Newmont Mining, the world's second largest gold producer and a member of the S&P 500, announced Tuesday it would acquire Canadian gold explorer Miramar Mining for $1.5 billion in cash. The agreed upon share price of $6.36 represented a 29% premium over Miramar's 20-day volume-weighted average trading price. Miramar offers Newmont a long-term source for gold with its Hope Bay Project in the Nunavut Territory of Canada, in a stable political climate. With resources quickly drying up in established areas, many mining companies have begun claiming stakes in unstable regions filled with risk. "It's a great deal for Newmont," said Joe Foster, a fund manager at New York-based Van Eck Associates Corp. "I did my valuation, and they have a great asset. It's world class." JPMorgan Chase and Citigroup agreed to underwrite a $1.3 billion loan to help finance the deal. Newmont shares traded up 2.2% to $45.82, and Miramar is up 22.7% to $6.32 in late morning trading Tuesday.
Sources: MarketWatch, Bloomberg
Commentary: Newmont Mining to Shutter Merchant Banking Business, Eliminate Gold Hedge • Look Who's Benefiting From Record-High Gold Prices
Stocks to watch: NEM, MNG, JPM, C. Competitors: AU, ABX. ETFs: GDX, XME
Earnings call transcript: Newmont Mining Q2 2007
Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.