The following research is a summary of a Blackmont Capital report entitled ‘The Stage is Set for M&A in the Gold and Silver Sector’ that was published on September 22, 2008.

Barrick Gold (ABX: TSX)



Rationale: Barrick requires large near term projects that might aid it in maintaining its current levels of production, which total 7.83 million ounces in 2008. Barrick currently has a strong presence in Nevada, Australia, Peru, Chile and Argentina. The company has the “balance sheet, cash flow and multiple to buy virtually anything they want. Kinross makes the most sense as it allows them to wait until Ecuador mining law is passed.”

1. Kinross Gold (K: TSX) – by acquiring Kinross Gold, which itself is currently in the process of acquiring Aurelian Resources (ARU: TSX) Barrick could increase its growth profile through large projects such as Kupol in Russia, Paracatu in Brazil and now Aurelian’s Fruta Del Norte (FDN) project in Ecuador. Barrick is already familiar with workings in Russia though its 34% ownership stake in Highland Gold Mining, which is Russia’s fourth largest gold producer. Additionally, Barrick could further consolidate ownership of the Round Mountain and Cerro Casale projects, both of which are currently joint ventures with Kinross Gold. Lastly, acquiring Kinross would allow Kinross CEO Tye Burt to take over the empty CEO spot at Barrick.