HudBay Minerals (HBM-T, HBMFF-O) has cut a $2.4-million cheque to Callinan Mines (CAA-V, CCNMF-O) this month as part of a net profits interest and royalty agreement for a Manitoba property, which sparked a contentious legal battle last March.
The payment represents 75% of what HudBay estimates it owes Callinan for the fourth quarter according to the 6.67% NPI on the 777 copper-zinc mine in Flin Flon. HudBay must pay the remaining 25% within 130 days of the completion of the fiscal year. It plans to release its results on March 17.
Under the agreement, which dates back to 1988, HudBay must pay the NPI on the mine and any other projects developed on the property once it has paid off all development costs. HudBay also pays a 25-per-tonne royalty for ore milled at the site.
HudBay made its first NPI payment to Callinan during the fourth quarter for $358,000. The amount was based on an undisclosed portion of third quarter profits, signifying that HudBay was out of the red but left Callinan wondering how much it would receive for its next payment.
It was last March, when HudBay reported earnings of $565 million for 2006, that Callinan became suspicious about HudBay’s calculations. HudBay had failed to provide Callinan with detailed accounting statements for several years, as the agreement calls for.
Callinan filed a lawsuit with the Manitoba Queen’s Bench against HudBay’s subsidiary HudBay Mining and Smelting, demanding that an independent auditor review HudBay’s books.
The court case over the agreement’s fine print continues, but now Callinan has an idea of how much it will be receiving on a quarterly basis.
HudBay’s after-tax earnings for third quarter were $66.5 million for all its operations.
Be the first to comment on "HudBay pays Callinan $2.4 million"