Mutual Reliance Review System for Exemptive Relief Applications - relief fromrequirement to include 3 years audited financial statements in take-over-bid circularprovided 2 years are included and subject to certain other conditions.
Applicable Ontario Statutory Provisions
Securities Act, R.S.O. 1990, c.S.5, as am., s. 104.
Regulation made under the Securities Act, R.R.O. 1990, Reg. 1015, as am., 53(6).
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
THISTLE MINING INC.
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (the "DecisionMakers") in each of the provinces of Ontario, Alberta, British Columbia, Manitoba, PrinceEdward Island, Saskatchewan, Quebec, Nova Scotia, Newfoundland and New Brunswick(the "Jurisdictions") has received an application from Thistle Mining Inc. ("Thistle") for adecision pursuant to the securities legislation, rules, orders and policies of theJurisdictions (the "Legislation") that Thistle be relieved from the requirement to includeaudited financial statements for the years ended December 31, 1997 and prior thereto ina share exchange takeover bid circular (the "Circular") to be mailed to shareholders ofEurasia Gold Corp. ("Eurasia") in connection with Thistle's proposed acquisition of theissued and outstanding common shares of Eurasia that it does not already own, directlyor indirectly (the "Bid");
AND WHEREAS pursuant to the Mutual Reliance Review System for ExemptiveRelief Applications (the "System"), the Ontario Securities Commission is the principalregulator for this application;
AND WHEREAS Thistle has represented to the Decision Makers that:
1. Thistle was incorporated under the laws of the Yukon Territory on April 26, 1996under the name "Ourominas Minerals Inc.".
2. Thistle's principal place of business is located at 10 Dundas Street, Edinburgh,Midlothian, Scotland. Thistle maintains an office in Ontario which is located at 65Queen Street West, Suite 1210, Toronto Ontario, M5H 2M5. Thistle's registeredoffice is located at 2093 Second Avenue, Whitehorse, Yukon V1A 1B5.
3. Thistle is a reporting issuer in Ontario, British Columbia and Alberta and itscommon shares are listed on the Toronto Stock Exchange.
4. The authorized share capital of Thistle consists of an unlimited number of commonshares ("Thistle Shares") and an unlimited number of Class A Preferred Shares("Class A Preferred Shares") issuable in series. As at the date hereof, 61,142,265Thistle Shares were issued and outstanding. No Class A Preferred Shares areissued and outstanding and there is no present intention to issue any such shares.
5. Since inception until mid-1998, Ourominas Minerals Inc. was engaged in thebusiness of acquiring, exploring and, if warranted, developing junior miningproperties primarily in Brazil. By early 1998 it was apparent that none of theexploration properties were going to be successful and Ourominas became a"shell". Pursuant to the approval of its shareholders in May 1998, the board ofdirectors was almost entirely reconstituted and the business was radically changedto that of a mining finance house for purposes of raising financing and investingsame in late stage development projects and production opportunities in globalmining, primarily in gold and precious metals (the "Reverse Takeover"). On January29, 1999, Thistle completed a prospectus financing to allow it to commence its newbusiness.
6. On January 29, 1999, Thistle acquired 60,000,000 common shares and 60,000,000common share purchase warrants representing a 50.7% interest in Eurasia GoldCorp. ("Eurasia") on a non-diluted basis. The common shares and common sharepurchase warrants in Eurasia were subsequently transferred to Thistle's wholly-owned French subsidiary, Compagnie Internationale de Developpement Minier SA("CIDEM"). Eurasia is a Yukon company whose head office is located in Calgary,Alberta and its shares are listed on the Canadian Venture Exchange. Eurasia'sprincipal assets are 100% interests in the Central Mukur and Myaly mines inKazakhstan. At the Central Mukur project, Eurasia has 3.44 million tonnes grading1.84 grams per tonne containing 203,500 ounces of gold in the C1 And C2 categoryof the Russian reserve estimate system. At the Myaly project, Eurasia has 0.58million tonnes grading 2.22 grams per tonne containing 41,400 ounces in the C1and C2 category for a total of 244,900 ounces of gold. Gold production from theseproperties for 1999 totalled 5,100 ounces at an average cost of $US 171 per ounceversus a net realized gold sale price of $US 339 per ounce. The cash flow fromoperations has been re-invested to increase the mining, leaching and gold recoverycapacities at both mine sites. Commercial production from these properties wasrealized effective January 1, 2000.
7. In June 1999, Thistle acquired all the issued and outstanding share capital ofCIDEM, a minerals group based in Paris, France. Upon completion of the CIDEMacquisition, Thistle acquired: (i) $34 million in cash; (ii) a 78% stake in Mines de laLucette SA, an antimony processor based in France; (iii) a 51% equity stake, whichhas since been reorganized into a 100% equity stake, in Semstone, a leadingsupplier of pumice stone from two Turkish quarries; and (iv) other minor mineralrelated investments outside of Canada.
8. Pursuant to a Memorandum of Understanding dated March 9, 2000 with the boardof Philippine Gold Plc ("PGO"), Thistle agreed to acquire, by way of a shareexchange under s.425 of the Companies Act 1985 of the United Kingdom, all of theissued shares of PGO (the "PGO Acquisition"). The PGO Acquisition, which issubject to court and shareholder approval, will result in PGO shareholders receiving1 Thistle Share for every 5.5 PGO shares they hold. PGO presently has on issue90.08 million ordinary shares and 19.29 million additional PGO shares will beissued upon the conversion of a convertible loan note. PGO is based in the UnitedKingdom and its shares are listed on the Alternative Investment Market of theLondon Stock Exchange ("AIM").
