Canarim agrees to buy unsold Prime units

The units valued at $4.25 million were withdrawn in a falling market on the next trading day following completion of the Prime offering in late September. Canarim’s withdrawing client was Alexanders Laing & Cruickshank, a London-based brokerage firm.

The withdrawal notice was in accordance with the provisions of the Securities Act. But the announcement sent shock waves through the Vancouver Stock Exchange when it was told that Canarim did not intend to take down the units because the withdrawal came on Sept 25, after the offer had officially expired.

Also of concern was the fact that it took Prime almost a month to disclose it had not raised the entire $20.8 million in its recent offering as had been assumed. The offering was for five million units priced at $4.50 (later changed to $4.25), with each unit consisting of one share and one Series A warrant.

Prime had a guaranteed agency agreement with Canarim Investments for four million units, Yorkton Continental Securities for 400,000 units and McDermid St. Lawrence for 600,000 units. The cash-strapped company intended to use the proceeds for working capital in order to fund current indebtedness and for the acquisition of new assets or properties.

Officials from the Vancouver Stock Exchange met with the British Columbia Superintendent of Brokers to discuss the issue last week, and are reported to have convinced Canarim to take down the units it had agreed to sell for Prime.

At presstime, Prime Resources was trading at $2.10 in a 52-week range of $1.60-5.75. Prime warrants were trading at 40 cents , in a 52-week range of 25 cents -$1.08.

The situation is further complicated by Prime Resources’ previous announcement that it intended to acquire the shares of Calpine Resources (VSE) which owns 50% of the Eskay Creek gold deposit, north of Stewart, B.C.

Calpine’s work to date on the property has resulted in the discovery of the 21 zone deposit, which contains gold, silver and base metal mineralization.

A group of shareholders, including former Calpine President George Oughtred, opposed the share swap, saying it did not reflect the value of Calpine’s assets. But at presstime, Oughtred told The Northern Miner that a formal notice of meeting had not yet been received. “I guess they have other problems to deal with right now,” he said. “I would think they may not do it, but they should either proceed or cancel because it’s confusing people.”

At presstime Calpine was trading at $5.00 in a 52-week range of $1-9.75. Calpine’s 50/50 partner, Stikine Resources, was trading at $38.50. The company recently appointed Yorkton Continental Securities as its fiscal agent to find a buyer for its shares. A media report that Corona Corp. was in advanced negotiations to acquire Stikine was later denied by the Toronto-based gold mining company.

Corona does, however, have about a 33% fully diluted interest in Prime Resources, which in turn will have a 43.5% fully diluted interest in Calpine.

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