TSXV: CAA
VANCOUVER,
Aug. 26, 2013 /CNW/ - Callinan
Royalties Corporation ("Callinan", the "Company") (TSXV: CAA)
reports that it has provided the required 30 day notice of
recommencing litigation to Hudson
Bay Mining & Smelting Co., Limited ("Hudbay"), a
wholly-owned subsidiary of Hudbay Minerals Inc. as provided under
the standstill agreement referenced below.
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") under the Net Profits
Interest and Royalty agreement with Hudbay dated January 1, 1988. The agreement covers past and
present mining areas that include Hudbay's flagship 777 mine,
currently in production, as well as the 777 North mine, which
recently commenced production.
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.
On September 09,
2011, Callinan reported that it had executed a standstill
agreement with Hudbay, 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.
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.
On February 26,
2013, Callinan reported that the independent audit by
Grant Thornton of the NPI
calculations could not be completed as planned. Audit work for the
four initially selected years as well as a partial audit of 2011
had been protracted as much of the source material evidencing
entries from the originally selected early years is not available
from Hudbay. Therefore, the audit work conducted is incomplete and
inconclusive in nature.
The Board of Directors of Callinan subsequently
undertook a review to determine the next course of action.
Alternatives included, but were not be limited to, conducting
additional audit work, engaging in discussions with a view to a
resolution of outstanding issues, or providing notice in writing to
Hudbay and proceeding with litigation.
The Board of Directors of Callinan has elected
to recommence litigation against Hudbay and the Company does not
intend to disclose information from the incomplete audit work
conducted or report any developments with respect to the litigation
unless required by regulation or law and until its Board of
Directors otherwise deems that disclosure is appropriate.
On Behalf of the Board of Directors,
Roland
Butler
Roland Butler,
CEO
About Hudbay Minerals
Hudbay is a Canadian integrated mining company
with assets in North and South
America principally focused on the discovery, production and
marketing of base and precious metals. Hudbay's objective is to
maximize shareholder value through efficient operations, organic
growth and accretive acquisitions, while maintaining its financial
strength. A member of the S&P/TSX Composite Index and the
S&P/TSX Global Mining Index, Hudbay is committed to high
standards of corporate governance and sustainability. Further
information about Hudbay can be found on www.hudbayminerals.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