Canadian Royalties Reports Nunavik Nickel Project Developments

    MONTREAL, Aug. 5 /CNW Telbec/ - Canadian Royalties Inc. (TSX:CZZ)
("Canadian Royalties" or the "Corporation") today announced several key
developments on its Nunavik Nickel Project (the "Nunavik Nickel Project").
These include the following:

    - Canadian Royalties has made significant progress with the detailed
      engineering work for the Nunavik Nickel Project;
    - an Impact Benefit Agreement ("IBA") has been signed with the local
      Inuit Government and an initial $1,000,000 payment has been made;
    - an Environmental Certificate of Authorization has been awarded to
      Canadian Royalties on May 21, 2008;
    - the Mining Leases for the Expo Site of the Nunavik Nickel Project were
      received from the ministère des Ressources Naturelles et de la Faune du
      Québec on June 12, 2008, and subsequently for the Mesamax, Ivakkak and
      Mequillon sites, on July 29, 2008.

    "Notwithstanding these positive developments, dramatic changes in the
Canadian capital markets together with other challenges have impaired our
ability to raise the balance of the funds we need to bring the Nunavik Nickel
Project into production in 2010" said Richard R. Faucher, the President and
CEO of Canadian Royalties.
    "As a result, a number of important measures have been taken, or are being
taken, to preserve and enhance value while we continue with these efforts" he
added. These conservatory measures include:

    - engineering and other test work for the Nunavik Nickel Project will
      continue as scheduled;
    - exploration work and delineation of additional resources and reserves
      on the properties of Canadian Royalties will continue as scheduled;
    - the formation of a Special Financing Committee, chaired by Lead
      Director David W. Holowack;
    - the Special Financing Committee retained PriceWaterhouseCoopers LLP
      ("PWC"), to provide a business review as part of its strategic
      financing initiative and the Special Financing Committee and the Board
      are considering PWC's recommendations;
    - essential construction work will continue at the Nunavik Nickel Project
      for the balance of 2008. The construction schedule will be resumed when
      full project financing has been arranged;
    - Canadian Royalties currently has cash on hand of approximately
      $100 million;
    - a detailed review of the impact of these decisions on the Corporation
      and its operations is underway and additional measures will be taken if
      required to protect the interests of the Corporation's shareholders,
      stakeholders, employees and suppliers;
    - the Special Financing Committee and the Board of Directors will
      continue to work with their financial advisors at N M Rothschild & Sons
      Canada Limited on their financing efforts;
    - negotiations between Canadian Royalties, the Bank of Montreal Capital
      Markets and Commonwealth Bank of Australia will continue until at least
      September 30, 2008.

    Canadian Royalties also is continuing to diligently prosecute its legal
proceedings against Nearctic Nickel Mines Inc. (formerly Ungava Minerals
Corp.) ("Nearctic") as well as certain of its principals.
    "Given that production from the Nunavik Nickel Project will now be
delayed beyond its projected May 2010 start-up, in part because we have had to
arbitrate our claims for the commencement of the joint venture and our 80%
interest in the Nunavik Nickel Project, we have asked our legal advisor to
consider all possible recourses against Nearctic for causing further harm to
our shareholders" said Glenn J. Mullan, Chairman of the Board of Canadian
    "Furthermore, while we are grateful for the assistance that we have
received from the local and provincial governments, we have also been unable
to reach a suitable and timely agreement for the use of local infrastructure.
These negotiations are ongoing but until these matters have been resolved, the
Corporation concluded that continuing with only essential construction was the
prudent course of action for our shareholders" Mr. Mullan said.
    "We remain confident that with the support of our key stakeholders,
employees, shareholders and suppliers, we will be able to overcome each of
these challenges and restart full construction" added Mr. Faucher.

    About Canadian Royalties and the Nunavik Nickel Project

    Canadian Royalties has initiated the development of an independent,
stand-alone nickel-copper mine on its Nunavik Nickel Project, located
20 kilometers south of Xstrata Nickel's Raglan Mine in Nunavik, Québec.
Canadian Royalties has received its Environmental Certificate of Authorization
and Mine Leases for the Expo, Mesamax, Ivakkak and Mequillon sites and
commenced construction on the project on June 30, 2008.

    Forward-looking Statement

    This news release contains certain forward-looking statements or forward
looking-information. These forward looking statements are subject to a variety
of risks and uncertainties beyond the Corporation's ability to control or
predict which could cause actual events or results to differ materially from
those anticipated in such forward looking statements. Such risks and
uncertainties are disclosed under the heading "Risk Factors" in the
Corporation's Annual Information Form for the year ended December 31, 2007 and
dated March 31, 2008. Further, forward-looking information is in addition
based on various assumptions, including, without limitation, the expectation
and beliefs of management, the assumed long term price of nickel, that the
Nunavik Nickel Project is a technical viable and economic operation, that it
can be successfully completed by the Corporation, that the Corporation will
receive the required permits and access to surface rights, and that the
Corporation can access financing, appropriate equipment, and sufficient
labour. Should one or more of these risks and uncertainties materialize, or
should the underlying assumption prove incorrect or different, actual results
may vary materially from those described in the forward-looking statements.
All forward looking statements speak only as of the date of this news release
and the Corporation does not undertake any obligation to update or publicly
disclose any revisions to such forward-looking statements to reflect events,
circumstances or changes in expectations after the date hereof, except as
required by law. Accordingly, readers should not place undue reliance on
forward-looking statements.

For further information:

For further information: please visit or
contact: Marc Chaput, VP Investor Relations and Communications, Canadian
Royalties Inc., (514) 879-1688 x 1223,;
----- Sébastien Vézina, Assistant Corporate Secretary, Canadian Royalties
Inc., (514) 879-1688 x 1299, sebastien.vezina; -----
Media: Renmark Financial Communications Inc.: Vanessa Napoli,; Adam Ross,, (514)

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