Newmont Mining shares spiked Tuesday as rumors flew that the Denver-based company would be acquired by larger rival Barrick Gold.

By day's end, however, the shares pulled back as Barrick CEO Gregory Wilkins denied his company planned to bid for Newmont.

"If we're taking over Newmont, I must have missed that board meeting," Wilkins said in an interview with CNBC. "When we do our valuations, I find our prospects much better than trying to put the companies together."

Newmont spokesman Omar Jabara declined to comment, citing policy not to speak about speculation.

Newmont had been the world's biggest gold company until Toronto-based Barrick acquired Vancouver-based Placer Dome in 2006.

Within the past year, Newmont's shares have failed to keep pace with the price of gold. After the retirement of CEO Wayne Murdy on July 1, new CEO Richard O'Brien wasted little time in unwinding Newmont's hedges in order to link the company's fate more closely with gold prices.

Tuesday's rumormongering was evident in the prices of options to buy Newmont stock.

Newmont hit a 52-week low of $38.01 Aug. 16 and closed at $40.45 Monday.

Options to buy Newmont next month for $45, however, started at 20 cents Tuesday, went to 45 cents after trading as high as $1.10, said Jerry Paul of Quixote Capital Management, a firm that makes money through merger arbitrage.

That suggests traders see the market price for Newmont stock exceeding $45 next month. If Newmont doesn't hit $45, those options will expire worthless.

"People are thinking this thing is going to the moon," said Todd Wilemon, an options trader at Keck Securities in San Francisco. "People are playing the upside, expecting it to move up to 45 to 50 over the next 60 days. Those are speculative calls that this is going to be taken over."

"It reflects there's a speculative fervor," Paul said.

The trading volume of all Newmont call options - the right to buy the stock, whether in September, December or other times - rose to more than six times the 20-day average.

Newmont stock traded as high as $42.69, up 5.5 percent, before settling in to close at $41.07, a gain of 1.5 percent for the day.

Barrick-Newmont rumors are not new. Similar speculation arose earlier this year.

Gold producers are turning to acquisitions to bolster metal reserves amid a dearth of gold discoveries, dwindling global output and surging costs. A combination of Barrick and Newmont would create a company with almost three times the production of South Africa's AngloGold Ashanti Ltd., its nearest rival, according to the companies' Web sites.

Newmont's O'Brien said July 24 the company may consider making takeovers.

Newmont Mining

NEM: NYSE

$41.07

+62 cents

Bloomberg News contributed to this article. Finance Editor David Milstead can be reached at milstead@RockyMountainNews.com or 303-954-2648.