CALLINAN ANNOUNCES A 2,000,000 UNIT PRIVATE
PLACEMENT
ROLAND BUTLER APPOINTED A DIRECTOR AND VICE
PRESIDENT
VANCOUVER, Oct. 25 /PRNewswire-FirstCall/ - Callinan Mines
Limited ("Callinan") today announces its intention to become a
royalty company by reorganizing its exploration assets into a
separate corporation ("the Spin-Out Proposal"), with a view to
enhancing shareholder value.
Callinan, upon becoming the royalty company, will hold a 6⅔% Net
Profits Interest royalty and a $0.25
per ton royalty (together the "Royalties") in the 777 Mine at
Flin Flon, Manitoba, Canada, which
produces copper, gold, zinc and silver and is operated by HudBay
Minerals Inc. Callinan will also hold the War Baby mineral
property, which covers an area down-trend from the 777 Mine.
The President and CEO of the royalty company will
be Roland Butler, a co-founder of
Altius Minerals Corporation, where until March 2010 he served as a Director,
Vice-President and Chief Operating Officer. He has joined Callinan
as interim Vice-President and he has been appointed to its Board of
Directors. Mr. Butler has been granted options to purchase 250,000
shares of Callinan at $2.38 per share
for a period of five years. Mr. Butler will participate in a
private placement in Callinan to become a key
shareholder.
The new exploration company will hold Callinan's exploration
assets in Canada, including its
interests in the Coles Creek polymetallic project in British Columbia, its base metal projects in
Manitoba and its Fox River nickel project in Manitoba.
Mike Muzylowski, Chief Executive
Officer of Callinan, will be the President and CEO of the
exploration company. He stated, "We see this proposal as an
excellent opportunity to enhance shareholder value and to give our
shareholders the best of both worlds: a well funded royalty company
led by an experienced and well regarded executive, and the
potential upside of exploration success under the direction of our
proven and successful team of explorers."
Roland Butler, commenting on the
proposal stated, "I welcome the opportunity to become a shareholder
of Callinan as we launch a new royalty company engaging in early
stage royalty creation through prospect generation and financing
complemented by selective royalty acquisitions. I hope our
company will build a reputation for high free cash flow, high
return on invested capital and dividends to our shareholders."
Private Placement
Mr. Butler will purchase two million Units of Callinan, pursuant
to a private placement, at the price of $2.02 per Unit to raise $4,040,000 to be applied to general working
capital. Each Unit will consist of one common share of
Callinan and one share purchase warrant. Each warrant will
entitle the holder to purchase one additional common share of
Callinan for a period of 5 years at the price of $2.74 per common share. Participation by
Mr. Butler is considered to be a related party transaction as
defined under Multilateral Instrument 61-101. The transaction will
be exempt from the formal valuation and minority shareholder
approval requirements of MI 61-101 as neither the fair market value
of any shares issued to or the consideration paid by Mr. Butler
will exceed 25 per cent of Callinan's market capitalization. This
private placement is subject to acceptance for filing by the TSX
Venture Exchange.
The Spin Out Proposal
The Spin Out Proposal is intended to provide Callinan
shareholders the opportunity to continue to participate in both
aspects of Callinan's present holdings.
Pursuant to the Spin Out Proposal, the assets of Callinan will
be separated into two corporations through a plan of arrangement,
such that one corporation will hold the Royalties, the outstanding
law suit against HudBay and the War Baby mineral claim (the
"Royalty Assets") and the other corporation will be seeded with
some capital from Callinan's present cash balances and hold
Callinan's exploration assets in Canada.
Under the terms of the Spin Out Proposal, existing Callinan
shareholders will receive the same percentage interest in a
corporation that has yet to be incorporated ("Newco") as they
presently hold in Callinan such that, following the implementation
of the Spin Out Proposal, the shareholders will hold shares in two
corporations, existing Callinan and newly incorporated Newco, with
the Royalty Assets being held by one corporation and the
Exploration Assets being held by the other corporation.
Callinan will hold a Special Meeting of shareholders to approve
the Spin Out Proposal. Further particulars, including the record
and meeting dates, will be announced in due course by press
release. A complete description of the Spin Out Proposal will be
set forth in a management proxy circular to be sent to Callinan's
shareholders in connection with the special meeting.
The implementation of the Spin Out Proposal is subject to, among
other things: further Board approval of the final structure and
terms and the arrangement agreement to be entered into with Newco
and shareholder, court and regulatory approvals, including TSX
Venture Exchange acceptance of the Spin Out Proposal and the
continued listing of Callinan common shares on the TSX Venture
Exchange and conditional listing approval of Newco shares. No
application for listing has been made and there is no assurance
that if made that approval will be granted. The TSX Venture
Exchange has not approved or disapproved the Spin Out Proposal and
there is no assurance that the TSX Venture Exchange will approve
the Spin Out Proposal.
By Order of the Board of Directors
Mike Muzylowski,
Mike Muzylowski, President and
CEO
Neither 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.
Some statements in this news release contain forward-looking
information. These statements include, but are not limited to,
statements with respect to the expected benefits of the proposed
Spin Out Proposal, the payment of dividends, the completion of the
Spin Out Proposal, the receipt of any shareholder and regulatory
approvals for the Spin Out Proposal and the development potential
of Callinan's properties. These statements address future events
and conditions and, as such, involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by
the statements. Such factors and assumptions include, among others,
the effects of general economic conditions, the price of gold,
silver, copper and other metals, changing foreign exchange rates
and actions by government authorities, uncertainties associated
with legal proceedings and negotiations and misjudgments in the
course of preparing forward-looking information. In addition, there
are known and unknown risk factors which could cause the Company's
actual results, performance or achievements to differ materially
from any future results, performance or achievements expressed or
implied by the forward-looking statements. Known risk factors
include risks associated with the ability obtain any necessary
approvals, waivers, consents and other requirements necessary or
desirable to permit or facilitate the Spin Out Proposal, the risk
that any applicable conditions of the proposed transaction may not
be satisfied, risks associated with project development; the need
for additional financing; operational risks associated with mining
and mineral processing; fluctuations in metal prices; title
matters; environmental liability claims and insurance; reliance on
key personnel; the potential for conflicts of interest among
certain officers, directors or promoters of the Company with
certain other projects; currency fluctuations; competition;
dilution; the volatility of the Company's common share price and
volume; tax consequences to U.S. investors; and other risks and
uncertainties. Forward-looking statements are made based on
management's beliefs, estimates and opinions on the date that
statements are made and Callinan undertakes no obligation to update
forward-looking statements if these beliefs, estimates and opinions
or other circumstances should change, except as required by
law.
SOURCE Callinan Mines Ltd.
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