9. In March of 2000, Thistle also announced that it has commenced negotiations withthe independent directors of Eurasia to acquire the outstanding shares in Eurasiathat it does not own. As at June 7, 2000, the registered Canadian shareholders ofEurasia (the "Eurasia Shareholders") were resident in the provinces of Alberta,British Columbia, Manitoba, Ontario, Quebec and Prince Edward Island, 79.69% ofall Eurasia Shareholders being residents of Ontario including the 60,000,000shares of Eurasia held indirectly by Thistle. Thistle intends to file and send toEurasia shareholders a formal insider take-over bid circular in these provinces inconnection with the Circular and Bid by no later than June 30, 2000. The followingis a breakdown of Eurasia Shareholders by province as at June 7, 2000:
Province Number of Registered Holders Percentage of Analysed Holdings
Alberta 25 2.4
British Columbia 3 0.3
Manitoba 3 0.12
Ontario 4 79.69
Prince Edward Island 1 0.42
Quebec 1 0.00
TOTAL 37 82.93
10. Pursuant to a previous MRRS Application in Ontario, Alberta and British Columbia,Thistle has requested relief from the requirements of National Policy 27 - CanadianGenerally Accepted Accounting Principles, section 14 of the Ontario SecuritiesCommission's Corporate Finance Accountants Practice Manual (the "Manual") andthe similar requirements under such securities laws and policies of British Columbiaand Alberta to comply with generally accepted accounting principles of Canada("Canadian GAAP") in respect of its financial statements on condition that Thistleshall comply with the requirements of section 14 of the Manual, and applicablesecurities laws and policies of British Columbia and Alberta, as they relate tocompliance with foreign GAAP in financial statements and subject to certain otherconditions. In light of this application, the audited financial statements of Thistle forthe years ended December 31, 1999 and 1998, the unaudited interim financialstatements of Thistle for the first quarters ended March 31, 2000 and 1999 and theunaudited pro forma statement of combined net assets of PGO and Thistle as atDecember 31, 1999 to be included in the Circular have been prepared incompliance with generally accepted accounting principles of the United Kingdom("UK GAAP") except note 30 to the annual statements which is prepared inaccordance with French GAAP.
11. On completion of the Reverse Takeover on January 29, 1999 and subsequentthereto, Thistle substantially changed the nature of its business from that of amining exploration company in Brazil to that of a mining finance company. As such,financial disclosure for Thistle for the years ended December 31, 1997 and priorthereto regarding Thistle's business as an exploration company is not relevant tothe operations of Thistle as a mining finance company and would be misleading toEurasia Shareholders subject to the Bid.
12. The Circular will contain audited financial statements for year ends December 31,1999 and 1998 of Thistle, unaudited interim financial statements for the firstquarters ended March 31, 2000 and 1999 of Thistle as well as an unaudited proforma statement of combined net assets of PGO and Thistle as at December 31,1999, all prepared in compliance with UK GAAP except note 30 to the annualstatements which is prepared in accordance with French GAAP. The notes to the1999 financial statements will include a reconciliation with Canadian GAAP. Thesefinancial statements constitute adequate financial disclosure to portray historicoperations of Thistle to enable a Eurasia Shareholder to make an informed decisionas to whether it should tender its shares under the Bid and that the non-inclusionof financial disclosure for prior periods in the Circular will not materially detract fromthe portrayal of such historical operations.
13. To include financial disclosure for Thistle for the years ended prior to December31, 1998 and the interim periods ended prior to March 31, 1999 which wereprepared in compliance with Canadian GAAP would be misleading to EurasiaShareholders in light of the fact that the audited financial statements for year endsDecember 31, 1999 and 1998 of Thistle, unaudited interim financial statements forthe first quarters ended March 31, 2000 and 1999 as well as an unaudited proforma statement of combined net assets of PGO and Thistle as at December 31,1999 to be included in the Circular have been prepared in accordance with UKGAAP except note 30 to the annual statements which is prepared in accordancewith French GAAP.
14. The audited financial statements of Thistle for the year ended December 31, 1997and the unaudited interim financial statements of Thistle for the first quarter endedMarch 31, 1998, all of which have been prepared in accordance with CanadianGAAP and are available on SEDAR.
AND WHEREAS pursuant to the System this MRRS Decision Document evidencesthe decision of the Decision Makers (collectively, the "Decision");
AND WHEREAS the Decision Makers are of the opinion that it would not beprejudicial to the public interest to make the Decision;
The Decision of the Decision Makers pursuant to the Legislation is that the requirementcontained in the Legislation to include audited financial statements for the years endedDecember 31, 1997 and prior thereto in the Circular to be mailed to Eurasia Shareholdersin connection with the Bid shall not apply to Thistle provided that the Circular contain:
(i) audited financial statements of Thistle for the year ended December 31,1999 prepared in accordance with UK GAAP and reconciled to CanadianGAAP except for note 30 which is prepared in accordance with FrenchGAAP and is unaudited and unreconciled;
(ii) audited financial statements of Thistle for the year ended December 31,1998 prepared in accordance with UK GAAP except for note 30 which isprepared in accordance with French GAAP and which is unaudited andunreconciled;
(iii) unaudited interim financial statements for the first quarters ended March 31,2000 and 1999 of Thistle prepared in accordance with UK GAAP; and
(iv) unaudited pro forma statement of combined net assets of PGO and Thistleas at December 31, 1999 prepared in accordance with UK GAAP.
July 14th, 2000.
"J. A. Geller" "Howard I. Wetston"