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How big is the "gap' between GAAP and non-GAAP"? That could be the $64,000,000 question: Callinan vs. HudBay

Callinan's most recently filed financial statement contains a review of "the "AUDITED" financial statements from HudBay, ' AUDITED' by Deloitte and Touche LLP revealed that the audit reports beginning in 2003 had changed from previous years and included the following statement:

" These financial statements, which have not been, and were not intended to be prepared in accordance with Canadian generally accepted accounting principles..."

This was a departure from financial statements received from 1989 and 2002 which stated:

"In our opinion, this financial statement represents fairly, in all material respects, the net profits interest and royalty for the year ended June 30,xxxx in accordance with Canadian generally accepted accounting principles and the Net Profits interest and Royalty Agreement dated January 1, 1988."

Has the stretch to cover the gap from non-GAAP to GAAP been a "Bridge too Far" in AUDITING creativity? The Callinan management thinks it has and has requested to see ALL the books as well as the working papers. The Manitoba court has compelled a reluctant HudBay to reveal all. At stake is the possibility of millions of dollars of restitution plus damages. There could be other ramifications when the legal world of words does their calculus on the creative world of numbers crunching.

Since the dispute involves the possible violation of accurate and timely disclosure as well as transparency rules, and of course, the effect on shareholder value in each company, one could reasonably ask the $ 64,000 question: "Where are the regulators?" Are they only interested in issues when powerful interests vent their frustrations in the newspaper headlines, such as when HudBay refused to grant their shareholders a vote on a major acquisition? The Ontario Securities Commission should sharpen up their picks and dig deeper into the HudBay corporate culture. They may find headline-making material. Of course, they could also find an answer to the question in this specific case: "HOW BIG IS THE 'GAP' BETWEEN THE NON-GAAP AND THE GAAP" when it comes to the accurate payment of Callinan's NPI royalty interest in the 777 and Callinan Mine? The shareholders of both companies have a right to know.

ref. Management discussion & analysis for three and nine months ended March 31, 2009: p. 8 section (i) Callinan ==filed on SEDAR