Canadian Royalties trolls for permits and big pot of cash

Nickel mine construction set for early 2008

By JANE GEORGE

It's full speed ahead for Canadian Royalties Inc., which wants to start building its Raglan South nickel mine in March 2008.

Last week, Canadian Royalties announced the results of its bankable feasibility study prepared by the engineering company SNC-Lavalin Inc.

With this study in hand, Canadian Royalties hopes to pin down the $465 million needed to develop the open-pit mine.

The purpose of the study is to show potential investors whether the project is worth sinking money into – and Raglan South shows "robust project economics," says the study. In other words, it's a good bet.

If nickel prices hold to at least $6 US a pound, investors can expect to get their money back within three years of the mine's start-up. If the price rises, investors will see an even more rapid payback.

"Our commitment is to advance this project as quickly as possible so as to benefit from expected high nickel prices over the next several years," said Richard Faucher, president and CEO of Canadian Royalties.

Raglan South is located about 90 kilometres west of Kangiqsujuaq, and just south of Xstrata Raglan's Kattiniq operations.

The study says a "significant" amount of money would be churned out during the Raglan South's first four years of operation when its 270 workers would start producing 3,500 tonnes of nickel ore a day.

The mine would have a lifespan of nine years, although many other promising deposits are nearby.

The feasibility study looked at Raglan South's Mesamax, Expo and Ivakkak deposits, which have a potential total of 11,296,328 tonnes of nickel, copper and other valuable metals.

Assuming the mine receives the necessary permits, the two-year construction period is set to begin next March. The mine would start operations in April 2010.

Start-up costs include the construction of a $52-million wharf and related infrastructure at Deception Bay and a $40- million disposal system for waste rock and tailings near the future mine site.

Canadian Royalties expects to receive a nod from the Kativik Environmental Quality Commission by the end 2007, with all mining permits and authorizations to follow early in 2008, says a company news release. An impact benefit agreement is also under negotiation with Makivik Corp.

This summer, Canadian Royalties plans to spend

$10 million on more exploration and drilling of Raglan South's deposits.

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