Fronteer Gold (FRG): 'Foundational gold holding'

by Brien Lundin, editor The Gold Newsletter

The summertime buying season for gold and metals stocks has arrived right on time. In a “typical” summer, the metal has bottomedbetween the middle of July and the middle of August.

Meanwhile we review Fronteer Gold (FRG), which we consider a "foundational" holding.

Underlying this trend is the opportunity to pick up quality stocks at prices that may be 20% or more cheaper than their subsequent levels in September or October, when the rest of the market usually begins to once again pay attention.

Further, I think the markets are factoring in a rebound not in the West, but in Asia. We mustn’t forget that the Great Recession wasn’t a recession at all in China, India and the other Asian export economies.

China, for one, kept galloping ahead, while the other Asian Tigers barely slowed to a trot. And the prospects for further growth are outstanding, at least for the next year or so.

The bottom line, as we enter August, is that the summer clearance sale has finally taken hold. Those who panic over this develpment will be whip-sawed out of the market, while those who take advantage of it are very likely to reap considerable rewards.

The purchase of well-positioned juniors on significant, market-wide price dips that are unrelated to the individual company is a policy that usually pays rich dividends over the long term.

One such company, Fronteer Gold, continues to climb on news of progress at the company’s key gold projects.

That’s understandable, considering the company has 11 rigs operating, with more than 65,000 meters of drilling planned across all projects this year.

So far, they’ve completed about 26,000 meters with about 70 holes pending release. Total program budget: $35 million, with Fronteer paying $20 million of that amount.

Here’s a quick rundown on what’s happening. At Northumberland, a large Carlin-type gold deposit, Fronteer is drilling nine holes to test high-grade targets that are key components of the deposit.

The company has also opened bidding for the construction of a 280-meter decline to access high-grade mineralization.
Construction is scheduled to begin in Q3, with completion targeted for early 2011.

At Sandman, a high-grade epithermal gold system, optionee Newmont has begun drilling up to eight new targets as part of a 95-hole, $3-million work program.

At Long Canyon, a high grade gold deposit in northeast Nevada, Fronteer has five rigs working on a 45,000-meter drilling program that is emphasizing resource definition and expansion. Fronteer (51%) is joint-venturing the property with AuEx Ventures Inc.

Drilling continues to return wide intervals of high-grade oxide gold from the 2.7-kilometer-long deposit, which remains open for expansion.

Lastly, in Turkey, Fronteer is drilling the Central Zone and new targets at the Halilaga property. The joint venture with Teck (60%) has a 10,000-meter, $2.7-million program underway to test copper-gold mineralization over a strike length of 1,200 meters and a width of 400 meters, with thicknesses of up to 400 meters.

Fronteer remains one of the most profitable recommendations in the history of this newsletter, and a shining example of how truly talented and professional management can create its own luck in the exploration game.

This company remains a foundational holding for any portfolio of exploration and development stocks. If you don’t already own it, buy it on any significant price dips.

Learn more about this financial newsletter at Brien Lundin's The Gold Newsletter.