Top Stories This Week: Newmont Makes Bid for Newcrest, Sparks Gold M&A Talk

Newmont makes all-stock offer for Newcrest

M&A activity was also in focus in the gold space this week. Major miner Newmont (TSX:NGT,NYSE:NEM) approached Newcrest Mining (TSX:NCM,ASX:NCM,OTC Pink:NCMGF) with a non-binding proposal to acquire the company.

The deal would be on the basis of 0.38 Newmont shares per Newcrest share.

Newmont's move has turned heads in the mining sector, and for good reason. If the all-stock offer goes through, it would be the biggest gold takeover ever — Newmont bills itself as the world's leading gold company, while Newcrest, whose assets span Australia, Canada and Papua New Guinea, says it is the largest ASX-listed gold producer.

"We believe a combination of Newmont and Newcrest presents a powerful value proposition to our respective shareholders, workforce and the communities in which we operate" — Tom Palmer, Newmont

However, not everyone thinks the tie-up is a good idea. Although the gold market has been facing continued calls for consolidation, some analysts are wondering whether Newmont and Newcrest have the right synergies.

Executives at Agnico Eagles Mines (TSX:AEM,NYSE:AEM) and Barrick Gold (TSX:ABX,NYSE:GOLD) have also questioned the decision, suggesting that size for the sake of size is the wrong approach.

"There is a difference between value merger acquisitions and getting bigger for the sake of getting bigger" — Mark Bristow, Barrick Gold

As it stands, Newcrest is considering Newmont's proposal and has assured shareholders that it will act in their best interests.

"The Newcrest Board advises that shareholders need not take any action in relation to the Indicative Proposal and remains fully committed to acting in the best interests of Newcrest shareholders" — Newcrest Mining

Check out INN's VRIC interviews

I want to wrap up with a brief note on the Vancouver Resource Investment Conference, which the INN team attended this past week. It was a busy event, and I found that resource sector sentiment was largely positive among attendees.

We've already begun publishing our interviews from the show, and I'm looking forward to sharing the rest of them with you in the days to come. You can click here for the full YouTube playlist — check it out if you'd like to see my discussions on gold, silver, uranium and more with experts like Rick Rule, Ross Beaty and Lynette Zang.