As filed with the United States Securities and Exchange Commission on January 23, 2009

Registration No. 333-                 

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM F-8

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

FRONTEER DEVELOPMENT GROUP INC.

(Exact name of Registrant as specified in its charter)

Ontario, Canada (Province or other jurisdiction of incorporation or organization)		1040 (Primary Standard Industrial Classification Code Number) 1650-1055 West Hastings Street Vancouver, British Columbia V6E 2E9 Canada (604) 632-4677		98-0489614 (IRS Employer Identification Number)

(Address and telephone number of Registrant’s
principal executive offices)

Troutman Sanders LLP
222 Central Park Avenue, Suite 2000
Virginia Beach, VA 23462
(757) 687-7500

(Name, address (including zip code) and telephone
number (including area code) of agent for service
in the United States)

Copies to:

Sean Tetzlaff Chief Financial Officer and Corporate Secretary Fronteer Development Group Inc. 1650-1055 West Hastings Street Vancouver, British Columbia V6E 2E9 Canada (604) 632-4677		Kevin J. Thomson, Esq. Davies Ward Phillips & Vineberg LLP 1 First Canadian Place, Suite 4400 Toronto, Ontario M5X 1B1, Canada (416) 863-0900		Bonnie J. Roe, Esq. Davies Ward Phillips & Vineberg LLP 625 Madison Avenue, 12th Floor New York, New York 10022 (212) 588-5500

Approximate date of commencement of proposed sale of the securities to the public:
As soon as practicable after this Registration Statement becomes effective.

     This Registration Statement and any amendment thereto shall become effective upon filing with the Commission in accordance with Rule 467(a).

     If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to the home jurisdiction’s shelf prospectus offering procedures, check the following box.  o

CALCULATION OF REGISTRATION FEE

							Proposed
	Title of each class						maximum
	of securities to be			Amount to be			aggregate offering			Amount of
	registered			registered (1)			price (2)			registration fee
	Common Shares			36,057,938			US$60,315,097			US$2,370.38

(1)  Represents the maximum number of shares of common shares of Fronteer Development Group Inc. (“Fronteer”) estimated to be issuable upon consummation of the exchange offer, calculated as the product of (a) 43,706,592, which is the estimated number of outstanding common shares of Aurora Energy Resources Inc. (“Aurora”), other than shares beneficially owned by Fronteer, as of September 30, 2008 (assuming the exercise of all outstanding options for common shares of Aurora having an exercise price of Cdn $2.99 or less per share as of November 1, 2008), as publicly disclosed by Aurora in its unaudited interim financials statements for the three and nine months ended September 30, 2008, and management’s discussion and analysis relating thereto, as filed on SEDAR on November 6, 2008, and (b) the exchange ratio of 0.825 of a common share of Fronteer for each common share of Aurora.

(2)  Estimated solely for the purpose of calculating the registration fee in accordance with General Instruction IV.G to Form F-8. The proposed maximum offering price is equal to the product of (a) US$1.38, which is the average of high and low sale prices of common shares of Aurora as reported on the Toronto Stock Exchange on December 30, 2008, converted into US dollars at the rate of US$0.82 per Canadian dollar (the noon rate of exchange as reported by the Bank of Canada on such date), and (b) 43,706,592, which is the estimated number of outstanding common shares of Aurora, other than shares beneficially owned by Fronteer, as of September 30, 2008 (assuming the exercise of all outstanding options for common shares of Aurora having an exercise price of Cdn $2.99 or less per share as of November 1, 2008), as publicly disclosed by Aurora in its unaudited interim financials statements for the three and nine months ended September 30, 2008, and management’s discussion and analysis relating thereto, as filed on SEDAR on November 6, 2008.

     If, as a result of stock splits, stock dividends or similar transactions, the number of securities purported to be registered on this Registration Statement changes, the provisions of Rule 416 shall apply to this Registration Statement.

 

 

PART I

INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS

Item 1.  Home Jurisdiction Documents

     Offer and Circular dated January 23, 2009, including the Letter of Transmittal and Notice of Guaranteed Delivery.

Item 2.  Informational Legends

     See page (ii) of the Offer and Circular dated January 23, 2009.

Item 3.  Incorporation of Certain Information by Reference

     As required by this Item, the Offer and Circular dated January 23, 2009 provides that copies of the documents incorporated by reference may be obtained on request without charge from the Corporate Secretary of Fronteer Development Group Inc. at Suite 1650, 1055 West Hastings Street, Vancouver, British Columbia, V6E 2E9 Canada or by telephone at 604-632-4677.

Item 4.  List of Documents Filed with the Commission

     See the information under the caption “Registration Statement Filed with the SEC” in the Offer and Circular dated January 23, 2009.

This document is important and requires your immediate attention. If you are in any doubt as to how to deal with it, you should consult your investment advisor, stock broker, bank manager, trust company manager, accountant, lawyer or other professional advisor. This Offer has not been approved or disapproved by any securities regulatory authority nor has any securities regulatory authority passed upon the fairness or merits of this Offer or upon the adequacy of the information contained in this document. Any representation to the contrary is unlawful. No securities regulatory authority in Canada or the United States has expressed an opinion about Fronteer’s securities and it is an offence to claim otherwise.

 

Information has been incorporated by reference in this Offer and Circular from documents filed with securities commissions or similar authorities in Canada and the United States. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Corporate Secretary of Fronteer at Suite 1650, 1055 West Hastings Street, Vancouver, British Columbia, V6E 2E9 or Telephone: 604-632-4677 and are also available electronically at www.sedar.com and www.sec.gov.

 

January 23, 2009

 

 

FRONTEER DEVELOPMENT GROUP INC.

OFFER TO PURCHASE

 

all of the outstanding common shares of

 

AURORA ENERGY RESOURCES INC.

 

on the basis of 0.825 of a Fronteer common share

for each common share of Aurora

 

Fronteer Development Group Inc. (“Fronteer”) hereby offers (the “Offer”) to purchase, on and subject to the terms and conditions of the Offer, all of the issued and outstanding common shares of Aurora Energy Resources Inc. (“Aurora”), other than common shares beneficially owned by Fronteer, including common shares that may become outstanding after the date of this Offer but before the expiry time of the Offer upon the conversion, exchange or exercise of options or other securities of Aurora that are convertible into or exchangeable or exercisable for common shares (collectively, the “Common Shares”), on the basis of 0.825 of a Fronteer Common Share (as hereinafter defined) for each Common Share.

 

 

 

 

The Offer is conditional upon, among other things, there having been validly deposited under the Offer and not withdrawn at the Expiry Time such number of Common Shares that (i) together with the Common Shares beneficially owned by Fronteer, or over which Fronteer and its joint actors exercise control or direction, constitutes at least 662/3% of the total number of Common Shares outstanding (calculated on a fully diluted basis), and (ii) constitutes at least a majority of the total number of Common Shares outstanding (calculated on a fully diluted basis), not including those Common Shares beneficially owned, or over which control or direction is exercised, by Fronteer and its joint actors, and the votes attaching to which shall be qualified to be included as votes in favour of any subsequent acquisition transaction in determining whether approval (as construed under applicable securities laws, including Multilateral Instrument 61-101 — Protection of Minority Security Holders) has been obtained in respect thereof. This condition and the other conditions of the Offer are described under “Conditions of the Offer” in Section 4 of the Offer. Subject to applicable laws, Fronteer reserves the right to withdraw the Offer and to not take up and pay for any Common Shares deposited under the Offer unless each of the conditions of the Offer is satisfied or waived at or prior to the Expiry Time.

 

The Common Shares are listed on the Toronto Stock Exchange (the “TSX”) under the symbol “AXU”. The Fronteer Common Shares are listed on the TSX and the NYSE Alternext US LLC (the “Alternext”) under the symbol “FRG”. The Offer represents a premium of approximately 166% over the December 19, 2008 closing price of the Common Shares on the TSX of $0.97, based on a closing price of $3.13 per Fronteer Common Share on the TSX on that same date, which was the last trading day prior to Fronteer’s announcement of its intention to make an Offer. The Offer also represents a premium of approximately 96% based on the respective volume weighted average trading prices of Fronteer and Aurora on the TSX for the 20 trading days ended December 19, 2008.

 

Fronteer owns and controls an aggregate of approximately 42% of the issued and outstanding Common Shares. In addition, pursuant to lock-up agreements entered into with each of Amber Capital Investment Management (“Amber”), Eastbourne Capital Management L.L.C. (“Eastbourne”) and MacKenzie Financial Corporation (“MacKenzie”), each such shareholder has agreed to deposit under the Offer and not withdraw, subject to certain exceptions, Common Shares representing in the aggregate 19,234,700 Common Shares or approximately 26% of the issued and outstanding Common Shares. See Section 4 of the Circular, “Agreements Relating to the Offer”.

 

This offering is made by a Canadian issuer that is permitted, under a multi-jurisdictional disclosure system adopted by the United States, to prepare the Offer and Circular in accordance with the disclosure requirements of Canada. Prospective investors should be aware that such requirements are different from those of the United States. The financial statements included or incorporated herein have been prepared in accordance with Canadian generally accepted accounting principles, and may be subject to Canadian auditing and auditor independence standards, and, thus, may not be comparable to financial statements of United States companies.

 

Prospective investors in the United States should be aware that the disposition of Common Shares and the acquisition of Fronteer Common Shares by them as described herein may have tax consequences both in the United States and in Canada. Such consequences for investors who are resident in, or citizens of, the United States may not be fully described herein. See “Certain Canadian Federal Income Tax Considerations” in Section 21 of the Circular and “Certain United States Federal Income Tax Considerations” in Section 22 of the Circular.

 

The enforcement by investors of civil liabilities under United States federal securities laws may be affected adversely by the fact that Fronteer is incorporated under the laws of the Province of Ontario, Canada, that Aurora is incorporated under the laws of the Province of Newfoundland and Labrador, Canada, and that a majority of Fronteer’s officers and directors are residents of Canada and a majority of Aurora’s officers and directors are residents of Canada, that the Information Agent and Depositary and some or all of the experts named herein may be residents of jurisdictions outside of the United States, and that all or a substantial portion of the assets of Fronteer and Aurora and of the above mentioned persons may be located outside of the United States.

 

THE SECURITIES TO BE DELIVERED IN CONNECTION WITH THE OFFER HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) NOR HAS THE SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE OFFER AND CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

Prospective investors should be aware that, during the period of the Offer, Fronteer or its affiliates, directly or indirectly, may bid for or make purchases of Common Shares, as permitted by applicable laws or regulations of Canada or its Provinces or Territories. See Section 13 of the Offer, “Market Purchases”.

 

The Fronteer Common Shares offered pursuant to this Offer involve certain risks and uncertainties. For a discussion of risks and uncertainties to consider in assessing the Offer, see “Risks Relating to the Offer” in Section 7 of the Circular and the risks and uncertainties described in Fronteer’s annual information form for the fiscal year ended December 31, 2007 and annual and interim management’s discussion and analyses, which are incorporated by reference into the Offer and Circular. See Section 11 of the Circular, “Documents Incorporated by Reference”.

 

Shareholders who wish to accept the Offer must properly complete and execute the accompanying letter of transmittal (printed on YELLOW paper) (the “Letter of Transmittal”) or a manually signed facsimile thereof and deposit it, at or prior to the Expiry Time, together with certificate(s) representing their Common Shares and all other required documents, with the Depositary at its office in Toronto, Ontario set out in the Letter of Transmittal in accordance with the instructions set out in the Letter of Transmittal. Alternatively, Shareholders may: (1) accept the Offer where the certificate(s) representing the Common Shares are not immediately available, or if the certificate(s) and all other required documents cannot be delivered to the Depositary at or prior to the Expiry Time, by following the procedures for guaranteed delivery set out in Section 3 of the Offer, “Manner of Acceptance — Procedure for Guaranteed Delivery”, using the accompanying notice of guaranteed delivery (printed on PINK paper) (the “Notice of Guaranteed Delivery”) or a manually signed facsimile thereof; or (2) accept the Offer by following the procedures for book-entry transfer of Common Shares set out in Section 3 of the Offer, “Manner of Acceptance — Acceptance by Book-Entry Transfer”. Shareholders will not be required to pay any fee or commission if they accept the Offer by depositing their Common Shares directly with the Depositary.

 

Shareholders whose Common Shares are registered in the name of an investment advisor, stock broker, bank, trust company or other nominee should immediately contact that nominee for assistance if they wish to accept the Offer in order to take the necessary steps to be able to deposit such Common Shares under the Offer.

 

Fronteer has engaged Kingsdale Shareholder Services Inc. to act as the depositary under the Offer (the “Depositary”) and to act as the information agent (the “Information Agent”) to provide a resource for information for Shareholders. Questions and requests for assistance may be directed to the Information Agent and Depositary. Additional copies of the Offer and Circular, the Letter of Transmittal and the Notice of Guaranteed Delivery may

be obtained without charge on request from the Information Agent and Depositary. The contact details for the Information Agent and Depositary are provided at the end of this document.

 

This document does not constitute an offer or a solicitation made to any person in any jurisdiction in which such offer or solicitation is unlawful. The Offer is not being made to, nor will deposits be accepted from or on behalf of, Shareholders in any jurisdiction in which the making or acceptance of the Offer would not be in compliance with the laws of such jurisdiction. However, Fronteer may, in Fronteer’s sole discretion, take such action as Fronteer may deem necessary to extend the Offer to Shareholders in any such jurisdiction.

 

Information has been incorporated by reference into this document from documents filed with securities commissions or similar authorities in Canada and the United States. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Corporate Secretary of Fronteer at Suite 1650, 1055 West Hastings Street, Vancouver, British Columbia V6E 2E9 or Telephone 604-632-4677, and are also available electronically on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

 

These securityholder materials are being sent to both registered and non-registered owners of the Common Shares of Aurora. If you are a non-registered owner of Common Shares, and Fronteer or its agent has sent these materials directly to you, your name and address and information about your holdings of Common Shares of Aurora have been obtained in accordance with applicable securities regulatory requirements from the intermediary holding on your behalf.

 

 

NOTICE TO SHAREHOLDERS IN THE UNITED STATES

 

The Offer is made for the securities of a Canadian company that does not have securities registered under Section 12 of the US Exchange Act. Accordingly, the Offer is not subject to Section 14(d) of the US Exchange Act, or Regulation 14D promulgated by the SEC thereunder. The Offer is being conducted in accordance with Section 14(e) of the US Exchange Act and Regulation 14E promulgated by the SEC thereunder as applicable to tender offers conducted under the US-Canadian multi-jurisdictional disclosure system tender offer rules. The Offer is made in the United States with respect to securities of a “foreign private issuer”, as such term is defined in Rule 3b-4 promulgated under the US Exchange Act, in accordance with Canadian corporate and tender offer rules. Shareholders resident in the United States should be aware that such requirements might be different from those of the United States applicable to tender offers under the US Exchange Act and the rules and regulations promulgated thereunder.

 

 

NOTICE TO HOLDERS OF OPTIONS
AND OTHER RIGHTS TO ACQUIRE COMMON SHARES

 

The Offer is made only for Common Shares and is not made for any Options or other securities of Aurora that are convertible into or exchangeable or exercisable for Common Shares. Any holder of Options or other securities of Aurora that are convertible into or exchangeable or exercisable for Common Shares who wishes to accept the Offer must, to the extent permitted by the terms of the security and applicable Laws, exercise the Options or other securities of Aurora that are convertible into or exchangeable or exercisable for Common Shares in order to obtain certificates representing Common Shares and deposit those Common Shares in accordance with the terms of the Offer. Any such conversion, exchange or exercise must be completed sufficiently in advance of the Expiry Time to ensure that the holder of such Options or other securities convertible into or exchangeable or exercisable for Common Shares will have certificates representing the Common Shares received on such exercise available for deposit at or prior to the Expiry Time, or in sufficient time to comply with the procedures referred to under “Manner of Acceptance — Procedure for Guaranteed Delivery” in Section 3 of the Offer.

 

If any holder of Options or other securities of Aurora that are convertible into or exchangeable or exercisable for Common Shares does not exercise such Options or other securities convertible into or exchangeable or exercisable for Common Shares prior to the Expiry Time, such Options or other securities convertible into or exchangeable or exercisable for Common Shares will remain outstanding; provided, however, that Fronteer presently intends to take such actions as are necessary to ensure that after completion of a Compulsory Acquisition or Subsequent Acquisition Transaction, an Option or other right to acquire Common Shares will become an option or right to acquire a number of Fronteer Common Shares, and/or in some cases an amount of cash, based upon the price for Common Shares offered under the Offer.

