Fronteer to raise $6.0 million

Vancouver — Fronteer Development Group (FRG-T) intends to raise $6 million through a private placement financing. The proceeds will be put towards the exploration of its projects in Labrador and Red Lake, as well as for the acquisition and development of new mineral properties and working capital.

The financing will be brokered by a syndicate of agents led by Pacific International Securities. Pacific International has the option, prior to closing, to increase the size of the offering to $10.0 million.

Fronteer will issue up to 5.5 million units at a price of $1.10. Each unit will consist of one common share and one-half of one share purchase warrant. Each whole share purchase warrant will entitle the holder to acquire one common share for a two-year period at an exercise price of $1.45 for the first year and $1.65 for the second year.

The underwriters will be paid a cash commission of 7% of the gross proceeds raised, and Broker Warrants equal to 10% of number of units sold. Each broker warrant shall entitle the underwriter to acquire one common share for a price of $1.50 for a 1-year period after the closing date.

Once completed, Fronteer will have about $9.3 million in its coffers and 26.8 million shares issued and outstanding. Fronteer currently has five active exploration programs in Canada focused on gold and copper-gold-silver-uranium (Olympic Dam style) deposits. Fronteer is also currently completing due diligence on Teck Cominco’s (TEK-T) gold portfolio in Turkey.

In a recent strategic deal with Teck Cominco’s Turkish subsidiary, Fronteer inked a letter of intent to acquire a 100% interest in five epithermal gold properties located in Western Turkey.

Fronteer has been granted 30 days to complete technical due diligence and enter into binding option agreements for each of the properties.

"Our goal at Fronteer is to build a company that the public feels secure in owning," commented Dr. Mark O’Dea, Fronteer’s President and CEO. "This new land package represents an unprecedented opportunity to dramatically increase our resource base and shareholder value. All of the properties we’ve optioned have large bulk-tonnage style footprints with potential for high grade ounces."

The Agi Dagi property is a large high sulphidation epithermal system, with a mineralized silica cap that measures 4-by-2 km. Teck Cominco drilled a grid of shallow vertical holes through a small part of this silica cap in the southwest corner of the property and calculated an inferred resource of 11.3 million tonnes averaging 1.2 grams gold per tonne. Fronteer believes the project may host higher-grade feeder structures and can be expanded along strike.

The Kirazli property represents a high sulphidation epithermal system characterized by a silicification footprint that measures 2-by-1 km. A number of high grade intervals were intersected by a previous owner.

The remaining three properties, referred to collectively as the Biga properties represent earlier stage prospects with large alteration and geochemical footprints. Fronteer plans to quickly advance these properties to the drill stage.