TSXV: CAA
VANCOUVER, July 23, 2013 /CNW/ - Callinan Royalties
Corporation ("Callinan", the "Company") (TSXV: CAA) announces
that it has signed an investment agreement with Excelsior Mining
Corporation ("Excelsior") (TSXV:MIN) and the privately-held James
Sullivan Trust ("Sullivan Trust") whereby Callinan will invest
C$1 million by way of a non-brokered
private placement in Excelsior and C$2
million to purchase a 0.5% Gross Revenue Royalty ("Initial
GRR") on the Gunnison Copper Project in Arizona, USA. The funding agreement is based
on a series of royalty acquisitions following the completion of a
key feasibility study and permitting milestones whereby Callinan
will have the right to acquire up to a 3% Gross Revenue Royalty
("GRR") by providing additional funding. The transaction is subject
to approval of the TSXV exchange.
Callinan is pleased to create this funding
mechanism with Excelsior to help fund a portion of the costs linked
to the completion of a feasibility study on the Gunnison Copper
Project. The transaction is beneficial to both groups, with
Excelsior securing flexible financing for a project of merit in a
challenging financial environment and Callinan gaining exposure to
a large copper project in a stable and mining friendly
jurisdiction. Copper currently represents approximately half of the
value of Callinan's current royalty revenue and this transaction
illustrates Callinan's goal to retain significant exposure to base
metals as it builds a diversified portfolio of royalties.
Project Summary
The Gunnison Copper Project is located in a
remote section of Cochise County
in southeastern Arizona, USA. The
focus of the project is the oxide portion of the North Star deposit, which has the potential to
be mined using in-situ recovery methods according to Excelsior's
public disclosure. Additional information about the Gunnison Copper
Project can be found in the technical report filed by Excelsior
under its profile on SEDAR at www.sedar.com entitled: "Gunnison
Copper Project Preliminary Economic Assessment, NI 43-101 Technical
Report" dated November 18, 2011.
Agreement Summary
Under the agreement, Callinan will purchase 6.25
million shares of Excelsior at a price of C$0.16 per share for proceeds of C$1 million and purchase from Excelsior a 0.5%
GRR on the Gunnison Copper Project. In addition, Callinan will be
granted three funding options to be exercised following the
completion of key milestones. With each option, Callinan has the
right to purchase an additional 0.5% GRR for C$3 million each for a total of C$9 million for a 1.5% GRR. If Excelsior has not
completed its earn-in option on the Gunnison Copper Project, the
Sullivan Trust will grant the royalties to Callinan.
The milestones to be met by Excelsior
include:
- Completion of a prefeasibility study and successful raise of
additional financing from other sources
- Completion of hydrology and metallurgy models to feasibility
study level
- Successful administrative review of the key permits (Aquifer
Protection Permit and the Underground Injection Control and Aquifer
Exemption Permit)
Callinan will also be granted a construction
option, which gives it the right to buy a 1% GRR for C$10 million following completion of the
feasibility study, receipt of all required permits and Excelsior
securing a firm commitment for 50% of the required capital required
for mine construction. One quarter (0.25%) of the construction
option will vest with each $3 million
paid by Callinan to Excelsior pursuant to the initial investment or
upon the exercise of any of the funding options.
The exercise price of the construction option
may be adjusted if the feasibility study recommends the
construction of a plant with capacity lower than 80 million pounds
of copper per year based on an agreed upon schedule.
In addition, Callinan has the right to require
Excelsior to purchase all or part of the Initial GRR for
C$2,000,000 pro-rated for the portion
of the GRR sold back to Excelsior and payable in common shares of
Excelsior priced at C$0.25 per share.
This right will expire at the earliest of 24 months from the
Closing Date or the exercise of the first funding option.
On Behalf of the Board of Directors,
Roland
Butler
Roland Butler,
CEO
About Excelsior
Excelsior is an exploration company with a
copper project located within the Copper Porphyry Belt of
Arizona. The Gunnison Copper
Project is located close to the required infrastructure and its
oxide copper resource has the potential to be mined using in-situ
recovery methods. The Excelsior team consists of experienced
professionals with proven track records of advancing projects
towards production.
Further details about Excelsior can be found at:
http://www.excelsiormining.com.
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 and 777 North Mine owned by Hudbay
Minerals Inc. located in Flin Flon,
Manitoba, Canada. 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 $28 million in cash and
approximately 49.1 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