Newmont Option Trading Soared on Talk of Takeover

Discussion in 'Wall St. News' started by archon, Aug 28, 2007.

  1. archon


    Newmont stock rises on talk of a Barrick takeover


    Tuesday, August 28, 2007

    NEW YORK — — Shares of Newmont Mining Corp. soared and options trading tripled Tuesday on rumours that the world's biggest gold producer, Barrick Gold Corp., was looking to buy its closest rival.

    A spokesman for Denver-based Newmont, the world No. 2 producer, declined to comment on the activity or the market rumours. There was no immediate comment from Canada's Barrick.

    In morning trading on the New York Stock Exchange, Newmont shares were $1.70, or 4.2 per cent, higher at $42.15 (U.S.). It was the top percentage gainer on the NYSE.

    In options trading, there was a total of 71,723 calls compared with 13,078 puts traded in Newmont, more than three times its normal options volume, according to market research firm Track Data.

    "Newmont Mining is seeing aggressive trading on a Barrick Gold for NEM rumour," said Frederic Ruffy, analyst at 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, Mr. Ruffy said.

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

    Jon Najarian, co-founder of Web information site in Chicago, said: "The rumours 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.

    (Reporting by Steve James; additional reporting by Doris Frankel in Chicago)

    © The Globe and Mail