HeadnoteClause104(2)(c) - Issuer exempt from the issuer bid requirements ofPart XX in connection with the proposed acquisition and purchasefor cancellation of common shares of the issuer where the cancellationof the shares is consideration for the purchase of the issuer'shalf interest in a mining property - transaction between issuerand its majority shareholder - almost identical acquisition agreemententered into at arm's length between the majority shareholderand the owner of the remainder of the interest in the mining property- transaction between issuer and majority shareholder approvedby sole independent director of issuer and conditionally approvedby the Toronto Stock Exchange - transaction is related party transactionunder OSC Rule 62-501 but exempt from the valuation requirementon the basis that issuer is in serious financial difficulty -order conditional on approval of transaction by the majority ofthe minority shareholders of the issuer - order contains representationto the effect that majority shareholder did not have materialnon-public information when acquisition agreement entered into- full disclosure of transaction provided in the information circular.
StatutesCitedSecuritiesAct, R.S.O. 1990, c.S.5, as am., ss.95, 96, 97, 98, 100 and 104(2)(c).
INTHE MATTER OF
R.S.O.1990, C.S.5, AS AMENDED (the "Act")
INTHE MATTER OF
UPONthe application of Thundermin Resources Inc. ("Thundermin")to the Ontario Securities Commission (the "Commission") foran order of the Commission pursuant to clause 104(2)(c) of theAct exempting Thundermin from the issuer bid requirements setforth in sections 95, 96, 97, 98 and 100 of the Act and theregulations made thereunder (the "Issuer Bid Requirements")in connection with a proposed transaction by which Thunderminwill dispose of its interest in a mineral property in Newfoundland(the "Duck Pond Property") to Aur Resources Inc. ("Aur") inexchange for, inter alia, the common shares of Thundermin("Thundermin Shares") held by Aur;
ANDUPON considering the application and the recommendationof staff of the Commission;
ANDUPON Thundermin having represented to the Commissionas follows:
1.Thundermin is incorporated under the Business CorporationsAct (Ontario) and is a reporting issuer in British Columbia,Alberta, Saskatchewan, Manitoba, Ontario and Quebec. Thunderminis not in default under the Act.
2.The authorized capital of Thundermin consists of an unlimitednumber of Thundermin Shares and unlimited number of Class Ashares, issuable in series, of which, as of this date, thereare 39,589,613 Thundermin Shares and no Class A shares outstanding.Thundermin also has outstanding options and warrants permittingthe purchase of an additional 2,325,000 Thundermin Shares atprices ranging from $0.16 to $0.23 per Thundermin Share.
3.The Thundermin Shares are listed and posted for trading on theToronto Stock Exchange (the "TSE").
5.Aur beneficially owns 11,209,968 Thundermin Shares (the "SubjectShares"), which, as of this date, represents approximately 28%of the outstanding Thundermin Shares.
6.Queenston Mining Inc. ("Queenston") is incorporated under theCBCA and is a reporting issuer in Quebec, Ontario, Manitoba, Albertaand British Columbia.
7.The authorized capital of Queenston consists of unlimited numberof common shares (the "Queenston Shares") and unlimited numberof preferred shares of which, as of this date, 28,009,191 QueenstonShares and no preferred shares are outstanding.
8.As of this date, Thundermin beneficially owns approximately 11%of the outstanding Queenston Shares. As of this date, Queenstonbeneficially owns approximately 4% of the outstanding ThunderminShares.
9.Two of the members of Thundermin's six person board of directors(the "Thundermin Board") are related to Aur. Three other membersof the Thundermin Board are related to Queenston. John Heslop,the President and Chief Executive Officer of Thundermin, is thesole independent member of the Thundermin Board (the "IndependentMember").
10.Except as set out in paragraph 9 above, none of the members ofQueenston's board of directors (the "Queenston Board") are relatedto Thundermin or have been nominated by Thundermin. None of themembers of the Queenston Board are related to Aur or have beennominated by Aur.
11.Thundermin and Queenston each hold identical rights to acquirea 50% interest in the Duck Pond Property.
