VANCOUVER, Nov. 29, 2012 /CNW/ - Callinan Royalties reports strong
financial performance in the three months ended September 30, 2012.
Callinan holds a 6⅔% Net Profits Interest ("NPI") royalty and another
$0.25 per ton royalty on its royalty lands that include the 777 Mine
owned by HudBay Minerals Inc. located at Flin Flon, Manitoba, Canada as
well as the adjacent 777 North Mine scheduled for production in late
The Company's net earnings attributable to shareholders for the period
ended September 30, 2012 is $2,456,123 compared to $9,634,348 for the
same period last year, or $0.05 per share compared to $0.19 per share
last year. The current period earnings include accrued interest of
$90,000 resulting from the reported financing agreement with Gold
Royalties Corporation. Prior year results included a one-time recovery
of $5,032,168 in deferred taxes realized from the spin-out of the
exploration properties in 2011.
A summary of the financial information is included in the following
Three Months Ended
Net earnings (After taxes)
Diluted earnings per share
Net cash flow from operating activities
The following are highlights from the first fiscal quarter:
Callinan Royalties Corporation has received interim quarterly royalty
payments totaling $3,359,471.50 from HudBay Minerals Inc.
The board of directors of the Company declared a regular quarterly cash
dividend for the first fiscal quarter on its common shares of two cents
per common share. The dividend was paid on October 15, 2012.
As previously announced on July 31, Callinan entered into an agreement
with Gold Royalties Corporation whereby Callinan provided C$5.4 million
to Gold Royalties Corporation ("GRC") via a convertible debenture. The
financing was provided to facilitate in part the purchase by GRC of
royalty interests on the Eagle gold project located in the Yukon
Territory, Canada. At Callinan's option and at any time before or on
the maturity date, Callinan has the right to convert the principal and
accrued interest to 60% of the royalty interests or into share units of
GRC comprised of 1 common share of GRC at $0.80 and 1 warrant priced at
$1.20. The accrued interest will be converted into shares issued at
Update on Independent Audit
The independent audit by Grant Thornton of the NPI calculations
continues towards completion. Audit work has been protracted as much of
the source material evidencing entries from the originally selected
early years is not available from HudBay. In addition, a partial audit
of 2011 for comparison purposes has been initiated. Once this phase of
work has been completed Grant Thornton will report to the Board of
Directors of Callinan.
On September 09, 2011, Callinan reported that it had executed a
standstill agreement with Hudson Bay Mining & Smelting Co., Limited
("HudBay"), a wholly-owned subsidiary of HudBay Minerals Inc., which
placed in abeyance Callinan's law suit in respect of its Net Profits
Interest and Royalty agreement with HudBay dated January 1, 1988 while
Callinan conducted an independent audit.
In the law suit, which was commenced in 2007 in the Manitoba Court of
Queen's Bench, Callinan alleged that HudBay had not properly accounted
to Callinan for the net profits interest ("NPI"). The law suit was
prolonged while Callinan pursued an application against Deloitte &
Touche, LLP ("Deloitte"), HudBay's auditor for production of Deloitte's
working papers prepared in connection with Deloitte's annual audit of
the NPI and opinion to the effect that the NPI had been properly
calculated. Although the application did not initially succeed,
Callinan prevailed on appeal and production of the working papers was
ordered by the Manitoba court.
Under the standstill agreement, Callinan initially planned to audit the
NPI calculations for four selected years, namely 1993, 2003, 2004 and
2007. Callinan retained Grant Thornton LLP to conduct the independent
audit. HudBay agreed to cooperate with the auditors and to supply all
available documents reasonably requested for the audit. In return,
Callinan had agreed to hold the law suit in abeyance during the conduct
of the audit while retaining the right at its sole discretion to
terminate the audit and proceed with the law suit on reasonable notice
in writing to HudBay of not less than 30 days.
The board of directors of Callinan Royalties Corporation has declared a
quarterly cash dividend for the quarter ending December 31, 2012 on its
common shares of two cents per common share to all shareholders of
record at the close of business on December 31, 2012. The ex-dividend
date will be December 27, 2012 and it is expected that the dividend
will be paid on or about January 15, 2013.
It is anticipated that future quarterly dividends will be payable
approximately 15 days following each fiscal quarter. The declaration,
timing, and payment of future dividends will largely depend on the
Company's financial results as well as other factors. Dividends paid by
Callinan Royalties Corporation are eligible dividends for Canadian
income tax purposes unless otherwise stated.
On Behalf of the Board of Directors,
Roland Butler, CEO
About Callinan Royalties
Callinan Royalties is a Canadian company that creates and acquires
mineral royalties. The company uses its royalty income to provide
alternative financing options to mineral exploration and development
companies with attractive projects. Callinan's strategy is to create
shareholder value over the long term by generating a portfolio of
profitable mineral royalties.
The Corporation currently has two producing royalties. Callinan holds a
6⅔% net profits interest royalty and a $0.25 per ton production royalty
on lands that include the 777 Mine owned by HudBay Minerals Inc.
located in Flin Flon, Manitoba, Canada as well as the adjacent 777
North Mine scheduled for production in 2012. Callinan also holds the
777 Deeps (War Baby) property and an associated royalty option on the
property, which is located adjacent to the 777 Mine.
Callinan is a dividend paying Tier 1 company listed on the TSX Venture
Exchange under the symbol CAA. The Corporation has a strong financial
position with no debt, approximately $29 million in cash and
approximately 48.2 million shares outstanding.
Cautionary Statement on Forward-Looking Information
Neither the TSX Venture Exchange nor its Regulation Services Provider
(as that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release. Certain of the information presented in this News Release may constitute
"forward-looking statements" or "forward-looking information" within
the meaning of Canadian securities legislation (together referred to as
"forward-looking statements"). The forward-looking statements are
subject to risks, uncertainties and other factors that may cause actual
results to be materially different from those expressed or implied by
such forward-looking statements, including any delays in the receipt of
consents or approvals. Although Callinan Royalties has attempted to
identify important factors that could cause actual actions, events or
results to differ materially from those described in forward-looking
statements, there may be other factors that cause actions, events or
results not to be as anticipated, estimated or intended. There can be
no assurance that such statements will prove to be accurate as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not place
undue reliance on forward-looking statements contained in this News
Release and in any document referred to in this News Release.
Forward-looking statements are made based on management's beliefs,
estimates and opinions on the date the statements are made and Callinan
Royalties undertakes no obligation to update forward-looking statements
if these beliefs, estimates and opinions or other circumstances should
change, except as required by applicable law.
SOURCE: Callinan Royalties Corporation