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Gold Mining ETFs in Focus on Endeavour-Teranga Merger Talks

The gold mining space has been buzzing with merger talks. Endeavour Mining is seeking to acquire smaller West African-focused miner Teranga Gold. Endeavour is 24.12% owned by Egypt’s Sawiris family and has been on the acquisition path this year as gold prices have rallied on the back of global stimulus to cushion economies from the fallout of the COVID-19 pandemic.

As a result of the solid run-up in the bullion price, shares of Teranga Gold have gained 87% this year as of Nov 9, giving the company a market capitalization of about C$2.2 billion ($1.7 billion). Endeavour is valued at about C$5.23 billion ($4 billion) in Toronto (see: all the Materials ETFs here).

The potential deal, if completed, would solidify Endeavour’s position as West Africa’s leading gold producer as it would add operating mine — Wahgnion — to its four existing mines in Burkina Faso, namely, Boungou (acquired from SEMAFO), Karma, Mana, and Hounde. The transaction would also provide exposure to Senegal with Teranga’s operations.

ETFs in Focus

The merger talks have put the spotlight on global gold mining ETFs that could be the best ways for investors to tap the opportunity:

Market Vectors Gold Mining ETF GDX

This is the most-popular and actively traded gold miner ETF with AUM of $17.8 billion and an average daily volume of around 21.8 million shares. The fund follows the NYSE Arca Gold Miners Index, holding 52 stocks in its basket. Canadian firms account for 45.7% of the portfolio, while the United States (16.5%) and Australia (14.6%) round off the top three. The fund charges 52 bps in annual fees.

iShares MSCI Global Gold Miners ETF RING

This ETF tracks the MSCI ACWI Select Gold Miners Investable Market Index and holds 37 securities in its portfolio. Canadian firms take 55.3% of the portfolio, while United States and South Africa round out the top three with a double-digit exposure each. RING charges 39 bps in fees and expenses. The fund has been able to manage assets worth $549.3 million and trades in good volume of 186,000 shares per day (read: ETFs to Bet on Biden's Potential Presidential Victory).

U.S. Global GO GOLD and Precious Metal Miners ETF GOAU

This fund provides investors with access to companies engaged in the production of precious metals either through active (mining or production) or passive (owning royalties or production streams) means. It tracks the U.S. Global Go Gold and Precious Metal Miners Index, holding 29 stocks in its basket. Canada takes the lion’s share at 64.9%, followed by South Africa (11.4%) and the United States (10%). It has amassed $123.5 million in its asset base and charges 60 bps in fees per year.

Sprott Gold Miners ETF SGDM

This fund follows the Solactive Gold Miners Custom Factors Index, holding 27 stocks in its basket. Here again, Canada takes the top spot at 76.5% followed by 16.3% in the United States. The fund has amassed $295.4 million in its asset base and trades in a good volume of around 63,000 shares a day. It charges 50 bps in annual fees from investors (read: Gold ETFs Look Attractive on Rising Market Uncertainties).

Global X Gold Explorers ETF GOEX

The ETF provides exposure to companies involved in the exploration of gold deposits and tracks the Solactive Global Gold Explorers & Developers Total Return Index. It is home to 49 stocks, and Canadian firms dominate the fund’s return at 55.1% followed by Australia (19.6%) and the Britain (14.9%). The fund is unpopular and illiquid with AUM of $67.3 million and an average daily volume of 15,000 shares. Expense ratio comes in at 0.65%.

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Sprott Gold Miners ETF (SGDM): ETF Research Reports
 
VanEck Vectors Gold Miners ETF (GDX): ETF Research Reports
 
iShares MSCI Global Gold Miners ETF (RING): ETF Research Reports
 
Global X Gold Explorers ETF (GOEX): ETF Research Reports
 
U.S. Global GO GOLD and Precious Metal Miners ETF (GOAU): ETF Research Reports
 
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