Court refuses to consider lawsuit over disputed nickel property

Canadian Royalties Inc. is in a state that the company calls "hibernation" and a "temporary work stoppage," but apparently it's not dead yet.

The junior miner, which wanted to develop Nunavik's second nickel mine near the Xstrata Raglan mine, is still sending out news releases, although the nosedive in metal prices means no one is looking to start up new nickel mines.

The good news is that Canadian Royalties Inc. recently learned it won't have to shell out $50.5 million in damages to Ungava Minerals Exploration Inc.'s for interests in the Expo-Ungava property.

"This matter may have significant carry-over benefits to Canadian Royalties," the company's president and CEO Glenn J. Mullan said optimistically in a news release.

The lawsuit, which the Supreme Court of Canada declined to hear, helped make it harder for Canadian Royalties to find the money it needed to develop its Nunavik nickel mine project.

Last August, when Canadian Royalties first started having financial problems, a May 2010 start-up for the Nunavik Nickel Mine still seemed possible, but, for work to resume, the company needed to raise another $130 million for the $500-plus million project.

This proved impossible as banks wanted to loan money only to the most secure ventures.

By the end of last year, Canadian Royalties had packed up its equipment in Nunavik and laid off more than 70 employees, handing out $200,000 worth of food bought for its camps to Nunavik communities before Christmas.

Canadian Royalties' shares stood at 26 cents earlier this week, down from a high of $4.25 a share in 2007.

The price of nickel, which reached a high of $ 13,450 a tonne earlier this year, now stands at about $10,450. That's down from a high of more that $52,000 two years ago.

Russia's Norilsk Nickel, the world's biggest producer of nickel and palladium, suspended operations at its Australian mines last month.

Norilsk Nickel had agreed to buy the nickel concentrates produced by the Nunavik nickel mine and committed $25 million to the project.

Xstrata, which operates the Raglan nickel mine in Nunavik, announced recently it would close two mines in Sudbury, Ont., putting 700 out of work.

Nickel is used in the manufacture of coins and stainless steel – so when the economy slows, the demand for nickel also declines.