IronCity

Barrick Gold's Move Into Oil: Precursor to Commodities Consolidation?

"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."

From: seekingalpha.com/artic...

At 345 M they will pay near $19.50 per barrel. Is this a fair price?