Securities Law & Instruments


Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Takeover Bids and Issuer Bids -- Exemption from the issuer bid requirements of MI 62-104 and the Securities Act (Ontario) -- Exemption from the valuation requirement applicable to issuer bids in MI 61-101 -- issuer requires an exemption from issuer bid requirements to acquire its own shares in connection with a negotiated settlement -- issuer acquired securities resulting from the settlement of claims or potential claims -- acquisition is not an independent transaction in which the issuer is repurchasing its own securities from one securityholder in preference to other shareholders -- settlement was negotiated at arm's length between the issuer and the transferring securityholder's legal representatives -- value of the consideration being paid to the transferring securityholder does not exceed the market value of the securities being acquired by the issuer.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 93 to 99.1, 104(2)(c).

Multilateral Instrument 11-102 Passport System.

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions.

Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions.

May 13, 2009





("MI 61-101")




(the "Filer")



(section 9.1)


The Ontario Securities Commission (the "OSC") has received an application from the Filer for a decision under section 9.1 of MI 61-101 exempting the Filer from the requirement under section 3.3 of MI 61-101 (the "Exemption Sought") that a formal valuation be obtained with respect to an acquisition by the Filer of common shares of the Filer pursuant to a settlement agreement (the "Settlement") with Global Gold Corporation ("Global") in respect of a legal action commenced by the Filer (the "Action").

Contemporaneous with this application, the Filer has applied to the British Columbia Securities Commission, as principal regulator, and to the OSC, under National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions, for a decision exempting the Filer from the issuer bid requirements under Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids ("MI 62-104") and the Securities Act (Ontario) (the "OSA") in respect of the Settlement (the "Issuer Bid Exemption Decision").


Terms defined in National Instrument 14-101 Definitions and MI 61-101 have the same meaning if used in this decision, unless otherwise defined.


This decision is based on the following facts represented by the Filer:

1. The Filer is incorporated under the laws of British Columbia and has its head office located in Vancouver, British Columbia.

2. The Filer is a reporting issuer in the jurisdictions of British Columbia, Alberta, Manitoba and Ontario.

3. As at April 7, 2009, the Filer's issued and outstanding capital consists of 44,552,660 common shares.

4. The common shares of the Filer are listed on the Toronto Stock Exchange (the "TSX") under the stock symbol "SWG".

5. The Filer is an exploration stage mineral exploration company engaged in the identification, evaluation, acquisition and exploration of mineral properties with the potential to host gold, silver and base metals. The Filer's material mineral property interests are in Peru.

6. Global is a company incorporated under the laws of Ontario. Global's registered office is in Ontario and its last address shown on the books of the Filer is in Vancouver, British Columbia.

7. As at April 7, 2009, Global directly or indirectly owned 7,117,600 common shares of the Filer, representing approximately 16% of the Filer's issued and outstanding common shares. Global is not a reporting issuer in any jurisdiction.

8. John Paterson ("Paterson"), the Filer's former President and Chief Executive Officer, previously held an approximate 8% interest in the shares of Global and exercised voting control and dispositive power over the common shares of the Filer held by Global.

9. The Filer had commenced the Action against Paterson, Global and others. Pursuant to the Settlement, Global has agreed to transfer to the Filer 452,908 common shares of the Filer (the "Settlement Shares") in exchange for a full and final release by the Filer of its claims against Global under the Action (the "Release").

10. The value of the consideration paid for the Settlement Shares under the Settlement will not be greater than the market price of the Filer's common shares on the TSX as determined in accordance with section 1.11 of MI 62-104.

11. The board of directors of the Filer has determined that the entering into and completion of the Settlement, including the acquisition of the Settlement Shares by the Filer, is in the best interests of the Filer and its shareholders and that the acquisition of the Settlement Shares by the Filer will not adversely affect the financial position of the Filer or the shareholders to whom the bid is not extended.

12. In approving the Settlement, the board of directors of the Filer considered the merits of the claims and the likelihood of success, the cost of pursuing the claims, including both management time and monetary costs of engaging external advisors, and the ability to collect on any judgment.

13. The acquisition of the Settlement Shares by the Filer is an integral part of the Settlement; it is not being proposed for the purpose or with the intention of providing preferential treatment to one shareholder; and the Settlement Shares will be cancelled immediately after such shares are acquired by the Filer, which will improve the equity position of the other shareholders.

14. The Settlement was negotiated at arm's length through legal counsel and finalized after extensive, intense and protracted negotiations between the parties.

15. Global is a defendant in the Action commenced by the Filer.

16. Global has had no representation on the board of directors of the Filer and no involvement in the management of the Filer since Paterson's resignation as President and Chief Executive Officer of the Filer in June 2007.

17. Global does not have access or is not privy to any undisclosed non-public information relating to the Filer.

18. There are no contractual arrangements between the Filer and Global, other than the Settlement Agreement.

19. Global's only interest in the Filer is the Filer's shares that it holds.

20. The Filer is not in default of any securities legislation in the jurisdictions in which it is reporting.

21. The Filer disclosed the Settlement in the Filer's interim financial statements and management discussion and analysis for the period ended September 31, 2008; the Filer has also disclosed the Settlement in the Filer's annual financial statements, management discussion and analysis and annual information form for the year ended December 31, 2008, and the Filer's management information circular dated April 7, 2009.

22. The acquisition of the Settlement Shares by the Filer is a formal issuer bid as defined in MI 61-101 and the Filer would be required to obtain a formal valuation. The Issuer Bid Exemption Decision, if granted, may not, for technical reasons, exempt the Filer from the formal valuation requirement applicable to formal issuer bids as contained in MI 61-101.

23. The Filer has entered into an arrangement agreement with Hochschild Mining plc (Hochschild) for the acquisition by Hochschild of all of the issued and outstanding common shares of the Filer by way of a plan of arrangement (the "Arrangement"); the Filer held a special meeting of its shareholders on May 8, 2009 to consider the Arrangement; the Arrangement was approved by the Filer's shareholders, the Filer will subsequently apply to the Supreme Court of British Columbia on or about May 11, 2009 for a final order approving the Arrangement; if all conditions respecting the Arrangement are fulfilled, Global will not be able to transfer its shares to the Filer after the effective date of the Arrangement.


Upon the Director being satisfied that to do so would not be prejudicial to the public interest;

It is the decision of the Director pursuant to section 9.1 of MI 61-101 that the Exemption Sought is granted.

"Michael Brown"
Assistant Manager, Corporate Finance
Ontario Securities Commission