Hot holes get hotter for Canadian Royalties

Vancouver — Wasting no time capitalizing on the recent popularity of its stock, Canadian Royalties (CZZ-V) is aiming to raise $8.5 million through a private placement.

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 by one share at a price of $3.25 for a period of 2 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 a 2-year period. The financing is expected to close on Nov. 29.

Shares in the company have exploded over the past few weeks from under $1 to a new 52-week high of $3.08.

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.

On Oct. 30, 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 of the law firm McCarthy Tetrault and former Chief Justice of the Court of Appeal of Quebec, rendered the ruling, in favour of the junior citing 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, and the claim is therefore dismissed.”

Canadian Royalties will, therefore, retain all of its rights in the Expo-Ungava and Phoenix Properties, which includes 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 $0.70. However, the big boost in its stock came on Nov 11, when the junior 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 of 3.32% nickel, 4% copper, 0.13% cobalt, 1.5 grams platinum, 5.17 grams palladium and 0.26 gram gold at 5.2 metres down-hole. 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 over 1 million on Nov. 15.

Then on Nov. 19, 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 consecutive 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 grams 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 grams gold, 0.72 grams platinum and 6.24 grams palladium) yielded 115.85 grams palladium. The new value boosts the platinum value of the intercept to 12.4 grams.

The new results vaulted to the stock to $3.08 on a volume of over 1.2 million.

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

Canadian Royalties has the right to earn up to 70% in the Expo-Ungava Property by incurring $1.75 million over 4-years (now completed). It can boost its stake 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 borders one its wholly owned property to the east and west. To earn 100% of the property, the junior must spend $500,000 over 4-years.

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