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Why IAMGOLD Stock Popped 11% Today

By Rich Smith - Updated Apr 12, 2019 at 10:10AM

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There may be a nugget of truth in rumors that IAMGOLD is for sale.

What happened

Two months ago, gold mining giant Newmont Mining announced a plan to merge with rival Goldcorp in a $10 billion all-stock transaction, sending Goldcorp stock up 12% in a day. Two months later, it's happening again -- this time to IAMGOLD (IAG 1.39%).

Shares of the Canadian gold miner closed 11% higher on Friday after reported that Australian miner Evolution Mining has expressed an interest in acquiring IAMGOLD.

A gold nugget in front of other gold nuggets

 Image source: Getty Images.

So what

This is a rumor. This is only a rumor.

And yet, SI noted that IAMGOLD's January decision to postpone construction on its "Cote Gold" project back in January suggests management "is open to a deal," keeping its business simple and uncomplicated for a would-be acquirer.

What's more, since IAMGOLD announced this postponement more than a month ago, I'd say it's also suggestive of negotiations having been going on for a while -- which might further increase the odds that a merger is in the works.

Check out the latest earnings call transcripts for the companies we cover.

Now what

Still, nothing's set in stone yet. Investors buying IAMGOLD stock in hopes of scoring a big payday when someone steps up to pay a big merger premium could still be disappointed -- and end up holding nothing more than a few shares of currently profitless IAMGOLD stock for their troubles.

Caveat gold-emptor.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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