The Friedland name was again in the limelight last week after Montana-based Stillwater Mining (NYSE:SWC) agreed to buy Peregrine Metals (TSX:PGM) for US$487 million.
The deal was a windfall for Eric Friedland, who, as chairman and CEO, has a 12% stake in Peregrine and is the younger brother of Robert Friedland, one of the mining industry’s best-known financiers and the man behind Ivanhoe Mines (TSX:IVN).
For Eric, the deal to sell Peregrine is vindication that the Friedland name continues to strike success in the oft-hazardous junior mining sector.
“The Friedland name is very well known within mining, and I’m happy for Eric with this transaction because he’s worked very hard on this project,” said Mike Westerlund, a Peregrine spokesman.
The deal comes barely a year after the junior miner completed a $20 million initial public offering on the Toronto Stock Exchange.
Since then, the company has filed an updated resource estimate that revealed some 11.7 billion pounds of copper sitting in the ground beneath its flagship Altar project.
Altar, which is in Argentina, is also believed to contain 2.4 million ounces of gold.
Westerlund said it’s extremely rare for a junior company to own such a large deposit.
Peregrine had yet to complete a preliminary economic assessment of the project before Stillwater launched its bid.The cash and share deal represents a 279% premium for the early stage explorer, and even more if you consider that Peregrine has invested only $50 million to $60 million in Altar to date.
Westerlund said the key to landing such a good deal for the company is its understanding of the rocks in the ground.
“The work we’ve done brings confidence for people to move a little earlier to buy it,” said Westerlund. “This deal also reflects the value that these deposits in juniors are very rare … they realized if they want to win it they’re going to have to aggressively go after it or someone else will.”
Peregrine’s stock soared 221% to $2.60 after the deal was announced, but Stillwater investors haven’t taken so well to the transaction. The Montana company’s shares were down 22% $18.46 after the takeover was announced.
Stillwater operates two platinum group metal mines (PGM) in Montana and carries a reputation in the market as one of the few significant PGM producers outside of South Africa and the Russian Federation.
J.P. Morgan analyst John Bridges said most investors bought into Stillwater for its palladium exposure, and the Peregrine deal seems to “bring too much base metal into the company.”
The deal is expected to close September 30.
At press time, Peregrine Metals’ shares were valued at $2.57.