Securities Law & Instruments

Headnote

Section 144 of the Securities Act (Ontario) -- application for a partial revocation of a cease trade order issued by the Commission -- issuer cease traded due to failure to file certain continuous disclosure documents required by Ontario securities law -- issuer has applied for a partial revocation of the cease trade order to permit the issuer to proceed with a private placement with accredited investors (as such term is defined in National Instrument 45-106 Prospectus and Registration Requirements) resident in Ontario 0- issuer will use proceeds from private placement to prepare and file continuous disclosure documents and pay related fees -- partial revocation granted subject to conditions.

Applicable Legislative Provisions

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

IN THE MATTER OF THE SECURITIES ACT, R.S.O. 1990, CHAPTER S.5, AS AMENDED (the Act) AND IN THE MATTER OF TANTALEX RESOURCES CORPORATION

ORDER (Section 144)

WHEREAS the securities of Tantalex Resources Corporation (the "Applicant") are subject to a temporary cease trade order made by the Director of the Ontario Securities Commission dated July 11, 2014 pursuant to paragraph 2 of subsection 127(1) and subsection 127(5) of the Act and a further cease trade order issued by the Director on July 23, 2014 pursuant to paragraph 2 of subsection 127(1) of the Act (together, the "Cease Trade Order") directing that trading in securities of the Applicant cease until further order by the Director;

AND WHEREAS an additional cease trade order was issued by the British Columbia Securities Commission on July 8, 2014 (the "B.C. Cease Trade Order");

AND WHEREAS notwithstanding the B.C. Cease Trade Order, the Applicant has applied only to the Ontario Securities Commission (the "Commission") pursuant to section 144 of the Act for a partial revocation of the Cease Trade Order;

AND WHEREAS the Applicant has represented to the Commission that:

1. The Applicant is a British Columbia corporation, incorporated under the Business Corporations Act (British Columbia) on September 28, 2009.

2. The Applicant's registered office is located at Royal Centre, 1055 West Georgia Street, Suite 1500, P.O. Box 11117, Vancouver, British Columbia, V6E 4N7.

3. The Applicant is a reporting issuer under the securities legislation (the "Legislation") of the provinces of Ontario, British Columbia and Alberta.

4. The Cease Trade Order and the B.C. Cease Trade Order were issued due to the failure of the Applicant to file its financial statements, management's discussion and analysis and certifications of the foregoing filings for the year ended February 28, 2014.

5. The Applicant is not currently subject to a cease trade order from the Alberta Securities Commission, however, the Applicant is currently in default in Alberta for failure to file the following:

(a) audited annual financial statements for the year ended February 28, 2014;

(b) management's discussion and analysis for the year ended February 28, 2014;

(c) certifications of the foregoing filings for the year ended February 28, 2014;

(d) interim financial statements for the period ended May 31, 2014;

(e) management's discussion and analysis for the period ended May 31, 2014; and

(f) certifications of the interim filings for the period ended May 31, 2014.

6. The Applicant is not, to its knowledge, in default of any of the requirements of the Act, or the rules and regulations made pursuant thereto, other than the following:

(a) The Applicant failed to file audited annual financial statements for the year ended February 28, 2014;

(b) The Applicant failed to file management's discussion and analysis for the year ended February 28, 2014;

(c) The Applicant failed to file certifications of the foregoing filings for the year ended February 28, 2014;

(d) The Applicant failed to file interim financial statements for the period ended May 31, 2014;

(e) The Applicant failed to file management's discussion and analysis for the period ended May 31, 2014;

(f) The Applicant failed to file certifications of the interim filings for the period ended May 31, 2014; and

(g) The Applicant failed to pay annual participation fees.

7. The Applicant has not previously been subject to a cease trade order of the Commission or in any other jurisdiction, other than the Cease Trade Order and the B.C. Cease Trade Order.

8. The Applicant's authorized capital consists of an unlimited number of common shares (the "Common Shares"), of which 40,714,996 Common Shares are issued and outstanding.

9. Other than (i) outstanding incentive stock options exercisable for an aggregate of 2,405,198 Common Shares, (ii) outstanding warrants to purchase an aggregate of 9,848,963 Common Shares, outstanding convertible debentures convertible into an aggregate of 4,500,000 Common Shares, (iii) 2,140,341 common shares pursuant to contractual arrangements, no Common Shares are reserved for issuance pursuant to outstanding convertible securities.

10. Prior to the date hereof, the Applicant has not remedied the deficiencies described in the Cease Trade Order as it does not have sufficient funds to do so.

11. The Applicant proposes to raise up to $85,000 by way of a limited private placement financing (the "Proposed Financing") in order to (i) raise sufficient funds to prepare and file the outstanding continuous disclosure documents and related filing fees to bring it into compliance with its obligations as a reporting issuer, and the associated fees of professional advisors; and (ii) pay outstanding accounts and fund continuing operations, as described more fully in representation 13 below. The Proposed Financing will be conducted on a prospectus exempt basis and will be limited to subscribers who are accredited investors (as such term is defined in National Instrument 45-106 Prospectus and Registration Exemptions).

