Dec 17 2010
Fronteer Gold (TSX:FRG)(NYSE Amex:FRG) announces that it has optioned 11 U.S exploration properties to West Kirkland Mining (TSX VENTURE:WKM).
West Kirkland may earn an initial 51% interest in all of the properties by spending an aggregate $15.4 million in exploration and development over the next four years. Fronteer Gold will subscribe for 800,000 shares in West Kirkland, at $1.25 per share by way of a private placement, for total proceeds of $1 million. West Kirkland will use the funds to advance the portfolio.
Under the terms of the option agreement, West Kirkland agrees to a $ 2-million, first-year exploration program across the 11 properties. To maintain its option on the entire package in the second year, West Kirkland must spend a further $3 million on exploration and development. After the second year West Kirkland can earn a 51% interest in any designated property by making specific exploration expenditures for that property.
Upon completion of the earn-in requirements, West Kirkland will have a one-time option to elect to earn an additional 9% interest, for a total of 60%, over a subsequent two-year period in any designated project by either: a) completing $4 million in exploration and development costs on that designated project; or (b) by producing a pre-feasibility study.
The majority of these promising projects, located in northern Nevada and Utah, have surface gold showings and limited exposure to drilling.
"These projects have strong potential for growth and discovery. We are extremely pleased to entrust these projects to West Kirkland's leadership team, who have an exceptional track record in discovering and building deposits, and raising equity. This partnership with West Kirkland gives Fronteer Gold additional exposure to near-term exploration success while we dedicate our full attention and resources to advancing our flagship Long Canyon gold project, and our Nevada development platform, to production," says Fronteer Gold President and CEO, Mark O'Dea.
With more than 60 gold projects in Nevada and bordering states, Fronteer Gold has built an exceptional growth pipeline. The agreement is consistent with Fronteer Gold's history of seeking joint-venture arrangements, or tactical divestments of assets, that afford the company the opportunity to maintain its strong treasury, create immediate value for shareholders, and provide ongoing exposure to exploration upside through retained interests and shareholdings.