Nord Pacific Limited - s. 144

Headnote

Section 144 - partial revocation of cease trade order to permit certain trades pursuant to a plan of arrangement.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 127 and 144.

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

NORD PACIFIC LIMITED

ORDER

(Section 144)

WHEREAS the securities of Nord (the "Issuer") are subject to a temporary order of the Director dated July 23, 2001 under paragraph 127(1)2 and subsection 127(5) of the Act and extended by a further order of the Director dated August 3, 2001 (collectively referred to as the "Cease Trade Order") directing that trading in the securities of the Issuer cease;

AND WHEREAS the Issuer has applied to the Ontario Securities Commission (the "Commission") for an order pursuant to section 144 of the Act for a partial revocation of the Cease Trade Order;

AND WHEREAS Nord has represented to the Commission that:

1. Nord

1.1 Nord was continued into the Province of New Brunswick, effective September 30, 1998 and is a reporting issuer in the Provinces of Alberta, British Columbia, New Brunswick and Ontario.

1.2 The principal office of Nord is located at 2727 San Pedro NE, Suite 116, Albuquerque, New Mexico U.S.A. 87110.

1.3 Nord is authorized to issue an unlimited number of common shares (the "Common Shares") of which 37,172,320 Common Shares are issued and outstanding as of May 11, 2004.

1.4 As of May 11, 2004, the books of Nord indicate that registered holders resident in the United States hold approximately 17,250,677 Common Shares representing 46% (86% prior to the issuance of Common Shares to Allied on conversion of the Convertible Notes described herein) of the issued and outstanding Common Shares.

1.5 As of March 2, 2004, the books of Nord indicate that one registered holder resident in Canada holds 1,354,013 Common Shares, representing 3.6% of the issued and outstanding Common Shares. This shareholder is Teck Cominco Limited, a large mining and refining company. Searches of beneficial holders indicate that as of March 2, 2004, in addition to the one registered holder of 1,354,013 Common Shares, there were 50 beneficial shareholders of Nord resident in Canada, representing approximately 0.4% of the issued and outstanding Common Shares. Based on searches of beneficial holders conducted March 2, 2004, searches of registered holders conducted May 5, 2004 and the current number of outstanding Common Shares, of the approximately 1,122 shareholders of Nord, the representation in Canada is as follows:

Province	Number of Beneficial Holders (percentage of total holders)			Number of Common Shares held (percentage of Common Shares)
Alberta	14	(1.25%)		26,500	(0.71%)
British Columbia	19	(1.69%)		67,325	(0.18%)
Ontario	16	(1.43%)		44,050	(0.12%)
Yukon	1	(0.09%)		300	(0.00%)
Total excluding registered holder	50	(4.46%)		138,175	(0.37%)
Registered holder (resident in British Columbia)	1	(0.09%)		1,354,013	(3.64%)
Total (including registered holder)	51	(4.55%)		1,492,188	(4.01%)

1.6 The Common Shares were previously listed and posted for trading on the Toronto Stock Exchange (the "TSX"), but were delisted on July 26, 2002 after a one-year suspension due to Nord failing to meet the minimum listing requirements of the TSX.

1.7 In the United States, the Common Shares trade only on the over-the-counter "Pink Sheets" market. No securities of Nord are traded on a marketplace (as defined in National Instrument 21-101 Marketplace Operation) in Canada. On May 11, 2004, the closing price of the Common Shares on the "Pink Sheets" was US$0.12.

1.8 The Cease Trade Order was issued due to the Issuer's failure to file annual audited financial statements under the Act for the year ended December 31, 2000 and interim financial statements for the first quarter of 2001.

1.9 On August 17, 2001, the Alberta Securities Commission issued a cease trade order against the Issuer and on February 19, 2002, the British Columbia Securities Commission issued a cease trade order against the Issuer.

1.10 On May 5, 2004, Nord filed its annual audited financial statements for the year ended December 31, 2003 on SEDAR (the 2003 Annual Financial Statements) and sent the statements to the Nord shareholders. Prior to this time, Nord had not filed with the Commission, or sent to its shareholders, annual audited financial statements for the years ended December 31, 2000, 2001 and 2002 or the first, second and third quarter interim financial statements for the years 2001, 2002 and 2003, due to a lack of funds necessary to engage the auditors.

2. Allied

2.1 Allied Gold Limited ("Allied") is a corporation incorporated on May 26, 2003 under the Corporations Act 2001 (Western Australia).

2.2 The principal office of Allied is located in Welshpool, Western Australia.

2.3 Allied is the equivalent of a reporting issuer in Western Australia and the issued and outstanding ordinary shares of Allied (the "Ordinary Shares") are listed on the Australian Stock Exchange under the symbol "ALD".

2.4 The authorized capital of Allied consists of an unlimited number of Ordinary Shares of which 28,500,000 Ordinary Shares were issued and outstanding as of March 2, 2004. Immediately after the Acquisition (defined below) and assuming all the shareholders of Nord exchange their Common Shares for Ordinary Shares, it is expected that there will be 52,170,157 Ordinary Shares issued and outstanding.

