In December 2008, Fronteer (FRG) bought the 58% of shares in Aurora Energy that it didn’t already own for $110m worth of its shares. The deal put a value of around $190m on Aurora and also came with the $86m in cash held by Aurora that was folded into the FRG books….so wrap that one with a neat bow and say FRG paid $104m for the Aurora assets.
Today, FRG has disposed of those assets. Paladin Energy (PDN.to) has agreed to pay $260m in stock for the Aurora assets. At first pass it looks like a decent win-win situation, where FRG gets to unload (and capitalize) on a decent asset that wasn’t part of its core plan moving forward (it wants to be a gold miner…..lord knows why?) and Paladin gets to do what it’s good at with a very good looking uranium asset (that’s still under moratorium). And for the last two years, FRG has basically done zipsquat with Aurora thanks to that moratorium.
A final thought: Maybe FRG is now more attractive to majors as a purer gold play. Maybe today’s move will start M&A rumours….maybe maybe maybe…..