Callinan Mines Is Protecting its Interest in the 777 and Callinan Mines

In the context of HudBay Minerals Inc.’s pending business combination with Lundin Mining Corporation and the subsequently announced alternative breakup bid by Jaguar Financial Corp, Callinan Mines will take all necessary actions to defend and preserve its interest in the Callinan and 777 Mines and the potential damages which may be awarded in Callinan’s court action against HudBay Minerals Inc..

Callinan owns a 6 2/3% net profits interest and a $0.25/ton royalty in the 777 Mine, located in Flin Flon, Manitoba and operated by HudBay.

Since November 2007, when the first net profits interest payment was made, Callinan has received from HudBay an aggregate total of $12.2 million in payments under the net profits interest agreement with HudBay which was signed in 1988.

Callinan is proceeding with an ongoing action filed in the province of Manitoba in order to bring much needed transparency to the means by which its net profits interest has been calculated in the past, and the means by which it is currently being calculated.

Callinan’s original statement of claim was filed in Manitoba’s Court of Queens Bench in March, 2007 seeking, among other things:

– A declaration that Callinan has the right to conduct an audit of the books and records of the operations of HudBay in relation to the Callinan Mine and the recently developed 777 Mine;
– A declaration that HudBay must keep and maintain separate records and accounts for each of the Callinan Mine and the 777 Mine;
– A declaration that the Cumulative Cash Flow defined in the NPI Agreement and accumulated for the Callinan Mine should not be used in calculating the Net Profits interest from the 777 Mine;
– An order compelling HudBay to make available to Callinan the books and records of both the Callinan Mine and the 777 Mine;
– An order for an accounting of all sums improperly included or excluded in calculating the Net Profits Interest;
– General damages for breach of contract and breach of fiduciary duty; and
– Aggravated and punitive damages, interest and costs.

In conjunction with this action the Manitoba Court of Queens Bench has issued a judgment entitling Callinan to direct access to the books, records and accounts of HudBay relating to the operations of the Callinan and 777 mines, as well as an order compelling HudBay to provide an affidavit of documents disclosing all books, records accounts and other documents in their possession relating to the same. The judgment may be viewed at callinan.com.

Management’s intention is to ensure that Callinan and its shareholders are being equitably treated and reasonably compensated and that all available legal remedies are utilized to protect Callinan’s interest in this world class project.