Fiddlehead Resources Corp.

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- exemption from the requirements of Paragraph 2.2(d)(ii) of National Instrument 44-101 Short Form Prospectus Distribution requiring an issuer to have current Annual Information Form in order to be eligible to file a short form prospectus.

Applicable Legislative Provisions

National Instrument 44-101 Short Form Prospectus Distributions, ss. 2.2(d)(ii), 8.1.

Citation: Re Fiddlehead Resources Corp., 2024 ABASC 200

December 16, 2024

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO AND ALBERTA (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF FIDDLEHEAD RESOURCES CORP. (the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (each a Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for an exemption from paragraph 2.2(d)(ii) of National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101), which sets out the qualification criteria for short form prospectus eligibility in respect of any prospectus filed by the Filer until the earlier of: (a) April 30, 2025; and (b) the date on which the Filer files its annual information form (AIF) for the year ended December 31, 2024 pursuant to National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) (collectively, the Exemption Sought).

Background

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for this application;

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of British Columbia, Saskatchewan, Manitoba, New ?Brunswick, Prince Edward Island, Nova Scotia, Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut (together with the Jurisdictions, the Provinces and Territories); and

(c) this decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in National Instrument 14-101 Definitions, MI 11-102, National Instrument 41-101 General Prospectus Requirements (NI 41-101), NI 44-101, National Instrument 44-102 Shelf Distributions (NI 44-102) and NI 51-102 have the same meanings if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

The Filer

1. The Filer is a corporation incorporated on June 24, 2011 under the Business Corporations Act (British Columbia) which was continued into Alberta under the Business Corporations Act (Alberta) on September 12, 2024.

2. The Filer's registered office, all of its material assets, and the office out of which it manages its operations are located in Alberta.

3. On May 28, 2024, the Filer entered into an asset sale agreement (the Acquisition Agreement) pursuant to which the Filer acquired (the Acquisition) certain oil and gas assets (the Acquired Assets) in Alberta from a senior Canadian producer (the Vendor).

4. On August 29, 2024, the Filer completed the Acquisition following which the Filer's principal business became the advancement of the Acquired Assets and the production of oil and gas within the Strachan area of southern Alberta.

5. The Filer is a reporting issuer in the Provinces of Alberta and British Columbia and is not in default of securities legislation in any of the provinces or territories.

6. The Filer's common shares (the Filer's Shares) currently trade on the facilities of the TSX Venture Exchange (TSXV) under the symbol "FHR".

7. The Filer's year end is December 31 and, accordingly, the Filer has not had its first year end since acquiring the Acquired Assets, which make up essentially all of its business.

Filer's Continuous Disclosure

8. In connection with the listing of the Filer's Shares on the TSXV, pursuant to Policy 2.3 Listing Procedures of the TSXV Corporate Finance Manual, the Filer filed a listing application with the TSXV dated August 29, 2024, as amended (the Listing Application).

9. The Listing Application was filed on SEDAR+ on August 29, 2024, with an amended version filed on August 30, 2024, and contains full, true and plain disclosure of all material facts related to the Filer and the Acquired Assets.

10. In accordance with Form 2B of the TSXV, the Listing Application contains the Filer's financial statements required pursuant to NI 41-101, as set forth in Form 41-101F1 Information Required in a Prospectus (Form 41-101F1).

11. Pursuant to section 2.2 of NI 44-102, an issuer is qualified to file a preliminary base shelf prospectus if, at the time of filing, the issuer is qualified under section 2.2 of NI 44-101 to file a prospectus in the form of a short form prospectus.

12. The Filer satisfies all of the qualification criteria set forth in section 2.2 of NI 44-101, but for the requirement to have a "current AIF", as such term is defined in NI 44-101.

13. The Filer is not required to file annual financial statements that include the Acquired Assets, which represent essentially all of the Filer's business, or an AIF pursuant to NI 51-102 until April 30, 2025. As a result, the Filer does not yet have a current AIF. Consequently, the Filer does not satisfy paragraph 2.2(d)(ii) of NI 44-101 and is therefore not eligible to file a short form prospectus.

14. Pursuant to paragraph 32.1(1)(b) and section 32.4 of Form 41-101F1, given that the Acquired Assets form the primary business of the Filer, the required financial statement disclosure for the Listing Application was the financial statements for the Acquired Assets for the two years before the date of the Listing Application.

15. The Filer relied on the exemption provided under subsection 32.9(1) of Form 41-101F1 to provide audited operating financial statements for the Acquired Assets in lieu of audited financial statements for the following reasons: (i) the Acquired Assets consist of interests in oil and gas properties in southern Alberta; (ii) the Filer acquired the Acquired Assets from the Vendor directly pursuant to the terms of the Acquisition Agreement and the acquisition of the Acquired Assets did not involve the acquisition by the Filer of the securities of another issuer; (iii) the Vendor was unable to provide financial statements in respect of the Acquired Assets at the time of the Acquisition because the financial statements for the Acquired Assets did not exist and it was impracticable to prepare carve-out financial statements because the Acquired Assets were integrated into other businesses of the Vendor and did not represent a separate reporting or operating segment of the Vendor; and (iv) the acquisition by the Filer of the Acquired Assets did not constitute a reverse takeover using the predecessor value method of accounting.

16. The Filer included the following financial statements in the Listing Application, which would be comparable to the disclosure required pursuant to section 2.2 of NI 44-101:

(a) the financial statements for the years ended December 31, 2022 and 2023;

(b) the interim condensed financial statements for the three months ended March 31, 2023 and 2024; and

(c) the operating financial statements for the Acquired Assets

(collectively, the Alternative Financial Statement Disclosure).

17. The disclosure in the Filer's Listing Application included substantively all of the disclosure that would have been included in a current AIF and included all of the financial statement disclosure required pursuant to NI 51-102 by way of the Alternative Financial Statement Disclosure.

18. The Filer is ineligible for the exemption for new reporting issuers under subsection 2.7(1) of NI 44-101 because it has not filed a long form prospectus.

19. The Filer is ineligible for the exemption for successor issuers under subsection 2.7(2) of NI 44-101 because of the transaction structure in the Acquisition Agreement.

20. The disclosure available to the public on the Filer's SEDAR+ profile consists of, in all material respects and based on the Exemption Sought, the disclosure that would have been included in a long form prospectus prepared in accordance with Form 41-101F1.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted, provided that the Filer includes, or incorporates by reference, in any applicable preliminary and final short form prospectus filed prior to the expiry of this decision:

(a) the Listing Application,

(b) the information required by section 10.2 of Form 51-102F2 Annual Information Form, and

(c) the Business Acquisition Report filed on November 12, 2024 in respect of the Acquired Assets.

This decision expires on the earlier of:

(a) the date on which the Filer files its annual financial statements and AIF for the financial year ended December 31, 2024; and

(b) April 30, 2025.

OSC File #: 2024/0585