We should see PDG to rock tomorrow. Good luck.
biz.yahoo.com
Reuters
UPDATE - Newmont to raise $1 bln, acquisition rumors fly
Tuesday November 4, 7:06 pm ET
(Recasts with analyst comments, details, background, changes dateline, previous LOS ANGELES. In U.S. dollars unless noted)
VANCOUVER, British Columbia , Nov 4 (Reuters) - Newmont Mining Corp. (NYSE:NEM - News) announced on Tuesday it will raise about a billion dollars in equity, a hefty sum that immediately set tongues wagging that the world's biggest gold producer was readying to make a big acquisition.
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Taking advantage of a share price that has leapt nearly 50 percent his year, the Denver-based mining giant said it will offer 20 million of its shares to the public. It expects the underwriters of the stock issue to take up a further two million shares to meet strong demand.
According to a Newmont spokesman, the price the shares will be sold at will be set on Wednesday. Newmont's stock closed at $43.31 in New York on Tuesday, up 43 cents and near its six-year high of $44.70. News of the share issue came after the stock market had closed.
The 7.5-million-ounce-a-year gold producer said in a statement the money raised would be used for "general corporate purposes, which may include new project development costs, other capital expenditures and debt reduction."
But an analyst who asked not to be identified said the mining giant could well be readying to pounce on a peer, despite Newmont's public statements recently that it has its hands full with its own development projects.
"Their biggest problem is, although they have organic growth, that that growth won't allow them to increase production by more than 5 percent over the next four to five years," the analyst said.
"When you have over 7 million ounces of production a year and you assume each mine has a reserve life of about 10 years, you can't replenish the reserves you are depleting fast enough.
"The only way to maintain that level, let alone grow, is to acquire," he said.
"We always look for opportunities but our primary purpose is debt reduction and project development," Newmont spokesman Doug Hock told Reuters.
At the end of September, Newmont had about $1.2 billion in debt.
Two analysts said a possible takeover target could be Canadian-based Placer Dome Inc. (Toronto:PDG.TO - News), whose share price, although up 12 percent this year, has lagged Newmont stock's performance.
One of the two analysts said Placer's hedge book, the ounces of gold its has sold forward at a set gold price, was "fairly light" and "manageable". Newmont is a vocal critic of hedging and has worked down at lightning speed the hedge contracts it got through its acquisition of Australia's Normandy Mining last year.
The other analyst said Placer's suite of projects, which includes four of the world's biggest undeveloped gold deposits, could be attractive to Newmont to boost its growth profile.
(Additional reporting by Sue Zeidler in Los Angeles) |
