Canadian Royalties Inc.
TSX : CZZ

Canadian Royalties Inc.

January 25, 2007 12:46 ET

Canadian Royalties Inc.: 2006 Exploration Results-Mesamax Deposit, High-grade Mineralization Discovered at Depth and Resource Updated

MONTREAL, QUEBEC--(CCNMatthews - Jan. 25, 2007) - Canadian Royalties Inc. (TSX: CZZ) reports a 20% increase in indicated resources at the Mesamax deposit, and the discovery of a zone of high-grade nickel-copper-platinum-palladium (Ni-Cu-PGE) mineralization, located approximately 100 metres below the bottom of the proposed Mesamax open pit. This deeper zone includes two intervals of mineralization in diamond drill hole MXNW-06-145: The upper interval of 4.5 metres (14.8 feet) of high-grade massive sulphide mineralization assayed 3.22% Ni, 2.68% Cu and 5.61 g/t PGE, and the lower interval of 7.95 metres (26.2 feet) assayed 1.04% Ni, 0.52% Cu and 4.23 g/t PGE.

Additional exploration results from the 2006 program, including assay results from drilling at Mequillon and new resource estimates for the Ivakkak and Mequillon deposits, as well as a final compilation of all updated resources will be reported over the next two months.

Zone of High-grade Ni-Cu-PGE Mineralization at Depth

During 2006, Canadian Royalties tested the potential at depth for the existence of additional mineralization along a northeast dipping fault. Several holes were drilled near the center of the Mesamax deposit, intersecting the interpreted fault at various depths ranging from 100 metres to 250 metres below surface (approximately 20 metres to 170 metres below the bottom of the proposed Mesamax open pit). Initial results included the intersections reported for hole MXNW-06-145 below the proposed open pit. The mineralized zone consists of two intervals of high-grade mineralization (assays are provided at the end of this release). Larger drills are being shipped to the site to follow up on these significant intervals of Ni-Cu-PGE mineralization.

Mineral Resource Update

The Mesamax Mineral Resources have been updated based on exploration drilling conducted during 2006 and ongoing metallurgical test work. The indicated resources have increased by 20% due to: (i) the inclusion of new material added through exploration drilling; (ii) a conversion of inferred resources to indicated resources through infill drilling completed in 2006; and (iii) the addition of several hundred thousand tonnes of near-surface, oxidized material to the mineral resources as a result of the completion of the metallurgical test work outlined further below. The updated undiluted mineral resource estimate completed by P&E Mining Consultants Inc. is summarized in the table below:



Ni Cu Co Au Pt Pd PGE
Category tonnes % % % g/t g/t g/t g/t
--------------------------------------------------------------------------
Indicated Resources 2,218,000 1.89 2.57 0.08 0.20 0.97 3.63 4.80
Inferred Resources 31,000 1.61 1.78 0.07 0.15 0.60 3.57 4.32

Notes:

- Mineral resources which are not mineral reserves do not have
demonstrated economic viability. The estimate of mineral resources
may be materially affected by environmental, permitting, legal, title,
taxation, sociopolitical, marketing, or other relevant issues.
- The quantity and grade of reported inferred resources in this
estimation are conceptual in nature, there has been insufficient
exploration to define these inferred resources as an indicated or
measured mineral resource, and it is uncertain if further exploration
will result in upgrading them to an indicated or measured mineral
resource category.
- The mineral resources in this press release were estimated using the
Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM
Standards on Mineral Resources and Reserves, Definitions and Guidelines
prepared by the CIM Standing Committee on Reserve Definitions and
adopted by CIM Council December 11, 2005. The mineral resources are
reported at a 0.25% Nickel grade cut-off value.


In September, 2006, SGS Lakefield Research Limited completed its report on the Mesamax flotation milling pilot plant program, which tested the 33 tonne bulk sample collected in 2005 from the Mesamax deposit. The pilot plant program considered the following: 1) crushing and grindability characteristics of Mesamax mineralization, generating design data for the development of the crushing and milling circuits; 2) optimizing flotation recovery of

nickel and copper with an emphasis on reagent use and flowsheet configuration; 3) processing 33 tonnes of material in a flotation pilot plant to confirm and optimize the metallurgical flowsheet; 4) provide complete metallurgical balances and summaries for full scale mill design and development; and 5) evaluate process water recirculation and detailed characterization of tailings and concentrates, to support environmental engineering and the technical requirements of the Environmental and Social Impact Study. All objectives of the pilot plant were met, achieving 97.2% recovery of copper, and 79.2% of nickel. Satisfactory performance of near surface oxidized material in the pilot plant test work led to its inclusion in the revised resource model.

Eugene Puritch, P.Eng., and Tracy Armstrong, P.Geo., of P&E Mining Consultants Inc. are Qualified Persons in accordance with National Instrument 43-101, and are responsible for the information regarding the updated Mesamax resource estimate presented in this news release. All assaying was completed by ALS Chemex with sample preparation completed in Val-d'Or, QC and analyses completed at ALS Chemex in Vancouver, BC. Base metal values were determined by sodium peroxide fusion with ICP-AES analysis. Platinum, palladium and gold values were determined by 30 gram fire assay with ICP-AES finish.