 

The tax consequences to holders of Options or other securities that are convertible into or exchangeable or exercisable for Common Shares of exercising, converting or exchanging, as applicable, their Options or other securities are not described in “Certain Canadian Federal Income Tax Considerations” in Section 21 of the Circular or “Certain United States Federal Income Tax Considerations” in Section 22 of the Circular. Holders of Options or other securities convertible into or exchangeable or exercisable for Common Shares should consult their tax advisors for advice with respect to potential income tax consequences to them in connection with the decision to exercise or not exercise such securities.

 

STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

 

This Offer and Circular, including the Schedules attached hereto, the unaudited pro forma condensed consolidated financial statements of Fronteer, some of the information incorporated by reference in this Offer and Circular, statements made in the Circular under Section 5, “Benefits of and Reasons to Accept the Offer”, Section 6, “Purpose of the Offer and Plans for Aurora”, Section 8, “Source of Offered Consideration”, Section 9, “Summary Historical and Unaudited Pro Forma Consolidated Financial Information” and Section 20, “Acquisition of Common Shares Not Deposited Under the Offer”, as well as other written statements made or provided or to be made or provided by Fronteer that are not historical facts, are “forward-looking statements” and “forward-looking information” under applicable Canadian and United States securities laws. Such forward-looking statements and forward-looking information includes, without limitation, information concerning the proposed transaction and the business, operations and financial performance and condition of Fronteer and Aurora, estimated production, costs and mine life of the various mineral projects of Fronteer or Aurora, those with respect to potential expansion of mineralization, plans for exploration and development, potential future production, exploration budgets and timing of expenditures and community relations activities and any statement that may predict, forecast, indicate or imply future plans, intentions, levels of activity, results, performance or achievements, and involve known and unknown risks, uncertainties and other factors which may cause the actual plans, intentions, activities, results, performance or achievements of Fronteer or Aurora to be materially different from any future plans, intentions, activities, results, performance or achievements expressed or implied by such forward-looking statements. Statements concerning mineral reserve and resource estimates may also be deemed to constitute forward-looking statements to the extent they involve estimates of the mineralization that will be encountered if any property is developed. Except for statements of historical fact relating to the companies, information contained herein or incorporated by reference herein constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as “will”, “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “forecast”, “schedule”, “estimate” and similar expressions, or statements that certain events or conditions “may” or “will” occur. Forward-looking statements are based upon a number of estimates and assumptions of management at the date the statements are made, and are inherently subject to significant business, social, economic, political, competitive and other risks and uncertainties, contingencies and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Assumptions upon which such forward-looking statements are based include, among others, that Fronteer will be successful in acquiring 100% of the outstanding Common Shares, that all required third party regulatory and governmental approvals to the transactions will be obtained and all other conditions to completion of the transactions will be satisfied or waived. Many of these assumptions are based on factors and events that are not within the control of Fronteer and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include, among others, the impact of mineral laws on Fronteer’s and Aurora’s licenses, operations and capital structure; changes in government legislation; changes in ownership interest in any project; conclusions of economic evaluations; environmental risks and hazards; increased infrastructure and/or operating costs; labour and employment matters; international operations and joint ventures; uncertainty regarding estimation of reserves and resources; the satisfaction of conditions to any Offer; the occurrence of any event, change or other circumstance that could give rise to the termination of the Lock-Up Agreements relating to the Offer; a delay in the consummation of the proposed transaction or the failure to complete the proposed transaction for any other reason; the amount of costs, fees and expenses related to the proposed transaction; the anticipated benefits to Aurora and Fronteer shareholders and other expected or anticipated benefits of the proposed acquisition; Aurora’s or Fronteer’s ability to renew existing licenses; the actual results of current exploration activities; political instability and delays in obtaining governmental approvals or financing or in the completion of development and construction activities; changes in market conditions; variations in ore grade or recovery rates; risks relating to international operations; changes in project parameters; the possibility of project cost overruns or unanticipated costs and expenses; accidents; disruptions in the credit markets; labour disputes and other risks of the mining industry; failure of plant, equipment or processes to operate as anticipated; changes in the worldwide price of certain commodities such as

gold, copper, silver, uranium, coal, fuel, electricity and fluctuations in resource prices, currency exchange rates and interest rates; inflationary pressures; legislative, political, social and economic developments or changes in jurisdictions in which Fronteer and Aurora carry on business; changes or disruptions in the securities markets; the occurrence of natural disasters, hostilities, acts of war or terrorism; the need to obtain and maintain licenses and permits and comply with laws and regulations or other regulatory requirements; operating or technical difficulties in connection with exploration or development activities, including conducting such activities in locations with limited infrastructure; employee relations and shortages of skilled personnel and contractors; the speculative nature of mineral exploration and development, including the risk of diminishing quantities or grades of mineralization; contests over title to properties; the risks involved in the exploration, development and mining business; the Fronteer Common Shares issued in connection with the Offer having a market value lower than expected; the acquisition of Aurora or its integration with Fronteer not being successful or such integration being more difficult, time-consuming and costly than expected; and the expected combined benefit from the Offer not being fully realized or realized within the expected time frame. See “Benefits of and Reasons to Accept the Offer” in Section 5 of the Circular, “Purpose of the Offer and Plans for Aurora” in Section 6 of the Circular, and “Risks Relating to the Offer” in Section 7 of the Circular; as well as those risk factors discussed or referred to in the annual and interim management’s discussion and analyses, Annual Information Form and Annual Report on Form 40-F for Fronteer filed with certain regulatory authorities in Canada and the SEC and the annual management’s discussion and analysis and annual information form for Aurora filed with certain securities regulatory authorities in Canada and available under each of Fronteer’s and Aurora’s respective profiles on SEDAR at www.sedar.com and, in the case of Fronteer’s filings with the SEC, under Fronteer’s profile on EDGAR at www.sec.gov. These factors are not intended to represent a complete list of the factors that could affect Fronteer and the combination of Fronteer and Aurora. Additional factors are noted elsewhere in the Offer and Circular and in the documents incorporated by reference.

 

Although Fronteer has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Fronteer disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable Laws. The reader is cautioned not to place undue reliance on forward-looking statements. Any forward-looking statements related to Aurora are derived from Aurora’s publicly available documents and records on file with the Canadian securities regulatory authorities.

 

INFORMATION CONCERNING AURORA

 

Except as otherwise indicated, the information concerning Aurora contained in this Offer and Circular has been taken from or is based exclusively upon Aurora’s publicly available documents and records on file with the Canadian securities regulatory authorities and other public sources. Aurora has not reviewed this Offer and Circular and has not confirmed the accuracy and completeness of the information in respect of Aurora contained herein. Although Fronteer has no knowledge that would indicate that any statements contained herein concerning Aurora taken from or based upon such documents and records are untrue or incomplete, neither Fronteer nor any of its directors or officers assumes any responsibility for the accuracy or completeness of such information, including any of Aurora’s financial statements, or for any failure by Aurora to disclose events or facts which may have occurred or which may affect the significance or accuracy of any such information but which are unknown to Aurora. Fronteer has no means of verifying the accuracy or completeness of any of the information contained herein that is derived from Aurora’s publicly available documents or records or determining whether there has been any failure by Aurora to disclose events that may have occurred or may affect the significance or accuracy of any information.

 

REPORTING CURRENCIES AND ACCOUNTING PRINCIPLES

 

Unless otherwise indicated, all references to “Cdn$”, “$” or “dollars” in this Offer and Circular refer to Canadian dollars and all references to “US$” in this Offer and Circular refer to United States dollars. Fronteer’s financial statements that are incorporated by reference herein, and Fronteer’s pro forma condensed consolidated financial statements contained herein, are reported in Canadian dollars and are prepared in accordance with Canadian GAAP. Aurora’s historical consolidated financial statements summarized herein are also reported in Canadian dollars.

 

EXCHANGE RATES

 

On January 22, 2009, the last trading day prior to the commencement of the Offer, the exchange rate for one US dollar expressed in Canadian dollars based upon the noon buying rates provided by the Bank of Canada was $1.2630.

 

The following table sets forth, for the periods indicated, certain information with respect to the rate of exchange for one US dollar expressed in Canadian dollars:

 

 

 

 

CAUTIONARY NOTE CONCERNING MINERAL RESOURCE CALCULATIONS

 

Information in this Offer and Circular, including information incorporated by reference, and disclosure documents of Fronteer that are filed with Canadian and United States securities regulatory authorities concerning mineral properties have been prepared in accordance with the requirements of securities laws in effect in Canada, which differ from the requirements of United States securities laws.

 

Without limiting the foregoing, these documents use the terms “measured resources”, “indicated resources” and “inferred resources”. Shareholders in the United States are advised that, while such terms are recognized and required by Canadian securities laws, the SEC does not recognize them. Under United States standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. United States investors are cautioned not to assume that all or any part of measured or indicated resources will ever be converted into reserves. Further, inferred resources have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. It cannot be assumed that all or any part of the inferred resources will ever be upgraded to a higher resource category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility, pre-feasibility or other technical reports or studies, except in rare cases. Therefore, United States investors are also cautioned not to assume that all or any part of the inferred resources exist, or that they can be mined legally or economically. Disclosure of contained ounces is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report resources as in place tonnage and grade without reference to unit measures. Accordingly, information concerning descriptions of mineralization and resources contained in these documents may not be comparable to information made public by United States companies subject to the reporting and disclosure requirements of the SEC.

 

National Instrument 43-101 — Standards of Disclosure for Mineral Projects (“NI 43-101”) is a rule developed by the Canadian Securities Administrators, which has established standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. Unless otherwise indicated, all resource estimates of Fronteer contained in this Offer and Circular, including information incorporated by reference, have been prepared in accordance with NI 43-101 and the Canadian Institute of Mining, Metallurgy and Petroleum Classification System.

 

TABLE OF CONTENTS

 

 

 

 

SUMMARY OF THE OFFER

		Fiscal Year Ended								Nine Months Ended
		December 31								September 30
		2007				2006				2008				2007
Consolidated Statement of Operations Data
Revenue		$	Nil			$	Nil			$	Nil			$	Nil
Operating expenses			(17,946	)			(6,930	)			(14,003	)			(13,787	)
Other income (expense)			42,689				20,947				217				(638	)
Tax expense (recovery)			4,368				(999	)			(1,116	)			74
Net income (loss) for the period			20,375				15,012				(12,670	)			(14,499	)
			0.29,				0.27,				(0.15	),			(0.22	),
Income (loss) per share — basic, diluted			0.28				0.25				(0.15	)			(0.22	)

		As at December 31								As at September 30
		2007				2006				2008				2007
Consolidated Balance Sheet
Cash and cash equivalents		$	99,039			$	40,392			$	87,464			$	101,831
Other current assets			1,465				4,322				1,624				2,973
Capital assets, net			1,237				309				1,622				1,169
Assets held for sale			9,392				1,331				Nil				4,146
Reclamation bonds			1,797				Nil				3,384				1,780
Interests in equity investments			89,654				37,508				88,744				47,212
Mineral interests			223,853				18,450				231,848				219,781
Total assets		$	426,437			$	102,311			$	414,686			$	378,891
Current liabilities		$	3,602			$	1,375			$	3,840			$	2,697
Long-term liabilities			55,986				1,572				54,405				50,719
Shareholders’ equity			366,850				99,364				356,441				325,475
Total liabilities and shareholders’ equity		$	426,437			$	102,311			$	414,686			$	378,891
Common shares outstanding (thousands)			83,176				60,970				83,226				83,040

		Fiscal Year Ended
		December 31
		2007				2006
Consolidated Statement of Operations Data
Revenue		$	Nil			$	Nil
Operating expenses			(11,080	)			(13,998	)
Other income			2,214				1,010
Tax expense (recovery)			(1,451	)			(417	)
Net loss for the period			(7,415	)			(12,572	)
Loss per share — basic and diluted			(0.11	)			(0.23	)

		As at December 31
		2007				2006
Consolidated Balance Sheet
Cash and cash equivalents		$	131,095			$	53,138
Other current assets			2,580				537
Capital assets, net			1,802				403
Mineral interests			56,710				22,341
Total assets		$	192,187			$	76,419
Current liabilities		$	3,777			$	1,289
Long term liabilities			3,531				560
Shareholders’ equity			184,879				74,571
Total liabilities and shareholders’ equity		$	192,187			$	76,419
Common shares outstanding (thousands)			73,147				65,504

		Nine Months				Fiscal Year
		Ended				Ended
		September 30 2008				December 31 2007
Pro forma Condensed Consolidated Statement of Operations
Revenue		$	Nil			$	Nil
Operating expenses			(20,362	)			(35,164	)
Other income			4,252				6,088
Income tax recovery			1,657				2,373
Net loss for the period			(14,453	)			(26,703	)
Loss per share — basic and diluted			(0.12	)			(0.23	)

		As at
		September 30 2008
Pro forma Condensed Consolidated Balance Sheet
Cash and cash equivalents		$	196,737
Accounts receivable and other current assets			4,087
Property, plant and equipment			3,375
Reclamation bond			3,384
Interests in Turkish Properties			13,125
Exploration properties and deferred exploration expenditures			283,476
Total assets		$	504,184
Current liabilities		$	9,464
Long-term liabilities			50,580
Shareholders’ equity			444,140
Total liabilities and shareholders’ equity		$	504,184

 

This Glossary forms part of the Offer. In the Offer, the Summary, the Circular, the Letter of Transmittal and the Notice of Guaranteed Delivery, unless the subject matter or context is inconsistent therewith, the following terms shall have the meanings set out below and grammatical variations thereof will have the corresponding meanings.

 

“Acquisition” has the meaning ascribed thereto under “Certain United States Federal Income Tax Considerations” in Section 22 of the Circular;

 

“affiliate” has the meaning ascribed thereto in the OSA;

 

“Agent’s Message” has the meaning ascribed thereto under “Manner of Acceptance — Acceptance by Book-Entry Transfer” in Section 3 of the Offer;

 

“allowable capital loss” has the meaning ascribed thereto under “Certain Canadian Federal Income Tax Considerations” in Section 21 of the Circular;

 

“Alternext” means the NYSE Alternext US LLC;

 

“Amber” means Amber Capital Investment Management;

 

“Amber Lock-Up Agreement” means the lock-up agreement dated December 20, 2008 between Fronteer and Amber, as described under “Agreements Relating to the Offer” in Section 4 of the Circular;

 

“Annual Information Form” means the annual information form of Fronteer for the fiscal year ended December 31, 2007 dated March 27, 2008, filed with certain Canadian provincial securities regulatory authorities;

 

“associate” has the meaning ascribed thereto in the OSA;

 

“Aurora” means Aurora Energy Resources Inc., a corporation existing under the laws of the Province of Newfoundland and Labrador and, where the context requires, its joint ventures;

 

“Aurora Special Committee” has the meaning ascribed thereto under “Background to the Offer” in Section 3 of the Circular;

 

“Board of Directors” means the board of directors of Aurora;

 

“Book-Entry Confirmation” means confirmation of a book-entry transfer of the Shareholder’s Common Shares into the Depositary’s account at CDS or DTC, as applicable;

 

“business combination” has the meaning ascribed thereto in MI 61-101;

 

“business day” has the meaning ascribed thereto in MI 62-104;

 

“Canada-US Tax Convention” has the meaning ascribed thereto under “Certain United States Federal Income Tax Considerations” in Section 22 of the Circular;

 

“Canadian GAAP” means generally accepted accounting principles in Canada;

 

“CDS” means CDS Clearing and Depository Services Inc. or its nominee, which at the date hereof is CDS & Co.;

 

“CDSX” means the CDS on-line tendering system pursuant to which book-entry transfers may be effected;

 

“Circular” means the take-over bid circular accompanying and forming part of the Offer, including the Schedules attached thereto;

 

“Code” has the meaning ascribed thereto under “Certain United States Federal Income Tax Considerations” in Section 22 of the Circular;

 

“Common Shares” means the issued and outstanding common shares of Aurora, including all common shares issued prior to the Expiry Time upon the conversion, exchange or exercise of Options or any other securities of Aurora convertible into or exchangeable or exercisable for common shares of Aurora, and “Common Share” means any one common share of Aurora;

 

