Callinan Mines Limited

Callinan Mines Limited

March 05, 2007 09:59 ET

Callinan Mines Limited Commences Action Against Hudbay

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - March 5, 2007) - Callinan Mines Limited (TSX VENTURE:CAA) has commenced an action in the Manitoba Court of Queens Bench against Hudson Bay Mining &Smelting Co., Ltd.,("Hudbay") a subsidiary of HudBay Minerals Inc.

The action arises from an agreement between Callinan and Hudbay dated January 1, 1988 (the "NPI" Agreement") pursuant to which Callinan was granted a 6 2/3% Net Profits Interest in the Callinan Mine and any other mines developed on the Callinan mineral properties from the operator, Hudbay, in exchange for their interest in the Callinan mine and surrounding ground.

Callinan also owns a royalty interest of $0.25/ per ton of ore milled from the project.

Callinan seeks, 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 777Mine;

- 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;

- Aggravated and punitive damages, interest and costs.

Callinan president Mike Muzylowski commented that, "This action represents the intention of management to achieve some degree of transparency and fairness with respect to this agreement on behalf of our shareholders."

On behalf of the board of Directors,

Mike Muzylowski, President and CEO

Contact Information