Assays

Composite assay values from the recently completed holes in the Mesamax Deposit and the deeper mineralized area are summarized below:



Mesamax From To Length Ni Cu Co Au Pt Pd PGE
DDH m m m % % % g/t g/t g/t g/t
-------------------------------------------------------------------
06-135 87.30 88.55 1.25 3.76 2.92 0.14 0.24 0.80 1.57 2.61
06-137 25.25 32.60 7.35 1.26 0.81 0.06 0.03 0.66 2.92 3.61
06-138 10.00 22.30 12.30 0.73 0.83 0.04 0.06 0.57 3.49 4.13
incl. 18.00 22.30 4.30 1.15 0.74 0.05 0.04 0.61 3.16 3.81
06-139 8.00 16.00 8.00 0.50 1.06 0.03 0.05 0.31 1.24 1.60
Incl. 11.00 12.00 1.00 1.26 1.03 0.06 0.03 0.47 2.41 2.91
06-141 144.10 147.65 3.55 0.89 2.06 0.04 0.34 0.38 4.27 5.00
06-142 94.40 102.30 7.90 2.76 6.98 0.11 0.72 0.65 9.57 10.94
06-142 133.60 134.35 0.75 2.76 3.38 0.14 0.21 1.49 14.80 16.50
06-143 74.05 79.55 5.50 3.83 3.19 0.15 0.15 0.84 2.63 3.62
06-143 114.35 118.40 4.05 2.21 2.06 0.12 0.48 0.46 13.54 14.48
06-144 139.40 142.40 3.00 1.04 1.48 0.05 0.05 0.48 2.03 2.56
06-145 194.30 198.80 4.50 3.22 2.68 0.13 0.07 1.31 4.23 5.61
06-145 217.50 225.45 7.95 1.04 0.52 0.05 0.04 0.74 3.44 4.23
06-146 6.00 18.70 12.70 0.51 0.84 0.03 0.04 0.40 1.91 2.36
06-147 253.40 262.50 9.10 1.40 0.63 0.06 0.05 0.84 3.23 4.12
06-148 285.60 287.00 1.40 3.94 3.26 0.14 0.07 0.90 2.18 3.14
06-149 215.30 217.50 2.20 1.66 2.31 0.07 0.27 0.71 3.21 4.19
03-70ex 158.90 160.30 1.40 1.81 0.54 0.08 0.02 0.78 3.11 3.91
03-90ex 73.15 74.05 0.90 1.18 1.81 0.06 0.27 0.46 5.35 10.50


Notes:
- Lengths are drill intersected core lengths, composite intervals are
length weighted;
- PGE equals platinum + palladium + gold;
- g/t equals grams per metric tonne;
- True widths have not yet been determined but are thought to be
generally 70% or more of the core lengths given in the table;
- 6 holes (MXNW-06-136, 140 and 150-153), located outside the
mineralized zone, had no significant values and are not presented
in the attached table;
- According to a pre-established sampling protocol, half of the diamond
drill core is sampled on lengths varying between 0.25 to
1.65 metres, sealed in bags, and sent to ALS CHEMEX Laboratory with
sample preparation completed in Val-d'Or (QC) and analyses completed
at ALS CHEMEX in Vancouver (BC). Base metal values were determined by
sodium peroxide fusion with ICP-AES analysis. Platinum, palladium and
gold values were determined by 30 gram fire assay with ICP-AES finish.
A quality control program (QA/QC) was established by the Company to
insure the precision of the analytical method and results. Gold,
platinum and palladium grades are uncut and assay interval lengths are
measured along the core axis.
- Holes MXNW-03-70ex and MXNW-03-90ex were deepened in the 2006 drilling
program.


The exploration program was supervised by Mr. Bertrand Brassard, M.Sc., P.Geo. (OGQ), a Qualified Person under NI 43-101. This news release has been prepared and revised under the supervision of Mr. R. Bruce Durham, Vice-president Exploration and Business Development.

About Canadian Royalties and the Raglan South Nickel Project
Canadian Royalties' main focus remains evaluating the potential of establishing an independent, stand-alone Ni-Cu-PGE mining and milling operation in the general vicinity of Xstrata Nickel's Raglan Mine in Nunavik, Quebec. Canadian Royalties is currently proceeding with permitting applications, a bankable feasibility study ("BFS" (1)), and an environmental and social impact analysis ("ESIA").

(1) A bankable (full) feasibility study is a comprehensive analysis of a projects economics (+/- 15% precision) and is used by the banking industry for financing purposes.

The statements contained in this press release may contain statements that may involve a number of risks and uncertainties. Actual events or results could differ materially from the Company's expectations and projections.

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