The cash and stock transaction, the latest in a string of deals targeting Canadian miners, adds 4.2 million ounces of gold resource to the portfolio of the world's second-largest gold producer.

"The acquisition of Fronteer Gold will contribute significantly to our anticipated growth profile in North America," Newmont Chief Executive Richard O'Brien said in a statement on Thursday.

Fronteer shareholders will receive C$14 in cash and one common share in a new company, called Pilot Gold, in exchange for each common share of Fronteer Gold.

The offer represents a 37 percent premium to Fronteer Gold's Wednesday close of C$10.25. Fronteer shares rose more than 40 percent to C$14.39 on Thursday morning.

CANADIAN TARGETS

Canada has spawned some of the world's most successful miners, including Barrick Gold Corp,, the No. 1 gold producer. That has made many of them attractive targets for global players looking for growth.

Only last month, Ohio-based Cliffs Natural Resources offered more than C$4 billion for Consolidated Thompson Iron Mines, while Lundin Mining and Inmet Mining agreed to a C$9 billion combination.

Gold mining has become one of the biggest draws as bullion prices hover near record highs and producers race to fill demand.

Brazilian billionaire Eike Batista, for example, is the middle of a hostile bid to buy Ventana Gold Corp,, a Vancouver-based exploration company with an early stage gold property in Colombia.

Spot gold was trading at some $1,336 an ounce on Thursday, more than five times what its price a decade ago. Gold rose to a record of $1,430.95 an ounce in December.

The Fronteer Gold deal, which has the approval of its board, will extend Newmont's presence in the U.S. state of Nevada, where it has operated since the 1960s.

Fronteer owns a 100 percent interest in the development-stage Long Canyon project in Nevada, located about 100 miles (160 km) from Newmont's existing operations in the western state.

"The proximity of Long Canyon to Newmont's Nevada operations provides the potential for significant development and operating synergies," the company said.

Fronteer shareholders are expected to vote on the deal in early April. It requires two-thirds approval.

The two parties have agreed to a C$85 million break fee should either side back out of the deal.

Newmont's financial adviser is BMO Capital Markets, and its legal counsel is Goodmans LLP and Wachtell, Lipton, Rosen & Katz.

Fronteer Gold's financial adviser is RBC Capital Markets, and its legal counsel is Davies Ward Phillips& Vineberg LLP.