“Company Material Adverse Effect” means any change, effect, event, circumstance, occurrence or state of facts, pending or threatened, that is, or would reasonably be expected to be, material and adverse to the business, properties, assets, liabilities (whether absolute, accrued, conditional or otherwise and including any contingent liabilities that may arise through outstanding, pending or threatened litigation or otherwise), capitalization, condition (financial or otherwise), operations, results of operations, prospects, licenses, permits, articles, by-laws, or rights or privileges of Aurora and its subsidiaries and joint ventures, if any;

 

“Compulsory Acquisition” has the meaning ascribed thereto under “Acquisition of Common Shares Not Deposited Under the Offer” in Section 20 of the Circular;

 

“CRA” means the Canada Revenue Agency;

 

“Depositary” means Kingsdale Shareholder Services Inc., the depositary for the Offer;

 

“Deposited Shares” has the meaning ascribed thereto under “Manner of Acceptance — Dividends and Distributions” in Section 3 of the Offer;

 

“designated stock exchange” has the meaning ascribed thereto under “Certain Canadian Federal Income Tax Considerations” in Section 21 of the Circular;

 

“Distributions” has the meaning ascribed thereto under “Manner of Acceptance — Dividends and Distributions” in Section 3 of the Offer;

 

“Dissenting Shareholders” has the meaning ascribed thereto under “Acquisition of Common Shares Not Deposited Under the Offer” in Section 20 of the Circular;

 

“DTC” means The Depository Trust Company;

 

“Eastbourne” means Eastbourne Capital Management, L.L.C.;

 

“Eastbourne Lock-Up Agreement” means the lock-up agreement dated December 19, 2008 between Fronteer and Eastbourne, as described under “Agreements Relating to the Offer” in Section 4 of the Circular;

 

“EDGAR” means the United States Electronic Data Gathering, Analysis, and Retrieval system maintained by the SEC;

 

“Effective Time” has the meaning ascribed thereto under “Manner of Acceptance — Power of Attorney” in Section 3 of the Offer;

 

“Eligible Institution” means a Canadian Schedule I chartered bank, a major trust company in Canada, a member of the Securities Transfer Agents Medallion Program (STAMP), a member of the Stock Exchanges Medallion Program (SEMP) or a member of the New York Stock Exchange, Inc. Medallion Signature Program (MSP);

 

“Expiry Date” means March 2, 2009, or such later date or dates as may be fixed by Fronteer from time to time as provided under “Extension, Variation or Change in the Offer” in Section 5 of the Offer, unless the Offer is withdrawn by Fronteer;

 

“Expiry Time” means 8:00 p.m. (Toronto time) on the Expiry Date, or such later time or times as may be fixed by Fronteer from time to time as provided under “Extension, Variation or Change in the Offer” in Section 5 of the Offer, unless the Offer is withdrawn by Fronteer;

 

“Fronteer” means Fronteer Development Group Inc., a corporation existing under the laws of the Province of Ontario;

 

“Fronteer Common Shares” means the common shares of Fronteer, and “Fronteer Common Share” means any one common share of Fronteer;

 

“Fronteer Special Committee” has the meaning ascribed thereto under “Background to the Offer” in Section 3 of the Circular;

 

“fully diluted basis” means, with respect to the number of outstanding Common Shares at any time, the number of Common Shares that would be outstanding if all Options and other securities of Aurora that are convertible into or exchangeable or exercisable for Common Shares, whether vested or unvested, were converted into or exchanged or exercised, as applicable, for Common Shares;

 

“Governmental Entity” means: (i) any supranational body or organization, nation, government, state, province, country, territory, municipality, quasi-government, administrative, judicial or regulatory authority, agency, board, body, bureau, commission, instrumentality, court or tribunal or any political subdivision thereof, or any central bank (or similar monetary or regulatory authority) thereof, any taxing authority, any ministry or department or agency of any of the foregoing; (ii) any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any court; and (iii) any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of such entities or other bodies;

 

“Information Agent” means Kingsdale Shareholder Services Inc., the information agent for the Offer;

 

“IRS” has the meaning ascribed thereto under “Certain United States Federal Income Tax Considerations” in Section 22 of the Circular;

 

“Laws” means any applicable laws, including, without limitation, supranational, national, provincial, state, municipal and local, civil, commercial, banking, securities, tax, personal and real property, security, mining, environmental, water, energy, investment, property ownership, land use and zoning, sanitary, occupational health and safety laws, treaties, statutes, ordinances, instruments, judgments, decrees, injunctions, writs, certificates and orders, by-laws, rules, regulations, ordinances, protocols, codes, guidelines, policies, notices, directions or other requirements of any Governmental Entity;

 

“Letter of Transmittal” means the Letter of Transmittal (printed on YELLOW paper) in the form accompanying the Offer and Circular, or a manually signed facsimile thereof;

 

“Lock-Up Agreements” means, collectively, the Amber Lock-Up Agreement, Eastbourne Lock-Up Agreement and MacKenzie Lock-Up Agreement;

 

“Locked-Up Shareholders” means, collectively, Amber, Eastbourne and MacKenzie;

 

“Locked-Up Shares” means those Fronteer Common Shares held by the Locked-Up Shareholders and subject to the Lock-Up Agreements;

 

“MacKenzie” means MacKenzie Financial Corporation;

 

“MacKenzie Lock-Up Agreement” means the lock-up agreement dated December 19, 2008 between Fronteer and MacKenzie, as described under “Agreements Relating to the Offer” in Section 4 of the Circular;

 

“Mark-to-Market Election” has the meaning ascribed thereto under “Certain United States Federal Income Tax Considerations” in Section 22 of the Circular;

 

“Minimum Deposit Condition” has the meaning ascribed thereto under “Conditions of the Offer” in Section 4 of the Offer;

 

“MI 61-101” means Multilateral Instrument 61-101 — Protection of Minority Security Holders in Special Transactions, as amended, supplemented or replaced from time to time;

 

“MI 62-104” means Multilateral Instrument 62-104 — Take-Over Bids and Issuer Bids, as amended, supplemented or replaced from time to time;

 

“NI 43-101” means National Instrument 43-101 — Standards of Disclosure for Mineral Projects, as amended, supplemented or replaced from time to time;

 

“NLCA” means the Corporations Act (Newfoundland and Labrador), as amended, supplemented or replaced from time to time;

 

“Non-Resident Shareholder” has the meaning ascribed thereto under “Certain Canadian Federal Income Tax Considerations” in Section 21 of the Circular;

 

“non-US Holder” has the meaning ascribed thereto under “Certain United States Federal Income Tax Considerations” in Section 22 of the Circular;

 

“Notice of Guaranteed Delivery” means the Notice of Guaranteed Delivery (printed on PINK paper) in the form accompanying the Offer and Circular, or a manually signed facsimile thereof;

 

“Offer” means the offer to purchase Common Shares made hereby to the Shareholders pursuant to the terms set out herein;

 

“Offer and Circular” means the Offer and the Circular, including the Summary, the Glossary and all Schedules to the Offer and Circular;

 

“Offer Consideration” has the meaning ascribed thereto under “The Offer” in Section 1 of the Offer;

 

“Offeror’s Notice” has the meaning ascribed thereto under “Acquisition of Common Shares Not Deposited Under the Offer” in Section 20 of the Circular;

 

“Options” means any options to acquire Common Shares issued pursuant to Aurora’s Stock Option Plan;

 

“OSA” means the Securities Act (Ontario), as amended, supplemented or replaced from time to time;

 

“OSC” means the Ontario Securities Commission;

 

“OSC Rule 62-504” means OSC Rule 62-504 — Take-Over Bids and Issuer Bids, as amended, supplemented or replaced from time to time;

 

“PFIC” has the meaning ascribed thereto under “Certain United States Federal Income Tax Considerations” in Section 22 of the Circular;

 

“Proposed Amendments” has the meaning ascribed thereto under “Certain Canadian Federal Income Tax Considerations” in Section 21 of the Circular;

 

“Purchased Securities” has the meaning ascribed thereto under “Manner of Acceptance — Power of Attorney” in Section 3 of the Offer;

 

“QEF” has the meaning ascribed thereto under “Certain United States Federal Income Tax Considerations” in Section 22 of the Circular;

 

“QFC” has the meaning ascribed thereto under “Certain United States Federal Income Tax Considerations” in Section 22 of the Circular;

 

“RBC” has the meaning ascribed thereto under “Background to the Offer” in Section 3 of the Circular;

 

“Redeemable Shares” has the meaning ascribed thereto under “Certain Canadian Federal Income Tax Considerations” in Section 21 of the Circular;

 

“Reorganization” has the meaning ascribed thereto under “Certain United States Federal Income Tax Considerations” in Section 22 of the Circular;

 

“Resident Shareholder” has the meaning ascribed thereto under “Certain Canadian Federal Income Tax Considerations” in Section 21 of the Circular;

 

“SEC” means the United States Securities and Exchange Commission;

 

“SEDAR” means the System for Electronic Document Analysis and Retrieval maintained by the Canadian Securities Administrators;

 

“SEDI” means the System for Electronic Data on Insiders;

 

“Shareholders” means, collectively, the holders of Common Shares, and “Shareholder” means any one of them;

 

“Stock Option Plan” means Aurora’s stock option plan approved by the Shareholders on February 7, 2006, as amended, supplemented or replaced from time to time;

 

“Subsequent Acquisition Transaction” has the meaning ascribed thereto under “Acquisition of Common Shares Not Deposited Under the Offer — Subsequent Acquisition Transaction” in Section 20 of the Circular;

 

“subsidiary” has the meaning ascribed thereto in the OSA;

 

“take up” in reference to Common Shares means to accept such Common Shares for payment by giving written notice of such acceptance to the Depositary and “taking up” and “taken up” have corresponding meanings;

 

“Tax Act” means the Income Tax Act (Canada) and all regulations made thereunder, as amended, supplemented or replaced from time to time;

 

“taxable Canadian property” has the meaning ascribed thereto under “Certain Canadian Federal Income Tax Considerations” in Section 21 of the Circular;

 

“taxable capital gain” has the meaning ascribed thereto under “Certain Canadian Federal Income Tax Considerations” in Section 21 of the Circular;

 

“Technical Experts” has the meaning ascribed thereto under “Experts” in Section 26 of the Circular;

 

“treaty-protected property” has the meaning ascribed thereto under “Certain Canadian Federal Income Tax Considerations” in Section 21 of the Circular;

 

“TSX” means the Toronto Stock Exchange;

 

“United States” or “US” means the United States of America, its territories and possessions, any State of the United States, and the District of Columbia;

 

“US Exchange Act” means the United States Securities Exchange Act of 1934, as amended, supplemented or replaced from time to time and the rules and regulations promulgated thereunder;

 

“US Holders” has the meaning ascribed thereto under “Certain United States Federal Income Tax Considerations” in Section 22 of the Circular;

 

“US Securities Act” means the United States Securities Act of 1933, as amended, supplemented or replaced from time to time and the rules and regulations promulgated thereunder; and

 

“Valuation Requirements” has the meaning ascribed thereto under “Regulatory Matters — Canadian Securities Laws” in Section 19 of the Circular.

 

The accompanying Circular, which is incorporated into and forms part of the Offer, contains important information that should be read carefully before making a decision with respect to the Offer. Capitalized terms used in the Offer but not otherwise defined herein, are defined in the Glossary.

 

January 23, 2009

 

TO:  THE HOLDERS OF COMMON SHARES OF AURORA

 

 

Fronteer is offering, upon and subject to the terms and conditions of the Offer, to purchase all of the issued and outstanding Common Shares, other than Common Shares beneficially owned by Fronteer, including Common Shares that may become issued and outstanding after the date of the Offer but before the Expiry Time upon the conversion, exchange or exercise of Options or other securities of Aurora that are convertible into or exchangeable or exercisable for Common Shares, on the basis of 0.825 of a Fronteer Common Share for each Common Share (the “Offer Consideration”).

 

Each Shareholder will receive the Offer Consideration in respect of all of the Shareholder’s Common Shares validly deposited under the Offer and not properly withdrawn, subject to adjustment for fractional shares.

 

The Offer represents a premium of approximately 166% over the December 19, 2008 closing price of the Common Shares on the TSX of $0.97, based on a closing price of $3.13 per Fronteer Common Share on the TSX on that same date, which was the last trading day prior to Fronteer’s announcement of its intention to make an Offer. The Offer also represents a premium of approximately 96% based on the respective volume weighted average trading prices of Fronteer and Aurora on the TSX for the 20 trading days ended December 19, 2008.

 

Fronteer owns and controls an aggregate of approximately 42% of the issued and outstanding Common Shares. In addition, pursuant to Lock-Up Agreements entered into with each of Amber, Eastbourne and MacKenzie, each such Shareholder has agreed to deposit under the Offer and not withdraw, subject to certain exceptions, Common Shares representing in the aggregate 19,234,700 Common Shares or approximately 26% of the issued and outstanding Common Shares. See Section 4 of the Circular, “Agreements Relating to the Offer”.

 

The Offer is made only for Common Shares and is not made for any Options or other securities of Aurora that are convertible into or exchangeable or exercisable for Common Shares. Any holder of such Options or other securities convertible into or exchangeable or exercisable for Common Shares who wishes to accept the Offer must, to the extent permitted by the terms of the security and applicable Laws, exercise the Options or other securities convertible into or exchangeable or exercisable for Common Shares in order to obtain certificates representing Common Shares and deposit those Common Shares in accordance with the terms of the Offer. Any such conversion, exchange or exercise must be completed sufficiently in advance of the Expiry Time to ensure that the holder of such Options or other securities convertible into or exchangeable or exercisable for Common Shares will have certificates representing the Common Shares on such exercise available for deposit at or prior to the Expiry Time, or in sufficient time to comply with the procedures referred to under “Manner of Acceptance — Procedure for Guaranteed Delivery” in Section 3 of the Offer.

 

If any holder of Options does not exercise such Options prior to the Expiry Time, such Options will remain outstanding; provided, however, that Fronteer presently intends to take such actions as are necessary to ensure that after completion of a Compulsory Acquisition or Subsequent Acquisition Transaction, an Option or other right to acquire Common Shares will become an option or right to acquire a number of Fronteer Common Shares, and/or in some cases an amount of cash, based upon the price for Common Shares offered under the Offer.

 

Shareholders will not have dissent or appraisal rights in connection with the Offer. However, Shareholders who do not tender their Common Shares to the Offer may have rights of dissent in the event Fronteer elects to acquire such Common Shares by way of a Compulsory Acquisition or Subsequent Acquisition Transaction. See “Acquisition of Common Shares Not Deposited Under the Offer” in Section 20 of the Circular.

 

No fractional Fronteer Common Shares will be issued pursuant to the Offer. Where the aggregate number of Fronteer Common Shares to be issued to a Shareholder as consideration under the Offer would result in a fraction of a Fronteer Common Share being issuable, the number of Fronteer Common Shares to be received by such Shareholder will either be rounded up (if the fractional interest is 0.5 or more) or down (if the fractional interest is less than 0.5) to the nearest whole number.

 

Shareholders will not be required to pay any fee or commission if they accept the Offer by depositing their Common Shares directly with the Depositary.

Shareholders whose Common Shares are registered in the name of an investment advisor, stock broker, bank, trust company or other nominee should immediately contact such nominee for assistance in depositing their Common Shares.

 

 

The Offer is open for acceptance until the Expiry Time, being 8:00 p.m. (Toronto time) on March 2, 2009, or such later time or times and date or dates as may be fixed by Fronteer from time to time pursuant to Section 5 of the Offer, “Extension, Variation or Change in the Offer”, unless the Offer is withdrawn by Fronteer.

 

 

Letter of Transmittal

 

The Offer may be accepted by delivering to the Depositary at its office in Toronto, Ontario set out in the Letter of Transmittal (printed on YELLOW paper) accompanying the Offer, so as to be received at or prior to the Expiry Time:

 

 

Participants of CDS or DTC should contact the Depositary with respect to the deposit of their Common Shares under the Offer. CDS and DTC will be issuing instructions to their respective participants as to the method of depositing such Common Shares under the terms of the Offer.

 

Shareholders will not be required to pay any fee or commission if they accept the Offer by depositing their Common Shares directly with the Depositary.

