Canadian Royalties Inc.: Implementing a New Longer Term Business Plan
MONTREAL, QUEBEC –(March 9, 2009) – Canadian Royalties Inc. (TSX:CZZ) announces that it continues to take additional conservatory measures subsequent to its decision to delay project development (see news release August 5th, 2008), and is currently implementing a new, longer-term business approach with a view to future production, once metal prices and capital markets recover.To date, the Company has successfully negotiated with suppliers, service providers, contractors, employees, and other stake holders that have been impacted as a result of the changing economic climate and the Company’s ensuing adaptation to the circumstances. Having cash resources in excess of $20 million (as at December 31, 2008), Canadian Royalties will continue to adapt its operations in order to maintain financial stability. Currently, such activities include a postponement of engineering and other test work for the Nunavik Nickel Project, as well as a curtailment of larger-scale exploration activities, and more recently, discussions to re-negotiate the terms of its 7% Convertible Senior Unsecured Debentures due March 31, 2015 (in the principal amount of $137,500,000).
In the event that the current market conditions prevail for an extended period, the Company may not have the liquid resources to meet the interest obligations of the Debentures through to 2015. Accordingly, the Company is investigating various amendments to the Indenture that may reduce the financial pressure over time, some of which may have the potential to be dilutive to shareholders. Alternative asset preservation options include the sale of certain mining equipment, application for certain Research and Development tax credits, further staffing, management and infrastructure reductions, and consideration of joint venture/transactional opportunities. Implementing these measures have been, and are expected to continue to be, instrumental in enabling the Company to ultimately achieve its longer-term objectives.
In respect of exploration activities, the Company’s historic exploration campaigns have demonstrated that resources can be increased with diamond drilling. Accordingly, the Company’s 2009 objectives include performing modest, value-driven work programs that are specifically focused on its flagship Nunavik Nickel Project.
These primary activities are as follows:
– Submit remaining permit applications required for the resumption of project development and complete environmental impact studies for the Allammaq Nickel, Copper and Platinum Group Element (PGE) deposit that would culminate in an additional mining lease application.
– Complete development project wrap-up reporting. This work is essential for the archiving of all project work and will allow for a more efficient re-start of development activities when market conditions improve.
– Prioritized selection of target areas of geological merit which have the highest probability of hosting mineralization in proximity to planned project infrastructure. These areas could then be subject to SQUID (Super-conducting Quantum Interference Device) geophysical surveying. SQUID sensors measure very small magnetic fields and are capable of discriminating high-conductance sulphide mineralization from other localised lower conductance features. The direct detection of magmatic sulphide mineralization at Allammaq and Cominga East using SQUID sensors in 2008 was a major technical success and demonstrated that the method is well-suited to the Nunavik Nickel Project area.
– The Company will commission a resource estimate for its wholly-owned, near-surface Puimajuq deposit, located 7 kilometres east of Allammaq. This work will allow studies which could integrate Puimajuq into an eventual updated mine plan.
– Consider executing a limited diamond drilling program during Q3 2009 to explore for new Nickel, Copper and PGE mineralization subject to the company’s financial position and metal prices prevailing at that time.
– Perform on-site inspections and execute environmental monitoring programs.
– Maintain relations with the local Inuit authorities, communities, and organizations.
The short term activities of the Company shall be conducive to and shall correlate with its ability to implement amendments to the terms of the Debenture that will enable the Company to achieve long term financial stability. In the context of these efforts, Grant Arnold, Vice President, Exploration, shall also assume the functions of Chief Operating Officer, for no additional consideration. The additional office allows the Company to maintain Mr. Arnold as a key executive, and to impose overlapping responsibilities during a period of reduced activity.
Mr. Arnold played an instrumental role on the geological team that was responsible for the discovery of the Allammaq and Puimajuq deposits. Prior to joining Canadian Royalties two years ago, he held the position of Regional Geologist and was involved in consecutive Nickel resource increases at Raglan for Falconbridge Ltd. (now Xstrata Nickel). During his tenure in Matagami with Noranda Inc., Mr. Arnold led the exploration group and was the key team member involved in the Perseverance Zn-Cu discoveries (currently mined by Xstrata Zinc). In 2001 his team received the prestigious Bill Dennis Prospector of the Year Award at the PDAC.
About Canadian Royalties and the Nunavik Nickel Project
Canadian Royalties had initiated the development of an independent, stand-alone nickel-copper mine on its Nunavik Nickel Project, located 20 kilometres south of Xstrata Nickel’s Raglan Mine in Nunavik, Quebec. Canadian Royalties has received its Environmental Certificate of Authorization and Mine Leases for the Expo, Mesamax, Ivakkak and Mequillon sites.
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 Corporation’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 Corporation’s Annual Information Form for the year ended December 31, 2007 and dated March 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 the actual results or developments anticipated by the Corporation, 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 Corporation or its business operations. All forward-looking statements speak only as of the date of this news release and the Corporation 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 law. Accordingly, readers should not place undue reliance on forward-looking statements.
For more information, please contact
Canadian Royalties Inc.
Glenn J. Mullan, Chairman of the Board
Interim President and Chief Executive Officer
514-879-1688, ext. 1222