Canadian Royalties says yes to Jilin Jien proposal
China-Canada venture grabs Nunavik Nickel Mine
Canadian Royalties Inc.’s board of directors say they plan to accept a $192 million buy-out offer by Jien Canada Mining Ltd..
The two companies announced Oct. 16 they would sign a “definitive support agreement” for the takeover of the Nunavik Nickel mine project.
In August, Jien Canada Mining Ltd, a joint venture between the Chinese mining giant Jilin Jien Nickel Industry Co., Ltd. and Goldbrook Ventures, a Canadian mining company, offered $148.5 million in a takeover bid for Canadian Royalties.
The bid came after Canadian Royalties’ $500-million development of the Nunavik Nickel mine fell apart last year, a casualty of the company’s legal disputes with its former partner, the decline in metal prices, logistical problems and bad economic times.
Jien said then it would pay Canadian Royalties’ shareholders 60 cents a share and debenture-holders $600 for every $1,000 of loans — but this was not nearly enough money, Glenn Mullan, Canadian Royalties’ chief executive officer, said at the time.
Mullan criticized Jien’s takeover bid as “incredibly opportunistic” and “financially inadequate.”
“Jien can pay substantially more,” Mullan said, noting that once the Nunavik Nickel project is in production, Canadian Royalties would produce almost as much nickel as Jilin Jien’s operations in China.
The new bid calls for 80 cents a share and $800 for every $1,000 of loans.
Jilin Jien’s offer expires on Oct. 27.
In the wake of the global recession, Chinese interests have taken advantage of low metal prices by going bargain hunting for financially-troubled Western mining assets.
Beijing-based China Minmetals Corp. took over Oz Minerals, the struggling Australian zinc producer that owns the lucrative Izok Lake and High Lake mineral properties in the Kitikmeot region of Nunavut, earlier this year.
The deal gave Minmetals ownership of the huge lead-zinc deposit at Izok Lake, as well as the High Lake, Gondor and Hood base metal deposits and the old Lupin Mine site.