Callinan Releases Q1 Financial
Statements, Updates Independent Audit and Announces Quarterly Dividend Payment
Date
Callinan Royalties reports strong
financial performance in the three months ended September 30, 2012.
Callinan holds a 62/3%
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
September
2012
|
Three
Months
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