Canadian Royalties Nunavik Nickel Project Update

Montr�al, Qu�bec � October 1^st, 2008 � Canadian Royalties Inc. (TSX: CZZ) provides the following update about the progress of construction of its Nunavik Nickel Project (the �Project�), and about the implementation of an Asset Conservation Plan (the �ACP�), previously announced on August 5^th, 2008.

The ongoing 2008 Exploration Program is progressing as planned with over 24,000 metres drilled to date; results will follow in separate news releases commencing in approximately one week.

Nunavik Nickel Project: Construction on the Project site started on May 20^th, 2008.  Following implementation of the ACP, construction activities were refocused to complete essential infrastructure and to prepare the site for a temporary shutdown. To date progress on the project includes the following:

• The housing complex is fully operational with a capacity of 250 people. 
• A significant portion of the mine fleet is on-site. 
• Site preparation for the complex, concentrator, power plant and fuel storage is complete. 
• The concentrator foundation has been completed.
• Critical path items such as ball mills, floatation cells etc. are stored on-site.
• Several large hanger-style shelters have been built to store and protect equipment, the mine fleet and other construction materials.
• Potable and waste water systems are installed and operational. 
• Winterization of the facilities and equipment is being carried out to ensure efficient future start-up.

A current aerial photograph of the Mine site is available at www.canadianroyalties.com 

Including the exploration crew, there are currently 131 employees on site.  Demobilization of site employees will continue progressively with the weekly crew rotations until the last week of October at which point the winter caretaking team will be in place. Final preparation of the Berbegamo camp for winter use will be completed in the coming weeks.  A fuel delivery for winter caretaking operations is planned and the last sealift backhaul of material from Deception Bay, including rental equipment, is planned for October 14^th.

Project Financing:  Discussions and negotiations are ongoing and strategic alternatives are being considered. 

Litigation: Canadian Royalties also is continuing to diligently prosecute its legal and arbitration pr oceedings against Nearctic Nickel Mines Inc. (formerly Ungava Minerals Corp.) ("Nearctic") as well as certain of its principals.   The Company is also vigorously defending itself from the various proceedings launched by the Ungava/Neararctic group and related parties.

Access to Infrastructure:  Negotiations to reach an agreement to share in the use of certain local infrastructures have been delayed until financing discussions are completed.  The absence of an agreement continues to impede the Corporation�s ability to efficiently and cost-effectively transport people and supplies to the Project site.

Employees and Contractors:  A retention plan was implemented for certain key employees and managers. Planned layoffs of other staff functions have occurred at all offices and sites as the Corporation implemented conservation measures (ACP) to preserve its financial resources. Additional staffing reductions a re expected as the Project winds down for the winter over the next several weeks. Most of the staff working on the Project site since the beginning of construction in May are contractors and will no longer be employed once essential work is completed.

About Canadian Royalties and the Nunavik Nickel Project:  Canadian Royalties has initiated the development of a nickel-copper mine on its Nunavik Nickel Project, located 20 kilometers south of Xstrata Nickel�s Raglan Mine in Nunavik, Qu�bec. Canadian Royalties received its Environmental Certificate of Authorization on May 20^th, 2008 and Mine Leases for the Expo, Mesamax, Ivakkak and Mequillon sites, which were obtained in June and July of 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 uncertaintie s 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 additional information please visit our website at www.canadianroyalties.com or contact:

Glenn J. Mullan, Chairman of the Board, Interim President and Chief Executive Officer
Canadian Royalties Inc.
Tel.: (514) 879-1688, ext. 1222
E-mail: glenn.mullan@canadianroyalties.com

Dr. Jens Zinke, VP, Business Development
Canadian Royalties Inc.
Tel.: (514) 879-1688, ext. 1250
E-mail: jens.zinke@canadianroyalties.com

Renmark Financial Communications Inc.
Jason Roy: jroy@renmarkfinancial.com
Dan Symons : dsymons@renmarkfinancial.com
Media � Fran�ois Tr�panier : ftrepanier@renmarkfinancial.com
Tel: (514) 939-3989
Fax : (514) 939-3717
www.renmarkfinancial.com