Dahlman Rose Discusses Barrick's Bid For Equinox (ABX)

Dahlman Rose & Co. has a research note on Barrick Gold ABX after the company bid on Equinox Metals yesterday. It rates Barrick at Hold. In a note to clients, Dahlman Rose writes, "Barrick is still citing Donlin Creek, Cerro Casale, and Turquoise Ridge open-pit in their pipeline (likely +$10Bn aggregate CapEx from ~2014-2020 by our estimate). Management emphasized its financial capacity and its ability to get low-cost financing as rational for the transaction. We can't help but worry why a gold company is looking to lever up their balance sheet to acquire copper assets. Further, we view ABX's core competencies as its ability to finance and execute large mining projects. Therefore, we are puzzled by the company's purchase of an operating copper asset at full price (in our view), using up much of its spare financial capacity. On a positive note, the $250MM break fee could be a boon to ABX should Minmetal try and top them for this asset." Shares of ABX closed at $51.86 yesterday.