Deals and IPOs

Barrick CEO: No Substance to Newmont Takeover Rumor


Barrick Goldbelieves its prospects are stronger if it remains on its own, and the world's biggest gold miner has no interest in acquiring U.S. rival Newmont Mining, Barrick Chief Executive Officer Greg Wilkins said Tuesday.

Wilkins responded to rumors that Barrick was looking to buy Newmont -- rumors that sent shares of Newmont higher and sparked heavy trading of the company's options.

Exclusive: Barrick Gold CEO

"If we're taking over Newmont, I must've missed that board meeting," Wilkins joked on CNBC.

Barrick has faced market speculation that it was pursuing Newmont -- the second-largest gold producer -- twice now in less than six months.

Wilkins pointed to internal growth efforts, citing five new mines it's commissioned since 2004 and eight more mine projects in the works. The CEO speculated that rumors of a takeover of Newmont surface because the two companies share property in Nevada.

Newmont Shares Remain Elevated

Shares of Newmont remained higher even after Barrick publicly refuted merger rumors earlier Tuesday.

"We previously said that this rumor had no substance to it, and again today that remains very much the case," Barrick spokesman Vincent Borg told Reuters in Toronto earlier in the day.

A spokesman for Denver-based Newmont declined to comment.

In morning New York Stock Exchange trade, Newmont shares rose more than 5 percent and the stock was the top percentage gainer. By the afternoon, it had eased back, but was still up more than 2 percent. Barrick was down more than 3 percent in New York and down C74 cents at C$33.14 in Toronto.

In options trading, there was a total is 102,405 calls and 16,591 puts, far outpacing average volume of 25,779 contracts, according to market research firm Track Data.

Options Action

"Newmont Mining is seeing aggressive trading on a Barrick Gold for NEM rumor," said analyst Frederic Ruffy of options education firm Optionetics.

The September calls allowing investors to buy Newmont shares at $42.50 and $45 apiece are seeing aggressive trading, as it appears that some players are positioning for further strength in the stock, Ruffy said.

"Such a merger would represent a major development in the gold mining industry, as it would unite the two largest players," he said.

Jon Najarian, co-founder of Web information site in Chicago, said: "The rumors are that Barrick Gold would be buying Newmont Mining for $57 to $60 a share. I think at that level, this would represent a $25 billion deal. So I am skeptical about this speculation."

Traders and analysts noticed unusual call activity in Newmont Monday as its shares dropped. Heavy volume of more than 20,000 contracts was seen in the December $45 calls, which some viewed as a bullish sign for the stock.

In March, a report in BusinessWeek magazine said Barrick might make a bid for Newmont. The report, citing "some pros," said Barrick would go after Newmont for its proven and probable reserves of about 95 million ounces of gold.

A deal between the two companies, according to the March 26 edition of the magazine, would probably value Newmont stock in the "mid-$50s" per share, compared with a trading price of $40.53 to $45.09 that month. The suggestion came from Brookhaven Capital Management, which has loaded up on Newmont stock.