 

Except as otherwise provided in the instructions set out in the Letter of Transmittal, the signature on the Letter of Transmittal must be guaranteed by an Eligible Institution. If a Letter of Transmittal is executed by a person other than the registered holder of the certificate(s) deposited therewith, and in certain other circumstances as set out in the Letter of Transmittal, (i) the accompanying certificate(s) representing the Common Shares must be endorsed or be accompanied by an appropriate share transfer power of attorney, in either case, duly and properly completed by the registered holder(s), and (ii) the signature(s) on the endorsement panel or share transfer power of attorney must correspond exactly to the name(s) of the registered holder(s) as registered or as written on the face of the certificate(s) and must be guaranteed by an Eligible Institution (except that no guarantee is required if the signature is that of an Eligible Institution).

 

In addition, Common Shares may be deposited under the Offer in compliance with the procedures for guaranteed delivery set out below under the heading “Procedure for Guaranteed Delivery” or in compliance with the procedures for book-entry transfers set out below under the heading “Acceptance by Book-Entry Transfer”.

 

Procedure for Guaranteed Delivery

 

If a Shareholder wishes to deposit Common Shares under the Offer and either the certificate(s) representing the Common Shares are not immediately available or the certificate(s) and all other required documents cannot be delivered to the Depositary at or prior to the Expiry Time, those Common Shares may nevertheless be deposited under the Offer, provided that all of the following conditions are met:

 

 

The Notice of Guaranteed Delivery must be delivered by hand or courier or transmitted by facsimile or mailed to the Depositary at its office in Toronto, Ontario set out in the Notice of Guaranteed Delivery and must include a guarantee by an Eligible Institution in the form set out in the Notice of Guaranteed Delivery. Delivery of the Notice of Guaranteed Delivery and the Letter of Transmittal and accompanying certificate(s) representing Common Shares and all other required documents to any office other than the Toronto, Ontario office of the Depositary does not constitute delivery for purposes of satisfying a guaranteed delivery.

 

Acceptance by Book-Entry Transfer

 

Shareholders may accept the Offer by following the procedures for a book-entry transfer established by CDS, provided that a Book-Entry Confirmation through CDSX is received by the Depositary at its office in Toronto, Ontario at or prior to the Expiry Time. The Depositary has established an account at CDS for the purpose of the Offer. Any financial institution that is a participant in CDS may cause CDS to make a book-entry transfer of a Shareholder’s Common Shares into the Depositary’s account in accordance with CDS procedures for such transfer. Delivery of Common Shares to the Depositary by means of a book-entry transfer will constitute a valid tender under the Offer.

 

Shareholders, through their respective CDS participants, who utilize CDSX to accept the Offer through a book-entry transfer of their holdings into the Depositary’s account with CDS shall be deemed to have completed and submitted a Letter of Transmittal and to be bound by the terms thereof and therefore such instructions received by the Depositary are considered a valid tender in accordance with the terms of the Offer.

 

Shareholders may also accept the Offer by following the procedures for book-entry transfer established by DTC, provided that a Book-Entry Confirmation, together with an Agent’s Message (as defined below) in respect thereof, or a properly completed and executed Letter of Transmittal (including signature guarantee if required) and all other required documents, are received by the Depositary at its office in Toronto, Ontario at or prior to the Expiry Time. The Depositary has established an account at DTC for the purpose of the Offer. Any financial institution that is a participant in DTC may cause DTC to make a book-entry transfer of a Shareholder’s Common Shares into the Depositary’s account in accordance with DTC’s procedures for such transfer. However, as noted above, although delivery of Common Shares may be effected through book-entry transfer at DTC, either an Agent’s Message in respect thereof, or a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and executed (including signature guarantee if required), and all other required documents, must, in any case, be received by the Depositary, at its office in Toronto, Ontario at or prior to the Expiry Time. Delivery of documents to DTC in accordance with its procedures does not constitute delivery to the Depositary. Such documents or Agent’s Message should be sent to the Depositary.

 

The term “Agent’s Message” means a message, transmitted by DTC to, and received by, the Depositary and forming part of a Book-Entry Confirmation, which states that DTC has received an express acknowledgement from the participant in DTC depositing the Common Shares which are the subject of such Book-Entry Confirmation that such participant has received and agrees to be bound by the terms of the Letter of Transmittal as if executed by such participant and that Fronteer may enforce such agreement against such participant.

 

General

 

The Offer will be deemed to be accepted only if the Depositary has actually physically received the requisite documents at or before the time specified. In all cases, payment of the Offer Consideration for the Common Shares deposited and taken up by Fronteer under the Offer will be made only after timely receipt by the Depositary of (a) certificate(s) representing the Common Shares (or, in the case of book-entry transfer to the Depositary, a Book-Entry Confirmation for the Common Shares), (b) a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and executed, covering such Common Shares with the signature(s) guaranteed in accordance with the instructions set out in the Letter of Transmittal (or in the case of Common Shares deposited using the procedures for book-entry transfer established by DTC, an Agent’s Message), and (c) all other required documents.

 

The method of delivery of certificate(s) representing Common Shares (or a Book-Entry Confirmation for the Common Shares, as applicable), the Letter of Transmittal, the Notice of Guaranteed Delivery and all other required documents is at the option and risk of the Shareholder depositing those documents. Fronteer recommends that those documents be delivered by hand to the Depositary and that a receipt be obtained or, if mailed, that registered mail, with return receipt requested, be used and that proper insurance be obtained. It is suggested that any such mailing be made sufficiently in advance of the Expiry Time to permit delivery to the Depositary at or prior to the Expiry Time. Delivery will only be effective upon actual physical receipt by the Depositary.

 

Shareholders whose Common Shares are registered in the name of an investment advisor, stock broker, bank, trust company or other nominee should immediately contact such nominee for assistance in depositing their Common Shares under the Offer.

 

All questions as to the validity, form, eligibility (including, without limitation, timely receipt) and acceptance of any Common Shares deposited under the Offer will be determined by Fronteer in its sole discretion. Depositing Shareholders agree that such determination shall be final and binding. Fronteer reserves the absolute right to reject any and all deposits that it determines not to be in proper form or that may be unlawful to accept under the applicable Laws of any jurisdiction. Fronteer reserves the absolute right to waive any defects or irregularities in the deposit of any Common Shares. There shall be no duty or obligation of Fronteer, the Depositary or any other person to give notice of any defects or irregularities in any deposit and no liability shall be incurred by any of them for failure to give any such notice. Fronteer’s interpretation of the terms and conditions of the Offer, the Circular, the Letter of Transmittal, the Notice of Guaranteed Delivery and any other related documents will be final and binding.

 

Under no circumstances will any amount be paid by Fronteer or the Depositary by reason of any delay in exchanging any Common Shares or in making payment of the Offer Consideration for Common Shares or in lieu of fractional Fronteer Common Shares to any person on account of Common Shares accepted for exchange or payment under the Offer.

 

Fronteer reserves the right to permit the Offer to be accepted in a manner other than that set out in this Section 3.

 

Dividends and Distributions

 

Subject to the terms and conditions of the Offer and subject, in particular, to Common Shares being validly withdrawn by or on behalf of a depositing Shareholder, and except as provided below, by accepting the Offer pursuant to the procedures set out herein, a Shareholder deposits, sells, assigns and transfers to Fronteer all right, title and interest in and to the Common Shares covered by the Letter of Transmittal or book-entry transfer (the “Deposited Shares”) and in and to all rights and benefits arising from such Deposited Shares including, without limitation, any and all dividends, distributions, payments, securities, property or other interests that may be declared, paid, accrued, issued, distributed, made or transferred on or in respect of the Deposited Shares or any of them on and after the date of the Offer, including any dividends, distributions or payments on such dividends, distributions, payments, securities, property or other interests (collectively, “Distributions”).

 

Power of Attorney

 

The execution of a Letter of Transmittal (or, in the case of Common Shares deposited by book-entry transfer, by making a book-entry transfer), irrevocably constitutes and appoints, effective at and after the time (the “Effective Time”) that Fronteer takes up the Deposited Shares, each director or officer of Fronteer, and any other person designated by Fronteer in writing, as the true and lawful agent, attorney, attorney-in-fact and proxy of the holder of the Common Shares covered by the Letter of Transmittal or book-entry transfer (which Common Shares upon being taken up are, together with any Distributions thereon, hereinafter referred to as the “Purchased Securities”) with respect to such Purchased Securities, with full powers of substitution (such powers of attorney, being coupled with an interest, being irrevocable), in the name of and on behalf of such Shareholder:

 

 

 

A Shareholder accepting the Offer under the terms of the Letter of Transmittal (including book-entry transfer) revokes any and all other authority, whether as agent, attorney-in-fact, attorney, proxy or otherwise, previously conferred or agreed to be conferred by the Shareholder at any time with respect to the Deposited Shares or any Distributions. The Shareholder accepting the Offer agrees that no subsequent authority, whether as agent, attorney-in-fact, attorney, proxy or otherwise will be granted with respect to the Deposited Shares or any Distributions by or on behalf of the depositing Shareholder unless the Deposited Shares are not taken up and paid for under the Offer or are properly withdrawn in accordance with Section 7 of the Offer, “Withdrawal of Deposited Common Shares”.

 

A Shareholder accepting the Offer also agrees not to vote any of the Purchased Securities at any meeting (whether annual, special or otherwise, or any adjournments thereof, including, without limitation, any meeting to consider a Subsequent Acquisition Transaction) of holders of relevant securities of Aurora and, except as may otherwise be agreed to with Fronteer, not to exercise any of the other rights or privileges attached to the Purchased Securities, and agrees to execute and deliver to Fronteer any and all instruments of proxy, authorizations or consents in respect of all or any of the Purchased Securities, and agrees to designate or appoint in any such instruments of proxy, authorizations or consents, the person or persons specified by Fronteer as the proxy of the holder of the Purchased Securities. Upon such appointment, all prior proxies and other authorizations (including, without limitation, all appointments of any agent, attorney or attorney-in-fact) or consents given by the holder of such Purchased Securities with respect thereto will be revoked and no subsequent proxies or other authorizations or consents may be given by such person with respect thereto.

 

Further Assurances

 

A Shareholder accepting the Offer covenants under the terms of the Letter of Transmittal (including book-entry transfer) to execute, upon request of Fronteer, any additional documents, transfers and other assurances as may be necessary or desirable to complete the sale, assignment and transfer of the Purchased Securities to Fronteer. Each authority therein conferred or agreed to be conferred is, to the extent permitted by applicable Laws, irrevocable and may be exercised during any subsequent legal incapacity of such holder and shall, to the extent permitted by applicable Laws, survive the death or incapacity, bankruptcy or insolvency of the holder and all obligations of the holder therein shall be binding upon the heirs, executors, administrators, attorneys, personal representatives, successors and assigns of such holder.

 

Formation of Agreement; Shareholder’s Representations and Warranties

 

The acceptance of the Offer pursuant to the procedures set forth above constitutes a binding agreement between a depositing Shareholder and Fronteer, effective immediately following the time at which Fronteer takes up Common Shares deposited by such Shareholder, in accordance with the terms and conditions of the Offer. This agreement includes a representation and warranty by the depositing Shareholder that (i) the person signing the Letter of Transmittal or on whose behalf a book-entry transfer is made has full power and authority to deposit, sell, assign and transfer the Deposited Shares and all rights and benefits arising from such Deposited Shares including, without limitation, any Distributions, (ii) the person signing the Letter of Transmittal or on whose behalf a book-entry transfer is made owns the Deposited Shares and any Distributions deposited under the Offer, (iii) the Deposited Shares and Distributions have not been sold, assigned or transferred, nor has any agreement been entered into to sell, assign or transfer any of the Deposited Shares or Distributions to any other person, (iv) the deposit of the Deposited Shares and Distributions complies with applicable Laws, and (v) when the Deposited Shares and Distributions are taken up and paid for by Fronteer, Fronteer will acquire good title thereto (and to any Distributions), free and clear of all liens, restrictions, charges, encumbrances, claims and rights of others.

 

 

Notwithstanding any other provision of the Offer and subject to applicable Laws, Fronteer will have the right to withdraw the Offer and not take up and pay for, or extend the period of time during which the Offer is open for acceptance and postpone taking up and paying for, any Common Shares deposited under the Offer, unless all of the following conditions are satisfied or waived by Fronteer at or prior to the Expiry Time:

 

 

 

 

 

 

The foregoing conditions are for the exclusive benefit of Fronteer and may be waived by it in whole or in part at any time and from time to time without prejudice to any other rights which Fronteer may have. The foregoing conditions may be asserted by Fronteer in its sole discretion at any time, regardless of the circumstances giving rise to any such assertion, including any action or inaction by Fronteer. The failure by Fronteer at any time to exercise any of the foregoing rights shall not be deemed to be a waiver of any such right and each such right shall be deemed to be an ongoing right that may be asserted at any time and from time to time.

 

The foregoing conditions are subject to Fronteer’s notification obligations with respect to changes in the information contained in the Offer and Circular that would reasonably be expected to affect the decision of a Shareholder to accept or reject the Offer, as described in Section 5 of the Offer, “Extension, Variation or Change in the Offer”.

 

Any waiver of a condition or the termination or withdrawal of the Offer shall be deemed to have been given and to be effective upon written notice or other communication confirmed in writing by Fronteer to that effect to the Depositary at its office in Toronto, Ontario. Forthwith after giving any such notice, Fronteer will make a public announcement of such waiver or withdrawal and, to the extent required by applicable Laws, will cause the Depositary as soon as is practicable thereafter to notify the Shareholders in the manner set forth under “Notices and Delivery” in Section 10 of the Offer, and will provide a copy of the aforementioned notice to the TSX. If the Offer is withdrawn, Fronteer will not be obligated to take up, accept for payment or pay for any Common Shares deposited under the Offer and the Depositary will promptly return all certificates for Deposited Shares, Letters of Transmittal, Notices of Guaranteed Delivery and related documents in its possession to the parties by whom they were deposited.

 

 

The Offer is open for acceptance until the Expiry Time, subject to extension or variation in Fronteer’s sole discretion, unless the Offer is withdrawn by Fronteer.

 

Subject to the limitations hereafter described, Fronteer reserves the right, in its sole discretion, at any time and from time to time while the Offer is open for acceptance (or at any other time if permitted by applicable Laws), to extend the Expiry Date or the Expiry Time or to vary the Offer by giving written notice (or other communication subsequently confirmed in writing, provided that such confirmation is not a condition of the effectiveness of the notice) of such extension or variation to the Depositary at its office in Toronto, Ontario, and by causing the Depositary, if required by applicable Laws, as soon as practicable thereafter to communicate such notice in the manner set forth in Section 10 of the

Offer, “Notices and Delivery”, to all registered Shareholders whose Common Shares have not been taken up prior to the extension or variation. Fronteer shall, as soon as practicable after giving notice of an extension or variation to the Depositary, make a public announcement of the extension or variation to the extent and in the manner required by applicable Laws and provide a copy of the notice thereof to the TSX. Any notice of extension or variation will be deemed to have been given and to be effective on the day on which it is delivered or otherwise communicated in writing to the Depositary at its office in Toronto, Ontario.

 

Where the terms of the Offer are varied, the Offer will not expire before 10 days after the notice of such change or variation has been given to Shareholders, unless otherwise permitted by applicable Laws and subject to abridgement or elimination of that period pursuant to such orders or other forms of relief as may be granted by any Governmental Entities.

 

If, prior to the Expiry Time or after the Expiry Time but before the expiry of all rights of withdrawal with respect to the Offer, a change occurs in the information contained in the Offer or the Circular, as amended from time to time, that would reasonably be expected to affect the decision of a Shareholder to accept or reject the Offer (other than a change that is not within the control of Fronteer or of an affiliate of Fronteer unless it is a change in a material fact relating to the Fronteer Common Shares), Fronteer will give written notice of such change to the Depositary at its office in Toronto, Ontario and will cause the Depositary, if required by applicable Laws, as soon as practicable thereafter to communicate such notice in the manner set forth under “Notices and Delivery” in Section 10 of the Offer, to all Shareholders whose Common Shares have not been taken up under the Offer at the date of the occurrence of the change, if required by applicable Laws. As soon as possible after giving notice of a change in information to the Depositary, Fronteer will make a public announcement of the change in information to the extent and in the manner required by applicable Laws and provide a copy of the notice thereof to the TSX and will extend the Offer to the extent required by applicable Laws. Any notice of change in information will be deemed to have been given and to be effective on the day on which it is delivered or otherwise communicated to the Depositary at its office in Toronto, Ontario.

