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

Gold Investing

Major miner Newmont made waves this week when it approached Newcrest Mining with an all-stock offer to acquire the company.

February has been rough for the gold price. After rising briefly above US$1,950 per ounce last week, the yellow metal has come crashing down. It was at about US$1,865 at the time of this writing on Friday (February 10) afternoon.

What's going on with gold? The dominant narrative is that last week's strong US jobs data stoked expectations that the Federal Reserve will hike interest rates for longer than expected. The yellow metal tends to perform better when rates are low.

Comments from Fed Chair Jerome Powell have added fuel to that fire. Speaking this past Tuesday (February 7), he reiterated that the central bank is not done raising rates, emphasizing that although disinflation has begun, getting inflation back to 2 percent will be "bumpy." At this point, he thinks it's unlikely to approach that level until 2024.

"If we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have do more and raise rates more than is priced in," Powell said at an event in Washington, DC.

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.

Want more YouTube content? Check out our expert market commentary playlist, which features interviews with key figures in the resource space. If there's someone you'd like to see us interview, please send an email to

And don't forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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