Canadian Royalties Inc.
TSX : CZZ

Canadian Royalties Inc.

March 05, 2008 09:29 ET

Canadian Royalties Inc.: Pricing of Convertible Senior Unsecured Debenture Offering

MONTREAL, QUEBEC--(Marketwire - March 5, 2008) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES

Canadian Royalties Inc. (the "Company" or "Canadian Royalties") (TSX:CZZ) is pleased to announce that, in connection with its previously announced filing of a preliminary short form prospectus with securities regulatory authorities, it has entered into an agreement with a syndicate of underwriters led by BMO Capital Markets and including Raymond James Ltd. and Desjardins Securities Inc. (the "Underwriters") under which the Underwriters have agreed to purchase $125 million aggregate principal amount of convertible senior unsecured debentures due March 31, 2015 (the "Debentures"). Canadian Royalties has granted the Underwriters an option to purchase up to an additional 10% in principal amount of Debentures on the same terms and conditions, exercisable up to 30 days following closing of the offering.

The offering is subject to certain conditions including, but not limited to, the receipt of all necessary approvals, including the approval of the Toronto Stock Exchange. The offering is scheduled to close on or about March 18, 2008.

The Debentures are senior, unsecured obligations of Canadian Royalties and will bear interest at a rate of 7.00% per annum payable semi-annually in arrears on September 30 and March 31 in each year commencing September 30, 2008. The Debentures are convertible at any time at the option of the holders into common shares at an initial conversion price of $2.75 per common share. The Debentures will not be redeemable by the Company prior to April 1, 2011. Between April 1, 2011 and April 1, 2013, Canadian Royalties has the right to redeem all or a portion of the Debentures at the principal amount plus accrued interest provided the current 20-day weighted average trading price of Canadian Royalties' common shares is at least 125% of the conversion price. After April 1, 2013, Canadian Royalties has the right to redeem all or a portion of the Debentures at the principal amount plus accrued interest. The Debentures will mature on March 31, 2015.

In the event Canadian Royalties obtains equity financing at a price (the "Reset Price") below the conversion price, the conversion price will be adjusted to become equal to the Reset Price, provided that there will be no downward adjustment to the conversion price after the Company obtains project bank financing of at least $250 million and the Environmental Certificate of Authorization for the Nunavik Nickel Project.

The Company plans to use the net proceeds from the offering to pursue the development of the Nunavik Nickel Project and for general corporate and administrative purposes.

This press release is not an offer to sell or the solicitation of an offer to buy the securities, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to qualification or registration under the securities laws of such jurisdiction. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and such securities may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from U.S. registration requirements.

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 a 70% interest in the Expo-Ungava property; its interest therein shall increase to 80% simultaneously with the creation of the joint venture. Further, Canadian Royalties holds an underlying 2% NSR on the Expo-Ungava property.

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

THIS NEWS RELEASE SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO PURCHASE SECURITIES OF THE COMPANY IN ANY JURISDICTION.

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