Canadian Royalties Inc.

Canadian Royalties Inc.


October 01, 2007 14:06 ET

Canadian Royalties and Norilsk Nickel Sign Agreements for the Sale of Nickel Concentrates and an Equity Investment

MONTREAL, CANADA AND ESPOO, FINLAND--(Marketwire - Oct. 1, 2007) - Canadian Royalties Inc. ("CRI")(TSX:CZZ) and Norilsk Nickel Harjavalta Oy ("Norilsk Nickel"), a wholly owned subsidiary of MMC Norilsk Nickel, are pleased to announce the signing of several agreements aimed at expediting the development of CRI's Nunavik Nickel Project. The agreements include a sales agreement for nickel concentrates, an immediate C$25 million share subscription, and an option for additional financing at a later date to ensure project completion.

Sales Agreement for Nickel Concentrates

Following an extensive bidding process, CRI has reached an agreement with Norilsk Nickel to sell nickel concentrates produced from its Nunavik Nickel Project to Norilsk Nickel. The terms of this agreement are considered by CRI's management to be highly competitive with market rates.

Equity Investment

Under the equity investment, Norilsk Nickel shall subscribe on a private placement basis for an aggregate of 7,246,377 common shares in the equity of CRI at a price of C$3.45 per common share for a total of C$25 million. The purchase price represents a 23% premium over the closing price of CRI's securities on Friday, September 28, 2007. The subscription is subject to the approval of the Toronto Stock Exchange (the "TSX"). Under the agreement, CRI may request Norilsk Nickel to provide an additional C$25 million in financing on mutually agreed terms to ensure project completion.

Richard Faucher, President and CEO of CRI stated that "The successful conclusion of these agreements represents a major milestone for CRI. Forming this strategic partnership with Norilsk Nickel reduces several project risks, including risks related to the financing of the project. Another significant part of our considerations in favour of Norilsk Nickel has been access to their technical know-how which will support CRI to capture the tremendous resource potential of the Nunavik Nickel Project."

Antti Aaltonen, Managing Director of Norilsk Nickel Finland Oy said "We are pleased to enter into this agreement with CRI. It is the culmination of a long period of cooperation and negotiation to bring the development of the Nunavik Nickel Project together with the assets and know-how of the Norilsk Nickel group. We look forward to working with the management of CRI on this exciting and important project."

About Norilsk Nickel

Norilsk Nickel, a corporation incorporated under the laws of the Russian Federation, is the largest mining and metals company in Russia and the world's largest producer of nickel and palladium and one of the world's largest producers of platinum and copper. In addition to this, Norilsk Nickel produces a large number of by-products, including cobalt, rhodium, silver, tellurium, selenium, iridium and ruthenium. The Norilsk Nickel group is involved in prospecting, exploration, extraction, beneficiation and metallurgical processing of minerals; and in production, marketing and sales of base and precious metals. The Company is headquartered in Moscow, Russia, with sales and distribution activities managed through its Moscow headquarters and international sales network. Norilsk Nickel's Russian operations include the operations of the Polar Division on the Taimyr Peninsula in the Krasnoyarsk region and the Kola Mining and Metallurgical Company ("KMMC") located on the Kola Peninsula in the Murmansk region.

Norilsk Nickel's international mining and metallurgical operations encompass nickel sulphide and laterite mining and processing operations, a refining plant and a process technology group spanning Finland, Australia, Botswana and South Africa. Norilsk Nickel Australia's assets include the Lake Johnston, Black Swan and Waterloo nickel operations and the Honeymoon Well project, as well as the Cawse and Avalon laterite high pressure acid leach (HPAL) operations. Norilsk Nickel Africa's assets include 85% ownership of both the Tati Nickel Mining Company and the Botswana Metal Refinery in Botswana (the remaining 15% is held by the Government of the Republic of Botswana). The African assets also include a 50:50 joint venture with African Rainbow Minerals in the Nkomati nickel mine in South Africa. Norilsk Nickel Finland's assets include the Harjavalta Refinery and a 7.4% share in the Talvivaara Mining Company. Supporting the mining, processing and refining operations is Norilsk Process Technology, which provides a wide range of technical process support from ore processing through to production of final metal. Norilsk Nickel also operates a research and development institute, LLC "Gipronickel", located in St Petersburg with branches at the Polar Division and KMMC. Norilsk Nickel is the majority shareholder in Stillwater Mining Company, the largest producer of platinum group metals in North America, whose shares are traded on the New York Stock Exchange.

About Canadian Royalties and the Nunavik Nickel Project

Canadian Royalties has initiated the development of an independent, stand-alone nickel-copper mine on its Nunavik Nickel Project, located in northern Quebec. Canadian Royalties is proceeding with permitting applications, as well as exploration for additional resources.

Canadian Royalties currently holds a 100% interest in the Ivakkak deposit, subject to a net smelter royalty ("NSR", refer to news release dated September 21, 2005). Additionally, Canadian Royalties has vested in a 70% interest in the Expo-Ungava property (which hosts the Mesamax, Mequillon and Expo deposits), where its interest shall be increased to 80% simultaneously with the creation of the joint venture. Further, Canadian Royalties holds an underlying 2% NSR on the Expo-Ungava Property.

Forward-looking Statement

This news release contains certain forward-looking statements. These forward-looking statements are subject to a variety of risks and uncertainties beyond the Company's ability to control or predict which could cause actual events or results to differ materially from those anticipated in such forward-looking statements. Such risks and uncertainties are disclosed under the heading "Risk Factors" in the Company's Amended and Restated Annual Information Form dated July 10, 2007 for the year ended December 31, 2006. Accordingly, readers should not place undue reliance on forward-looking statements.

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