The future of Calpine Resources (VSE) will be determined April 2, when shareholders of the company and those of Prime Resources (VSE) meet to vote on the proposed merger. Calpine shareholders have been offered one share of Prime plus 0.5 warrants, each exercisable at $5.25 per share for one year, in return for one share of Calpine.
The meeting and vote, originally scheduled for December, was delayed when the British Columbia Securities Commission ordered a second opinion on the fairness of the merger.
The second opinion, prepared by Levesque Beaubien Geoffrion, found the merger to be fair to minority shareholders from a financial point of view.
Goepel Shields & Partners prepared the original opinion, which also found the merger fair from a financial point of view. The commission ordered the second opinion to address minority shareholders’ concerns relating to the two companies having essentially the same board of directors. Prime owns close to 50% of Calpine.
Murray Pezim, on the board of both companies, believes the merger will receive the required 75% majority vote. As a result of the merger, Prime will have 40.1 million shares outstanding.
The main contention over the merger is between Prime and certain minority shareholders of Calpine who believe their company is worth more than that offered by Prime.
The primary factor involved in evaluating the worth of Calpine is attaching a value to the company’s 50% interest in the rich Eskay Creek property.
An evaluation by Roscoe Postle Associates estimated reserves of more than one million tons grading 1.66 oz. gold per ton, 43.3 oz. silver, 2.1% lead and 5.2% zinc.
Recent infill drilling on the deposit is confirming continuity in the area of Roscoe Postle’s calculation. Intersections of 88.6 ft. grading 0.307 oz. gold and 62.99 oz. silver and of 42.6 ft. grading 3.83 oz. gold and 102.56 oz. silver were among a number of other excellent holes in the continuing program.
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