Canadian Royalties Inc.

Canadian Royalties Inc.

September 11, 2007 08:00 ET

Canadian Royalties Inc./Nunavik Nickel Project Mequillon Update: Mineral Resource Increases 94% and Metal Content Improves

MONTREAL, QUEBEC--(Marketwire - Sept. 11, 2007) - Canadian Royalties Inc. (TSX:CZZ) reports the results of an updated evaluation of the Mequillon resource model derived from 9,259 metres of drilling in the 2005 and 2006 exploration campaigns completed by P&E Mining Consultants Inc. resulting in a significant 94% increase in the mineral resource with an improved metal content. A Preliminary Economic Assessment has been initiated to evaluate the Mequillon deposit as an open pit and underground bulk mining operation, which can be incorporated into a Bankable Feasibility Study Update for the Nunavik Nickel Project. Commenting on the Results, Mr. Richard Faucher, President and CEO, stated: "The addition of the Mequillon deposit has the potential to substantially increase the mine life above the 9 year plan in SNC-Lavalin's Bankable Feasibility Study (1). This significant achievement brings us closer in our goals and plans to become a mid-tier producer."

The table below summarizes the updated resource estimate:

Resource Ni Cu Co Au Pt Pd PGE
Category tonnes (%) (%) (%)(g/t)(g/t)(g/t) (g/t)
OP Indicated 1,447,000 0.73 1.00 0.04 0.21 0.71 2.56 3.48
UG Indicated 3,927,000 0.75 1.10 0.04 0.23 0.69 2.68 3.60
TOTAL Indicated 5,374,000 0.74 1.07 0.04 0.23 0.70 2.65 3.58
UG Inferred 3,085,000 0.82 1.12 0.04 0.18 0.65 2.57 3.40

(1) The newly updated resource for Mequillon was calculated on the basis of US$ metal prices of $5.50/lb nickel $1.50/lb copper, $15/lb cobalt, $450/oz gold, $900/oz platinum and $300/oz palladium and the $US exchange rate was $0.80. NSR cut-offs of $40/tonne for open pit and $75/tonne for underground were utilized to report the resource.

(2) 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.

(3) The quantity and grade of reported inferred resources in this estimation are conceptual in nature and 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.

(4) OP equals Open Pit; UG equals Underground.

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.

Eugene Puritch, P.Eng., Tracy Armstrong, P.Geo and Antoine Yassa, P.Geo of P&E Mining Consultants Inc. will be the authors of an NI 43-101 compliant Resource Estimate Technical Report on the Mequillon deposit to be filed within 45 days of this news release. They are Qualified Persons in accordance with NI 43-101, and are responsible for the information 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, B.C. 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.

Corporate Update - Corporate Paper Exposure

Canadian Royalties does not invest in commercial papers and has no exposure to such investments. It is the Corporation's policy to invest surplus development funds in Government guaranteed Treasury Bills, Bankers Acceptances and Bank guaranteed interest bearing deposits.

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 kilometers 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 press 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), which 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.

(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.

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