 

Notwithstanding the foregoing but subject to applicable Laws, the Offer may not be extended by Fronteer if all of the terms and conditions of the Offer, except those waived by Fronteer, have been fulfilled or complied with, unless Fronteer first takes up all Common Shares then validly deposited under the Offer and not properly withdrawn.

 

During any extension or in the event of any variation of the Offer or change in information, all Common Shares previously deposited and not taken up or withdrawn will remain subject to the Offer and may be accepted for purchase by Fronteer in accordance with the terms hereof, subject to Section 7 of the Offer, “Withdrawal of Deposited Common Shares”. An extension of the Expiry Time, a variation of the Offer or a change in information does not, unless otherwise expressly stated, constitute a waiver by Fronteer of any of its rights set out under “Conditions of the Offer” in Section 4 of the Offer.

 

If, prior to the Expiry Time, the consideration being offered for the Common Shares under the Offer is increased, such increased consideration will be paid to each of the depositing Shareholders whose Common Shares are taken up under the Offer, whether or not such Common Shares were taken up before the increase.

 

 

If all the conditions referred to under “Conditions of the Offer” in Section 4 of the Offer have been fulfilled or waived by Fronteer at or prior to the Expiry Time, Fronteer will take up and pay for Common Shares validly deposited under the Offer and not properly withdrawn promptly after the Expiry Time and, in any event, not later than 10 calendar days after the Expiry Time. Any Common Shares taken up under the Offer will be paid for promptly and, in any event, not more than three business days after taking up such Common Shares. Subject to applicable Laws, any Common Shares deposited under the Offer after the first date on which Common Shares have been taken up by Fronteer under the Offer but prior to the Expiry Time will be taken up and paid for promptly and, in any event, within 10 calendar days of such deposit.

 

Fronteer will be deemed to have taken up and accepted for payment Common Shares validly deposited and not properly withdrawn under the Offer if, as and when Fronteer gives written notice or other communication subsequently confirmed in writing to the Depositary at its office in Toronto, Ontario to that effect. Subject to applicable Laws, Fronteer expressly reserves the right in its sole discretion to delay taking up and paying for any Common Shares or to, on or after the initial Expiry Time, withdraw or terminate the Offer and not take up or pay for any Common Shares if any condition specified under “Conditions of the Offer” in Section 4 of the Offer is not fulfilled or waived, by giving written notice thereof or other communication subsequently confirmed in writing to the Depositary at its office in Toronto, Ontario.

 

Fronteer also expressly reserves the right, in its sole discretion, to delay taking up and paying for Common Shares in order to comply, in whole or in part, with any applicable Laws or government regulatory approval. Fronteer will not, however, take up and pay for any Common Shares deposited under the Offer unless it simultaneously takes up and pays for all Common Shares then validly deposited under the Offer and not withdrawn.

 

Fronteer will pay for Common Shares validly deposited under the Offer and not withdrawn by providing the Depositary with sufficient share certificates representing the Fronteer Common Shares for transmittal to depositing Shareholders. Under no circumstances will interest accrue or be paid by Fronteer or the Depositary to persons depositing Common Shares on the purchase price of Common Shares purchased by Fronteer, regardless of any delay in making such payment.

 

The Depositary will act as the agent of persons who have deposited Common Shares in acceptance of the Offer for the purposes of receiving payment from Fronteer and transmitting such payment to such persons, and receipt of payment by the Depositary will be deemed to constitute receipt of payment by persons depositing Common Shares under the Offer.

 

No fractional Fronteer Common Shares will be issued pursuant to the Offer. Where the aggregate number of Fronteer Common Shares to be issued to a Shareholder as consideration under the Offer would result in a fraction of a Fronteer Common Share being issuable, the number of Fronteer Common Shares to be received by such Shareholder will either be rounded up (if the fractional interest is 0.5 or more) or down (if the fractional interest is less than 0.5) to the nearest whole number.

 

Settlement with each Shareholder who has deposited Common Shares pursuant to the Offer will be made by the Depositary forwarding a share certificate representing the Fronteer Common Shares to which the depositing Shareholder is entitled. Unless otherwise directed in the Letter of Transmittal, share certificates representing the Offer Consideration will be issued in the name of the registered holder of the Common Shares so deposited. Unless the person depositing the Common Shares instructs the Depositary to hold the certificates representing the Fronteer Common Shares for pick-up by checking the appropriate box in the Letter of Transmittal, such share certificates will be forwarded by first class insured mail to such person at the address specified in the Letter of Transmittal. If no such address is specified, the certificate(s) representing Fronteer Common Shares will be sent to the address of the holder as shown on the securities registers maintained by or on behalf of Aurora. Certificates representing Fronteer Common Shares mailed in accordance with this paragraph will be deemed to be delivered at the time of mailing.

 

Shareholders will not be required to pay any fee or commission if they accept the Offer by depositing their Common Shares directly with the Depositary.

 

 

Except as otherwise stated in this Section 7 of the Offer or otherwise required by applicable Laws, all deposits of Common Shares under the Offer are irrevocable. Unless otherwise required or permitted by applicable Laws, any Common Shares deposited in acceptance of the Offer may be withdrawn by or on behalf of the depositing Shareholder:

 

 

 

is mailed, delivered or otherwise properly communicated (subject to abridgement of that period pursuant to such order or orders as may be granted by applicable courts or Governmental Entities) and only if such deposited Common Shares have not been taken up by Fronteer at the date of the notice.

 

Withdrawals of Common Shares deposited under the Offer must be effected by notice of withdrawal made by or on behalf of the depositing Shareholder and must be actually physically received by the Depositary at the place of deposit of the applicable Common Shares (or Notice of Guaranteed Delivery in respect thereof) within the time limits indicated

above. Notices of withdrawal: (a) must be made by a method, including facsimile transmission, that provides the Depositary with a written or printed copy; (b) must be signed by or on behalf of the person who signed the Letter of Transmittal accompanying (or Notice of Guaranteed Delivery in respect of) the Common Shares which are to be withdrawn; and (c) must specify such person’s name, the number of Common Shares to be withdrawn, the name of the registered holder and the certificate number shown on each certificate representing the Common Shares to be withdrawn. Any signature in a notice of withdrawal must be guaranteed by an Eligible Institution in the same manner as in a Letter of Transmittal (as described in the instructions set out therein), except in the case of Common Shares deposited for the account of an Eligible Institution.

 

Alternatively, if Common Shares have been deposited pursuant to the procedures for book-entry transfer, as set out in Section 3 of the Offer, “Manner of Acceptance — Acceptance by Book-Entry Transfer”, any notice of withdrawal must specify the name and number of the account at CDS or DTC, as applicable, to be credited with the withdrawn Common Shares and otherwise comply with the procedures of CDS or DTC, as applicable.

 

A withdrawal of Common Shares deposited under the Offer can only be accomplished in accordance with the foregoing procedures. The withdrawal will take effect only upon actual physical receipt by the Depositary of the properly completed and executed written notice of withdrawal.

 

All questions as to the validity (including timely receipt) and form of notices of withdrawal will be determined by Fronteer in its sole discretion, and such determination will be final and binding. Neither the Depositary, Fronteer nor any other person shall be under any duty or obligation to give notice of any defect or irregularity in any notice of withdrawal and no liability shall be incurred or suffered by any of them for failure to give such notice.

 

If Fronteer extends the period of time during which the Offer is open, is delayed in taking up or paying for Common Shares or is unable to take up or pay for Common Shares for any reason, then, without prejudice to Fronteer’s other rights, Common Shares deposited under the Offer may, subject to applicable Laws, be retained by the Depositary on behalf of Fronteer and such Common Shares may not be withdrawn except to the extent that depositing Shareholders are entitled to withdrawal rights as set forth in this Section 7 or pursuant to applicable Laws.

 

Withdrawals cannot be rescinded and any Common Shares withdrawn will be deemed not validly deposited for the purposes of the Offer, but may be re-deposited at any subsequent time prior to the Expiry Time by following any of the procedures described in Section 3 of the Offer, “Manner of Acceptance”.

 

In addition to the foregoing rights of withdrawal, Shareholders in the Provinces and Territories of Canada are entitled to one or more statutory rights of rescission, price revision or to damages in certain circumstances. See Section 30 of the Circular, “Statutory Rights”.

 

 

Any deposited Common Shares that are not taken up and paid for by Fronteer pursuant to the terms and conditions of the Offer for any reason will be returned, at Fronteer’s expense, to the depositing Shareholder as soon as practicable after the Expiry Time or withdrawal or termination of the Offer, by either (i) sending certificates representing the Common Shares not purchased by first class insured mail to the address of the depositing Shareholder specified in the Letter of Transmittal or, if such name or address is not so specified, in such name and to such address as shown on the securities registers maintained by or on behalf of Aurora, or (ii) in the case of Common Shares deposited by book-entry transfer of such Common Shares pursuant to the procedures set out in “Manner of Acceptance — Acceptance by Book-Entry Transfer” in Section 3 of the Offer, such Common Shares will be credited to the depositing holder’s account maintained with CDS or DTC, as applicable.

 

 

If, on or after the date of the Offer, Aurora should divide, combine, reclassify, consolidate, convert or otherwise change any of the Common Shares or its capitalization, issue any Common Shares, or issue, grant or sell any Options or other securities that are convertible into or exchangeable or exercisable for Common Shares, or disclose that it has taken or intends to take any such action, then Fronteer may, in its sole discretion and without prejudice to its rights under “Conditions of the Offer” in Section 4 of the Offer, make such adjustments as it considers appropriate to the purchase price and other terms of the Offer (including, without limitation, the type of securities offered to be purchased and the amount payable therefor) to reflect such division, combination, reclassification, consolidation, conversion, issuance, grant, sale or other change. See “Extension, Variation or Change in the Offer” in Section 5 of the Offer.

 

Common Shares and any Distributions acquired under the Offer shall be transferred by the Shareholder and acquired by Fronteer free and clear of all liens, restrictions, charges, encumbrances, claims and equities and together with all rights and benefits arising therefrom, including, without limitation, the right to any and all dividends, distributions, payments, securities, property, rights, assets or other interests which may be accrued, declared, paid, issued, distributed, made or transferred on or after the date of the Offer on or in respect of the Common Shares, whether or not separated from the Common Shares. If, on or after the date of the Offer, Aurora should declare, set aside or pay any dividend or declare, make or pay any other distribution or payment on or declare, allot, reserve or issue any securities, rights or other interests with respect to any Common Shares, which is or are payable or distributable to Shareholders on a record date prior to the date of transfer into the name of Fronteer or its nominee or transferee on the securities registers maintained by or on behalf of Aurora in respect of Common Shares accepted for purchase under the Offer, then (and without prejudice to its rights under “Conditions of the Offer” in Section 4 of the Offer), (a) in the case of cash dividends, distributions or payments, the amount of dividends, distributions or payments shall be received and held by the depositing Shareholders for the account of Fronteer until Fronteer pays for such Common Shares, and to the extent that the value of such dividends, distributions or payments do not exceed the value of the Offer Consideration per Common Share payable by Fronteer pursuant to the Offer, the Offer Consideration per Common Share, as the case may be, pursuant to the Offer will be reduced by the amount of any such dividend, distribution or payment; (b) in the case of non-cash dividends, distributions, payments, securities, property, rights, assets or other interests, the whole of any such non-cash dividends, distributions, payments, securities, property, rights, assets or other interests shall be received and held by the depositing Shareholder for the account of Fronteer and shall be required to be promptly remitted and transferred by the depositing Shareholder to the Depositary for the account of Fronteer, accompanied by appropriate documentation of transfer; and (c) in the case of any cash dividends, distributions or payments, the aggregate value of which exceeds the value of the Offer Consideration per Common Share payable by Fronteer pursuant to the Offer, the whole of any such cash dividend, distribution or payment shall be received and held by the depositing Shareholders for the account of Fronteer and shall be required to be promptly remitted and transferred by the depositing Shareholders to the Depositary for the account of Fronteer, accompanied by appropriate documentation of transfer. Pending such remittance, Fronteer will be entitled to all rights and privileges as the owner of any such dividend, distribution, payment, securities, property, rights, assets or other interests and may withhold the entire Offer Consideration payable by Fronteer under the Offer or deduct from the Offer Consideration payable by Fronteer under the Offer the amount or value thereof, as determined by Fronteer in its sole discretion.

 

The declaration or payment of any such dividend or distribution may have tax consequences not discussed under “Certain Canadian Federal Income Tax Considerations” in Section 21 of the Circular or “Certain United States Federal Income Tax Considerations” in Section 22 of the Circular.

 

 

Without limiting any other lawful means of giving notice, and unless otherwise specified by applicable Laws, any notice to be given by Fronteer or the Depositary under the Offer will be deemed to have been properly given if it is mailed by first class mail, postage prepaid, to the registered Shareholders at their respective addresses as shown on the securities registers maintained by or on behalf of Aurora and, unless otherwise specified by applicable Laws, will be deemed to have been received on the first business day following the date of mailing. These provisions apply notwithstanding any accidental omission to give notice to any one or more Shareholders and notwithstanding any interruption of mail services following mailing.

 

Except as otherwise required or permitted by applicable Laws, if mail service is interrupted or delayed following mailing, Fronteer intends to make reasonable efforts to disseminate the notice by other means, such as publication. Except as otherwise required or permitted by applicable Laws, if post offices in Canada or the United States are not open for the deposit of mail, any notice which Fronteer or the Depositary may give or cause to be given to Shareholders under the Offer will be deemed to have been properly given and to have been received by Shareholders if: (a) it is given to the TSX for dissemination through their facilities; (b) it is published once in the National Edition of The Globe and Mail or The National Post, together with either the New York Times or The Wall Street Journal, and in La Presse in Québec; or (c) it is given to the Canada News Wire Service and the Dow Jones News Service for dissemination through its facilities.

 

The Offer and Circular and the accompanying Letter of Transmittal and Notice of Guaranteed Delivery will be mailed to registered holders of Common Shares by first class mail, postage prepaid, or made in such other manner as is permitted by applicable Laws and Fronteer will use its reasonable efforts to furnish such documents to investment advisors, stock brokers, banks, trust companies and similar persons whose names, or the names of whose nominees, appear in the securities registers maintained by or on behalf of Aurora in respect of the Common Shares or, if security

position listings are available, who are listed as participants in a clearing agency’s security position listing, for subsequent transmittal to the beneficial owners of Common Shares when such listings are received.

 

Wherever the Offer calls for documents to be delivered to the Depositary, such documents will not be considered delivered unless and until they have been physically received at the Toronto, Ontario office of the Depositary specified in the Letter of Transmittal or in the Notice of Guaranteed Delivery, as applicable.

 

 

Notwithstanding the provisions of the Offer, the Circular, the Letter of Transmittal and the Notice of Guaranteed Delivery, share certificates and any other relevant documents will not be mailed if Fronteer determines that delivery thereof by mail may be delayed. Persons entitled to such certificate(s) and any other relevant documents that are not mailed for the foregoing reason may take delivery thereof at the office of the Depositary to which the deposited certificate(s) for Common Shares were delivered until such time as Fronteer has determined that delivery by mail will no longer be delayed. Fronteer shall provide notice of any such determination and in accordance with Section 10 of the Offer, “Notices and Delivery”. Notwithstanding the provisions set out under “Take Up and Payment for Deposited Common Shares” in Section 6 of the Offer, share certificates and any other relevant documents not mailed for the foregoing reason will be conclusively deemed to have been delivered on the first day upon which they are available for delivery to the depositing Shareholder at the Toronto, Ontario office of the Depositary.

 

 

The purpose of the Offer is to enable Fronteer to acquire all of the outstanding Common Shares. If a sufficient number of Common Shares are validly deposited under the Offer and are taken up and paid for by Fronteer, Fronteer currently intends to carry out a Compulsory Acquisition or a Subsequent Acquisition Transaction to acquire all of the Common Shares not deposited under the Offer as described in Section 20 of the Circular, “Acquisition of Common Shares Not Deposited Under the Offer”.

