The Reminder is making its archives back to 2003 available on our website. Please note that, due to technical limitations, archive articles are presented without the usual formatting.
Just shy of $20 million in profits from the 777 mine flowed westward last year. That's how much Vancouver-based Callinan Royalties Corp. collected in 2012 through a lucrative profit-sharing deal with Hudbay. Royalty payments totalled $19,996,975, including interest, with the final 2012 payment of nearly $5 million recently forwarded to Callinan. Under a 1988 deal, Callinan receives 6.67 per cent of net profits from 777 and its extension, 777 North. HudBay is entitled to recover all capital, operating and other costs incurred on the mine, plus interest, before Callinan receives its share. HudBay must also pay 25 cents for every ton of ore milled from the site. Interim quarterly payments were made throughout 2012, estimated by Hudbay to represent 75 per cent the cash owed to Callinan. The remaining 25 per cent is paid with interest annually each July, 130 business days after the financial year end of Hudbay as per the agreement. Meanwhile, a lawsuit involving the two companies remains unresolved. In 2007, Callinan took Hudbay to court, alleging it had not received its fair share under the profit-sharing deal. Callinan sought access to all Hudbay books, records and accounts concerning the 777 mine and the now-defunct Callinan mine. See 'Lawsuit' on pg. Continued from pg. A Master of the Court initially denied Callinan access to working papers, prepared by accounting firm Deloitte & Touche, relative to annual audits of Callinan's interest in the mines. But upon appeal in 2011, that ruling was overturned. A new ruling also denied a Hudbay motion to strike affidavit evidence given by accountant Mark Lotz, whom Callinan called its expert witness. In September 2011, the lawsuit was suspended, at least temporarily, while Callinan conducted an independent audit of Hudbay's books. Callinan was granted authority to audit the profit-sharing calculations for four selected years: 1993, 2003, 2004 and 2007. A Callinan news release made no mention of why those years were chosen. Callinan retained Grant Thornton LLP to conduct the independent audit. Callinan said Hudbay agreed to cooperate with the auditors and supply all available documents reasonably requested for the audit. In return, Callinan agreed to suspend the lawsuit during the audit while retaining the right to terminate the audit and proceed with the lawsuit. Hudbay would have to receive at least 30 days notice if that were to happen. Callinan has not provided an update on the lawsuit since the suspension.