3. Acquisition

3.1 Allied and Nord have agreed that Allied will acquire all of the Common Shares of Nord in accordance with an arrangement agreement dated December 20, 2003 (the "Acquisition"). In connection with the Acquisition, each issued and outstanding Common Share (other than Common Shares held by Allied) will be exchanged for $0.20 Australian to be satisfied through the issuance of one Ordinary Share. In addition, each option and other right to acquire Common Shares (the "Options") will be exchanged for Ordinary Shares by determining the value of such Options and paying such amount through the issuance of Ordinary Shares at a rate of $0.20 Australian per Ordinary Share. All of the Options will be cancelled pursuant to the Acquisition. The Options that have economic value will be cancelled in exchange for Ordinary Shares at a rate of one Ordinary Share per $0.20 Australian that such Options are "in the money". The other Options which have no economic value will be cancelled with no payment therefore. If completed, the Acquisition will result in all former shareholders of Nord holding Ordinary Shares of Allied. One holder of $280,000 Australian of subordinated indebtedness of Nord will exchange such indebtedness for Ordinary Shares at a rate of $0.20 Australian of such indebtedness for one Ordinary Share.

3.2 Allied has also agreed to provide a credit facility of up to US$5.4 million (US$2.4 million committed and a further US$3.0 million at the option of Allied) (the "Credit Facility") to Nord. The purpose of the Credit Facility is to provide interim financing to Nord, to pay for operating expenses and to fully satisfy capital commitments of Nord relating to its mineral property joint venture obligations to prevent Nord from having its interest therein diluted by failure to meet cash calls. A portion of the financing is to be used by Nord for the purpose of paying auditors to audit financial statements for the years ended December 31, 2002 and December 31, 2003, local counsel and advisors to complete the 2003 Nord 10-KSB and to apply for certain exemptions from Canadian securities laws in order to reasonably facilitate the Acquisition. Nord is entitled to draw down on the Credit Facility by issuing convertible notes to Allied (the "Convertible Notes"). The Convertible Notes bear interest at LIBOR plus 2%, mature on December 31, 2005 and are convertible, at the option of Allied, into Common Shares at staged rates varying from US$0.05 to US$0.25 per Common Share.

3.3 Currently, Nord has drawn down US$1,075,792 for these purposes and issued Series A Convertible Notes to Allied (the "Series A Notes") in the aggregate amount of US$600,000 which are convertible into Common Shares at a rate of $0.05 per share and Series B Convertible Notes (the "Series B Notes") in the aggregate amount of US$475,792 which are convertible into Common Shares at a rate of $0.10 per share. As of May 11, 2004, Allied had exercised its option to convert all of the Series A Notes and $443,365 Series B Notes into an aggregate of 16,433,650 Common Shares.

3.4 The Acquisition will be subject to the approval of the holders of Common Shares and Options of Nord and the holders of Ordinary Shares of Allied. Nord and Allied will hold securityholder meetings to obtain such approvals (collectively, the "Securityholder Meetings").

3.5 The Acquisition will be effected by Nord obtaining court approval for a plan of arrangement under the Business Corporations Act (New Brunswick).

3.6 The board of directors of Nord has unanimously determined that the Acquisition is in the best interests of Nord and to recommend the Acquisition to securityholders and to recommend that securityholders of Nord vote in favor of the Acquisition.

3.7 The holders of Common Shares and Options of Nord and the holders of Ordinary Shares of Allied will, in connection with the Securityholder Meetings, be provided with a joint information circular containing prospectus level disclosure on Allied and including sufficient information for securityholders to form a reasoned judgment on the Acquisition (the "Joint Information Circular"). The Joint Information Circular will also include the disclosure contained in the 2003 Nord 10-KSB, including the 2003 Annual Financial Statements of Nord.

3.8 Nord Resources Corporation, each of the directors of Nord and certain other shareholders of Nord comprising an aggregate of 43% of the outstanding Common Shares at the time (the "Principal Shareholders"), entered into a voting support agreement with Allied pursuant to which the Principal Shareholders have undertaken to vote or cause to be voted all their shares of Nord in favour of the Acquisition.

3.9 Following the successful completion of the Acquisition, all of the outstanding securities of Nord will be beneficially held directly or indirectly by Allied. Allied will as soon as practicable apply and cause Nord to apply to cease to be a reporting issuer in all applicable jurisdictions in Canada.

AND WHEREAS the Commission's power to make the Order has been assigned to the Director;

AND UPON the Director being satisfied that to grant this Order would not be prejudicial to the public interest;

IT IS ORDERED, pursuant to section 144 of the Act, that the Cease Trade Order be and is hereby varied solely to permit:

(a) the transfer of Common Shares and Options to Allied;

(b) the cancellation of Options;

(c) the transfer of $280,000 Australian subordinated indebtedness of Nord to Allied; and

(d) all other acts in furtherance of the Acquisition that may be "trades" under the Act.

August 13, 2004.

"Iva Vranic"