 

 

As of the date hereof, Fronteer does not intend to acquire, or make or enter into any agreement, commitment or understanding to acquire beneficial ownership of any Common Shares other than under the terms of the Offer and as disclosed in the Offer and Circular. However, the intention of Fronteer to make purchases may change following the date of the Offer in which case Fronteer may acquire or cause an affiliate to acquire at any time prior to the Expiry Time, if and to the extent that market conditions, the trading price of the Common Shares and other factors make it desirable for Fronteer to complete such purchases, Common Shares by making purchases through the facilities of the TSX, provided, however, that in no event will Fronteer make any such purchases of Common Shares until the third business day following the date of the Offer and Fronteer shall comply with the following requirements under Section 2.2(3) of MI 62-104 and Section 2.1 of OSC Rule 62-504 in the event of any such change in intention:

 

 

Purchases pursuant to Section 2.2(3) of MI 62-104 or Section 2.1 of OSC Rule 62-504 shall be counted in any determination as to whether the Minimum Deposit Condition has been fulfilled.

 

Although Fronteer has no present intention to sell Common Shares taken up under the Offer, Fronteer reserves the right to make or enter into arrangements, commitments or understandings at or prior to the Expiry Time to sell any of such Common Shares after the Expiry Time, subject to compliance with Section 2.7(2) of MI 62-104 or Section 93.4(2) of the OSA, as applicable.

 

For the purposes of this Section 13, the term “Fronteer” includes Fronteer and any person acting jointly or in concert with Fronteer.

 

 

 

Fronteer has filed with the SEC a registration statement on Form F-8, together with exhibits furnishing additional information with respect to the Offer, and may file amendments thereto. Pursuant to the Rules under the US Exchange Act and the instructions to Form F-8, Fronteer is exempt from filing a tender offer statement on Schedule TO. Shareholders will be able to obtain copies of such documents free of charge from the SEC’s website at www.sec.gov. In addition, documents filed with the SEC by Fronteer will be available free of charge from Fronteer. You should direct requests for documents to the Corporate Secretary of Fronteer at Suite 1650, 1055 West Hastings Street, Vancouver, British Columbia, V6E 2E9 or Telephone: 604-632-4677.

 

The Offer and the accompanying Circular together constitute the take-over bid circular required under Canadian securities legislation with respect to the Offer. Shareholders are urged to refer to the accompanying Circular for additional information relating to the Offer.

 

Dated: January 23, 2009

FRONTEER DEVELOPMENT GROUP INC.

 

Lyle Hepburn

Director and Chairman, Fronteer Special Committee

 

This Circular is furnished in connection with the accompanying Offer dated January 23, 2009 by Fronteer to purchase all of the issued and outstanding Common Shares. The terms and conditions of the Offer, the Letter of Transmittal and the Notice of Guaranteed Delivery are incorporated into and form part of this Circular. Shareholders should refer to the Offer for details of the terms and conditions of the Offer, including details as to the manner of payment and withdrawal rights. Capitalized terms used in this Circular but not otherwise defined herein, are defined and have the meanings set out in the Glossary, unless the context otherwise requires.

 

Unless otherwise indicated, the information concerning Aurora contained in the Offer and Circular has been taken from or is based upon publicly available documents and records on file of Aurora with Canadian securities regulatory authorities and other public sources available at the time of the Offer. Although Fronteer has no knowledge that would indicate that any statements contained herein relating to Aurora taken from or based upon such documents and records are untrue or incomplete, neither Fronteer nor any of its officers or directors assumes any responsibility for the accuracy or completeness of such information or for any failure by Aurora to disclose events or facts that may have occurred or which may affect the significance or accuracy of any such information but that are unknown to Fronteer. Unless otherwise indicated, information concerning Aurora is given as at November 6, 2008.

 

 

Fronteer is principally engaged in the acquisition, exploration and development of mineral properties or interests in corporations controlling mineral properties of interest to Fronteer. Fronteer began concentrating its efforts in the area of mineral exploration in June of 2001. Prior to that, it was involved in the development, building and marketing of residential real estate properties, primarily in the Province of Ontario. Fronteer’s principal exploration properties are located in Nevada, U.S.A. and Turkey, and it holds additional properties in California, U.S.A. Fronteer also has exposure to projects, through its approximate 42% equity interest in Aurora, in Newfoundland and Labrador and Nunavut, Canada.

 

Fronteer is focused on discovering and advancing deposits with strong production potential. Fronteer’s vision is to advance a robust pipeline of projects stretching from exploration through to production. In particular, Fronteer has an interest in several major gold projects throughout Nevada, United States and gold and copper-gold projects in northwest Turkey. Among its large portfolio of precious metal mineral rights in Nevada, Fronteer’s key projects include a 100% interest in Northumberland, one of the largest undeveloped Carlin-style gold deposits in the state; a 51% interest in Long Canyon as part of a joint venture with AuEx Ventures Inc., a discovery defining an entirely new gold trend in the Eastern Great Basin, with its first resource estimate currently planned for the first quarter of 2009; and Sandman, a property in which Newmont Mining Corporation has the option to acquire up to a 60% interest by advancing the project to a production decision by 2011. In Turkey, as part of a joint venture with Teck Cominco Ltd., Fronteer has built and retained a 40% interest in a new mineral district that includes two gold deposits and a third copper-gold porphyry deposit.

 

Fronteer has no debt and is not invested in any short-term commercial paper or asset-backed securities. Fronteer has approximately $79 million in cash and cash equivalents held with large Canadian commercial banks. For additional information, reference is made to Fronteer’s Annual Information Form incorporated by reference herein, a copy of which is available on SEDAR at www.sedar.com, and to Fronteer’s latest Annual Report on Form 40-F on file with the SEC at www.sec.gov.

 

In April 2006, Fronteer entered into a shared services agreement with Aurora to share head office space and related administration costs. The service arrangement with Aurora was amended in May 2008 to reflect the reduced level of office and administrative services provided by Fronteer since Aurora relocated its head office to St. John’s, Newfoundland and Labrador; certain employees of Fronteer continue to provide services to Aurora. During the 12 months ended December 31, 2008, Fronteer invoiced Aurora a total of $1,130,618 for costs and related taxes relating to exploration activities at Aurora’s uranium project in the Central Mineral Belt of coastal Labrador, fixed assets and general administration costs incurred by Fronteer on behalf of Aurora.

 

Fronteer is a corporation existing under the Business Corporations Act (Ontario). Fronteer’s head office and principal place of business is located at Suite 1650, 1055 West Hastings Street, Vancouver, British Columbia V6E 2E9 and its registered office is located at 40 King Street West, 2100 Scotia Plaza, Toronto, Ontario M5H 3C2.

 

Fronteer is a reporting issuer in each of the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador. The Fronteer Common Shares are listed and posted for trading on the TSX and the Alternext under the symbol “FRG”. On December 19, 2008,

the last trading day prior to Fronteer’s announcement of its intention to make the Offer, the closing price of the Fronteer Common Shares on the TSX and the Alternext was $3.13 and US$2.60, respectively.

 

See Section 10 of the Circular, “Certain Information Concerning Fronteer and its Shares”. See also “Background to the Offer” in Section 3 of the Circular and “Benefits of and Reasons to Accept the Offer” in Section 5 of the Circular.

 

For further information regarding Fronteer, reference is made to Fronteer’s filings with the Canadian securities regulatory authorities available on SEDAR at www.sedar.com and Fronteer’s filings with the SEC available at www.sec.gov. See also “Documents Incorporated by Reference” in Section 11 of the Circular.

 

 

Aurora is a uranium exploration and development company. Aurora’s principal asset is its 100%-owned uranium portfolio (subject to a 2% royalty interest) located in the Central Mineral Belt in coastal Labrador, Canada, one of the world’s most promising uranium districts. Aurora’s uranium portfolio in Labrador is underpinned by the Michelin uranium deposit, and also contains the Jacques Lake deposit and four other deposits (known as the Gear, Nash, Inda and Rainbow deposits). Aurora recently acquired an option to earn a majority interest in the Baker Lake Basin property located in Nunavut, Canada through an agreement with Pacific Ridge Exploration Ltd.

 

On April 8, 2008, the Nunatsiavut Government implemented a three-year moratorium on uranium mining on Labrador Inuit Lands, but continues to allow uranium exploration. The moratorium provides the Nunatsiavut Government with the opportunity to enact environment assessment legislation and to formulate the land use plan required by the Labrador Inuit Land Claims Agreement. The Nunatsiavut Government has indicated that it will review the moratorium by March 31, 2011.

 

Fronteer owns and controls 30,947,336 Common Shares, representing approximately 42% of the outstanding Common Shares. See Section 12 of the Circular, “Ownership of and Trading in Shares of Aurora”. In addition, pursuant to Lock-Up Agreements entered into with each of Amber, Eastbourne and MacKenzie, each such Shareholder has agreed to deposit under the Offer and not withdraw, subject to certain exceptions, Common Shares representing in the aggregate 19,234,700 Common Shares or approximately 26% of the issued and outstanding Common Shares. The remaining approximately 32% of the outstanding Common Shares are widely held. See Section 4 of the Circular, “Agreements Relating to the Offer”.

 

Aurora was incorporated under the Corporations Act (Newfoundland and Labrador) on June 8, 2005 under the name “Labrador Uranium Co. Ltd.”. Pursuant to articles of amendment dated July 29, 2005, the name of Aurora was changed to “Aurora Energy Resources Inc.”. Aurora’s head office and registered and records office is located at 323 Duckworth Street, P.O. Box 5955, St. John’s, Newfoundland and Labrador, A1C 5X4.

 

Aurora is a reporting issuer in each of the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador. The Common Shares are listed and posted for trading on the TSX under the symbol “AXU”. On December 19, 2008, the last trading day prior to Fronteer’s announcement of its intention to make the Offer, the closing price of the Common Shares on the TSX was $0.97.

 

See “Background to the Offer” in Section 3 of the Circular and “Benefits of and Reasons to Accept the Offer” in Section 5 of the Circular.

 

For further information regarding Aurora, reference is made to Aurora’s filings with the Canadian securities regulatory authorities available on SEDAR at www.sedar.com.

 

 

In September 2008, the board of directors of Fronteer began to discuss the possibility of pursuing a strategic transaction relating to Aurora based on a number of factors, including that management of Fronteer had been advised by certain Shareholders of Aurora that they viewed positively the possibility of Fronteer merging with Aurora.

 

During the next two months, the board of directors of Fronteer considered the advantages and disadvantages of pursuing a strategic transaction relating to Aurora. As a result of these deliberations, on October 17, 2008, the Fronteer board of directors convened a special committee (the “Fronteer Special Committee”), to consider and evaluate possible strategic opportunities with respect to Aurora. The Fronteer Special Committee is composed of the following independent directors of Fronteer: Lyle Hepburn (Chairman), Jo Mark Zurel, George Bell, Scott Hand and Donald McInnes.

 

On October 17, 2008, Mr. Oliver Lennox-King and Mr. Jo Mark Zurel of Fronteer contacted representatives of Aurora’s Board of Directors to discuss with them the possibility of Fronteer acquiring the Common Shares of Aurora not already owned by Fronteer. Following that initial contact, the Fronteer Special Committee continued to actively consider, and engaged in discussions with Aurora regarding such a transaction.

 

Subsequently, the Fronteer Special Committee engaged RBC Capital Markets (“RBC”) as its financial advisor and retained Davies Ward Phillips & Vineberg LLP as its legal advisor to assist in connection with the potential acquisition of Common Shares of Aurora not already held by Fronteer.

 

On November 6, 2008, Mr. Mark Dobbin, a director of Aurora, advised Mr. Zurel of Fronteer that a special committee of the Board of Directors of Aurora (the “Aurora Special Committee”) was being established to respond to Fronteer’s proposed transaction. Fronteer was advised that Mr. Dobbin had been appointed as Chairman of the Aurora Special Committee.

 

On November 19, 2008, Mr. Zurel had a telephone conversation with Mr. Dobbin to ascertain whether Aurora would be willing to support Fronteer approaching a number of Aurora’s key Shareholders in order to discuss with them their willingness to lock-up to a proposed acquisition transaction by Fronteer. During the call, Mr. Dobbin advised Mr. Zurel that the Aurora Special Committee had met, that it did not feel it had sufficient information at that time to actively support Fronteer’s approach to its Shareholders, but that it would want to review further information regarding the offer being contemplated by Fronteer prior to making any decision.

 

Later that day, at a meeting of the Fronteer Special Committee, Mr. Zurel reported on his telephone discussion with Mr. Dobbin. Following discussions, the Fronteer Special Committee instructed RBC to evaluate and report upon the benefits of a proposed acquisition transaction and to outline a range of values that the Fronteer Special Committee should consider in respect of any offer to be made to the Shareholders of Aurora.

 

The Fronteer Special Committee convened a meeting on November 20, 2008, at which RBC reported on a range of possible share exchange ratios and resulting premiums for consideration by the Fronteer Special Committee. At this meeting, the Fronteer Special Committee authorized Mr. Zurel to further communicate with Mr. Dobbin about the possibility of obtaining Aurora’s support for Fronteer approaching Aurora’s largest Shareholders and to report back to the Fronteer Special Committee following such communications.

 

On November 21, 2008, Mr. Zurel met with Mr. Dobbin to discuss Fronteer’s proposal to acquire all of the outstanding Common Shares that it did not already own and Fronteer’s desire to enter into lock-up agreements with Aurora’s three largest Shareholders. Mr. Dobbin took the request under advisement pending a meeting of the Aurora Special Committee.

 

On December 2, 2008, Mr. Dobbin wrote a letter to Mr. Lyle Hepburn, the Chairman of the Fronteer Special Committee, advising, among other things, that while the Aurora Special Committee was interested in learning more about the Fronteer proposal, it could not endorse Fronteer’s approach to Aurora’s largest Shareholders without understanding the details of such a proposal. This letter also requested that a meeting between Fronteer representatives and the Aurora Special Committee be convened for the purposes of discussing any proposed transaction.

 

On December 2, 2008, the Fronteer Special Committee met to discuss a response to that letter and to further deliberate on a proposed offer for Aurora. At this meeting, Mr. Lennox-King and Mr. Zurel were authorized by the Fronteer Special Committee to meet with the Aurora Special Committee to discuss Fronteer’s position, and such a meeting occurred on December 5, 2008. The Fronteer Special Committee also instructed Mr. Lennox-King, Mr. Mark O’Dea and RBC to arrange meetings with key Aurora Shareholders in order to propose terms of a potential transaction and negotiate lock-up agreements with such Shareholders.

 

On December 5, 2008, Mr. Hepburn sent a letter to the Aurora Special Committee in response to Mr. Dobbin’s December 2^nd letter, indicating that Fronteer understood that, as a matter of corporate governance, the Aurora Special Committee was not in a position to consent to Fronteer approaching its key Shareholders. The December 5^th letter also advised Aurora that, consistent with Fronteer’s belief that an offer was in the best interests of shareholders of both Aurora and Fronteer, Fronteer intended to approach a small number of key Aurora Shareholders on a confidential basis to elicit their support for an offer.

 

On December 8, 2008, RBC reviewed with the Fronteer Special Committee updated share exchange ratio information and resulting premiums and the Fronteer Special Committee also directed Mr. O’Dea and RBC to approach Amber, Eastbourne and MacKenzie, three of Aurora’s key Shareholders, with a view to negotiating lock-up agreements with each Shareholder in connection with Fronteer’s intention to make an offer. Following subsequent discussions among

the Fronteer board of directors and the Fronteer Special Committee and with RBC, on December 18, 2008, the Fronteer Special Committee authorized the Offer and the making and announcement thereof to the Shareholders of Aurora, conditional upon Fronteer obtaining lock-ups from the Locked-Up Shareholders.

 

Negotiations continued with the Locked-Up Shareholders throughout the weeks of December 8 and December 15, 2008. On Friday, December 19, 2008, as the negotiations with all three Locked-Up Shareholders appeared to be close to reaching agreement, Fronteer advised Mr. Dobbin by telephone that lock-up negotiations with Aurora’s three largest shareholders were close to being finalized.

 

By the late afternoon on Sunday, December 21, 2008, the Lock-Up Agreements had been executed and delivered. That same day, Mr. Hepburn contacted Mr. Dobbin to advise him that the Lock-Up Agreements had been finalized and that Fronteer would be announcing its intention to make an Offer by issuing a press release prior to the opening of financial markets the following morning.

 

Prior to the opening of financial markets on Monday, December 22, 2008, Fronteer issued a press release announcing the execution of the Lock-Up Agreements and its intention to make the Offer.

 

 

Fronteer entered into the Lock-Up Agreements with the Locked-Up Shareholders in respect of an aggregate of 19,234,700 Common Shares beneficially owned by the Locked-Up Shareholders, or over which they exercise control or direction. The Locked-Up Shares represent approximately 26% of the outstanding Common Shares.

