Fronteer wants Newmont to fast-track Sandman

Vancouver – Keen to see some near-term benefit from its recently acquired Nevada mineral assets, Fronteer Development Group (FRG-T, FRG-X) is looking for Newmont Mining (NMC-T, NEM-N) to expedite a production decision on the Sandman gold project located about 20 km west of Winnemucca.

Under a letter of intent (LOI), Newmont can earn 51% interest in the project within 36 months by spending US$14 million on the ground, complete a positive bankable feasibility study, commit to fund and build the mine, secure the necessary permits and also contribute some adjacent ground to the joint venture.

The major can grab a further 9% of the project by spending an additional US$9 million on development. Fronteer retains a 2% net smelter return royalty on the first 310,000 oz. of gold production from Sandman and can also opt to have Newmont arrange its 40% of development costs.

Sandman consists of five deposits, four of which (Abel Knoll, North Hill, Silica Ridge and Southeast Pediment) host a cumulative measured and indicated resource of 7.3 million tonnes at 1.17 grams gold per tonne for about 272,000 contained oz. gold. An additional 1.3 million inferred tonnes were also tabled grading 0.93 gram gold — kicking in another 38,000 contained oz.

The near surface deposits are open pittable and contain significant oxide gold mineralization — making it amenable to heap leach extraction. They deposits are also open to expansion due to the significant overburden cover.

Sandman offers Newmont potential ore feed for its nearby mining operations.

The LOI also sees Fronteer regaining 100% of the Northumberland project in central Nevada just north of Barrick Gold‘s (ABX-T, ABX-N) and Kinross Gold‘s (K-T, KGC-N) Round Mountain gold mine — upon Newmont relinquishing its option to earn 60%.

Northumberland contains 28 million tonnes of measured and indicated resource averaging 2.3 grams gold for just over 2 million contained oz. gold. An additional inferred resource of 4 million tonnes at 3.1 grams gold was also reviewed (about 400,000 contained oz.).

In mid-2007 Fronteer acquired NewWest Gold through a share offering (0.26 of a Fronteer share for each NewWest share) and acquired its portfolio of 19 mineral projects in Nevada that includes Sandman and Northumberland.