Qubec: Home Ice Advantage

One of the busiest exploration camps in Quebec is the Ungava (Cape Smith) mafic/ultramafic belt in the Far North, where an estimated $25 million is being spent this year on exploration. Falconbridge Ltd. has already proven this to be good territory for a nickel-copper-PGE mine; its Raglan mine has operated since 1998, continually replacing mined reserves.

Naturally, when geologist Glenn Mullan launched Canadian Royalties Inc. as a public company in 1998 in Val d’Or, Que., he included property interests from the Ungava in the portfolio. The company developed from a private prospecting business, starting out with 122 property interests, which have grown to 221 properties and royalties. It operates in what Mullan calls “the mining-friendly provinces”–Quebec, Ontario and Manitoba. “Quebec is by far the most attractive jurisdiction in Canada in which to conduct mining exploration. We’ve had good experience with the government.”

To date, the company has assembled 1,476 km2 in 44 properties along the Raglan South Trend, just 15 km south of the Raglan mine, making this the most active and so far the most successful junior in the region. In his capacity as Canadian Royalties chairman, Mullan spoke to CMJ about his company.

Corporate growth has been spectacular, from prospecting to advanced exploration. “Our initial drill program in 2001 was 1,500 m; that has grown to more than 26,000 m this year,” says Mullan. Now the company uses the services of some top-notch contractors: Strathcona Mineral Services, Roche Engineering and Stavibel Engineering. Metallurgical test work is underway at SGS Lakefield Research.

“‘Trying to score’ might have described us in 2001,” says Mullan, who loves hockey analogies, “but we’ve achieved a hat-trick with the Mesamax, TK and Mequillon deposits, in addition to the historic Expo deposit, whose resource estimate is pending. Defining three deposits is evidence of the company’s rapid progress since setting our vision in 2001.” As a result of this success, Canadian Royalties was proclaimed the Quebec Prospector of the Year in 2003.

The market has supported Canadian Royalties. Including the $8.5-million private placement this month, the company has raised $38 million. (It moved from the TSX Venture to a Toronto Stock Exchange listing in June.) At the same time, NSR royalties and other fees from the “royalty” side of the business grew from nearly nil to over $950,000 in 2003.

The resource is also growing. As of June, Mesamax had indicated resources of 1.84 million tonnes grading 1.9% Ni, 2.3% Cu and 5 g/t PGEs; as well there are inferred resources of 67,000 tonnes at 1.6% Ni, 2.2% Cu and 7.3 g/t PGEs. In September, Mequillon was assigned an initial inferred mineral resource estimate of 1.4 million tonnes grading 0.7% Ni, 0.9% Cu, 0.03% Co and 2.7 g/t PGEs for a conceptual pit within a larger body of mineralization. Those numbers are expected to increase after this year’s $7.5-million Raglan-area exploration program is complete.

The Raglan mine has paved the way for others in the Ungava, making the “threshold tonnage” for a stand-alone new mine much less than it used to be, particularly because of the improvement of infrastructure since 1995–a road system, seaport access, and access to quality landing strips. Support from the Quebec government has played a significant role in this, as well as participation from the Inuit communities. The Inuit work in the exploration camps and also provide support and services through Inuit-owned partnerships and companies.