Shares of NewWest Gold Corp. soared more than 30 percent on Friday, after NewWest and Fronteer Development Group said late on Thursday that Fronteer may buy the Nevada-focused gold explorer in a share swap.

Fronteer, based in Vancouver, British Columbia, said it has a conditional agreement with NWG Investments Inc. to buy the latter's 86 percent stake in NewWest.

NWG Investments has agreed to support a Fronteer offer to all NewWest shareholders at a ratio of 0.26 of a Fronteer common shares for each NewWest share, the companies said.

Based on Thursday's closing share prices, the proposed transaction would be worth about C$3.20 per NewWest share, a 36 percent premium to its C$2.35 closing price, or about C$187 million for NewWest overall.

Fronteer has 30 days to complete due diligence.

A special committee of the NewWest board has not made any recommendation about the proposed acquisition, the two companies said.

NWG Investments can tender its shares to a superior transaction in certain circumstances, they said.

GMP Securities is financial adviser to NewWest while Canaccord Capital is advising Fronteer.

On the Toronto Stock Exchange late on Friday NewWest had jumped 32 percent to C$3.10, while Fronteer rose 2.6 percent to


($1=$1.06 Canadian)