China takes a run at Canadian junior miner

Shares of Canadian Royalties (TSX: T.CZZ, Stock Forum) climbed 21% to 58 cents on Friday after Goldbrook Ventures (TSX: V.GBK, Stock Forum) said it has entered into a shareholder, joint bid and operating agreement with China’s Jilin Jien Nickel Industry Co., Ltd. and its wholly-owned subsidiary Jien International Investment Ltd. to make an all-cash take-over bid for Canadian Royalties at a price of 60 cents a share in cash and all of the outstanding 7% convertible senior unsecured debentures due March 31, 2015, at a price of $600 per $1000 principal amount of debentures, plus accrued and unpaid interest up to, but excluding, the date the debentures are taken up under the take-over bid. Total cash consideration is approximately $148.5 million.

Canadian Royalties is a mineral exploration company that has discovered and delineated several potentially mineable nickel-copper-cobalt-platinum-palladium-gold deposits located in the Raglan mining district of northern Quebec's Nunavik Region. Jilin Jien, one of China's largest producers of nickel, copper and cobalt sulphates, would hold 75% of the voting shares with the remaining 25% being held by Goldbrook.

On the Canadian Royalties forum, poster MrBigger strongly asserted “management better find a white knight!! Less than 200 million for billions in ore and all the legwork done? … Should go for at least a buck!! Come you big mining companies. Do something – the Chinese are stealing assets from under your nose for 10 cents on the dollar.”

long34, meanwhile, believes “Xstrata is watching it and most likely will take it out as the numbers improve. Sudbury ores are getting expensive and VALE may shut it down (slowly). CZZ has open pit deposits and are very close to their mill. Xstrata is gambling that CZZ will not find more ore. Heads will roll at Xstrata if wrong.”

On the Goldbrook Ventures Bullboard, however, M139 questions the deal, “saying as Goldbrook shareholders it's not clear what we get out of this. Do we gain another asset, is Jien Mining going to become a Goldbrook subsidiary... or are we basically just along for the ride while Jien and Goldbrook administration use our infrastructure to do this takeover?”