Newmont Mining buys Fronteer to improve efficiency, expand mining operations

In a deal that could help it to decrease its business costs and improve its efficiency, Newmont Mining agreed to buy Fronteer Gold for $2.3 billion this week.

Newmont Mining, the largest producer of gold in the U.S., announced that it will pay roughly $14 for each Fronteer share, 37 percent higher than the target company's closing price in Toronto on Wednesday, Bloomberg reports; Pilot Gold will be the new company formed from the ashes of the two former mining giants.

Newmont chief executive Richard O'Brien told reporters that "the acquisition of Fronteer Gold will contribute significantly to our anticipated growth profile in North America." O'Brien asserted that Newmont will soon gain control of the Long Canyon, Northumberland and Sandman projects in Nevada, helping the company expand; O'Brien affirmed that drilling and testing indicated the sites may contain as much as 4.2 million ounces of gold.

Moreover, the new mining locations are strategically located near Newmont's facilities in the state, providing "significant" cost savings to the company. Gold futures have climbed for the past ten consecutive years, logging a 30 percent jump in 2010.