 

The following is a summary only of the principal terms of the Lock-Up Agreements. A complete copy of each of the Lock-Up Agreements has been filed by Fronteer on SEDAR and is available at www.sedar.com. Shareholders are urged to read the complete copy of each of the Lock-Up Agreements.

 

Each of the Locked-Up Shareholders has covenanted that, during the period commencing on the date of each Lock-Up Agreement and continuing until the earlier of the termination of each agreement and Fronteer’s take up and payment of Common Shares under the Offer, it shall, among other things, not option, sell, assign, dispose of, pledge, create an encumbrance on, grant a security interest in or otherwise convey or transfer, and will not grant a proxy or other voting right in respect of, any Locked-Up Shares or any right or interest therein, or agree to do any of the foregoing, except pursuant to the Offer and the terms of the Lock-Up Agreements.

 

Under the Lock-Up Agreements, subject to the termination rights of each party described below, the Locked-Up Shareholders have agreed to tender an aggregate of 19,234,700 Common Shares beneficially owned thereby, or over which they exercise control or direction, to the Offer.

 

Generally, each of the Locked-Up Shareholders has the right to terminate its Lock-Up Agreement (and withdraw any Common Shares deposited under the Offer) if (i) Fronteer has not complied in any material respect with its obligations contained in the Lock-Up Agreement; (ii) Fronteer has not taken up and paid for the Locked-Up Shares by midnight (Toronto time) on March 31, 2009; (iii) a third party commences (or in the case of the Amber Lock-Up Agreement and the Eastbourne Lock-Up Agreement, announces an intention to commence) a bona fide offer to acquire, directly or indirectly, all of the outstanding Common Shares for consideration that exceeds the Offer Consideration, and Fronteer has not publicly announced its intention to amend the Offer in order to match or exceed the bona fide offer in question within three business days of the formal commencement (and/or announcement, as the case may be, under the Amber Lock-Up Agreement and the Eastbourne Lock-Up Agreement) of such offer. In addition, under the Eastbourne Lock-Up Agreement, Eastbourne has the right to terminate the Eastbourne Lock-Up Agreement if there occurs a Buyer Material Adverse Effect (as defined in the Eastbourne Lock-Up Agreement). MacKenzie also has the right to terminate its Lock-Up Agreement in the event that a material change occurs to the funds managed by MacKenzie and through which MacKenzie beneficially holds its Common Shares, and such material change gives rise to redemption payment obligations that are material to such funds.

 

Provided that the Lock-Up Agreements have not been terminated by the Locked-Up Shareholders or Fronteer, as the case may be, upon the satisfaction or waiver by Fronteer of the conditions to the Offer, Fronteer must take up the Common Shares (including the Locked-Up Shares) on the first date upon which it is legally entitled to do so and pay for the Common Shares deposited under the Offer (including the Locked-Up Shares) with three business days after take up.

 

Each of Amber and MacKenzie must deposit or cause to be deposited its Common Shares under the Offer within five calendar days of the mailing of the Offer, and thereafter not withdraw its Common Shares from the Offer, unless the Amber Lock-Up Agreement or the MacKenzie Lock-Up Agreement, as applicable, terminates in accordance with its

terms. Provided that the Eastbourne Lock-Up Agreement has not been terminated by Eastbourne or Fronteer in accordance with its terms, as the case may be, Eastbourne must deposit or cause to be deposited its Common Shares under the Offer at least five business days prior to the initially scheduled Expiry Time, and thereafter not withdraw the Common Shares from the Offer.

 

 

Shareholders are urged to consider the following factors and significant benefits in making their decision whether to accept the Offer:

 

 

 

 

The purpose of the Offer is to enable Fronteer to acquire all of the Common Shares. If a sufficient number of Common Shares are validly deposited under the Offer and are taken up and paid for by Fronteer, Fronteer currently intends to carry out a Compulsory Acquisition or a Subsequent Acquisition Transaction to acquire all of the remaining Common Shares not deposited under the Offer. See also “Acquisition of Common Shares Not Deposited Under the Offer” in Section 20 of the Circular.

 

If, within 120 days after the date of the Offer, the Offer has been accepted by Shareholders who, in the aggregate, hold not less than 90% of the issued and outstanding Common Shares, other than Common Shares held at the date of the Offer by or on behalf of Fronteer and its affiliates and associates (as such terms are defined in the NLCA), and Fronteer acquires or is bound to take up and pay for such deposited Common Shares under the Offer, Fronteer may at its option acquire those Common Shares which remain outstanding held by those persons who did not accept the Offer pursuant to a Compulsory Acquisition. If a Compulsory Acquisition is not available or Fronteer chooses not to avail itself of such statutory right of acquisition, Fronteer currently intends to, depending upon the number of Common Shares taken up and paid for under the Offer, pursue other means of acquiring the remaining Common Shares not tendered under the Offer, including by causing one or more special meetings of Shareholders to be called to consider an amalgamation, capital reorganization, share consolidation, statutory arrangement or other transaction involving Aurora and Fronteer or an affiliate of Fronteer for the purpose of enabling Fronteer or an affiliate of Fronteer to acquire all Common Shares not acquired pursuant to the Offer. There is no assurance that such acquisitions will be completed, in particular if Fronteer acquires less than 662/3% of the outstanding Common Shares on a fully diluted basis under the Offer.

 

If a Compulsory Acquisition or Subsequent Acquisition Transaction is unavailable or if Fronteer is unable to promptly obtain required approvals for a Compulsory Acquisition or Subsequent Acquisition Transaction, Fronteer will evaluate its other alternatives. Such alternatives could include, to the extent permitted by applicable Laws, purchasing additional Common Shares in the open market, in privately negotiated transactions, in another take-over bid or otherwise, or selling or otherwise disposing of any or all of the Common Shares acquired under the Offer.

 

If the Offer is successful, Fronteer intends to conduct a detailed review of Aurora, including an evaluation of its business, assets, operations, policies, management, personnel and organizational and capital structure to determine what changes would be desirable in light of such review and the circumstances which then exist. If the Offer is successful, and Fronteer acquires 100% of the Common Shares on a fully diluted basis, Fronteer will consider its various options concerning Aurora and its assets and properties, including the possibility of integrating the operations of Aurora into the operations of Fronteer if desirable in the circumstances having regard to a variety of factors following the completion of the Offer and any Compulsory Acquisition or Subsequent Acquisition Transaction. See “Benefits of and Reasons to Accept the Offer” in Section 5 of the Circular.

 

If permitted by applicable Laws, as soon as practicable following the completion of the Offer and any Compulsory Acquisition or Subsequent Acquisition Transaction, Fronteer intends to apply to delist the Common Shares from the TSX. In addition, if permitted by applicable Laws, Fronteer intends to cause Aurora to cease to be a reporting issuer under the securities Laws of each Province of Canada in which it is a reporting issuer. See “Effect of the Offer on the Market for and Listing of Common Shares and Status as a Reporting Issuer” in Section 18 of the Circular. See also “Acquisition of Common Shares Not Deposited Under the Offer” in Section 20 of the Circular.

 

 

As Shareholders will acquire Fronteer Common Shares as consideration under the Offer, Shareholders should consider the risks and uncertainties associated with Fronteer and the Offer, including without limitation those set out in this Section 7. Additional risks and uncertainties relating to Fronteer are discussed or referred to in the Annual Information Form and the management’s discussion and analyses for Fronteer incorporated by reference herein and available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. These risks may not be the only risks faced by Fronteer. Risks and uncertainties not presently known by Fronteer or which are presently considered immaterial may also adversely affect Fronteer’s business, results of operations and/or condition (financial or otherwise). Additional risks and uncertainties relating to Aurora are discussed or referred to in the documents filed by Aurora with the Canadian securities regulatory authorities and available on SEDAR at www.sedar.com.

 

The Fronteer Common Shares issued in connection with the Offer may have a market value different than expected

 

Fronteer is offering to purchase Common Shares on the basis of 0.825 of a Fronteer Common Share for each Common Share. Therefore, each Shareholder would be entitled to receive 0.825 of a Fronteer Common Share for each Common Share tendered, subject to adjustment for fractional shares. Because the exchange ratio will not be adjusted to reflect any changes in the market value of Fronteer Common Shares, the market values of the Fronteer Common Shares and the Common Shares at the time of the take up of Common Shares under the Offer may vary significantly from the values at the respective dates of Fronteer’s announcement of its intention to make an Offer and the Offer and Circular or the date that Shareholders tender their Common Shares. If the market price of Fronteer Common Shares declines, the value of the consideration received by Shareholders will decline as well. Variations may occur as a result of changes in, or market perceptions of changes in, the condition, business, operations or prospects of Fronteer, market assessments of the likelihood that the Offer will be consummated, regulatory considerations, general market, social and economic conditions, changes in Laws applicable in Canada, the United States, Turkey or elsewhere, political changes, commodity price changes and other factors over which Fronteer has no control.

 

Fronteer has not verified the reliability of the information regarding Aurora included in, or which may have been omitted from, the Offer and Circular

 

Except as otherwise indicated, Fronteer has relied exclusively upon publicly available information and records on file of Aurora in connection with the information provided herein. All historical information regarding Aurora contained in the Offer and Circular, including all Aurora financial information and all pro forma financial information reflecting the pro forma effects of a combination of Aurora and Fronteer which are derived in part from Aurora’s financial information, has been derived from Aurora’s publicly available information. Any inaccuracy or material omission in Aurora’s publicly available information, including the information about or relating to Aurora and its business, prospects, condition (financial and otherwise) and assets contained in the Offer and Circular, could result in unanticipated liabilities or expenses, increase the cost of integrating Aurora into Fronteer’s operations or adversely affect the operational plans or prospects of Fronteer or Aurora following Fronteer’s proposed acquisition of Aurora, or Fronteer’s business, assets, results of operations and condition (financial or otherwise) following such acquisition, if successful.

 

The market and listing for Common Shares may be affected

 

The purchase of any Common Shares by Fronteer under the Offer will reduce the number of Common Shares that might otherwise trade publicly, as well as the number of Shareholders and, depending on the number of Shareholders depositing and the number of Common Shares purchased under the Offer, successful completion of the Offer would likely adversely affect the liquidity and market value of the remaining Common Shares held by the public. After the purchase of the Common Shares under the Offer, it may be possible for Aurora to take steps towards the elimination of any applicable public reporting requirements under applicable securities legislation in any Province of Canada or any other jurisdiction in which it has an insignificant number of Shareholders. See Section 18 of the Circular, “Effect of the Offer on the Market for and Listing of Common Shares and Status as a Reporting Issuer”.

 

The rules and regulations of the TSX establish certain criteria that, if not met, could lead to the delisting of the Common Shares from the TSX. Among such criteria are the number of shareholders, the number of shares publicly held and the aggregate market value of the shares publicly held. Depending on the number of Common Shares purchased under the Offer, it is possible that the Common Shares would fail to meet the criteria for continued listing on the TSX. If this were to happen, the Common Shares could be delisted and this could, in turn, adversely affect the market or result in a lack of an established market for the Common Shares. Additionally, to the extent permitted under applicable Laws and TSX

rules, Fronteer intends to cause Aurora to apply to delist the Common Shares from the TSX as soon as practicable after the completion of the Offer or any Compulsory Acquisition or Subsequent Acquisition Transaction. If the Common Shares are delisted and Aurora ceases to be a “public corporation” for the purposes of the Tax Act, the Common Shares would cease to be qualified investments for trusts governed by registered retirement savings plans, registered education savings plans, registered retirement income funds, registered disability savings plans, deferred profit sharing plans and tax-free savings accounts. Delisting can also have adverse tax consequences to Non-Resident Shareholders of the Common Shares, as described in Section 21 of the Circular, “Certain Canadian Federal Income Tax Considerations — Qualified Investment Status”.

 

The issuance of a significant number of Fronteer Common Shares could adversely affect the market price of Fronteer Common Shares after the take up of Common Shares under the Offer

 

If all of the Common Shares are tendered to the Offer, a significant number of additional Fronteer Common Shares will be available for trading in the public market. Moreover, the overall increase in the number of Fronteer Common Shares may lead to sales of such shares or the perception that such sales may occur, either of which may adversely affect the market for, and the market price of, Fronteer Common Shares. The perceived risk of substantial sale of Fronteer Common Shares, as well as any actual sales of such Fronteer Common Shares in the public market, could adversely affect the market price of the Fronteer Common Shares.

 

Price and Volatility of Public Stock

 

The market price of securities of Fronteer has experienced wide fluctuations which may not necessarily be related to the financial condition, operating performance, underlying asset values or prospects of Fronteer. It may be anticipated that any market for Fronteer Common Shares will be subject to market trends generally and the value of Fronteer Common Shares on the TSX may be affected by such volatility.

 

The enforcement of shareholder rights by Shareholders resident in the United States may be adversely affected by the combination of Aurora and Fronteer

 

The enforcement by Shareholders of civil liabilities under United States federal securities laws may be affected adversely by the fact that Fronteer is incorporated under the laws of the Province of Ontario, Canada, that Aurora is incorporated under the laws of the Province of Newfoundland and Labrador, Canada, and that a majority of Fronteer’s officers and directors are residents of Canada and a majority of Aurora’s officers and directors are residents of Canada, that the Information Agent and Depositary, as well as some or all of the experts named in this Offer and Circular, are residents of countries other than the United States, and that all or a substantial portion of the assets of Fronteer and Aurora and of the above mentioned persons may be located outside of the United States. You may not be able to sue Fronteer, Aurora, or their respective officers or directors in a foreign court for violations of the US securities laws. It may be difficult to compel Fronteer, Aurora and their respective affiliates to subject themselves to a US court’s judgment.

 

Additional Risk Factors

 

In assessing the Offer, Shareholders should also carefully review the risks and uncertainties described in Fronteer’s Annual Information Form and its management’s discussion and analyses incorporated by reference herein and filed with certain Canadian securities regulatory authorities and Fronteer’s Annual Report on Form 40-F on file with the SEC. In addition, Aurora may be subject to risks and uncertainties that may or may not be applicable or material to Fronteer at the present time, but that may apply to Fronteer following its acquisition of Aurora, if successful. Risk factors relating to Aurora can be found in Aurora’s most recent annual information form and management’s discussion and analysis filed with certain Canadian securities regulatory authorities and available on SEDAR at www.sedar.com.

 

 

Fronteer will issue Fronteer Common Shares to or for the account of Shareholders who tender their Common Shares under the Offer. Fractional Fronteer Common Shares will not be issued. Where a Shareholder is entitled to receive Fronteer Common Shares as consideration under the Offer and the aggregate number of Fronteer Common Shares to be issued to such Shareholder would result in a fraction of a Fronteer Common Share being issuable, the number of Fronteer Common Shares to be received by or for the account of such Shareholder will either be rounded up (if the fractional interest is 0.5 or more) or down (if the fractional interest is less than 0.5) to the nearest whole number. Cash will not be paid in lieu of any fractional Fronteer Common Shares in any circumstances whatsoever.

 

Fronteer will pay certain expenses associated with the Offer including, without limitation, Fronteer’s legal fees, accounting fees, fees of other advisors, fees and expenses payable to the Information Agent and Depositary, the TSX and the Alternext in connection with the additional listing of the Fronteer Common Shares to be issued as consideration for Common Shares deposited under the Offer, regulatory filing fees and printing and mailing costs.

 

 

The tables set out below include a summary of (i) Fronteer’s historical consolidated financial information as at and for the fiscal years ended December 31, 2007 and 2006 and as at and for the nine month periods ended September 30, 2008 and 2007, (ii) Aurora’s historical financial information as at and for the fiscal years ended December 31, 2007 and 2006, and (iii) unaudited pro forma condensed consolidated financial information for Fronteer as at and for the nine-month period ended September 30, 2008 and for the fiscal year ended December 31, 2007. The historical financial information of Fronteer as at and for the fiscal years ended December 31, 2007 and 2006 has been derived from Fronteer’s audited consolidated financial statements, and the historical financial information of Fronteer as at and for the nine month periods ended September 30, 2008 and 2007 has been derived from Fronteer’s unaudited interim consolidated financial statements, each of which is incorporated by reference herein and is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. The historical financial information for Aurora as at and for the fiscal years ended December 31, 2007 and 2006 has been derived from Aurora’s audited financial statements, which are available on SEDAR at www.sedar.com. See note 1 of the unaudited pro forma condensed consolidated financial statements attached as Schedule “A” hereto for information as to how the pro forma condensed consolidated financial statements were derived.

