TSXV: CAA
VANCOUVER, Nov. 20, 2014 /CNW/ - Callinan Royalties
Corporation ("Callinan," the 'Company') (TSXV: CAA) announces that
Wallbridge Mining Company Limited ("Wallbridge") has agreed to
early prepayment of the full principal and interest owing on the
$2,000,000 Line of Credit ("LOC")
extended by Callinan to Wallbridge as announced November 20, 2012.
The LOC was granted to Wallbridge pursuant to a more
comprehensive royalty and equity placement transaction that gave
Callinan an equity ownership stake in Wallbridge, provided an LOC
to fund development of Wallbridge's Broken Hammer mine, and
established terms for Callinan's future rights to acquire Net
Smelter Return ("NSR") royalties in multiple exploration projects
within Wallbridge, including an NSR in Broken Hammer.
Callinan management sees the early prepayment as a positive
outcome that achieves the company's objectives of risk management
while maintaining exposure to future development. The receipt
of $2,000,000 plus interest ahead of
maturity strengthens Callinan's balance sheet without relinquishing
opportunities to participate in future projects that Wallbridge may
develop in the prolific Sudbury
camp. All other terms of the agreements including the right
to acquire future NSR royalties, remain intact.
Callinan remains supportive of Wallbridge management and its
recently announced actions, including paying down other existing
debt. We intend to continue as a strong shareholder.
Under an amendment signed by both parties, Wallbridge has agreed
to prepay the full $2,000,000
principal plus 10% annual interest owing in two proposed
prepayments as follows:
- The first prepayment of $1,000,000 due immediately;
- The second prepayment of $1,000,000 plus accrued interest upon completion
of the sale of Duluth Metals Limited ("Duluth") shares held by
Wallbridge to either Antofagasta Investment Company Limited
("Antofagasta") in connection with its recently announced proposed
acquisition of Duluth, or to a competing bidder. If no
superior proposal is accepted and the Antofagasta offer closes without extension,
the closing date is expected to be no later than February 15, 2015. The second payment would
be due upon receipt of proceeds by Wallbridge from the sale of the
Duluth shares to Antofagasta or
such competing bidder.
If the second prepayment is not made due to the acquisition
proposal or a competing offer not closing prior to the original
term of the LOC, then the interest payable by Wallbridge to
Callinan will be adjusted back to the greater of the prorated NSR
calculation or the 10% annual calculation as originally set in the
LOC.
In return for the early prepayment, Callinan has agreed to
receive interest payments owed at the rate of 10% per annum on the
outstanding balances until full repayment, rather than the option
of payments based on a 1.5% prorated NSR. It is estimated that
payments based on the 1.5% NSR calculation would have exceeded the
10% interest rate by approximately $100,000 overall assuming that the LOC had been
maintained to its term. This forgone amount and the interest that
would have been payable under the original term are offset by the
reduced collection risk.
On Behalf of the Board of Directors,
Glenn Brown
Glenn Brown, Interim President
and CEO
About Callinan Royalties
Callinan Royalties Corporation is one of the oldest public
listings in Canada and one of the
first contributors to the development of the Flin Flon, Manitoba copper-zinc
district. Callinan holds a 6⅔% net profits interest royalty
and a production royalty of $0.25 per
short ton of ore milled on lands that include the producing 777
mine and 777 North mine operated by Hudbay Minerals Inc.
The Company uses its royalty income to provide alternative
financing options to mineral exploration and development companies
with attractive projects and excellent management.
Callinan is a dividend paying Tier 1 company listed on the TSX
Venture Exchange under the symbol CAA. The Company has a
strong financial position with no debt, recurring annual cash flow
from the 777 royalties and approximately 49.2 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 Corporation 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 Corporation 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