VANCOUVER, July 31, 2012 /CNW/ - Callinan Royalties Corporation ("Callinan") has entered into an agreement with Gold Royalties Corporation whereby Callinan will provide C$5.4 million to Gold Royalties Corporation ("GRC") via a convertible debenture.
The financing is provided to facilitate in part the purchase by GRC of royalty interests located in the Yukon Territory, Canada.
The convertible debenture will carry an interest rate of 10% per annum and mature on July 30, 2016. Interest payments shall accrue quarterly and are deferred until the maturity date. The principal and interest are secured by the royalties and corporate assets of GRC.
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.
If neither conversion option is exercised by Callinan, the full principal and interest will be repaid in cash. In addition, GRC will hold an early repayment option for $8,600,000 after offering Callinan the right to convert the loan to shares.
Callinan Royalties Corporation is pleased to provide this flexible and alternative form of financing to Gold Royalties Corporation and to find a common interest in facilitating the growth plans of each company.
On Behalf of the Board of Directors,
Roland Butler, CEO
About the Royalty Interests
The Eagle Zone Gross Smelter Royalty
The Eagle Zone gross smelter royalty (the "Eagle Zone GSR"), known otherwise as the Mar Gold Zone, is a 2% gross smelter royalty on the Eagle Zone gold deposit being advanced by Victoria Gold Corp. The project is located approximately 85 km NE of Mayo, Yukon, Canada. The 2% gross smelter royalty, which comes with advance royalty payments, reverts to a 1% gross smelter royalty after payment of $1,000,000, of which approximately $420,000 has been received by the third-party vendor to-date. There is no royalty buy-back provision afforded to the operator with the Eagle Zone GSR.
The Lynx Zone Net Smelter Royalty
The Lynx Zone net smelter royalty (the "Lynx Zone NSR"), known otherwise as the Len Property, is a 1% net smelter royalty, which comes with advance royalty payments, on claims being advanced by Victoria Gold Corp. The project is located NE of Mayo, Yukon, Canada. The Lynx Zone NSR may be repurchased by the operator at a rate of $100,000 per 0.15%, either pro-rata or in whole, for a total of $1,500,000, less advance royalty payments made to-date to the royalty vendor.
About Gold Royalties Corporation
Gold Royalties Corporation is a growth-orientated royalty business, which acquires and holds mining royalty assets for investment purposes. The company acquires small-to-mid tier net smelter return and metal stream royalties, with a focus on gold royalties, securely located within North America. Gold Royalties Corporation currently holds net smelter return royalties on seven mining projects, including four royalties in Ontario and one each in British Columbia, Québec and the Yukon. The Corporation continues to use an established business model to acquire royalty interests with the clear objective of delivering accretive value for shareholders. See www.goldroyalties.ca for more information.
Callinan Royalties Corporation is a mineral royalty company based in Canada. Its principal business activities centre on creating mineral royalties through financing and royalty acquisition while diligently managing its royalty interests and investments.
The Corporation currently has two producing royalties. Callinan holds a 6⅔% net profits interest royalty and another $0.25 per ton royalty on 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 2012. Callinan also holds the 777 Deeps (War Baby) property and an associated royalty option located on that property, which is located adjacent to the 777 Mine.
Callinan is a dividend paying Tier 1 company listed on the TSXV under the symbol CAA. The Corporation has a strong financial position with no debt, approximately $30 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:
please visit www.callinan.com or contact: