VSE orders new study for Calpine/Prime merger

The move comes after a group of Calpine minority shareholders demanded an independent valuation of the assets of both companies, something that was not addressed in the circular mailed to shareholders.

In particular, the minority shareholders demanded an independent valuation of the Eskay Creek project, north of Stewart, B.C. Calpine owns 50% of the Eskay Creek property, a significant gold-base metals deposit. Prime Resources in turn is Calpine’s largest (44.3% fully diluted) and controlling shareholder.

Goepel Shields & Partners prepared the original fairness opinion for the proposed merger. Speaking for the minority Calpine shareholders, George Oughtred, Calpine’s former president, said the evaluation provided no information concerning the value of Eskay Creek. The group was advised by Pezim’s office that it was too early to determine the size and grade of reserves.

In any event, the VSE has formally requested that a second valuation opinion be prepared on terms of reference acceptable to the exchange. According to the VSE, the report will have to address the issue of “valuing a property which is currently undergoing a substantial drill program, but one which may not be developed to the extent needed to permit the calculation of known reserves.”

The valuation, to be prepared by an independent valuator acceptable to the exchange, will also address the risk factors associated with voting on a merger during the course of a drilling program when material announcements can be anticipated routinely.

In addition, the VSE is requesting complete prospectus-level disclosure of all material changes in the affairs of the companies since the date of the circular.

The VSE did not request any amendment in the voting structure. Officials were satisfied that the proposed voting threshold of 75% of the shareholders voting on the plan is at least as advantageous to minority shareholders as is a “majority of minority” requirement.

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