Shares of New Gold (NGD) surged 15.12% in pre-market trading on Monday, following the announcement of a $7 billion acquisition deal with Coeur Mining. The significant jump in stock price comes as investors react positively to the premium offer and the potential benefits of the merger.

Coeur Mining has agreed to purchase New Gold in an all-stock transaction, offering 0.4959 of a Coeur share for each New Gold share. This deal values New Gold at $8.51 per share, representing a 16% premium to its last closing price on the NYSE American exchange. The acquisition is part of a broader trend of consolidation in the gold industry, as precious metal prices hover near all-time highs.

The merger is set to create a larger, more resilient company with enhanced production capabilities. The combined entity will boast an annual production of approximately 900,000 ounces of gold, 20 million ounces of silver, and 100 million pounds of copper. New Gold shareholders will retain a 38% stake in the merged company, while Coeur stockholders will own the remaining 62%. This strategic move is expected to result in lower costs, higher margins, and improved free cash flow, potentially reaching $2 billion by 2026.