Callinan Releases Q1 Financial Statements, Updates Independent Audit and Announces Quarterly Dividend Payment Date


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 2012.

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 table:

    Three Months Ended
    September 2012 September 2011
Operating Summary   $ $
Revenue   4,586,398 6,476,937
Net earnings (After taxes)   2,456,123 9,634,348
Diluted earnings per share   0.05 0.19
Net cash flow from operating activities   7,108,527 8,961,979

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 market price.

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.

Quarterly Dividend

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

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

For further information:

For more information, please visit or contact:

Roland Butler, CEO
Callinan Royalties Corporation
+1 709 535 3433

Tamara Edwards, CFO
Callinan Royalties Corporation
+1 604 605 0885

Corporate Office:
1110 - 555 West Hastings Street
Vancouver, BC
Canada, V6B 4N4

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Callinan Royalties Corporation

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