Securities Law & Instruments

Headnote

National Instrument 51-102 Continuous Disclosure Obligations, s. 13.1- application for relief from the requirement in item 14.2 of Form 51-102F5 Information Circular to include three years of audited annual financial statements for a business being acquired in the Filer's information circular - issuer represented that it was impracticable to prepare 2003 audited consolidated finanancial statements for business being acquired because management and personnel required to complete the audit are no longer employed by parent company of business being acquired - issuer represented that 2003 audited consolidated financial statements would not contain material or meaningful additional information to Filer's shareholders - information circular will include all other disclosure for the business being acquired prescribed by Form 41-501F1 of Ontario Securities Commission Rule 41-501 General Prospectus Requirements, as required by item 14.2 of Form 51-102F5.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations, s. 13.1.

Form 51-102F5 Information Circular, item 14.2.

Ontario Securities Commission Rule 41-501 General Prospectus Requirements, Part 4.

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, c. S.5, AS AMENDED

AND

NATIONAL INSTRUMENT 51-102

CONTINUOUS DISCLOSURE OBLIGATIONS

(NI 51-102)

AND

IN THE MATTER OF

CGA MINING LIMITED (the Filer)

 

EXEMPTION

(Section 13.1 of NI 51-102)

UPON the Director having received an application from the Filer for an order under Section 13.1 of NI 51-102 exempting the Filer from the requirements of Item 14.2 of Form 51-102F5 Information Circular (Form 51-102F5) to include in an information circular to be sent to the Filer's shareholders to approve the proposed acquisition of all of the issued and outstanding shares of Philippine Gold Limited (PGO) from Thistle Mining Inc. (Thistle) three years of audited financial statements in respect of PGO pursuant to the requirements of Part 4 of OSC Rule 41-501 (the Financial Statement Requirements);

AND UPON considering the application and the recommendation of staff of the Ontario Securities Commission;

AND UPON the Filer having made the following representations to the Director:

1. The Filer is a corporation incorporated under the Australian Corporations Act 2001. The registered and head office of the Filer is located at Level 5, the BGC Centre 28 the Esplanade, Perth, West Australia 6000.

2. The common shares of the Filer are listed and posted for trading on the Toronto Stock Exchange (the TSX) under the trading symbol "CGA" and on the Australian Stock Exchange under the trading symbol "CGX".

3. The Filer is a reporting issuer in the province of Ontario and is not in default of any of its obligations as a reporting issuer under Ontario securities law.

4. Thistle is a company incorporated in the Yukon and has its shares listed on the Alternative Investment Market (AIM) of the London Stock Exchange.

5. Thistle is a reporting issuer in the provinces of Ontario, British Columbia and Alberta.

6. Thistle currently holds 100% of the issued and outstanding shares of PGO, a private company incorporated in the United Kingdom (the PGO Shares). PGO in turn has interests in two companies incorporated in the Republic of the Philippines.

7. The Filer and Thistle are proposing an acquisition (the Acquisition) whereby the Filer will acquire from Thistle all of the PGO Shares, 40% of the issued and outstanding shares of a company (Newco) that will be incorporated under the laws of the Republic of the Philippines prior to completion of the Acquisition, intercompany loans in the aggregate amount of US$66.1 million and an option to acquire the remaining 60% of the issued and outstanding shares of Newco, in exchange for a combination of cash and common shares of the Filer in the aggregate amount of US$51 million.

8. The Acquisition will result in the Filer acquiring a 64% indirect interest in the Masbate Gold Project, located in the Republic of the Philippines (the Masbate Project), through a number of corporate structures. The Acquisition will be undertaken pursuant to the terms of a purchase agreement between the Filer, Central Asia Gold Limited, a wholly-owned Bahamian subsidiary of the Filer, and Thistle dated January 31, 2007.

9. The acquisition of the PGO Shares will constitute a "significant acquisition" for the Filer under NI 51-102.

10. The Filer is required to obtain shareholder approval for the Acquisition under section 611(c) of the TSX Company Manual. In order to obtain such approval, the Filer must prepare and send an information circular in Form 51-102F5 (the Circular) to all of its shareholders in connection with a meeting of shareholders.

11. Pursuant to Section 14.2 of the Form 51-102F5, because the Acquisition will be a "significant acquisition" for the Filer, the Filer is required to include in the Circular the disclosure (including financial statements) in respect of PGO prescribed by Form 41-501F1, being the form of prospectus that PGO would be eligible to use for a distribution of securities in Ontario (the Prescribed Disclosure).

12. The Prescribed Disclosure in respect of PGO includes the financial information contained in the Financial Statement Requirements.

13. Thistle has advised the Filer that it was previously exempt by virtue of Section 228 of the U.K. Companies Act 1985 from the requirement to prepare group accounts and, accordingly, the audited consolidated financial statements for PGO for the year ended December 31, 2003 do not exist since they are not prepared on a consolidated basis with PGO's subsidiaries.

14. It is impracticable to prepare audited consolidated financial statements of PGO for the year ended December 31, 2003 because the management and staff of Thistle who were involved with PGO for the 2003 financial year and who are necessary for the completion of the audit of the consolidated financial statements are no longer employees of Thistle. Thistle has advised the Filer that its Edinburgh and Toronto offices were restructured in 2004 and 2005 following financial difficulties of Thistle's South African operations, which resulted in numerous senior staff being terminated.

15. Thistle has advised the Filer that PGO's 2003 audited consolidated financial statements, if prepared, would not contain any material additional information in respect of PGO or its business and operations, and such financial statements would provide no meaningful additional information to CGA's shareholders, principally because:

(a) PGO's financial statements for the past three fiscal years are not complex as PGO has nominal revenue and has not been an operating business; and

(b) PGO's business is not subject to cyclical changes and its expenditures have been principally attributable to expenses incurred in connection with the Masbate Project, including professional fees for the preparation of a feasibility study and supporting testwork, contractor services for exploration work and employee and contractor salaries at the Makati Manila head office and Masbate site.

16. In lieu of the Financial Statement Requirements, the Filer will include the following financial statements in the Circular for PGO: (a) audited consolidated annual financial statements for each of the financial years ended December 31, 2004 and December 31, 2005, being the two most recently completed financial years of PGO ended more than 90 days before the date of the Circular; and (b) unaudited consolidated interim statements for the nine month period ended September 30 ,2006, being the period ended more than 60 days before the date of the Circular (collectively, the Alternative Financial Disclosure).

17. Except for the Alternative Financial Disclosure in lieu of the Financial Statement Requirements, the Circular will include the Prescribed Disclosure for PGO.

18. The Circular will contain full, true and plain disclosure with respect to PGO.

19. The Filer is current with all of its continuous disclosure obligations under NI 51-102.

AND UPON the Commission being of the opinion that to do so would not be prejudicial to the public interest;

IT IS THE DECISION of the Director that for the purposes of the Circular the Financial Statement Requirements do not apply to the Filer, provided that the Filer includes the Alternative Financial Disclosure in the Circular.

DATED at Toronto this 12th day of February, 2007.

"Erez Blumberger"
Manager, Corporate Finance