CGX Needs to Provide a Formal Valuation of the Corentyne This caught my eye on the news release:
The transactions described herein between Frontera and CGX are related party transactions under Multilateral Instrument 61-101 ("MI 61-101") but are exempt from the obligations to obtain a formal valuation and approval from a minority of shareholders as the Company will be relying on the exemptions under section 5.5(b) and 5.7(l)(e) of MI 61-101. The material change report to be filed by CGX in connection with this news release will contain the required disclosure regarding such exemptions and the formal valuation for the Corentyne block obtained by CGX.
My read of the news release and MI 61-101 is that in order for CGX to qualify for an exemption from having to obtain approval from a minority of shareholders, CGX will need to provide certain information explaining how they qualify for an exemption. That information includes a formal valuation of the Corentyne block. It will be very telling to see how the block was valued, and the timing associated with that valuation. I would suggest if the valuation was dated, or otherwise doesn't appear to represent the true value of the asset, the filing of the exemption could be challenged by shareholders.