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Gold surged in Europe Wednesday morning

ARND WIEGMANN/Arnd Weigmann/Reuters

The board of International Royalty Corp. recommended Tuesday that shareholders reject an "inadequate" takeover bid from Franco-Nevada Corp. and opt for an offer from rival bidder Royal Gold Inc. .

The Royal Gold offer values IRC at $749-million, trumping the Franco-Nevada bid of $639-million in cash.

IRC's board issued a statement saying Franco-Nevada's offer was inadequate "from a financial point of view," while the Royal Gold deal was "superior" and more attractive to shareholders.

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Under the terms of an agreement with IRC's board, Royal is offering either $7.45 in cash or 0.1385 of a share for each common share of IRC.

IRC's shares closed Thursday, before the holiday weekend, at $7.62 on the Toronto Stock Exchange. Royal Gold's shares closed at $51.10, giving the stock alternative an implied value of about $7.08 per share.

Royal Gold's bid has a cash cap of $350-million (U.S.) and a limit of 7.75 million common shares.

The agreement is subject to approval by at least two-thirds of IRC shareholders.

IRC's board added that the option to receive Royal Gold shares provided shareholders with potential benefits not available under the Franco-Nevada offer.

IRC also said the Franco-Nevada bid was "not a firm offer" and had conditions that could not be satisfied.

With the Royal Gold bid, the combined company will hold a portfolio of nearly 200 royalty interests, including 31 producing properties, 20 development-stage properties and 143 evaluation and exploration projects.

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IRC shareholders are scheduled to decide on the Royal Gold transaction at a special meeting to be held Feb. 16.

IRC is a mineral royalty company with 85 royalties on 20 projects around the world. Its properties contain gold, silver, nickel, copper, cobalt, zinc and coal.

Among its royalties, IRC owns 2.7 per cent of the nickel production from Voisey's Bay as well as royalties on the Chilean portion of the Pascua-Lama project and 1.5 per cent of Inmet Mining Corp.'s Las Cruces copper project in Spain.

Denver-based Royal Gold owns royalties on 118 properties on six continents.

Toronto-based Franco-Nevada is a resource royalty and investment company with a portfolio of precious and base metal royalties as well as oil and natural gas royalties.

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