12. The Applicant has undertaken to bring itself back into compliance with its continuous disclosure obligations by filing all outstanding continuous disclosure documents that are required to be filed in all jurisdictions and to pay all outstanding filing fees and participation fees owing within three (3) business days of the date of closing of the Proposed Financing.

13. Following closing of the Proposed Financing, the Applicant intends to use the proceeds from the Proposed Financing solely to permit the Applicant to satisfy certain outstanding debts, filing fees and other expenses as described below:

Description

Cost

 

(a)

the settlement of certain debt with its auditors to facilitate the release of the audit for the year ended February 28, 2014

$30,000

 

(b)

the services of legal counsel with regard to the Proposed Financing, the application for this Order and the final full revocation order and other miscellaneous costs and expenses of the foregoing

$20,000

 

(c)

payment of application fees for a full revocation application to the applicable regulators, including the Commission

$8,500

 

(d)

the settlement of certain debt with its transfer agent

$6,000

 

(e)

the payment of outstanding fees and participation fees owing to regulators, including the Commission

$16,000

 

(f)

miscellaneous working capital

$4,500

 

Total Financing Required

$85,000

14. Prior to the completion of the Proposed Financing, the Applicant will:

(a) provide each potential purchaser with a copy of the Cease Trade Order;

(b) provide each potential purchaser with a copy of the Order herein sought; and

(c) obtain and, upon receipt, provide to the Commission signed and dated acknowledgements from all investors in the Proposed Financing, which clearly states that the issuance of a partial revocation order does not guarantee the issuance of a full revocation order in the future and that all of the Applicant's securities, including the securities to be issued in connection with the Proposed Financing, will remain subject to the Cease Trade Order until it is revoked.

15. The Applicant believes that the proceeds from the Proposed Financing will be sufficient to bring its continuous disclosure obligations up to date and to pay all related outstanding fees. The Applicant will use the proceeds of the Proposed Financing first to pay for the costs associated with bringing its continuous disclosure record up to date. Any remaining amounts will be used to pay for other costs as outlined in representation 13 above.

16. The Applicant has applied for a partial revocation of the Cease Trade Order so as to permit the Applicant to proceed with the Proposed Financing as described in this Order. As the Proposed Financing will involve trades in securities of the Applicant (including, for greater certainty, acts in furtherance of trades in securities of the Applicant), the Proposed Financing cannot be completed without a variation of the Cease Trade Order.

17. The Applicant has also applied for a partial revocation of the B.C. Cease Trade Order so as to permit the Applicant to proceed with the Proposed Financing as described in this Order.

18. The Applicant is not considering, nor is it involved in any discussion relating to a reverse take-over, merger, amalgamation or other form of combination or transaction similar to any of the foregoing.

19. Following the filing of all outstanding continuous disclosure documents and the payment of all outstanding filing fees owing, the Applicant intends to make a further application to the Commission for a full revocation of the Cease Trade Order and also intends to make an application to the British Columbia Securities Commission for a full revocation of the B.C. Cease Trade Order.

20. The Common Shares of the Applicant are listed and posted for trading on the Canadian Securities Exchange ("CSE"), however, trading in such shares was halted on July 9, 2014 because of the Cease Trade Order and B.C. Cease Trade Order against the Applicant.

21. Other than on the CSE, the securities of the Applicant are not currently listed or quoted on any exchange or market in Canada or elsewhere.

AND WHEREAS considering the application and the recommendation of the staff of the Commission;

AND WHEREAS the Director being satisfied that to do so 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 partially revoked solely to permit the trades and acts in furtherance of trades that are necessary for and are in connection with the Proposed Financing and all other acts in furtherance of the Proposed Financing that may be considered to fall within the definition of "trade" within the meaning of the Act, provided that:

(a) prior to the completion of the Proposed Financing, investors in the Proposed Financing:

(i) receive a copy of the Cease Trade Order;

(ii) receive a copy of this Order; and

(iii) receive a written notice from the Applicant, and provide a signed and dated acknowledgement to the Applicant, clearly stating that all of the Applicant's securities, including the securities to be issued in connection with the Proposed Financing, will remain subject to the Cease Trade Order until it is revoked, and that the granting of this Order does not guarantee the issuance of a full revocation order in the future;

(b) the Applicant will provide the signed and dated written acknowledgments referred to in paragraph (a)(iii) above to staff of the Commission; and

(c) the Order will terminate on the earlier of the closing of the Proposed Financing and 60 days from the date hereof.

DATED at Toronto, Ontario on this 20th day of October, 2014.

"Sonny Randhawa"
Manager, Corporate Finance
Ontario Securities Commission