Think of a puzzle with golden pieces: Newmont Mining , Barrick Gold , and Goldcorp .
Figuring out how the miners will fit together—in a world where easily exploitable gold is increasingly scarce—has become a parlor game for investors and analysts covering the sector. UBS analyst Cleve Rueckert thinks the outcome of proposed mergers among the firms will be decided soon, likely in April. Investors should look past near-term problems with production and further into the future, he says.
The back story. The gold sector has been dominated by merger news this year and it is moving the stocks. Newmont (ticker: NEM) announced a $10 billion acquisition of Goldcorp (GG) in mid-January, but last week, Barrick Gold made an unsolicited bid to take over Newmont at $17.85 billion. Newmont shot down that idea days later.
In its presentation rejecting Barrick’s proposal, Newmont said a merger with Goldcorp would create more value for its shareholders. Its net asset value would grow 27% from the merger with Goldcorp, but only 12% from the Barrick proposal, the mining company said.
