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Copper Canyon Resources Ltd. shares jumped more than 20 per cent Monday after the exploration-stage company agreed to a revised takeover offer from NovaGold Resources Inc. .

Copper Canyon shares gained 19 cents to $1.03 on the TSX Venture Exchange with more than 8.3 million shares traded.

In the new proposal, Canyon Creek will effectively be split into two companies including a spinoff that will be largely independent of NovaGold, and NovaGold will end up with 100 per cent of a property near the Galore Creek gold project in British Columbia.

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The share swap arrangement would see Copper Canyon shareholders receive 0.07 of a share in NovaGold for each Copper Canyon share held, plus one share of a newly incorporated company, code-named SpinCo, for every four Copper Canyon shares.

The deal represents an effective purchase price of $1.05 for each Copper Canyon share. That's a significant improvement from the rejected all-stock bid that was announced in December.

SpinCo will hold substantially all of Copper Canyon's assets other than certain cash and Copper Canyon's 40 per cent joint venture interest in the Copper Canyon copper-gold-silver property, which it jointly owned with NovaGold.

NovaGold will primarily end up with a further 40 per cent share of the joint venture interest in the Copper Canyon copper-gold-silver property in British Columbia. It will also hold less than a 10 per cent stake in SpinCo, which will hold the majority of Copper Canyon's other assets.

The property is adjacent to the Galore Creek project, owned equally by NovaGold and Teck Resources Ltd.

"We are pleased to have reached agreement with Copper Canyon on a proposed transaction," said Rick Van Nieuwenhuyse, chief executive officer of NovaGold.

"We believe the acquisition of Copper Canyon shares in accordance with the arrangement will benefit the shareholders of both NovaGold and Copper Canyon."

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Copper Canyon's CEO Tim Termuende said he is pleased with the outcome of negotiations with NovaGold.

"In addition, the creation of a new exploration company gives Copper Canyon shareholders the ability to participate in additional growth opportunities during a robust bull market commodities cycle," Termuende said.

The revised agreement comes after Copper Canyon went to a B.C. court last week claiming it had the right to acquire NovaGold's 60 per cent of the joint venture as required under their agreement.

NovaGold has disputed Copper Canyon's assertion that the right of first refusal was triggered when NovaGold's stake was transferred to its Galore Creek partnership with Teck Resources Inc.

Meanwhile, NovaGold had asked the B.C. Securities Commission to block a shareholder rights plan put in place by Copper Canyon, whose board had rejected the bid.

Copper Canyon had also earlier asked the B.C. Securities Commission to block NovaGold's hostile takeover bid, saying key information hasn't been properly disclosed.

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Under the agreement announced Monday, the companies will drop litigation against each other.

The boards of directors from both companies have unanimously approved the new deal, but it still requires Copper Canyon shareholder approval as well as the customary regulatory approvals. It is expected to close in May.

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