Canadian Royalties tally Mesamax resource

Vancouver An independent resource estimate for the Mesamax zone has verified the economic potential of the Expo-Ungava nickel-copper-platinum-palladium property in northern Quebec.

"Mesamax is a significant discovery containing robust base metal and pge (platinum group element) values," says Glen Mullen, President of Canadian Royalties (CZZ-V), which operates the project.

Based on 41 drill holes, consulting firm Strathcona Mineral Services pegged the indicated resource at 1.45 million tonnes grading 2.1% nickel, 2.7% copper, 0.08% cobalt, plus 0.3 gram gold, 1 gram platinum and 4.2 grams palladium per tonne. The resource includes 700,000 tonnes grading 3.5% nickel, 4.4% copper, 0.14% cobalt, 0.5 gram gold, 1.4 grams platinum and 4 grams palladium in the massive sulphide section and 750,000 tonnes grading 0.8% nickel, 1.1% copper, 0.04% cobalt, 0.1 gram gold, 0.6 gram platinum and 4.4 grams palladium in the disseminated sulphide portion.

An additional 130,000 tonnes grading 2.1% nickel, 2.5% copper, 0.09% cobalt, 0.3 gram gold, 1.1 gram platinum and 3.9 grams palladium lie in the inferred category. Of this, disseminated sulphide mineralization represents 105,000 tonnes grading 0.8% nickel, 1.2% copper, 0.04% cobalt, plus 0.1 gram gold, 0.5 gram platinum and 3.7 grams palladium.

"At Mesamax, the mineralization is typically coarse grained and appears to be metallurgical simple, except for possible challenges of oxide material at surface," states Canadian Royalties vice president of Exploration, Bruce Durham.

The 150,000 tonnes of near surface, somewhat oxidized material is not currently included in the resource calculation.

"It is predominately sulphide with fractures containing oxide," continues Durham. " We are currently working on the metallurgy."

Over the past three years, Canadian Royalties has been aggressively exploring a 35-km-long sequence of ultramafic rocks some is 15 km south of Falconbridge‘s (FL-T) Raglan nickel-copper mine in a region known as the South trend. The mineralization consists of disseminated, net-textured and massive sulphides positioned in the basal portions of ultramafic flows and intrusions. The property and hosts three mineralized structures, Expo, Cominga and Mesamax, all of which were discovered in the 1960s. The junior sparked interest in the project last year by reporting a series of high-grade drill intercepts at the Mesamax zone (T.N.M., Nov 18-24/02).

"In 2001, Canadian Royalties was the only junior working in the Reglan belt," remarks Durham, "and in 2003 we expect expenditures to hit $10 million."

Mineralization on the property is believed to occur at the transition from shallow sub-volcanic feeder sills into channelized lava flows. Early staged studies of the mineralization indicate a magmatic sulphide deposit, with form and structure resembling komatiite-hosted “Kambalda-type” deposits but with the composition suggesting a “Norilsk-type” deposit. (The Norilsk region in Siberia is the largest producer of palladium in the world, and the second-largest producer of nickel and copper.)

"At the Raglan mine, the largest single lens is 1.4 million tonnes and the average ore body is 300,000 tonnes," adds Durham," with 90% disseminated and 10% massive sulphides."

Raglan is a typical komatiite deposit with a nickel-copper ratio of 5-to-1, while Mesamax has a nickel-copper ratio of 1-to-1. The mineralization at Mesamax is also equally weighted between massive and disseminated sulphides.

"This is very typical of a basalt hosted nickel sulphide," adds Durham.

Moving 3.2-km west, Strathcona also tallied a limited resource estimate for the eastern portion of the TK Zone. Based on only 27 holes, TK holds an indicated resource of 90,000 tonnes grading 1.6% nickel, 1.2% copper, 0.1% cobalt, 0.1 gram gold, 0.4 gram platinum and 2 grams palladium. The inferred resource stands at a modest 7,000 tonnes averaging 1.6% nickel, 1% copper, 0.11% cobalt, no gold, 0.4 gram platinum and 1.6 grams palladium.

Both Mesamax and TK remain open to expansion in several directions.

Earlier this year, Canadian Royalties cut a new zone some lies 25-km west of the Mesamax zone. Dubbed Tootoo, the latest find is the third massive sulphide occurrence discovered by the junior in the past two years.The best drill results came from hole 2, which yielded 2% nickel, 1.91% copper, 0.11% cobalt, 0.6 gram platinum and 2.62 grams palladium per tonne over 22 metres. Included in this section was a higher-grade portion running 3.14% nickel, 2.56% copper, 0.17% cobalt, 0.8 gram platinum and 2.6 grams palladium over 10.5 metres.

Mineralization is hosted in pyroxenite and consists of disseminated-to-massive pyrrhotite, pentlandite and chalcopyrite.

The holes were collared on the southwestern portion of the 5-km-long Tootoo pyroxenite. The only previous drilling in the area occurred in 1969, when a program targeted mineralization at the pyroxenite contact.

Some 12 km east of the latest find, resources at the historic Expo-Ungava deposit 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.

"The economics of the large, low-grade, potentially open pittable Expo Ungava deposit may be affected by the high-grade nature of Mesamax, " states Durham. "We expect low capital costs to start a mining operation so the challenge is to find enough resources to support a mill."

Canadian Royalties, which plans on spending $5 million of the project this year, has earned a 70% interest in the property by spending $1.75 million over four years. It can boost its stake to 80% by completing a bankable feasibility study.

"Sulphide nickel deposits are very rare." says Durham, "We have a large land package that has been virtually unexplored for more than 20 years, and we’ve been successful at finding new areas of mineralizationthere is tremendous potential on the property."