Barrick's Bid for Cadence Energy a Sign of Things to Come

Barrick Gold Corp.'s (ABX) C$354-million bid for Cadence Energy Ltd. (CDSFF.PK) has a "minimal" financial impact on the gold giant, according to Blackmont Capital analyst Richard Gray. He wrote that the total value of the offer represents just 0.8% of Barrick's market cap, and that Cadence's estimated cash flow for 2009 would augment Barrick's by just 2%.

However, he still sees the logic in Barrick's takeover proposal.

In a note to clients, he wrote:

The significance of the world's largest gold company acquiring an oil/gas producer underscores the impact of the rising energy prices for miners and is a manoeuvre that we believe will become more common.

Mr. Gray maintained a "buy" rating on Barrick and a target of C$54.00 a share.

Comments

[Steven Ward:]

Oil qand gas seem to have replaced the gold as an inflation and cap gains vehicle.

Is this a contrarian indicator on the price of oil? I doubt it, but it is interesting that oil has soared 50.00 a barrel while gold has done nothing.

2008 Jul 16 09:32 AM

[john s. gordon:]

oil/gas have replaced gold as speculation vehicle. next it will be tulip bulbs redux.
> jack

2008 Jul 16 11:19 AM

[Diegojames:]

My BMW is powered by
TULIPS.
Seriously...AEM...is dropping...what is happening...it is also a Canadian dollar play and a gold play...it does need energy....Cameco -CCJ- is looking at gold producers...Cameco has lots of power. OK, I will buy more CCJ but the US dollar going down should help AEM because dividend is paid in Looney dollars and value of gold does up when dollar down... and the bill for the democrats miss managing energy for the USA and the mistakes made my Congress and its managing of USA economy and mortgages for everyone or 2 (two) houses for everyone no problem ...because the COngress(democrats) are protecting you....

Buy solar and wind turbine and energy transmission lines...

Diego,
in the sun with a cold ( beer or martini) cannot be certain after my
stocks all dropped today-
Sunny southern California

2008 Jul 16 08:46 PM

[IronCity:]

Diego, I could not access your website.

2008 Aug 08 07:42 PM