1 yr. price target SFEG - $3.00
Newmont-Miramar PactShows Push in IndustryTo Focus on the Metal
Newmont Mining Corp. is betting that the gold boom has legs.
The deal marks the Denver miner's latest move to focus its business around its core gold operations. It is among the first in what could be a wave of industry consolidation. Yamana Gold Inc. announced last month that it had agreed to acquire Meridian Gold Inc. for $3.6 billion.
The Newmont deal is a further sign that gold miners are simplifying their operations to take advantage of gold prices, which have risen to 28-year highs, and to become more attractive to investors who want a more focused company. Newmont in July said it would discontinue its merchant banking business unit. It also eliminated its entire gold hedge position, intended to protect the company if gold prices fell.
The deal values Miramar at C$6.25 per share, a 20% premium over Monday's close price of C$5.19 on the Toronto Stock Exchange. Yesterday its shares rose C$1.09, or 21%, to finish at C$6.28.