Canadian Royalties Inc.
TSX : CZZ

Canadian Royalties Inc.

July 12, 2005 08:00 ET

Canadian Royalties Inc.: Indicated Resources Increase by 73% to More Than 10 Million Tonnes

MONTREAL, QUEBEC--(CCNMatthews - July 12, 2005) - Canadian Royalties Inc. (TSX:CZZ) reports initial resources at the Expo deposit of 4,445,000 tonnes indicated grading 0.8% nickel (Ni), 0.8% copper (Cu), 0.04% cobalt (Co), 0.1 g/t gold (Au), 0.3 g/t platinum (Pt) and 1.5 g/t palladium (Pd) (1.9 g/t Pt + Pd + Au (PGE)), and 645,000 tonnes inferred grading 1.8% Ni, 1.5% Cu, 0.08% Co, 0.1 g/t Au, 0.7 g/t Pt and 2.5 g/t Pd (3.3 g/t PGE). This increases the total indicated resources on Canadian Royalties' Raglan South Nickel project by 73% to 10,568,000 tonnes with a weighted average grade of 1.0% Ni, 1.2% Cu, 0.04% Co, 0.2 g/t Au, 0.6 g/t Pt and 2.3 g/t Pd (3.0 g/t PGE).

Henrik Thalenhorst, P.Geo., of Strathcona Mineral Services Inc. ("Strathcona") is the author of this report on the estimates of mineral resources at the Expo deposit, based on results from drilling, bulk density and metallurgical studies conducted to date.



Highlights

- Total indicated resources on Canadian Royalties' Raglan South
Nickel project have increased by 73% from 6,123,000 tonnes to
10,568,000 tonnes with the addition of the Expo deposit resources;

- Diamond drilling has started in the Expo ultramafic complex with
two drills to confirm and expand the resource base, and to look for
new areas of mineralization;

- The Expo deposit is now Canadian Royalties largest deposit on the
Raglan South Nickel project, approximately 16% larger than the
Mequillon deposit that has indicated resources of 4,185,000 tonnes,
and 240% larger than the Mesamax deposit, which has indicated
resources of 1,848,000 tonnes. Refer to the following table for
current resources of the Raglan South Nickel project:


Table 1 - Canadian Royalties NI 43-101 Undiluted Resources

Deposit and
Category of Thousands Ni Cu Co Au Pt Pd PGE
Mineralization of tonnes (%) (%) (%) (g/t) (g/t) (g/t) (g/t)
---------------------------------------------------------------------
---------------------------------------------------------------------
Mesamax Deposit
---------------------------------------------------------------------
Indicated 1,848 2.1 2.6 0.08 0.2 1.0 3.8 5.0
---------------------------------------------------------------------
Inferred 30 1.6 1.8 0.08 0.1 0.6 5.5 6.2
---------------------------------------------------------------------
Expo Deposit
---------------------------------------------------------------------
Indicated 4,445 0.8 0.8 0.04 0.1 0.3 1.5 1.9
---------------------------------------------------------------------
Inferred 645 1.8 1.5 0.08 0.1 0.7 2.5 3.3
---------------------------------------------------------------------
TK Deposit
---------------------------------------------------------------------
Indicated 90 1.6 1.2 0.10 0.1 0.4 2.0 2.5
---------------------------------------------------------------------
Inferred 7 1.6 1.0 0.11 0.0 0.4 1.6 2.0
---------------------------------------------------------------------
Mequillon
Deposit
---------------------------------------------------------------------
Indicated 4,185 0.6 0.9 0.03 0.2 0.7 2.4 3.3
---------------------------------------------------------------------
Inferred 167 0.8 1.0 0.04 0.2 0.7 2.4 3.3
---------------------------------------------------------------------
Weighted Average Total Canadian Royalties NI 43-101 Resources (July
12, 2005)
---------------------------------------------------------------------
Indicated 10,568 1.0 1.2 0.04 0.2 0.6 2.3 3.0
---------------------------------------------------------------------
Inferred 849 1.6 1.4 0.07 0.1 0.7 2.6 3.4
---------------------------------------------------------------------

Note: The Mequillon resources are partially diluted (for details
refer to the press release May 12, 2005).

Expo Deposit Resources

The Expo deposit is a series of shallow dipping to sub-horizontal,
near surface, nickel and copper bearing, disseminated to massive
sulphide zones first drill tested in 1967. Canadian Royalties first
did systematic assaying for platinum-palladium content during its
initial exploration program in 2001. This work confirmed the
historical base metal values and also identified extensive core
intervals assaying up to 2.5 g/t combined platinum and palladium. The
Expo deposit lies between the Mesamax and Mequillon deposits, about
15 kilometres to the south of the Katinniq complex of Falconbridge's
Raglan Mine.

With the completion of 111 diamond drill holes (11,578 metres of
drilling) in 2003 and 2004, Canadian Royalties has better defined
portions of mineralized zones that extend over a 1,000-metre length
and which occur from surface to as much as 120 metres in depth and
across 150 metres in width.

