.fronteergroup.com
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