RE:RE:Correction: And .......The Rest of the Story - Globe & Mail Brookfield appears eager to lock in its gains from a turnaround at the mining company and strong prices for the metal, which is used in vehicles to minimize toxic emissions. Takeover talks with Impala intensified in July and shares in North American Palladium ran up by 35 per cent over the next few months.
Brookfield first got involved as a debt holder in 2013, advancing US$130-million to North American Palladium at a 15-per-cent interest rate. The company needed the funds to expand its Lac des Iles palladium mine, northwest of Thunder Bay. But over the next few years, the company ran into operational problems and soon was facing a cash crunch amid crumbling palladium prices. In 2015, the company went through a recapitalization that saw Brookfield convert its debt to equity and in the process become the biggest shareholder with 92 per cent of the stock.
In the past few years, North American Palladium’s fortunes have improved significantly, because of a more successful mine expansion, and a dramatic turnaround in the price of palladium.
On Monday, palladium changed hands for around US$1,660 an ounce, not far from a record high. Over the past year, the precious metal has risen about 55 per cent, based on rising demand from the automotive industry and squeezes on the supply side. New stricter air-quality regulations in Europe and Asia have resulted in increased worldwide demand for the metal, which is used in catalytic converters. While North American Palladium is a “pure play,” most of the palladium supply in the world comes as a byproduct of mining nickel or platinum. Russian miner MMC Norilsk Nickel PJSC is the world’s biggest producer.
While Brookfield is walking away with a gain of more than three times its investment, one analyst said minority shareholders could have gotten more.
"They’re leaving a lot of money on the table. A couple of hundred million based on what they could get,“ said David Stewart, analyst with GMP Securities Inc.
“It’s not just the value of the offer. Everyone can agree that’s really low. It’s also the timing. It’s just way too soon, “ Mr. Stewart said.