Highlights from the 2004 exploration program at the Expo deposit
include:

- Expo deposit, northeast area: An 11 metre (36 foot) interval in
hole EX-04-73 from 62 metres assayed 2.60% nickel, 2.88% copper,
0.10 % cobalt, 1.81 g/t platinum and 5.64 g/t palladium. One
diamond drill is currently working in this area to continue
defining this zone of mineralization;
- Expo deposit, south contact: A nine metre interval of mostly
massive sulphides in drill hole EX-04-95, commencing at 56.0
metres, assayed 2.43% nickel, 1.69% copper, 0.11% cobalt, 0.17 g/t
gold, 0.66 g/t platinum, and 3.75 g/t palladium (4.58 g/t PGE).
This interval is part of a wider 25 metre (82 foot) interval
grading 1.11% nickel, 0.74% copper, 0.05% cobalt, 0.04 g/t gold,
0.33 g/t platinum and 1.79 g/t palladium (2.21 g/t PGE). The
importance of this 9-metre massive sulphide intersection is that it
is situated on the south side of the ultramafic body, where massive
sulphides have only previously been reported in three drill holes.
In each of these holes the widths of the massive sulphides was less
than a metre. Hole EX-04-95 demonstrates the potential to find
high-grade mineralization in the under-explored parts of the Expo
ultramafic complex. A second diamond drill is currently working
along the south contact to further define mineralization in this
area.

SGS Lakefield Laboratories completed interim metallurgical test work
on net-textured ore samples collected from Expo in 2004. Initial
results show no unusual metallurgical characteristics with respect to
grindability or payable sulphide concentration using standard
floatation techniques. Additional sampling and testing will be
undertaken in 2005 in an effort to maximize ore recoveries.

The updated undiluted resource estimate completed by Strathcona,
based on exploration conducted to December 31, 2004 and ongoing
metallurgical test work, is summarized in Table 2 below:


Table 2-Expo Undiluted Mineral Resource Estimate as of
December 31, 2004

Thousands Ni Cu Co Au Pt Pd PGE
Category of Tonnes (%) (%) (%) (g/t) (g/t) (g/t) (g/t)
---------------------------------------------------------------------
---------------------------------------------------------------------
Massive
Sulphides
---------------------------------------------------------------------
Indicated 222 2.9 2.3 0.14 0.1 0.9 2.9 3.9
---------------------------------------------------------------------
Inferred 223 3.1 1.9 0.13 0.1 0.9 2.7 3.7
---------------------------------------------------------------------
Net-Textured
Sulphides
---------------------------------------------------------------------
Indicated 4,223 0.6 0.7 0.03 0.1 0.3 1.4 1.8
---------------------------------------------------------------------
Inferred 179 0.6 0.7 0.03 0.1 0.3 1.2 1.6
---------------------------------------------------------------------
Vein-Type
Sulphides
---------------------------------------------------------------------
Indicated None
---------------------------------------------------------------------
Inferred 243 1.5 1.6 0.07 0.1 0.7 3.3 4.1
---------------------------------------------------------------------
Totals
---------------------------------------------------------------------
Indicated 4,445 0.8 0.8 0.04 0.1 0.3 1.5 1.9
---------------------------------------------------------------------
Inferred 645 1.8 1.5 0.08 0.1 0.7 2.5 3.3
---------------------------------------------------------------------

To satisfy the requirement for a mineral resource to have "reasonable
prospects for economic extraction" (Canadian Institute of Mining and
Metallurgy, 2004), the resource estimate reported for the Expo
project was subjected to economic constraints. The diluted mineral
resources are reported at a CDN$30/tonne NSR cut-off value, at the
following metal prices in US$: Ni: $5.00; Cu: $1.10; Co: $15; Au:
$375; Pt: $750; and Pd: $175, with a CDN/US exchange rate of 1.25.
These metal prices are considered by management to be quite
conservative; approximately 35% to 50% lower than current prices of
base metals, and approximately 5% to 15% lower than current prices of
precious metals. They are further constrained by a Whittle 4X open-
pit shell. The shell was constructed using fifty-degree pit slopes.
Both indicated and inferred resources were utilized for the pit
optimization after application of the external dilution. The pit
shell is clearly responding to the location and amount of the higher-
grade massive sulphide and vein mineralization. It leaves behind the
deeper net-textured mineralization in the western, and in some cases
in the deeper southern parts of the deposit, a total of two million
tonnes of mainly net-textured mineralization in all classes.


Table 3 - Estimate of Expo Diluted Mineral Resources as of
December 31, 2004

Thousands Ni Cu Co Au Pt Pd PGE
Category of Tonnes (%) (%) (%) (g/t) (g/t) (g/t) (g/t)
---------------------------------------------------------------------
Indicated 4,974 0.7 0.7 0.04 0.1 0.3 1.3 1.7
---------------------------------------------------------------------
Inferred 722 1.2 1.0 0.05 0.1 0.4 1.7 2.1
---------------------------------------------------------------------


Canadian Royalties' Raglan South Nickel project

Canadian Royalties has focused its exploration efforts at defining zones of nickel-copper-platinum-palladium mineralization in near surface deposits near the center of the project area, while continuing to identify and evaluate new target areas across the Raglan South project.

Canadian Royalties has expended over $18 million on exploration in the region since 2001, covering a broad range of exploration activities including the drilling of 58,500 metres in over 500 diamond drill holes at 18 different deposit and target areas. A budgeted $8.5 million exploration program for 2005 has begun. Drilling is currently underway at three locations, geological and ground geophysics programs are underway, and airborne geophysics programs will be starting in the near future over a variety of under-explored areas on the extensive property. Approximately 20% of the diamond drill program will target new areas of mineralization, or newly defined geophysical and geological targets, located mainly between the Mequillon and Mesamax deposits.

The cumulative impact of the discovery of several shallow nickel-copper-PGE deposits close to existing mining infrastructure is one of the key economic advantages that will continue to enhance the potential for Canadian Royalties to establish an independent, stand-alone mining operation.

Canadian Royalties holds a 70% interest in the property discussed and will hold 80% upon delivery of a bankable feasibility study.

Bruce Durham, P.Geo., and President of Canadian Royalties Inc. is the designated Qualified Person responsible for the exploration program on the property and the person responsible for the preparation of this release.

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

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