Shares in Vancouver-based Fronteer Gold rose sharply Thursday, gaining close to 40 per cent on news that U.S. giant Newmont Mining Corp. has offered to buy the company for $2.3 billion.

Fronteer's stock closed up $4.07 to $14.32 on the Toronto Stock Exchange at midday.

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A handout photo released by Newmont Mining Corporation, showing gold bars. Newmont on Thursday announced a deal to buy Vancouver-based Fronteer Gold for $2.3B. ((Newmont Mining/Associated Press))

Denver-based Newmont has operations in Nevada, where Fronteer is a joint venture partner in several projects.

Fronteer's flagship project is Long Canyon, about 160 kilometres from Newmont's operations.

"We believe that Long Canyon holds the potential to grow beyond three to four times Fronteer Gold's current stated resource estimate, with an attractive average gold grade of approximately 2.3 grams per tonne,"  Newmont CEO Richard O'Brien said in a statement.

The offer is for $14 in cash for each Fronteer share, as well as one common share in a new company, Pilot Gold, which will hold exploration assets in Nevada, Turkey and Peru.

The cash portion of the offer represents a premium of approximately 37 per cent on Fronteer's recent price.

The Fronteer board has unanimously endorsed the deal, which must still be approved by at least two-thirds of shareholders at a meeting expected to be held in early April, and is also subject to regulatory approvals.

All of the directors and senior officers have agreed to vote their shares in favour of the takeover.

Late last year, Newmont increased its stake in Toronto-based Loncor Resources, which has gold mining operations in the Democratic Republic of the Congo, and Vancouver-based Eurasian Minerals, which is looking for gold in Turkey, Europe and the Kyrgyz Republic.

With files from The Canadian Press