Rumours of the worlds number one gold miner Barrick Gold (ABX-T, ABX-N) taking over the worlds number two Newmont Mining (NEM-N, NMC-T) are, evidently, too juicy to let go of.
For the second time in six months the rumours have flared up, and Newmont shares went along for the ride until a Barrick denial helped erase much of its market gains.
Newmont shares had been up as much as 6% to US$42.69 on Aug. 28, and options on the Denver-based company were trading at more than 72,000 calls, compared with 13,000 puts (a call is an option to buy a stock at a later date when the buyer thinks the price will go higher. Conversely, a put option is placed when the investor thinks the price of the underlying share will go down).
September calls let investors buy Newmont shares for US$42.50 and US$45 apiece.
The enthusiasm, however, eventually cooled and Newmonts shares finished the day up just 1.5% or 62 at US$41.07 on a high volume of roughly 18 million shares.
In Toronto, Barricks shares were off 3% or $1.04 to $32.84 on nearly 3 million shares traded. The price of gold fell roughly 1% to US$662.30 on the day.
In March of this year BusinessWeek magazine reported Barrick could make a bid for Newmont that would value the miner in the mid US$50 per share range.
Weighing against such reports is the known use of rumour spreading through the media by big investors looking to unload a particular stock.
Barrick, for its part, had little time to delve into such matters. It dismissed the rumours swiftly.
“We’ve previously said there is no substance to that rumour and that very much remains the case today,” a Barrick spokesman told Dow Jones.
Be the first to comment on "Barrick and Newmont rumours won’t die"