Fronteer shares get a lift from Sandman drill results

Intersections of more high-grade,  near-surface oxide gold at Fronteer Development Group‘s (FRG-T, FRG-X) Sandman project in Nevada grabbed the market’s attention in morning trading in Toronto.

The highlight from six drill holes was hole NSM-137, starting at a depth of 20 metres, which returned 42.28 grams per tonne gold over 7.56 metres, including 98.24 grams gold over 2.65 metres and 26.52 grams gold over 0.61metres.

The remaining five holes all intersected oxide gold mineralization starting within 15 metres of surface, including 1.36 grams gold over 7.25 metres in hole NSM-125, and 1.43 grams gold over 11.09 metres in hole NSM-130.

News of the drill results sent Fronteer’s shares up 6.75% or 31¢ apiece to $4.87 per share in mid-day trading. (Over the last year the company has traded in a range of $2.45-$5.75 per share.)

Since Fronteer’s joint-venture partner Newmont Mining (NMC-T, NEM-N) started drilling at Sandman in 2008, 26 out of 110 holes, or 24%, have returned intercepts of greater than 10 grams gold per tonne over more than 1 metres. Drill composites were calculated using a cut-off grade of 2 grams gold per tonne.

So far Newmont has completed more than 12,000 metres of drilling. Further results from the 2009 drill work-program have yet to be released.

Newmont has met its annual earn-in obligations and is continuing to advance the project. This year it plans to drill as many as eight new targets, continue development drilling and conducting additional geotechnical and metallurgical work.

Sandman is within trucking distance to Newmont’s Twin Creeks mine, which potentially eliminates the need for a stand-alone milling facility and other significant capital expenditures if the project proceeds to production.

Newmont has the option of advancing the project to a production decision by 2011. As part of the agreement, Fronteer can also elect to have Newmont arrange financing for its 40% of development costs.

In addition to Sandman, Fronteer has two other gold deposits in Nevada that are high-grade starting at or near surface. A preliminary economic assessment for its Long Canyon project released in December 2009 suggests the project can be a “financially robust” open-pit, run-of-mine heap-leach operation. Its Northumberland project Fronteer says is “one of Nevada’s largest undeveloped Carlin-style deposits.” An updated resource estimate on Northumberland is due out in the first quarter of this year.

Fronteer also has an interest in Halilaga, a world-class copper-gold porphyry system in northwestern Turkey, and 100% ownership of Aurora Energy Resources, a developer of one of the world’s largest primary deposits of uranium in Labrador.

The company has 119.7 million shares outstanding.