Securities Law & Instruments

Headnote

Application made under MRRS and MI 11-101 -- issuer's current annual information form filed June 29, 2005 -- issuer has been a reporting issuer in a jurisdiction for more than 12 months however, not for the 12 months preceding June 29, 2005 -- issuer exempt from short form prospectus eligibility requirement that it be a reporting issuer for 12 months prior to the filing of its most recent annual information form.

Applicable Rules

National Instrument 44-101 Short Form Prospectus Distributions, ss. 2.1, 2.2, 15.1.

Citation: TUSK Energy Corporation, 2005 ABASC 969

December 5, 2005

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

(THE "JURISDICTIONS")

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

TUSK ENERGY CORPORATION (THE "FILER")

 

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the "Decision Maker") in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the "Legislation") that the Filer be exempted from the eligibility requirements of section 2.1 of National Instrument 44-101 Short Form Prospectus Distributions for filing a prospectus to qualify the distribution of the Filer's common shares (the "Short Form Prospectus") which will be issued on exercise or deemed exercise of Special Warrants (as defined below) (the "Requested Relief").

Application of the Principal Regulator System

Under the Multilateral Instrument 11-101 Principal Regulator System ("MI 11-101") and the Mutual Reliance Review System for Exemptive Relief Applications;

(a) the Alberta Securities Commission is the principal regulator for the Filer;

(b) the Filer is relying on the exemption in Part 4 of MI 11-101 in British Columbia, Manitoba and Saskatchewan; and

(c) this MRRS decision document evidences the decision of each Decision Maker.

Interpretation

Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are defined in this decision.

Representations

The decision is based on the following facts by the Filer:

1. The Filer is a company incorporated under the Business Corporations Act (Alberta) on September 24, 2004 and is headquartered in Calgary, Alberta.

2. The Filer is engaged in the exploration for, and the acquisition, development and production of, oil and natural gas reserves primarily in the Provinces of Alberta, Saskatchewan and British Columbia.

3. The authorized capital of the Filer consists of an unlimited number of common shares (the "Common Shares") and an unlimited number of preferred shares issuable in series, of which, as of the date hereof, 35,030,371 Common Shares and no preferred shares are issued and outstanding.

4. On November 5, 2004, Common Shares of the Filer began trading and continue to be traded on the Toronto Stock Exchange under the symbol "TSK".

5. The Filer has been a reporting issuer in Alberta and Ontario since November 2, 2004.

6. The Filer's current market capitalization as at November 14, 2005 is approximately $150,630,595 given the closing price of the Common Shares on the Toronto Stock Exchange of $4.30.

7. On November 14, 2005, the Filer entered into an agreement with Orion Securities Inc. as lead underwriter of a syndicate of underwriters including Westwind Partners Inc., Canaccord Capital Corporation, Acumen Capital Partners, and Brant Securities Ltd. (the "Underwriters") pursuant to which the Underwriters proposed an underwritten private placement of special warrants in the amount of $24,551,250. The issue will comprise 3,100,000 class A special warrants at an issue price of $4.05 each and 2,285,000 class B special warrants to be issued on a flow-through basis at an issue price of $5.25 each (collectively the "Special Warrants").

8. The Filer has committed to qualify the distribution of the Common Shares which will be issued on exercise or deemed exercise of the special warrants by prospectus within 60 days of the closing of the private placement.

9. Section 2.1 of NI 44-101 prohibits an issuer from filing a short form prospectus unless the issuer is qualified under section 2.2, 2.3, 2.4, 2.5, 2.6, 2.7 or 2.8 of NI 44-101.

10. Subparagraphs 2.2(1)(a)(i) and (ii) of NI 44-101 require that the issuer have been a reporting issuer in a local jurisdiction for the 12 calendar months preceding the date of the filing of its most recent AIF as one condition to being able to file a prospectus in the form of a short form prospectus.

11. The Filer's fiscal year end is March 31.

12. The Filer is required to file an AIF under National Instrument 51-102 Continuous Disclosure Obligations ("NI 51-102") on or before the 90th day after March 31. The Filer filed its AIF on June 29, 2005.

13. The Filer does not meet the Eligibility Criteria as it has not been a reporting issuer in the local jurisdiction for the 12 calendar months preceding the date of the filing of its most recent AIF.

14. Absent relief, the Filer would be required to re-file its 2005 AIF in order to qualify to file a prospectus in the form of short form prospectus under section 2.2 of NI 44-101.

15. The Filer is not currently in default under the securities legislation in any of the Jurisdictions.

Decision

The Decision Makers being satisfied that each has jurisdiction to make this decision and that the test under the Legislation has been met, the Requested Relief is granted provided that the Filer:

(a) is an electronic filer under NI 13-101;

(b) satisfied the requirements of section 2.2 of NI 44-101, other than subparagraph 1;

(c) is, and throughout the year immediately preceding the date of the filing of the preliminary Short Form Prospectus, a reporting issuer in at least one Jurisdiction; and

(d) has filed with the securities regulatory authority in each jurisdiction in which it is a reporting issuer all periodic and timely disclosure documents that it is required to have filed in that jurisdiction:

(i) under applicable securities legislation;

(ii) pursuant to an order issued by the securities regulatory authority; or

(iii) pursuant to an undertaking to the securities regulatory authority

during the year preceding the date of the filing of the preliminary Short Form Prospectus under Canadian securities legislation of any jurisdiction in which it has been a reporting issuer.

"Mavis Legg", CA
Manager, Corporate Finance