Canadian Royalties (CZZ-T) is giving shareholders some reassurance about their investment just a few days after they approved a poison pill to fight off a hostile takeover bid.
Today, the company announced an updated resource estimate for the Allammaq deposit at the Nunavik nickel-copper platinum group metals project in Quebec’s Ungava region.
It’s Canadian Royalties’ flagship project, and, much to the company’s dismay, it caught the eye of Jien Canada Mining, a subsidiary of China’s Jilin Jien Nickel Industry Co. and Vancouver-based Goldbrook Ventures (GBK-V, GBKVF-O), which offered $148.5 million in cash for all of Canadian Royalties’ shares in the summer.
About 60% of Canadian Royalties shareholders approved a shareholder rights plan on Sept. 30 that will buy the company some extra time to explore other options.
The company has taken about 6,700 metres worth of drilling from 2008, to update the resource at Allammaq. Measured and indicated resources are up 45.5% for nickel, now totaling 86.1 million lbs. while copper is 53.8% higher at 106.4 million lbs.
These resources are contained in 4.3 million tonnes grading 0.9% nickel and 1.12% copper plus cobalt and pgms (71,000 oz. platinum and 311,000 oz. palladium). Inferred resources come in at 1.6 million tonnes grading 0.47% nickel and 0.53% copper plus cobalt and pgms.
It’s not just Allammaq that Goldbrook and Jien are after. Allammaq was discovered after Canadian Royalties had completed a bankable feasibility study envisioning a mine that would produce 26 million lbs. nickel in concentrate, 38.8 million lbs. copper in concentrate, 900,000 lbs. cobalt in concentrate, 14,500 oz. platinum and 78,600 oz. palladium per year over nine years with the potential to double the mine life.
Canadian Royalties was unable to secure enough financing in 2008 and construction was halted midway.
The company had closed a $137.5-million, 7% convertible debenture with the intention of later securing a $250- million credit facility — enough money to reach production.
But the loan didn’t happen due to worsening market conditions leaving Canadian Royalties no choice but suspend construction and conserve cash.
The company says Allammaq could be an additional open pit but further work is needed to determine the economics of it.
Total measured and indicated resources for the entire Nunavik project now total 21.7 million tonnes grading 0.93% nickel, 1.14% copper, 0.04% cobalt, 0.14 gram gold per tonne, 0.53 gram platinum and 2.18 grams palladium, plus another 5.2 million tonnes grading 0.72% nickel and 0.92% copper.
Canadian Royalties shares were up almost 4% today, or 2¢, to 53¢ apiece on a trading volume of 209,000 shares.
Excellent article – great site! Keep up the good work!
Well said, Stanley.
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