Analysts say Gold Fields got a good deal in mine purchase


The selloff in Gold Fields (GFI -7.8%) shows no sign of abating, even as analysts say GFI got a good deal in its purchase of three western Australian gold mines from Barrick Gold (ABX +2.6%) for $300M; Cowen analysts calculate the mines are worth $513M.

GFI is paying the equivalent of $1,137/oz. of output from the mines based on annual production of 452K oz. and the equivalent of $115/oz. for reserves of 2.6M oz. vs. the North American group average of ~$280/oz.

An SBG Securities analyst in Johannesburg estimates the price paid per ounce is cheaper than the average paid between 1999 and 2012 in Australia.

For ABX, it's "a situation of doing the best you can with a bad hand."

Comments (8)
  • Philip Marlowe
    , contributor
    Comments (1466) | Send Message
     
    I think the cancellation of the dividend might also have something to do with the sell-off.
    22 Aug 2013, 02:26 PM Reply Like
  • Shaggieman
    , contributor
    Comments (709) | Send Message
     
    One percent still not bad.
    22 Aug 2013, 02:30 PM Reply Like
  • Philip Marlowe
    , contributor
    Comments (1466) | Send Message
     
    What do you mean by "one percent"? As far as I know the dividend was cancelled entirely.
    22 Aug 2013, 02:56 PM Reply Like
  • relic51
    , contributor
    Comments (15) | Send Message
     
    Sorry you think that way...I'm trying to increase my lowest dividend stocks to at least 10-12% return...you could get a lot better with an old-school GIC.
    23 Aug 2013, 09:01 AM Reply Like
  • Investor Talkroom
    , contributor
    Comments (548) | Send Message
     
    Nice opportunity. Bought at $5.65 today. Will hold for the long term.
    22 Aug 2013, 03:20 PM Reply Like
  • relic51
    , contributor
    Comments (15) | Send Message
     
    I have no idea where you bought Barrick at $5.65 but I would love to know because I would mortgage the house to buy all I could...I had dumped my old stock because of the small dividend but did buy some on sale(I thought) at $15.30 for some quick turn-around money and likely will sell at $23.00...easy money.
    23 Aug 2013, 09:01 AM Reply Like
  • Investor Talkroom
    , contributor
    Comments (548) | Send Message
     
    LOL. I meant GFI.

     

    Actually added more GFI today at $5.48.
    23 Aug 2013, 10:41 AM Reply Like
  • relic51
    , contributor
    Comments (15) | Send Message
     
    Barrick Gold is now paying out about 1% in dividends and even before this cut the % was a joke...I was getting less than 5% on my money and glad I dumped it...there isn't a dividend stock in my portfolio paying anything less than 9.3%...learn to shop around and use the different screeners available through all banks to choose stocks...do not be fooled by the so-called "name brand blue-chip" stocks....they look safe but pay little and even they will fail as we all have seen since 2008.
    23 Aug 2013, 09:01 AM Reply Like
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