 

The summary unaudited pro forma condensed consolidated financial statement information set forth below should be read in conjunction with the unaudited pro forma condensed consolidated financial statements of Fronteer and the accompanying notes thereto attached as Schedule “A” to the Offer and Circular. The summary unaudited pro forma condensed consolidated financial statement information for Fronteer gives effect to the proposed acquisition of Aurora as if such acquisition had occurred as at September 30, 2008 for the purposes of the pro forma condensed consolidated balance sheet information and as at January 1, 2007 for the purposes of the pro forma condensed consolidated statements of operations for the fiscal year ended December 31, 2007 and the nine-month period ended September 30, 2008. In preparing the unaudited pro forma condensed consolidated financial statement information, management of Fronteer has made certain assumptions that affect the amounts reported in the unaudited pro forma condensed consolidated financial statement information. The summary unaudited pro forma condensed consolidated financial information is not intended to be indicative of the results that would actually have occurred, or the results expected in future periods, had the events reflected herein occurred on the dates indicated. Actual amounts recorded upon consummation of the transaction contemplated by the Offer will differ from the pro forma information presented below. In preparing the unaudited pro forma condensed consolidated financial statements a review was undertaken by management of Fronteer to identify accounting policy differences where the impact was potentially material and could be reasonably estimated. Further accounting differences may be identified after consummation of the proposed acquisition, if successful. To the knowledge of Fronteer, the significant accounting policies of Aurora conform in all material respects to those of Fronteer. Any potential synergies that may be realized after consummation of the transaction have been excluded from the unaudited pro forma condensed consolidated financial statement information. The unaudited pro forma condensed consolidated financial statement information set forth below is extracted from and should be read in conjunction with the unaudited pro forma condensed consolidated financial statements of Fronteer and accompanying notes included in Schedule “A” to the Offer and Circular.

 

Summary of Consolidated Financial Information of Fronteer
(Expressed in Canadian dollars)
(All dollar amounts are in thousands, except per share data)

 

 

Summary of Financial Information of Aurora
(Expressed in Canadian dollars)
(All dollar amounts are in thousands, except per share data)

 

 

Summary of Unaudited Pro Forma Condensed Consolidated Financial Information of Fronteer
(Expressed in Canadian dollars)
(All dollar amounts are in thousands, except per share data)

 

 

 

 

Authorized and Outstanding Share Capital

 

The authorized share capital of Fronteer consists of an unlimited number of Fronteer Common Shares. As of January 22, 2009, there were 83,551,050 Fronteer Common Shares issued and outstanding. As of January 22, 2009, stock options to acquire an additional 5,763,500 Fronteer Common Shares, were outstanding. Assuming the exercise of all of the outstanding stock options, the issued and outstanding Fronteer Common Shares on a fully diluted basis would be, as of January 22, 2009, 89,314,550 Fronteer Common Shares.

 

Holders of Fronteer Common Shares are entitled to receive notice of any meetings of shareholders of Fronteer, and to attend and to cast one vote per Fronteer Common Share at all such meetings. Holders of Fronteer Common Shares do not have cumulative voting rights with respect to the election of directors and, accordingly, holders of a majority of the Fronteer Common Shares entitled to vote in any election of directors may elect all directors standing for election. Holders of Fronteer Common Shares are entitled to receive on a pro rata basis such dividends on such Fronteer Common Shares, if any, as and when declared by the board of directors of Fronteer at its discretion from funds legally available therefor and, upon liquidation, dissolution or winding up of Fronteer, are entitled to receive on a pro rata basis the net assets of Fronteer after payment of debts and other liabilities, in each case subject to the rights, privileges, restrictions and conditions attaching to any other series or class of shares ranking senior in priority to or on a pro rata basis with the holders of Fronteer Common Shares with respect to dividends or liquidation. The Fronteer Common Shares do not carry any pre-emptive, subscription, redemption, retraction, surrender or conversion or exchange rights, nor do they contain any sinking or purchase fund provisions.

 

Details concerning the stock options of Fronteer are set out in Fronteer’s Annual Information Form and its most recent management’s discussion and analysis for the nine month period ended September 30, 2008, each of which is incorporated by reference herein and is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

 

The following table sets forth the number of currently outstanding Fronteer Common Shares and the number expected to be outstanding upon completion of the Offer, based on certain assumptions as set out in the notes to the pro forma consolidated financial statements of Fronteer attached as Schedule “A” hereto.

 

Pro Forma Fronteer Common Shares Outstanding and Ownership

 

 

 

Consolidated Capitalization

 

The following table sets forth Fronteer’s consolidated capitalization as at September 30, 2008, adjusted to give effect to any material changes (if any) in the share capital of Fronteer since September 30, 2008, the date of Fronteer’s most recent unaudited interim consolidated financial statements, and further adjusted to give effect to the Offer. The table should be read in conjunction with the pro forma condensed consolidated financial statements and notes attached hereto, the unaudited consolidated financial statements of Fronteer as at and for the nine month period ended September 30, 2008, including the notes thereto, and management’s discussion and analysis thereof and the other financial information contained in or incorporated by reference in this Offer and Circular.

 

 

 

Distributions of Fronteer Common Shares

 

Except as listed below, there have been no Fronteer Common Shares issued by Fronteer in the 12-month period preceding the date of the Offer.

 

 

Dividend and Dividend Policy

 

There are no restrictions which prevent Fronteer from paying dividends. Fronteer has not paid any dividends on its outstanding Fronteer Common Shares since the date of its incorporation. The board of directors of Fronteer, from time to time, on the basis of many factors, including Fronteer’s earnings, operating results, financial condition and anticipated cash needs may consider paying dividends in the future when its operational circumstances permit.

 

Price Range and Trading Volumes of the Fronteer Common Shares

 

The Fronteer Common Shares are listed and posted for trading on the TSX and the Alternext under the symbol “FRG”. The following table sets forth, for the periods indicated, the reported high and low daily trading prices and the aggregate volume of trading of the Fronteer Common Shares on the TSX and the Alternext.

 

 

Source: TSX Datalinks, LexisNexis Sunguard and www.NYSE.com.

 

The Offer represents a premium of approximately 166% over the December 19, 2008 closing price of the Common Shares on the TSX of $0.97, based on a closing price of $3.13 per Fronteer Common Share on the TSX on that same date, which was the last trading day prior to Fronteer’s announcement of its intention to make an Offer. The Offer also represents a premium of approximately 96% based on the respective volume weighted average trading prices of Fronteer and Aurora on the TSX for the 20 trading days ended December 19, 2008.

 

Fronteer owns and controls an aggregate of approximately 42% of the issued and outstanding Common Shares. In addition, pursuant to Lock-Up Agreements entered into with each of Amber, Eastbourne and MacKenzie, each such Shareholder has agreed to deposit under the Offer and not withdraw, subject to certain exceptions, Common Shares representing in the aggregate 19,234,700 Common Shares or approximately 26% of the issued and outstanding Common Shares. See Section 4 of the Circular, “Agreements Relating to the Offer”.

 

 

The following documents of Fronteer, filed with the various securities commissions or similar regulatory authorities in certain of the Provinces of Canada, are specifically incorporated by reference into and form an integral part of the Offer and Circular:

 

 

Information has been incorporated by reference in the Offer and Circular from documents filed with certain securities commissions or similar regulatory authorities in Canada and the United States. Copies of these documents may be obtained on request without charge from the Corporate Secretary of Fronteer at Suite 1650, 1055 West Hastings Street, Vancouver, British Columbia, V6E 2E9 or Telephone: 604-632-4677 or may be obtained on SEDAR at www.sedar.com or on EDGAR at www.sec.gov. To the extent that any document or information incorporated by reference into the Offer and Circular is included in a report that is filed with or furnished to the SEC on Form 40-F or 6-K, such document or information shall also be deemed to be incorporated by reference as an exhibit to the registration statement on Form F-8 covering the Fronteer Common Shares to be issued pursuant to the Offer. Fronteer’s US filings are electronically available on EDGAR and may be accessed at www.sec.gov.

 

All material change reports (excluding confidential reports), financial statements (including any report of the auditor, where applicable), management’s discussion and analysis, annual information forms, information circulars and business acquisition reports filed by Fronteer with securities commissions or similar regulatory authorities in the Provinces of Canada after the date of the Circular and before the Expiry Time shall be deemed to be incorporated by reference into the Offer and Circular. Other than the announcement of the Offer, Fronteer is not aware of any information that indicates any material change in the affairs of Fronteer since the date of the last published financial statements of Fronteer. In connection with the preparation of the information contained in this Offer and Circular, a review of Fronteer’s unaudited interim consolidated financial statements for the nine month periods ended September 30, 2008 and 2007 was undertaken as required by applicable securities Laws.

 

Any statement contained in the Offer and Circular or a document incorporated or deemed to be incorporated by reference in the Offer and Circular shall be deemed to be modified or superseded for purposes of the Offer and Circular to the extent that a statement contained in the Offer and Circular or in any other subsequently filed document which also is or is deemed to be incorporated by reference in the Offer and Circular modifies or supersedes such statement. The making of a modifying or superseding statement shall not be deemed an admission for any purpose that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. Any statement so modified or superseded shall not be deemed to constitute a part of the Offer and Circular, except as so modified or superseded.

 

Information contained in or otherwise accessed through Fronteer’s website, www.fronteergroup.com, or any other website does not form part of the Offer and Circular. All such references to Fronteer’s website are inactive textual references only.

 

 

Other than as disclosed below, none of Fronteer or any of its directors or officers or, to the knowledge of Fronteer after reasonable enquiry: (a) any associate or affiliate of such directors or officers, (b) any person or company holding more than 10% of any class of equity securities of Fronteer or its associates or affiliates, (c) any other insider of Fronteer, or (d) any associate, affiliate or person or company acting jointly or in concert with Fronteer, beneficially owns, directly or indirectly, or exercises control or direction over any of the securities of Aurora.

 

The following table sets out the approximate number of Common Shares, Options and other securities of Aurora that Fronteer and each director and officer of Fronteer and, to the knowledge of Fronteer after reasonable enquiry, each of the other persons and companies referred to in the foregoing paragraph, beneficially owns, directly or indirectly, or exercises control or direction over at the date of the Offer.

 

 

 

To the knowledge of Fronteer, no persons beneficially own, directly or indirectly, or exercise control or direction over Common Shares carrying more than 10% of the voting rights associated with the issued and outstanding Common Shares, other than the following:

 

 

 

To the knowledge of Fronteer based on insider reports publicly filed by directors and officers of Aurora on SEDI, as of January 19, 2009 the directors and officers of Aurora and its subsidiaries as a group, beneficially owned, directly or indirectly, or exercised control or direction over approximately 230,900 Common Shares, representing approximately 0.3% of the outstanding Common Shares.

 

Except as set forth below, during the twelve-month period preceding the date of the Offer, no Common Shares have been traded by Fronteer or any of its directors or officers, or, to the knowledge of Fronteer and Fronteer’s directors and officers after reasonable inquiry: (a) any associate or affiliate of a director or officer of Fronteer; (b) any person or company holding more than 10% of any class of equity securities of Fronteer or its associates or affiliates; (c) any other insider of Fronteer; or (d) any associate, affiliate or person or company acting jointly or in concert with Fronteer.

 

 

 

To the knowledge of Fronteer after reasonable enquiry, the following directors and officers of Fronteer, associates and affiliates of such directors and officers, persons or companies holding more than 10% of any class of securities of Fronteer and its associates and affiliates, other insiders of Fronteer, and associates, affiliates and persons and companies acting jointly or in concert with Fronteer, have accepted or intend to accept the Offer:

 

 

 

 

Except pursuant to the Offer and the Lock-Up Agreements, neither Fronteer nor any of its directors or officers or, to the knowledge of Fronteer, after reasonable enquiry, any associate or affiliate of any such director or officer, any person or company holding more than 10% of any class of equity securities of Fronteer or its associate or affiliate, any other insider of Fronteer, or any person or company acting “jointly or in concert” with Fronteer or its associate or affiliate, has entered into any commitments to acquire any equity securities of Aurora, except as otherwise disclosed in the Offer and Circular.

 

 

Except for the Lock-Up Agreements (described above under Section 4 of the Circular, “Agreements Relating to the Offer”) or as otherwise disclosed in the Offer and Circular, there are (a) no agreements, commitments or understandings made or proposed to be made between Fronteer and any of the directors or officers of Aurora; and (b) no agreements, commitments or understandings, formal or informal, between Fronteer and any securityholder of Aurora with respect to the Offer, or between Fronteer and Aurora or between Fronteer and any other person or company with respect to any securities of Aurora in relation to the Offer.

 

Each of Mark O’Dea and Sean Tetzlaff were previously employed by Aurora and, in connection with the prior termination of their employment, are entitled to or have received certain severance payments from Aurora. Mr. O’Dea is entitled to severance equal to six months’ of his prior Aurora annual salary ($255,000) and may be entitled to receive a bonus payment in respect of his prior employment with Aurora during a portion of 2008, at an amount to be determined by the Aurora Board of Directors. Mr. Tetzlaff received a total of $85,000 in severance payments, equal to six months’ of his prior Aurora annual salary. None of these payments are in relation to the Offer.

 

 

To the knowledge of Fronteer, there are no direct or indirect benefits of accepting or refusing to accept the Offer, that will accrue to any director or officer of Aurora, to any associate or affiliate of a director or officer of Aurora or to the knowledge of Fronteer, after reasonable enquiry, to any associate or affiliate of Aurora, any person or company holding more than 10% of any class of equity securities of Aurora or its associates or affiliates, to any other insider of Aurora or its associates or affiliates, or to any person or company acting “jointly or in concert” with Aurora, other than those that will accrue to Shareholders generally. Certain Options or other securities of Aurora that are convertible into or exchangeable or exercisable for Common Shares that are not currently convertible into or exchangeable or exercisable for Common Shares may become convertible into or exchangeable or exercisable for Common Shares upon the completion of the Offer and certain officers or employees of Aurora may be entitled to additional compensation or benefits under employment or management contracts in connection with the completion of the Offer.

 

 

Fronteer has no information that indicates any material change in the affairs of Aurora has occurred since the date of the last published financial statements of Aurora, other than the making of this Offer by Fronteer and such other material changes as have been publicly disclosed by Aurora. Fronteer has no knowledge of any material fact concerning securities of Aurora that has not been generally disclosed by Aurora or any other matter that has not previously been generally disclosed but which would reasonably be expected to affect the decision of Shareholders to accept or reject the Offer.

 

 

Authorized and Outstanding Capital

 

Based on publicly available information, the authorized share capital of Aurora is comprised of an unlimited number of Common Shares. As of November 6, 2008, based on the information contained in Aurora’s management’s discussion and analysis for the nine months ended September 30, 2008, there were 73,299,928 Common Shares issued and outstanding.

 

Fronteer understands that as at November 1, 2008, based on the information contained in Aurora’s management’s discussion and analysis and unaudited interim financial statements for the nine months ended September 30, 2008, Aurora had Options outstanding which, if exercised on that date, would give rise to the issuance of 5,389,668 Common Shares. As of September 30, 2008, Aurora disclosed that it had no outstanding warrants. Based exclusively on publicly available information, Fronteer understands that there are no other rights, agreements or commitments of any nature requiring the issuance, sale or transfer by Aurora of any Common Shares or any securities convertible into, or exchangeable or exercisable for, or that otherwise evidence a right to acquire any Common Shares.

 

Dividends and Dividend Policy

 

Based solely on publicly available information, Aurora has never declared or paid any dividends since the date of its incorporation and, as of September 30, 2008, no dividends had been declared or paid since the beginning of 2008 based on the information disclosed in Aurora’s unaudited interim financial statements for the nine months ended September 30, 2008. According to publicly available information, there are no restrictions that could prevent Aurora from paying

dividends. Dividends, if any, are payable to holders of Common Shares out of profits and surplus available for dividends, on declaration by the Board of Directors from time to time.

 

Price Range and Trading Volumes of the Common Shares

 

The Common Shares of Aurora are listed and posted for trading on the TSX under the symbol “AXU”. The following table sets forth, for the periods indicated, the reported high and low daily prices and the aggregate volume of trading of the Common Shares on the TSX.