Exemption Orders (Discretionary)
GMD RESOURCE CORP.
2001 BCSECCOM 424
IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c. 418
AND
IN THE MATTER OF GMD RESOURCE CORP.
Exemption Order Under Section 76
[para 1]
WHEREAS GMD Resource Corp. has applied to the Executive Director for an order under section 76 of the Securities Act, R.S.B.C. 1996, c. 418 that certain intended trades in securities of GMD are exempt from the requirements of section 61 of the Act;
[para 2]
AND WHEREAS GMD has represented to the Executive Director that:
1. GMD was incorporated pursuant to the laws of British Columbia, is a reporting issuer under the Act and is not in default of any requirements of the Act or the SecuritiesRules, B.C. Reg.194/97;
2. the authorized capital of GMD consists of 100,000,000 common shares of which 23,328,075 are issued and outstanding;
3. the common shares of GMD are listed and posted for trading on the Canadian Venture Exchange Inc. ("CDNX") and GMD is a Tier 2 issuer on CDNX;
4. GMD is an electronic filer under National Instrument 13-101 System for Electronic Document Analysis and Retrieval;
5. GMD beneficially owns certain mining claims in the Northwest Territories (collectively, the “Royce Group Property”);
6. GMD has entered into an Option/Joint Venture Agreement dated June 15, 1999 (the “Agreement”) with De Beers Canada Exploration Inc. ("De Beers"); under the terms of the Agreement, De Beers can earn a 51% interest in the Royce Group Property at the end of stage 4 of the exploration program by expending $14,500,000, if there is no mini-bulk sampling in stage 3, or $16,000,000 if there is mini-bulk sampling in stage 3; the Royce Group Property is registered in the name of De Beers as required under the Agreement;
7. De Beers is not a reporting issuer under the Act; De Beers is a wholly-owned subsidiary of De Beers Centenary AG, a South African public company whose securities are listed on the Johannesburg, London, Paris, Frankfurt and Swiss stock exchanges;
8. between May 1, 1999 to April 30, 2000 De Beers spent $1,722,261 on exploration and development of the Royce Group Property pursuant to the Agreement;
9. between May 1, 2000 to December 31, 2000 De Beers spent $996,970 on exploration and development of the Royce Group Property pursuant to the Agreement;
10. sections 142(2) and 143 of the Rules (the “Applicable Resale Rules”) provide that certain trades are deemed to be distributions unless, among other things, a 12 month hold period has elapsed from the relevant dates referred to in the Applicable Resale Rules;
11. BC Instrument 45-506 (“BCI 45-506”) reduces, from 12 months to four months, the hold periods under the Applicable Resale Rules, provided the issuer distributing the securities subject to the hold periods is a “qualifying issuer” under, and otherwise complies with the terms of, BCI 45-506;
12. GMD is not a “qualifying issuer” under BCI 45-506 because the consolidated audited financial statements of GMD for the year ended August 31, 2000 do not report expenditures of more than $100,000 on exploration and development as required under BCI 45-506;
13. if GMD rather than De Beers had incurred the exploration and development expenses referred to in paragraphs 8 and 9, GMD would be a qualifying issuer under BCI 45-506;
[para 3]
AND WHEREAS the Executive Director considers that to do so would not be prejudicial to the public interest;
[para 4]
IT IS ORDERED under section 76 of the Act, that a trade in securities of GMD subject to the Applicable Resale Rules is exempt from the requirements of section 61 of the Act, provided that:
1. GMD complies with the provisions of BCI 45-506, except as set out in paragraph 2 below;
2. paragraph 3(a)(ii) of BCI 45-506 may be satisfied by GMD certifying that it is a reporting issuer that has equity securities listed on a “recognized market”, as defined in Local Policy Statement 3-27, and that De Beers has spent more than $100,000 on exploration and development on the Royce Group Property pursuant to the Agreement during GMD’s most recently completed financial year;
3. four months have elapsed from the date the 12 month hold period commences under the Applicable Resale Rules;
4. if the seller is an insider of GMD, other than a director or officer of GMD, the seller has filed all records required to be filed under sections 87 and 90 of the Act;
5. if the seller is a director or officer of GMD, the seller has filed all records required to be filed under sections 87 and 90 of the Act and GMD has filed all records required to be filed under part 12 of the Act and Rules;
6. the trade is not a distribution from the holdings of a control person;
7. no unusual effort is made to prepare the market or to create a demand for the securities; and
8. no extraordinary commission or other consideration is paid in respect of the trade.
[para 5]
DATED April 19, 2001.
Derek E. Patterson
Manager