Canadian Royalties Inc.

Canadian Royalties Inc.

August 25, 2009 08:46 ET

Canadian Royalties Board Unanimously Recommends Securityholders Reject Jien's Unsolicited Offer

MONTREAL, QUEBEC--(Marketwire - Aug. 25, 2009) - Canadian Royalties Inc. (the "Company", or "Canadian Royalties") (TSX:CZZ) today announced that its Board of Directors unanimously recommends that shareholders and debentureholders (together, the "Securityholders") reject the unsolicited offers (the "Jien Offers") by Jien Canada Mining Ltd. ("Jien") to acquire 100% of the Company's outstanding common shares (the "Shares") and 100% of the Company's outstanding convertible senior unsecured debentures (the "Debentures").

The Board's recommendation is contained in a Directors' Circular that will be filed with Canadian securities regulators on SEDAR at Securityholders are encouraged to read the Directors' Circular in its entirety.

Glenn Mullan, Chief Executive Officer and Chairman of the Board of Directors, stated, "After careful review, the Board has concluded that the Jien Offers substantially undervalue Canadian Royalties and fail to recognize the strategic value of the Nunavik Nickel Project. In addition, the timing of the Jien Offers is incredibly opportunistic and the Jien Offers come at a time when Canadian Royalties is trading at a significant discount to its peer group."

Mr. Mullan added, "As a hostile bidder, Jien has indicated that it does not want to pay a fair price to Canadian Royalties Securityholders. The Board of Directors is fully committed to aggressively pursuing value-maximizing alternatives for our Securityholders."

Reasons for the Recommendation

In concluding that the Jien Offers are inadequate and not in the best interests of Canadian Royalties Securityholders, the Board of Directors identified the following factors as being the most relevant:

- The Jien Offers substantially undervalue Canadian Royalties.

- The Jien Offers fail to recognize the strategic value of the Nunavik Nickel Project.

- The timing of the Jien Offers is opportunistic.

- Jien does not want to offer a fair price to Canadian Royalties Securityholders.

- Jien can pay substantially more.

- The share offer does not reflect an adequate premium for control of Canadian Royalties.

- The Debenture indenture requires payment of 101% to holders of the Debentures in the event of a change of control.

- The Jien Offers are financially inadequate.

- The Jien Offers are highly conditional, including a particularly open-ended People's Republic of China approval condition.

- The Board of Directors is aggressively pursuing value-maximizing alternatives.

- Rejection of the share offer by Canadian Royalties' Directors and Officers.

- The share offer is not a Permitted Bid under the Shareholder Rights Plan.

BMO Capital Markets is acting as financial advisor to the Special Committee of independent directors appointed by the Board in connection with the Jien Offers and Fraser Milner Casgrain LLP is acting as the Special Committee's legal counsel. The Company's legal counsel is Groia & Company.

Conference Call

A conference call will be held on August 25, 2009 at 11:00 a.m. EDT.

To listen to the conference call, please dial:

Local access: 514-807-8791

Toll-free access: 1 800 731 5319

A webcast will also be available at Canadian Royalties' website:

The webcast will also be available for replay at

About Canadian Royalties and the Nunavik Nickel Project

Canadian Royalties is a mineral exploration company whose principal active area is along the South Trend located in the Raglan mining district of Northern Quebec's Nunavik Region. Since 2001, the Company has discovered and delineated several potentially mineable nickel-copper-cobalt-platinum-palladium-gold deposits which collectively form the Nunavik Nickel Project (the "Project"). The Company has completed a Bankable Feasibility Study and has received its Environmental Certificate of Authorization; it has also received mine leases for four sites, namely the Ivakkak, Mequillon, Expo, and Mesamax deposits. An Impact and Benefits Agreement ("IBA") has been entered into between the Company, three (3) Inuit communities, and Makivik Corporation, the non profit legal representative of the Inuit; the IBA constitutes the Company's formal commitment to ensure a fair and sustainable distribution of the economic benefits stemming from the Project. Development of the Project was initiated in 2007; the Project was subsequently put on care and maintenance as a result of the 2008 financial crisis. The Company's objective is to develop and exploit the mineral resources comprising the Project either independently or through a partnership.

Forward-looking Statement

This news release contains certain forward-looking statements or forward-looking information. These forward-looking statements are subject to a variety of risks and uncertainties beyond the Company's ability and control, which could cause actual events or results to differ materially from those anticipated in such forward-looking statements. Some of these risks and uncertainties are identified and disclosed under the heading "Risk Factors" in the Company's Annual Information Form for the year ended December 31, 2008. Accordingly, all of the forward-looking information contained in this press release is qualified by this cautionary statement and there can be no assurance that actual results or developments anticipated by the Company, as expressed or implied by the forward-looking information, will be realized or, even if substantially realized, that they will have the expected consequences to or effects on the Company or its business operations,. All forward-looking statements speak only as of the date of this news release and the Company does not undertake any obligation to update or publicly disclose any revisions to such forward-looking statements to reflect events, circumstances or changes in expectations after the date hereof, except as required by applicable securities law. Accordingly, readers should not place undue reliance on forward-looking statements.

Contact Information

  • Canadian Royalties Inc.
    Glenn J. Mullan
    Chairman of the Board, and Chief Executive Officer
    514-879-1688, ext. 1222
    Shareholders / Debentureholders:
    Laurel Hill Advisory Group
    North American Toll Free Number: 1-888-298-1523
    Outside of North America: 1-416-637-4661
    Media Relations:
    NATIONAL Public Relations Inc.
    Roch Landriault