Exemption Orders (Discretionary)
NORTHERN CROWN MINES LTD.
IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c. 418
AND
IN THE MATTER OF NORTHERN CROWN MINES LTD.
Exemption Order Under Sections 48 and 76
WHEREAS Northern Crown Mines Ltd. has applied to the Executive Director for an order under sections 48 and 76 of the Securities Act, R.S.B.C. 1996, c. 418 that intended trades in common shares and share purchase warrants of Northern Crown are exempt from the requirements of sections 34(1)(a) and 61 of the Act;
- AND WHEREAS Northern Crown has represented to the Executive Director that:
1. Northern Crown is a company incorporated under the laws of British Columbia, is a reporting issuer under the Act and is not in default of any requirement of the Act or the Securities Rules, R.B.C. Reg. 194/97;
2. the authorized capital of Northern Crown consists of 100,000,000 common shares of which 18,263,141 common shares were issued and outstanding as of February 26, 1999;
3. the common shares of Northern Crown are listed and posted for trading on The Toronto Stock Exchange (the “TSE”);
4. Minera Sierra Pacifico S.A. de C.V. (“Pacifico”) and Minera Tatemas S.A. de C.V. (“Tatemas” and, with Pacifico, the “Mexican Companies”) are corporations incorporated under the laws of Mexico and are not reporting issuers under the Act;
5. pursuant to a lump sum purchase agreement (the “Lump Sum Agreement”) between the Mexican Companies and Enrique Gaitan Enriquez (“Gaitan Enriquez”) and Minera Campanillas, S.A. de C.V., a company controlled by Gaitan Enriquez (collectively, the ‘Gaitan Vendors’), Tatemas has agreed to purchase, and the Gaitan Vendors have agreed to sell, certain mining lots located in the State of Sinaloa, Mexico (the “Gaitan Property”) in consideration for the sum of $1,600,000 U.S. payable by the Mexican Companies to the Gaitan Vendors in installments commencing in 1997 and ending in 2000;
6. Gaitan Enriquez holds 10% of the voting shares of Tatemas and Northern Crown holds the remaining 90%;
7. all of the issued and outstanding shares of Pacifico are owned by Northern Crown;
8. the Mexican Companies and the Gaitan Vendors subsequently agreed (the “Gaitan Amendment”) to amend the terms of the Lump Sum Agreement to decrease the yearly installment payments and to extend the time in which the $1,600,000 U.S. must be paid to December 31, 2001, in consideration for which the Mexican Companies agreed to pay $25,000 U.S. and deliver 200,000 common shares of Northern Crown to Enrique Gaitan Maumejean (“Gaitan”), the son of Gaitan Enriquez, at the direction of the Gaitan Vendors, which shares will be distributed by Northern Crown to Gaitan;
9. Northern Crown is party to a purchase agreement (the “Purchase Agreement”) with Klaus Genssler, Genssler Investment, LLC, Douglas D. Foote, Eleanor A. Foote and Synergex Group Limited Partnership (collectively, the “Mariposa Vendors”), pursuant to which Northern Crown agreed to cause Pacifico to enter into an agreement with Compania Minera Mariposa, S.A. de C.V., a company controlled by the Mariposa Vendors, pursuant to which Pacifico agreed to purchase, and the Mariposa Vendors caused Compania Mariposa to agree to sell, certain mining lots located in the State of Sinaloa Mexico (the “Mariposa Property”) to Pacifico in consideration for, among other things, the payment of the aggregate amount of $890,000 U.S. by Northern Crown to the Mariposa Vendors in installments commencing on the execution of the Purchase Agreement and ending on June 30, 2001;
10. Northern Crown and the Mariposa Vendors subsequently agreed to amend (together with the Gaitan Amendment, the “Amendment Agreements”) the terms of the Purchase Agreement to extend the time during which the purchase price must be paid to June 30, 2004, in consideration for a $20,000 U.S. rescheduling fee, the increase of the purchase price to $965,000 U.S.,the issuance of 200,000 common shares by Northern Crown to the Mariposa Vendors and the issuance of non-transferable share purchase warrants by Northern Crown to the Mariposa Vendors (the “Warrants”) which entitle the Mariposa Venders to purchase up to an additional 100,000 common shares, in the capital stock of Northern Crown at a price of $0.04, $0.05, $0.06, $0.07, $0.08, and $0.09 per common share annually until December 20, 2003, at which time the Warrants expire;
11. Minera Campanillas, SA. de CV. and Compania Minera Mariposa, SA. de CV. are corporations incorporated under the laws of Mexico and are not reporting issuers under the Act;
12. Gaitan Enriquez and Gaitan are residents of Mexico;
13. the Gaitan Vendors and the Mariposa Vendors (together, the “Vendors”) are dealing at arm's length to Northern Crown;
14. the terms of the Lump Sum Agreement and Purchase Agreement, as amended, by the Amendment Agreements and the number of shares and Warrants to be issued by Northern Crown to the Vendors were determined through arm's length negotiations;
15. the Gaitan Property is the primary asset of Tatemas and the exploration and development of theGaitan Property is the principal business of Tatemas;
16. the Mariposa Property is one of the primary assets of Pacifico and the exploration and development of the Mariposa Property, together with other Mexican mining properties, is the principalbusiness of Pacifico;
17. under Mexican mining law, only Mexican individuals, companies incorporated under Mexican law and “ejidos” (a form of communal farm) and agrarian communities may hold mining lots or concessions in Mexico (the “Ownership Restrictions”);
18. as a result of the Ownership Restrictions, Northern Crown is limited under the laws of Mexico to holding aninterest in the Gaitan Property and the Mariposa Property through the Mexican Companies;
19. the TSE has conditionally approved the listing of the 200,000 common shares issuable to the Gaitan Vendors, and has approved the listing of the aggregate 300,000 common share issuable to the Mariposa Vendors, including the up to 100,000 common shares issuable upon the exercise of the Warrants; and
20. but for the fact that the interests in the Gaitan and Mariposa Properties are being acquired by the Mexican Companies rather than by Northern Crown, the intended trades of the common shares by Northern Crown would be exempt from the requirements of sections 34(1)(a) and 61 of the Act under the registration and prospectus exemptions contained in sections 45(2)(21) and 74(2)(18) of the Act;
- AND WHEREAS the Executive Director considers that to do so would not be prejudicial to the public interest;
- IT IS ORDERED:
1. under sections 48 and 76 of the Act that the intended trades by Northern Crown of Northern Crown common shares to Gaitan and the intended trades by Northern Crown of Northern Crown common shares and the Warrants to the Mariposa Vendors pursuant to the Amendment Agreements are exempt from the requirements of sections 34(1)(a) and 61 of the Act provided that Northern Crown:
(a) provides a copy of this order to Gaitan and the Mariposa Vendors prior to the trades; and
(b) files a Form 20 on or before the 10th day after each trade; and
- (a) a 12 month period has elapsed from the date of issue of the common shares or Warrants, as the case may be;
(b) if the seller is an insider of Northern Crown, other than a director or senior officer of Northern Crown, the seller has filed all records required to be filed under sections 87 and 90 of the Act;
(c) if the seller is a director or senior officer of Northern Crown, the seller has filed all records required to be filed under sections 87 and 90 of the Act and Northern Crown has tiled all records required to be filed under part 12 of the Act and Rules;
(d) the trade is not a distribution from the holdings of a control person;
(e) no unusual effort is made to prepare the market or to create a demand for the securities; and
(f) no extraordinary commission or other consideration is paid in respect of tie trade.
DATED at Vancouver, British Columbia, on May 18, 1999.
Margaret Sheehy
Director