Hot holes for Canadian Royalties

Vancouver — Shares in Canadian Royalties (CZZ-V) have risen dramatically to a new 52-week high of $3.08 from under $1 only a few weeks ago. Wasting no time capitalizing on the increase, the company is aiming to raise $8.5 million through a private placement.

Driving the surge has been a combination of drill results from the Expo-Ungava nickel-copper-platinum-palladium property in northern Quebec and the winning of a legal battle over disputed ground on the project.

Dundee Securities will act as agent for the financing, which comprises a guaranteed 1.6 million units priced at $2.50 each. A unit holds one share and half a warrant. A full warrant allows the holder to buy one share at $3.25 for two years. Some 600,000 additional units will be sold on a best-effort basis.

The junior is also seeking to place up to 1 million flow-through shares priced at $3 each. The securities will be offered in British Columbia, Alberta, Quebec and Ontario, and outside of North America. There will be a minimum subscription of $25,000 for Canadian investors, with the exception of Quebec, where the minimum subscription will be $150,000.

Dundee Securities will be paid a fee of 6.5% of the gross proceeds from the offering, as well as the right to buy up to 6.5% of the shares and units sold, exerciseable at a price of $2.50 for two years. The financing is expected to close on Nov. 29.

In late October, investors rewarded Canadian Royalties after the company announced that it had won the legal battle over a disputed ground on its Phoenix nickel-copper-platinum-palladium property.

The arbitrator, Claude Bisson, former Chief Justice of the Court of Appeal of Quebec, who is now with the law firm McCarthy Tetrault, ruled in favour of the junior, stating that the claimants, Ungava Minerals (UNGV-CUB), “have not met the burden of the proof and have failed to establish, by a balance of probabilities, the essential facts necessary to justify the granting of any of the conclusions sought . . .”

TK zone

With the claim dismissed, Canadian Royalties retains all its rights in the Expo-Ungava and Phoenix properties, which include the area along the boundary, commonly referred to as the TK zone.

This development sent shares in the company to just over $1 from around 70. However, the big boost in its stock came on Nov. 11, when Canadian Royalties announced the latest drill results from the Mesamax northwest grid area on the Expo-Ungava property.

Highlights include hole 18, which yielded 49.3 metres grading of 3.32% nickel, 4% copper and 0.13% cobalt, plus 1.5 grams platinum, 5.17 grams palladium and 0.26 gram gold per tonne, at a down-hole depth of 5.2 metres. A second mineralized zone was encountered 76.7 metres down-hole, the results being 1.85% nickel, 2.23% copper, 0.06% cobalt, 0.58 gram platinum, 1.2 grams palladium and 0.04 gram gold over 2.3 metres.

The results propelled Canadian Royalties’ stock to an intra-day high of $2.75 on a volume of more than 1 million on Nov. 15.

Three days later, the market’s new darling reported that three samples in hole 18 were capped at 10 grams palladium per tonne because the values received were beyond the limits of detection. Subsequent assaying of the consequative samples returned an average of 443.71 grams palladium over 3 metres. Given the new values, the mineralized intercept in hole 18 now grades 3.32% nickel, 4.01% copper, 0.13% cobalt, 0.26 gram gold, 1.52 grams platinum and 30.3 grams palladium.

A single overlimit assay from hole 19 (5.5 metres grading 1.79% nickel, 4.46% copper, 0.07% cobalt, 0.28 gram gold, 0.72 gram platinum and 6.24 grams palladium) yielded 115.85 grams palladium. The new value boosts the platinum vlaue of the intercept to 12.4 grams.

The results of the three holes were consistent with those from an earlier hole, MXNW01-02, which was drilled west into the same ultramafic body last summer. The new holes test an area slightly deeper and to the east of the earlier hole.

The new results vaulted the stock to $3.08 on a volume of greater than 1.2 million. Shares traded at $2.78 at press time.

Some 30 additional holes drilled into the Mesamax area are expected to be released shortly.

Canadian Royalties can earn up to a 70% stake in the Expo-Ungava property by spending $1.75 million on exploration over four years, and it can boost this to 80% by completing a bankable feasibility study.

The property is 15 km south of Falconbridge‘s (FL-T) Raglan nickel-copper mine and hosts three mineralized structures — Expo, Cominga and Mesamax, all of which were discovered in the 1960s.

Resources at Expo-Ungava are pegged at 17 million tonnes grading 0.6% nickel and 0.8% copper. Included is a higher-grade core of some 3 million tonnes grading 1% nickel and 1% copper.

Based on the promising results, Canadian Royalties has inked a deal with fellow junior Montoro Resources (MNQ-V) to pick up a block of ground some 40 km west of the Expo Ungava property. The new claims border its wholly owned property to the east and west. To earn 100% of the property, the junior must spend $500,000 over four years.

In exchange, Montoro gets $30,000 and recieves a 1% net smelter return royalty. A private Alberta company controlled by a director of Canadian Royalties holds a 1% NSR in the new claims.