Securities Law & Instruments

Headnote

Section 144 of the Securities Act (Ontario) -- application for partial revocation of a cease trade order -- issuer cease traded due to failure to file interim financial statements and audited annual financial statements with the Commission -- issuer applied for 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) and under the Family, Friends and Business Associates exemption (as such term is defined in National Instrument 45-106 Prospectus and Registration Requirements) resident in British Columbia -- issuer will use proceeds from private placement to prepare and file continuous disclosure documents and pay related fees -- partial revocation granted subject to conditions.

Statutes Cited

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 RED ORE GOLD INC.

ORDER (Section 144)

WHEREAS the securities of Red Ore Gold Inc. (the Filer) are subject to a temporary cease trade order made by the Director dated September 11, 2014 under paragraph 2 of subsection 127(1) and subsection 127(5) of the Act and a further cease trade order issued by the Director on September 23, 2014 pursuant to subsection 127(1) of the Act (together, the OSC CTO) directing that trading in the securities of the Filer cease until the OSC CTO is revoked;

AND WHEREAS the Filer has applied to the Ontario Securities Commission (the Commission) pursuant to section 144(1) of the Act for a partial revocation of the OSC CTO (the Application);

AND WHEREAS the Filer has represented to the Commission that:

1. The Filer was incorporated under the Business Corporations Act (British Columbia) on January 13, 2011.

2. The head office of the Filer is located at #206-2290 Marine Drive, West Vancouver, B.C. V7V 1K4.

3. The authorized capital of the Filer consists of an unlimited number of common shares of which 21,740,227 are issued and outstanding and an unlimited number of preference shares of which none are issued and outstanding.

4. The Filer is a reporting issuer under the securities legislation of the provinces of British Columbia, Alberta and Ontario.

5. The Filer's securities are not listed on any stock exchange or quotation system.

6. The OSC CTO was issued as a result of the Filer's failure to file its annual audited financial statements, annual management's discussion and analysis (MD&A), and certification of annual filings for its fiscal year ending April 30, 2014 (the Unfiled Documents);

7. The Unfiled Documents were not filed in a timely manner as a result of financial difficulties.

8. Subsequent to the failure to file the Unfiled Documents, the Filer also failed to file the following documents:

(a) annual audited financial statements for the year ended April 30, 2015;

(b) interim unaudited financial statements for the interim periods ended July 31, 2014, October 31, 2014, January 31, 2015, July 31, 2015, and October 31, 2015;

(c) MD&A relating to the financial statements referred to in paragraphs (a) and (b) above; and

(d) certificates required to be filed in respect of the financial statements referred to in paragraphs (a) and (b) above under National Instrument 52-109 Certification of Disclosure in Filers' Annual and Interim Filings.

(together with the Unfiled Documents, the Unfiled Continuous Disclosure).

9. The Filer is also subject to cease trade orders issued by the British Columbia Securities Commission on September 8, 2014 and the Alberta Securities Commission on December 9, 2014, for failure to file required filings under applicable securities laws (the Other CTOs). An application for partial revocation has been filed with the B.C. Securities Commission as principal regulator.

10. The Filer is seeking a partial revocation of the OSC CTO to be able to complete a private placement (the Placement) of up to 5,000,000 units at a price of $0.025 per unit for aggregate gross proceeds of $125,000. Each unit will be comprised of one common share and one share purchase warrant (a warrant), each warrant entitling the holder to purchase one additional common share for a period of two years from the date of issuance at a price of $0.033 per share.

11. The Filer intends to prepare and file the Unfiled Continuous Disclosure within a reasonable period of time following the completion of the Placement.

12. Other than the failure to file the Unfiled Continuous Disclosure, the Filer is not in default of any of the requirements of the Act or the rules and regulations made pursuant thereto. The Filer's SEDAR and SEDI profiles are up to date.

13. After the completion of the Placement, the Filer intends to file the Unfiled Continuous Disclosure and pay all outstanding fees. The Filer also intends to apply to the applicable securities regulators to have the OSC CTO and the Other CTOs fully revoked.

14. The Filer intends to allocate the proceeds from the Placement as follows:

Description

Cost

 

Fees and penalties for late filing of financial disclosures and expenses for the revocation of the cease trade order

$45,000

 

Costs associated with preparation and filing of outstanding continuous disclosure records, including audit fees

$50,000

 

Past due audit fees

$7,500

 

Outstanding transfer agent fees

$4,500

 

Working capital and general and administrative expenses

$18,000

 

Total

$125,000

15. The Filer reasonably believes that the Placement will be sufficient to bring its continuous disclosure obligations up to date and pay all related outstanding fees and provide it with sufficient working capital to advance its business.

16. As the Placement would involve a trade of securities and acts in furtherance of trades, the Placement cannot be completed without a partial revocation of the OSC CTO.

17. The Placement will be completed in accordance with all applicable laws.

18. Prior to the completion of the Placement, the Filer will:

(a) provide any subscriber to the Placement with:

(i) a copy of the OSC CTO;

(ii) a copy of the partial revocation order for which this Application has been made; and

(b) obtain from the subscriber a signed and dated acknowledgement which clearly states that all of the Filer's securities, including the securities issued in connection with the Placement, will remain subject to the OSC CTO and the Other CTOs, and that the issuance of a partial revocation order does not guarantee the issuance of a full revocation order in the future.

19. Upon issuance of this order, the Filer will issue a press release announcing the order and the intention to complete the Placement. Upon completion of the Placement, the Filer will issue a press release and file a material change report. As other material events transpire, the Filer will issue appropriate press releases and file material change reports as applicable.

AND UPON considering the application and the recommendations of staff of the Commission;

AND UPON the Director being satisfied that to do so would not be prejudicial to the public interest;

IT IS ORDERED, pursuant to s.144 of the Act, that the OSC CTO is partially revoked solely to permit trades in securities of the Filer (including for greater certainty, acts in furtherance of trades in securities of the Filer) that are necessary for and are in connection with the Placement, provided that:

(a) prior to the completion of the Placement, the Filer will:

(i) provide to each subscriber under the Placement a copy of the OSC CTO;

(ii) provide to each subscriber under the Placement a copy of this partial revocation order; and

(iii) obtain from each subscriber under the Placement a signed and dated acknowledgement, which clearly states that all of the Filer's securities, including the securities issued in connection with the Placement, will remain subject to the OSC CTO, and the Other CTOs, and that the issuance of a partial revocation order does not guarantee the issuance of a full revocation order in the future.

(b) The Filer will make available a copy of the written acknowledgement referred to in paragraph (a)(iii) to staff of the Commission on request; and

(c) This order will terminate on the earlier of the closing of the Placement and 60 days from the date hereof.

DATED this 11th day of March, 2016.

"Sonny Randhawa"
Manager,
Corporate Finance
Ontario Securities Commission