Canadian Royalties Inc.
TSX : CZZ

Canadian Royalties Inc.

November 02, 2007 17:05 ET

Canadian Royalties Seeks Vesting of Additional 10% Ownership in Expo-Ungava Property

MONTREAL, QUEBEC--(Marketwire - Nov. 2, 2007) - Canadian Royalties Inc. (TSX:CZZ) advises that it has initiated arbitration proceedings against Ungava Minerals Exploration Inc. ("UMEI") and Nearctic Nickel Mines Inc. (formerly Ungava Minerals Corp., hereinafter "NNM") in connection with the vesting of an additional 10% right, title, and interest in and to the Company's Expo-Ungava Property (the "Property") which hosts the Mesamax, Mequillon, and Expo deposits. UMEI and NNM have indicated their intentions of contesting these proceedings. Upon delivery of a favourable arbitration decision with respect to these proceedings, the Company will acquire an additional 10% right, title, and interest in and to the Property, for an aggregate 80% interest.

In other news, the Company announces that it has entered into an asset purchase agreement, pursuant to which the Company sold certain of its mineral claims located in the Lac Desjardins and Vernot Townships of Quebec (the "Purchased Claims") to Rukwa Uranium Ltd. ("Rukwa"). Thereunder, the Company also granted an option to Rukwa to acquire a 100% interest in the uranium rights (the "Uranium Rights") only of certain mineral claims located in the Bijoux Township of Quebec, subject to a net smelter return royalty ranging between 1% and 3% of the actual price per pound received by Rukwa in respect of the production of yellowcake (U3O8) sold during any given year once commercial production has begun. As consideration for the transactions described above, Rukwa shall issue to the Company an aggregate 978,152 common shares (the "Payment Shares") representing 8% of Rukwa's issued and outstanding share capital. Additionally, in the event that Rukwa does not become a reporting issuer by December 31, 2008, the Company retains an opt-out option pursuant to which it may return the Payment Shares to Rukwa in exchange for the Purchased Claims and the Uranium Rights (collectively the "Assets"). Notwithstanding the foregoing, should Rukwa elect to retain the Assets, Rukwa shall purchase the Payment Shares from the Company for an aggregate purchase price of $489,076. Pursuant to the terms of the agreement, the Company also retains the right to maintain its pro-rata 8% ownership interest in Rukwa in the event that Rukwa completes an issuance of additional equity securities.

In addition, the Company announces that an arm's length party to the Company will receive a cash commission consisting of 0.5% of the proceeds raised pursuant to the closing of the private placement offering of an aggregate 7,246,377 common shares at $3.45 on October 25, 2007 with Norilsk Nickel Harjavalta Oy, a division of Norilsk Nickel MMC (please refer to Company's news release dated October 25, 2007).

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 20 kilometres south of Xstrata Nickel's Raglan Mine 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.

For additional information please visit our website at www.canadianroyalties.com.

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