Royalties gets revised feasibility numbers (August 28, 2006)

The Raglan South project of Canadian Royalties (CZZ-T, CRYAF-O) appears to have better economics than a recent scoping study showed, following a review of the operating costs in the study’s financial model.

The refining charge for copper in the model was, incorrectly, the same charge used for nickel, US50 per lb. (US$1,100 per tonne). When copper refining charges — currently estimated by other sources at US9 to US9.5 per lb. — were changed to US10 per lb. (US$220 per tonne), the project’s cash flow improved substantially.

The revised discounted cash flow model estimates the project’s internal rate of return at 25.4%, up from 19.6%. Its net present value at a 5% discount rate grows to $258 million from $175 million, and the payback period shrinks by about half a year to three and a half years.

Raglan South, in the Nunavik (Ungava) area of far northern Quebec, has resources calculated on four nickel-copper-palladium-platinum deposits, Expo, Mesamax, Mequillon and Ivakkak (T.N.M., May 26-June 1/06). Canadian Royalties holds a 70% interest and Ungava Minerals (UGVAF-O) 30% in most of the project area, with Royalties holding a 100% interest in some of the ground.

Royalties approved a $1.5-million increase to its 2006 exploration budget, to $6.8 million. The increase goes to a program of deep geophysical exploration on targets in the South Raglan trend. The nickel-copper deposits are mainly hosted by ultramafic sills, and Royalties believes nickel-hosting intrusive bodies may host additional mineralization at depth.