NEM Quick Quote NEM - Free Report) has agreed to buy Australian gold and copper miner Newcrest for $17.5 billion (A$29 billion). This is the latest in the wave of deals in the sector as global miners seek to boost their exposure to metals like copper and gold. If completed, the acquisition would be the largest-ever gold-mining deal. The deal came on the back of weeks of talks over a sweetened offer by the U.S. company. Newcrest initially rejected a $19-billion offer from Newmont in February. The American gold giant subsequently raised its offer to nearly A$29.4 billion in April, including debt (read: Why Investors Are Flocking to Gold ETFs). This put the spotlight on gold mining ETFs, which could be the best way for investors to tap the opportunity arising from the proposed deal. Investors should keep a close eye on the movement of these ETFs — iShares MSCI Global Gold Miners ETF ( RING Quick Quote RING - Free Report) , Market Vectors Gold Mining ETF ( GDX Quick Quote GDX - Free Report) , Sprott Gold Miners ETF ( SGDM Quick Quote SGDM - Free Report) , SPDR S&P North American Natural Resources ETF ( NANR Quick Quote NANR - Free Report) and SPDR S&P Metals & Mining ETF ( XME Quick Quote XME - Free Report) — over the coming weeks. Deal in Focus
Per the terms of the deal, Newcrest shareholders will receive 0.400 Newmont shares for each Newcrest share and a special dividend of up to $1.10 per share paid by Newcrest, representing a 30.4% premium to where NCM shares were trading in early February before Newmont’s interest was known.
Should the transaction be complete, Newmont would become the largest gold and copper producer by market capitalization in the United States. The acquisition will strengthen Denver-based Newmont’s operations in Australia, Canada and Papua New Guinea and potentially create a ripple effect in the industry as smaller mines owned by the combined business are shed. Newmont would have combined annual copper production of approximately 350 million pounds from Australia and Canada. The takeover is subject to a shareholder vote, scheduled to be held in September or October, and will also require approval from the Foreign Investment Review Board and regulators in Canada and PNG. Newmont is expected to deliver $500 million in annual synergies and to generate an estimated $2 billion in cash flow as a result of the takeover. The combined company will maintain a listing on the ASX, while Newcrest investors will have the choice of receiving New York Stock Exchange-listed shares or Australian-listed CDIs as payment. ETFs in Focus
Let’s delve into each ETF below:
iShares MSCI Global Gold Miners ETF ( RING Quick Quote RING - Free Report) iShares MSCI Global Gold Miners ETF offers exposure to companies that derive the majority of their revenues from gold mining. It follows the MSCI ACWI Select Gold Miners Investable Market Index and holds 34 securities in its portfolio. Newmont takes the top spot at 16.3% of assets. Canadian firms take half of the portfolio, while the United States takes the next spot at 17.1% share. RING is the cheapest choice in the gold mining space, charging just 39 bps in fees and expenses (read: Low-Beta ETFs to Counter Market Volatility). iShares MSCI Global Gold Miners ETF has been able to manage assets worth $481.2 million and trades in a good volume of 160,000 shares per day. Market Vectors Gold Mining ETF ( GDX Quick Quote GDX - Free Report) Market Vectors Gold Mining ETF is the most popular and actively traded gold miner ETF with AUM of $14.3 billion and an average daily volume of around 24 million shares. It follows the NYSE Arca Gold Miners Index, holding 48 stocks in its basket. Newmont occupies the top position with a 9.7% share. Canadian firms account for about 41% of the portfolio, while the United States (15.2%) and Australia (14.5%) round off the top three. Market Vectors Gold Mining ETF charges 51 bps in annual fees. Sprott Gold Miners ETF ( SGDM Quick Quote SGDM - Free Report) Sprott Gold Miners ETF follows the Solactive Gold Miners Custom Factors Index, which aims to track the performance of larger-sized gold companies whose stocks are listed on Canadian and major U.S. exchanges. It holds 30 stocks in its basket, with Newmont taking the fourth spot at 8.5%. Here again, Canada takes the top spot at 75.2%, followed by 14.2% in the United States and 5.7% in South Africa. Sprott Gold Miners ETF has amassed $296 million in its asset base and trades in a lower volume of around 63,000 shares a day. It charges 54 bps in annual fees from investors. SPDR S&P North American Natural Resources ETF ( NANR Quick Quote NANR - Free Report) SPDR S&P North American Natural Resources ETF provides exposure to U.S. and Canadian publicly traded large and mid-cap companies within the subÂ¿Â¿Â¿industries of the energy, metals & mining or agriculture categories. It follows the S&P BMI North American Natural Resources Index, holding 34 stocks in its basket. Newmont occupies the fourth spot with a 5.3% share in the basket. SPDR S&P North American Natural Resources ETF has amassed $560 million and charges 35 bps in annual fees. It trades in a moderate volume of 124,000 shares a day on average (read: 5 Defensive Investment ETF Strategies for Your Portfolio). SPDR S&P Metals & Mining ETF ( XME Quick Quote XME - Free Report) SPDR S&P Metals & Mining ETF offers broad exposure to the U.S. metal and mining industry by tracking the S&P Metals and Mining Select Industry. It holds 34 stocks in its basket, with Newmont taking the second spot at 5.3%. From an industrial look, steel firms account for 40.7% of the portfolio, while coal & consumable fuels, gold, and diversified metals & mining round off the next three spots with double-digit exposure each. SPDR S&P Metals & Mining ETF has 0.35% in expense ratio and AUM of $1.9 billion. It trades in an average daily volume of around 4.1 million shares.