Unfortunately, there seems to be a correlation between lost passports and exceptionally long waits for citizenship.
It would be wise to be prepared for an RQ and fingerprint requests as well.
From the CIC's perspective, passports are primary proof of an applicant's status in their home country, in other countries and in Canada. How much did they travel? Have they been barred from ever returning to certain countries? Have they been refused entry to Canada in the past? Do the stamps on their passport correspond with their declarations? Are they trying to hide evidence of a secret work visa in the UAE? Was their passport revoked by their home country because of something terrible? Was the lost passport later sold on the black market?
Yes, there are other ways to verify identity and travel, but none are quite so primary as the passport. None hold as much weight.
Of course, it's far more likely that the applicant just had their passport stolen or dropped it by mistake like so many tourists and travelers before. But, a very few applicants might declare their passport lost in order to hide evidence of misrepresentation or criminality or inconvenient facts. It's hard for the CIC to tell the difference between the honest passport-losers and the dishonest passport-losers, so, from what I can tell, the CIC seems to try to use time to sort out the difference between the honest and dishonest. This allows them to see if any criminality comes up or any problems meeting the PR residency obligation, or if any other (presumably sketchy) people show up with your name and your old passport.
Sorry not to have good news. If there's any chance you could find your passport, it's worth turning your house upside down. If it's gone for good, it would be best to prepare yourself for a long-haul citizenship process and hopefully you will be surprised by a process that's not quite as long as you might fear.
Good luck.