Securities Law & Instruments


Section 147 - Exemption from provisions of section 13.2 of OSC Policy 5.2 where priceper share at which debt is to be converted into shares is below $0.20 per share

Statutes Cited

Securities Act, R.S.O. 1990, c.S.5, as amended, ss. 6 and 147

Rules Cited

In the Matter of Certain Trades in Securities of Junior Natural Resource Issuers (1997)20 O.S.C.B. 1218 (March 1, 1997).

R.S.O. 1990, CHAPTER S.5. AS AMENDED (the "Act")



(Section 147)

UPON the application (the "Application") of Pan American Resources Inc. (the"Issuer") to the Ontario Securities Commission (the "Commission") for an order pursuantto section 147 of the Act exempting the Issuer from the provisions of section 13.2 ofOntario Securities Commission Policy Statement No. 5.2 ("OSC Policy 5.2") now deemedto be a rule pursuant to the rule entitled In the Matter of Certain Trades in Securities ofJunior Resource Issuers (1997) 1218 20 OSCB as amended, (the "Junior ResourceIssuers Rule"), which restricts the price per share at which any debt may be converted toshares;

AND UPON the Issuer having represented to the Commission that:

1. The Issuer was amalgamated under the laws of the Province of Ontario on January16, 1996.

2. The Issuer is a reporting issuer under the Act and the Securities Act (Quebec) andis not on the list of defaulting reporting issuers maintained pursuant to the Act.

3. The common shares in the capital of the Issuer (the "Pan American Shares") arequoted on the Montreal Exchange.

4. The price of the Pan American Shares, using a 10 day weighted average price asof August 23, 2000, applied without a discount, is $0.07.

5. In connection with the debt settlement agreements to be entered into between theIssuer and certain creditors pursuant to which the Issuer would issue shares insettlement of certain debts (the "Debt Settlement"), the Issuer proposes to issue5,306,666 Pan American Shares to certain creditors as follows:

(i) 2,333,334 Pan American Shares at a price of $0.15 per share, in satisfactionof accounts from a non-arms length party (the "Insider") in the amount ofapproximately $350,000; and

(ii) 2,973,332 Pan American Shares at a price of $0.15 per share, in satisfactionof trade accounts payable to various arm's-length creditors (the "Creditors")in the amount of approximately $446,000.

6. Section 13.2 of OSC Policy 5.2 would require that the Pan American Shares beissued at $0.20 per share.

7. The Insider and Creditors have expressed their willingness to receive 5,306,666Pan American Shares at $0.15 per share in satisfaction of such accounts payable.

8. The Issuer will disclose in the agreements with the Insider and Creditors the factthat this Order has been issued and that, but for this Order, OSC Policy 5.2 wouldhave required that such Pan American Shares be issued at $0.20 per share.

9. The Debt Settlement will otherwise comply with the provisions of Article 13 of OSCPolicy 5.2 and the Junior Resource Issuers Rule.

AND UPON considering the Application and the recommendation of the staff of theCommission;

AND UPON the Director being satisfied that to do so would not be prejudicial to thepublic interest;

IT IS ORDERED, pursuant to section 147 of the Act, that the Issuer is exempt fromthe provisions of section 13.2 of OSC Policy 5.2 and the Junior Resource Issuers Rule inrespect of the issuance of Pan American Shares to the Insider and to the Creditors inrelation to the Debt Settlement.

September 5th, 2000.

"Margo Paul"