Cdn. Royalties targets Ungava’s board

The fight between Canadian Royalties (CZZ-V) and Ungava Minerals (UNGV-CUB) has taken a twist, with the former, via a numbered subsidiary company, launching a 10-per-share cash bid for 51% of the latter’s outstanding shares.

Canadian Royalties says it intends to replace Ungava’s current management team and board of directors because they have not acted in the best interest of its minority shareholders. The company claims that Ungava has twice jeopardized its interest in the Expo-Ungava property in northern Quebec by failing to pay renewal fees for its permits.

The company also cites Ungava’s failure to hold annual shareholder meetings for the past five years and management’s decision not to accept the Canadian Venture Exchange’s invitation in 1999 to list its shares for trading.

The bad blood between the two companies stems from a dispute over the inclusion of a key piece of ground in the Phoenix nickel-copper-platinum-palladium property in northern Quebec. A 4-sq.-km piece of land borders Canadian Royalties’ wholly owned Phoenix property and Ungava Minerals’ Expo Ungava property.

In early April, Ungava Minerals notified Canadian Royalties that the junior was in default of its option and joint-venture agreement because the border area, which includes the Mesamax NW grid and TK copper-nickel platinum-palladium discovery, was subsequently included into the Phoenix property.

Canadian Royalties says the land was properly transferred by Ungava Minerals when the Expo-Ungava property was expanded and the boundary repositioned in June 2001.

Canadian Royalties can earn a 70% stake in the Expo Ungava property by spending $1.7 million over four years. It can boost its stake to 80% by completing a bankable feasibility study.

The property is 15 km south of Falconbridge‘s (FL-T) Raglan nickel-copper mine and hosts three mineralized structures — Expo, Cominga and Mesamax, all of which were discovered in the 1960s.

Resources at Expo-Ungava are pegged at 17 million tonnes grading 0.6% nickel and 0.8% copper. Included is a higher-grade core of some 3 million tonnes grading 1% nickel and 1% copper.

Canadian Royalties’ offer will remain open for at least 35 days. If the offer receives more than 51% of Ungava’s outstanding shares, the offer price will be diluted in proportion to the total number of shares tendered.

The offer is subject to at least 51% of Ungava’s outstanding shares being tendered and to Ungava’s not implementing its proposed shareholders’ rights protection plan.

Ungava has advised its shareholders to take no action in response to the offer for just less than 9.3 million of Ungava’s outstanding shares. The company says its board of directors will review the offer and determine the appropriate course for shareholders.