New Mesamax resource estimate bigger (June 11, 2004)

Drilling last summer by Canadian Royalties (CZZ-T) at the Mesamax nickel-copper deposit in the Ungava region of northern Quebec underpins a substantial increase in a new resource estimate.

The new estimate, done by consulting firm Strathcona Mineral Services, puts the indicated resource at 1.8 million tonnes grading 1.9% nickel and 2.3% copper, with 0.08% cobalt, 0.9 gram platinum, 4.3 grams palladium and 0.3 gram gold per tonne. An inferred resource of 67,000 tonnes grades 1.6% nickel and 2.2% copper, with 0.08% cobalt, 0.7 gram platinum, 6.6 grams palladium and 0.2 gram gold per tonne.

A calculation announced in April 2003 estimated the indicated resource at 1.4 million tonnes with grades of 2.1% nickel and 2.7% copper, plus 0.08% cobalt, 1 gram platinum, 4.2 grams palladium and 0.3 gram gold per tonne. A further 130,000 tonnes was inferred, with grades of 2.1% nickel and 2.5% copper, plus 0.09% cobalt, 1.1 grams platinum, 3.9 grams palladium and 0.3 gram gold per tonne.

The new mineralization includes conversion of previously inferred resources to indicated ones, following infill drilling. The rest of the increase was new mineralization discovered last summer in drilling on extensions of the deposit.

The new mineralization is mostly disseminated and “net-textured” sulphide material, with slightly lower grades than massive sulphides. In the indicated resource, almost 1.1 million tonnes of the material is disseminated mineralization, with average grades of 1.9% nickel, 2.3% copper, 0.04% cobalt, 0.6 gram platinum, 3.7 grams palladium, and 0.1 gram gold per tonne. Grades in the massive mineralization, wich makes up 760,000 tonnes, average 3.4% nickel, 4.1% copper, 0.14% cobalt, 1.5 grams platinum, 5.2 grams palladium, and 0.4 gram gold.

Left out of the calculation entirely is an oxidized zone near surface, estimated to make up about 150,000 tonnes of material. Metallurgical and density tests on the material will need to be done before a number can be put on the resource.

Metallurgical tests on the massive and disseminated mineralization are under way, with results expected in a couple of months. Canadian Royalties also plans work on the Expo deposit, on the same property, and on exploration targets in the area.

The current data base is from 76 holes for a total of 7,400 metres of drilling; Strathcona has recommended another 20 holes (about 3,000 metres of core) to provide enough information for a feasibility study.

The operator holds 70% of the property, with the rest held by Ungava Minerals. Royalties can earn a further 10% by delivering a final feasibility study on production from the property.