12.Thundermin and Aur have entered into an agreement dated December6, 2001 (the "Aur/Thundermin Agreement") pursuant to which Thunderminhas agreed to sell to Aur its right to acquire a 50% interestin the Duck Pond Property (the "Transaction"). The considerationpayable by Aur to Thundermin under the Aur/Thundermin Agreementconsists of, among other things, $2,100,000 in cash and the transferby Aur of the Subject Shares to Thundermin for cancellation. TheSubject Shares will be cancelled by Thundermin.
13.Queenston and Aur have entered into an agreement also dated December6, 2001 (the "Aur/Queenston Agreement") pursuant to which Queenstonhas agreed to sell to Aur its right to acquire a 50% interestin the Duck Pond Property. The aggregate consideration payableby Aur to Queenston under the Aur/Queenston Agreement is $3,000,000,payable in cash. All other elements of the consideration, otherthan the cancellation of the Subject Shares as provided for inthe Aur/Thundermin Agreement, are identical in both agreements.
14.The terms of the Transaction have been approved by the IndependentMember. The Independent Member has concluded that the Transactionis reasonable in the circumstances of Thundermin and in the bestinterests of Thundermin and the holders of Thundermin Shares (the"Thundermin Shareholders").
15.The completion of the Transaction is conditional upon TSE approvaland the approval, at a special meeting of Thundermin Shareholders(the "Special Meeting") to be held on or about March 7, 2002 forthe purpose of considering the Transaction, of Thundermin Shareholdersholding a majority of the Thundermin Shares other than the SubjectShares held by Aur, its affiliates and associates.
16.Thundermin did not, at the time the Aur/Thundermin Agreement wasentered into, and does not at this time, know of any materialnon-public information in respect of Thundermin, the ThunderminShares and the Duck Pond Property that has not been generallydisclosed. To the knowledge of Thundermin, after reasonable enquiry,Aur did not, at the time the Aur/Thundermin Agreement was enteredinto, and does not at this time, know of any material non-publicinformation in respect of Thundermin, the Thundermin Shares andthe Duck Pond Property that has not been generally disclosed.
17.Thundermin is indebted to Queenston in the principal amount of$1,500,000 and the completion of the Transaction is the only meanscurrently available to Thundermin by which it can repay such indebtedness.
18.The Aur/Queenston Agreement was negotiated at arm's length andestablishes a fair value of $3,000,000 for the right to acquirea 50% interest in the Duck Pond Property. Therefore, the Transactionattributes a value of $900,000 to the Subject Shares or approximately$0.08 per Thundermin Share. At the time the Transaction was enteredinto and announced, the Thundermin Shares were trading in a rangeof $0.09 to $0.095 per share.
19.The transfer by Aur of the Subject Shares to Thundermin for cancellationis an issuer bid for which no exemption is available from theIssuer Bid Requirements.
20.The Transaction is a "related party transaction" under CommissionRule 61-501 ("Rule 61-501"). The Thundermin Board and the IndependentMember have each determined that Thundermin is entitled to relyupon the valuation exemption in subsection 5.6(8) of Rule 61-501as Thundermin is in serious financial difficulty, the Transactionis designed to improve the financial position of Thundermin andthe terms of the Transaction are reasonable in the circumstancesof Thundermin.
21.The TSE has conditionally approved the Transaction.
22.The information circular for the Special Meeting (the "InformationCircular") will be sent to all Thundermin Shareholders and willinclude all relevant material information concerning Thunderminand Duck Pond Property that is known to Thundermin and Aur, whetheror not such information has been generally disclosed. The InformationCircular will also contain the facts and circumstances surroundingthe Transaction in sufficient detail to comply with the substantiveinformational requirements for issuer bids set out in Part XXof the Act.
ANDUPON the Commission being satisfied that to so orderwould not be prejudicial to the public interest.
ITIS ORDERED pursuant to clause 104(2)(c) of the Act thatThundermin is exempt from the Issuer Bid Requirements in connectionwith the Transaction.
"TheresaMcLeod" "Lorne Morphy"