Uranium miner Paladin Energy Ltd (ASX:PDN) has initiated its uranium business in Canada and entered into a definitive agreement to purchase Aurora Energy Resources Inc., a wholly owned subsidiary of Fronteer Gold (TSX:FRG, AMEX:FRG).

The consideration for 100 per cent ownership of Aurora amounts to C$260.87M via the issuance of 52.09 million shares in Paladin, the company said in a statement. This values the current resources at US$1.90/lb.

Aurora Energy holds title to significant uranium assets within the highly prospective Central Mineral Belt (CMB) of Newfoundland and Labrador in Eastern Canada.

The company said it considers the CMB to be one of the few remaining, underexplored uranium districts globally.

"This highly strategic transaction fulfils Paladin's long held ambition to expand its footprint into Canada, a leading country in uranium mining, both in terms of resources and its stable political and business environment, providing the company with an important new platform from which to plan its continued growth."

"With this acquisition, Paladin's global uranium portfolio increases appreciably and, with strong potential for additional uranium resource discovery to complement the existing resource base, provides a genuine development opportunity within the forthcoming decade."

Completion of the transaction is subject to certain customary conditions, including the receipt of all necessary government and regulatory approvals, including the approval of the TSX and third party consents and is expected to close in February 2011. Cormark Securities Inc. of Toronto acted as Paladin's financial advisor on this transaction.

The shares to be issued to Fronteer will be subject to a four-month hold period under Canadian securities laws. In addition, Fronteer will enter into an agreement at closing that sets out procedures designed to ensure that any disposition of shares by Fronteer will occur in an orderly fashion to as wide a distribution as possible of institutional investors.