MONTREAL, Aug. 5 /CNW Telbec/ - Canadian Royalties Inc. (TSX:CZZ) ("Canadian Royalties" or the "Corporation") today announced several key developments on its Nunavik Nickel Project (the "Nunavik Nickel Project"). These include the following:
- Canadian Royalties has made significant progress with the detailed
engineering work for the Nunavik Nickel Project;
- an Impact Benefit Agreement ("IBA") has been signed with the local
Inuit Government and an initial $1,000,000 payment has been made;
- an Environmental Certificate of Authorization has been awarded to
Canadian Royalties on May 21, 2008;
- the Mining Leases for the Expo Site of the Nunavik Nickel Project were
received from the ministere des Ressources Naturelles et de la Faune du
Quebec on June 12, 2008, and subsequently for the Mesamax, Ivakkak and
Mequillon sites, on July 29, 2008.
"Notwithstanding these positive developments, dramatic changes in the
Canadian capital markets together with other challenges have impaired our
ability to raise the balance of the funds we need to bring the Nunavik Nickel
Project into production in 2010" said Richard R. Faucher, the President and
CEO of Canadian Royalties.
"As a result, a number of important measures have been taken, or are being
taken, to preserve and enhance value while we continue with these efforts" he
added. These conservatory measures include:
- engineering and other test work for the Nunavik Nickel Project will
continue as scheduled;
- exploration work and delineation of additional resources and reserves
on the properties of Canadian Royalties will continue as scheduled;
- the formation of a Special Financing Committee, chaired by Lead
Director David W. Holowack;
- the Special Financing Committee retained PriceWaterhouseCoopers LLP
("PWC"), to provide a business review as part of its strategic
financing initiative and the Special Financing Committee and the Board
are considering PWC's recommendations;
- essential construction work will continue at the Nunavik Nickel Project
for the balance of 2008. The construction schedule will be resumed when
full project financing has been arranged;
- Canadian Royalties currently has cash on hand of approximately
$100 million;
- a detailed review of the impact of these decisions on the Corporation
and its operations is underway and additional measures will be taken if
required to protect the interests of the Corporation's shareholders,
stakeholders, employees and suppliers;
- the Special Financing Committee and the Board of Directors will
continue to work with their financial advisors at N M Rothschild & Sons
Canada Limited on their financing efforts;
- negotiations between Canadian Royalties, the Bank of Montreal Capital
Markets and Commonwealth Bank of Australia will continue until at least
September 30, 2008.
Canadian Royalties also is continuing to diligently prosecute its legal proceedings against Nearctic Nickel Mines Inc. (formerly Ungava Minerals Corp.) ("Nearctic") as well as certain of its principals.
"Given that production from the Nunavik Nickel Project will now be delayed beyond its projected May 2010 start-up, in part because we have had to arbitrate our claims for the commencement of the joint venture and our 80% interest in the Nunavik Nickel Project, we have asked our legal advisor to consider all possible recourses against Nearctic for causing further harm to our shareholders" said Glenn J. Mullan, Chairman of the Board of Canadian Royalties.
"Furthermore, while we are grateful for the assistance that we have received from the local and provincial governments, we have also been unable to reach a suitable and timely agreement for the use of local infrastructure. These negotiations are ongoing but until these matters have been resolved, the Corporation concluded that continuing with only essential construction was the prudent course of action for our shareholders" Mr. Mullan said.
"We remain confident that with the support of our key stakeholders, employees, shareholders and suppliers, we will be able to overcome each of these challenges and restart full construction" added Mr. Faucher.
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 Nunavik, Quebec. Canadian Royalties has received its Environmental Certificate of Authorization and Mine Leases for the Expo, Mesamax, Ivakkak and Mequillon sites and commenced construction on the project on June 30, 2008.
Forward-looking Statement
This news release contains certain forward-looking statements or forward looking-information. These forward looking statements are subject to a variety of risks and uncertainties beyond the Corporation'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 Corporation's Annual Information Form for the year ended December 31, 2007 and dated March 31, 2008. Further, forward-looking information is in addition based on various assumptions, including, without limitation, the expectation and beliefs of management, the assumed long term price of nickel, that the Nunavik Nickel Project is a technical viable and economic operation, that it can be successfully completed by the Corporation, that the Corporation will receive the required permits and access to surface rights, and that the Corporation can access financing, appropriate equipment, and sufficient labour. Should one or more of these risks and uncertainties materialize, or should the underlying assumption prove incorrect or different, actual results may vary materially from those described in the forward-looking statements. All forward looking statements speak only as of the date of this news release and the Corporation does not undertake any obligation to update or publicly disclose any revisions to such forward-looking statements to reflect events, circumstances or changes in expectations after the date hereof, except as required by law. Accordingly, readers should not place undue reliance on forward-looking statements.