Wish this to happen to us
Last Updated: Monday, July 11, 2011 | 10:18 AM EDT
SharesofCanadian junior miner Peregrine Metals Ltd. are soaring afterStillwaterMining Ltd. agreed to pay a staggering premium for theVancouver-based company.
Stillwater, the U.S. platinum giant, is paying US$487.1-million in cash and stock for Peregrine, or about $3.16 a share. Peregrine shares,whichclosedat just 81¢ last Friday, were up 250% on $2.84 on Mondaymorning. Thedeal gives Stillwater the Altar copper-gold project inArgentina.
Inexplainingthe premium, Stillwater chairman and chief executive FrankMcAllistersaid on a conference call that he valued Peregrine at 3.8¢per pound ofcopper resources, which is in line with recent transactionsin thesector.
However, the shareprice premium is higher than any copper merger in recent memory.
“We’re looking at it from the miner’s perspective rather than the financial markets perspective,” he said.
Stillwatersaid that the deal, worth $3.16 a share in cash and stock,providesimmediate scale in copper, with potential “to develop into oneof theleading producers in the Americas.” It also providesdiversification forStillwaterm which is currently focused on platinumand palladium.
“ThePeregrinetransaction provides us with broader diversification intocopper — ametal with favorable long-term fundamentals driven by growingmarketdemand — as well as meaningful exposure to gold,” Mr. McAllistersaid in astatement.