Lomiko Metals Inc. et al.

Headnote

National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions - Exemption from registration requirement - A purchaser under an equity line of credit wants relief from the requirement to register as an underwriter - The purchaser will not solicit any offers to purchase the securities it acquires from the issuer and will resell any securities through an exchange, using a registered dealer unaffiliated with the issuer or the purchaser.

Exemption from prospectus delivery requirement - A purchaser under an equity line of credit wants relief from the requirement to deliver a prospectus - The issuer will file a supplement to its base shelf prospectus describing the terms of the equity purchase agreement - The issuer will issue a news release upon entering into the equity purchase agreement and file the agreement on SEDAR - For each drawdown under the agreement, the issuer will issue a news release indicating that the base shelf prospectus and relevant prospectus supplement have been filed and will specify where and how purchasers may obtain a copy.

Exemption from short form prospectus form requirements - An issuer wants relief from the requirement to include in the prospectus a statement of purchasers' statutory rights in the prescribed form - The issuer is distributing securities to purchasers on the TSX Venture Exchange through a purchaser under an equity line of credit - The purchasers on the Exchange will have all statutory rights except those rights triggered by delivery of the prospectus - The issuer will provide an amended statement of rights in the prospectus so that the prospectus properly describes applicable rights and purchasers are not misled.

Exemption from shelf prospectus form requirements - An issuer wants relief from the requirement to include certain disclosure in the base shelf prospectus - The issuer is distributing securities to purchasers on the TSX Venture Exchange through a purchaser under an equity line of credit - The purchasers on the Exchange will have all statutory rights except those rights triggered by delivery of the prospectus - The issuer will include in its base shelf prospectus all disclosure required under section 5.5 of National Instrument 44-102 but will eliminate or modify statements that specifically refer to delivery of the prospectus

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25, 71(1), 71(2), 74, 147.

National Instrument 44-101, s. 8.1.

Form 44-101F1, s. 20.

National Instrument 44-102, s. 5.5(2), 5.5(3), 11.1.

April 5, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

BRITISH COLUMBIA AND ONTARIO

(THE JURISDICTIONS)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

LOMIKO METALS INC. (LOMIKO), DUTCHESS

OPPORTUNITY CAYMAN FUND, LTD (DUTCHESS)

AND DUTCHESS CAPITAL MANAGEMENT II, LC

(THE MANAGER AND, TOGETHER WITH LOMIKO

AND DUTCHESS, THE FILERS)

DECISION

Background

1 The securities regulatory authority or regulator in each of the Jurisdictions (Decision Makers) has received an application (the Application) from the Filers for a decision under the securities legislation of the Jurisdictions (the Legislation) that:

(a) the following disclosure requirements under the Legislation (the Prospectus Disclosure Requirements) do not fully apply to Lomiko in connection with the Distribution (as defined below):

(i) the statement in the Prospectus Supplement (as defined below) respecting statutory rights of withdrawal and rescission required by item 20 of Form 44-101F1 of National Instrument 44-101 - Short Form Prospectus Distributions (NI 44-101); and

(ii) the statements required by Subsections 5.5(2) and (3) of National Instrument 44-102 - Shelf Distributions (NI 44-102);

(b) the prohibition from acting as a dealer unless the person is registered as such (the Dealer Registration Requirement) does not apply to Dutchess and the Manager in connection with the Distribution; and

(c) the requirement that a dealer send a copy of the Prospectus (as defined below) to a subscriber or purchaser in the context of a distribution (the Prospectus Delivery Requirement) does not apply to Dutchess and the Manager or the dealer(s) through whom Dutchess distributes the Shares (as defined below) and, as a result, rights of withdrawal or rights of rescission, price revision, or damages for non-delivery of the Prospectus do not apply in connection with the Distribution;

(collectively, the Exemptive Relief Sought).

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

(a) the British Columbia Securities Commission is the principal regulator for this application,

(b) the Filers will provide notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in all of the provinces and territories of Canada except for Quebec (collectively with British Columbia and Ontario, the Provinces), and

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

Interpretation

2 Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined in this decision.

Representations

3 This decision is based on the following facts represented by the Filers:

Lomiko

1. Lomiko is incorporated pursuant to the Business Corporations Act (British Columbia) and has its head office and registered office located at #439, 7231 - 120th Street, Delta BC V4C 6P5;

2. Lomiko is a junior mining and exploration corporation engaged in the acquisition, exploration and development of resource properties;

3. Lomiko is currently a reporting issuer under the securities legislation of each of the provinces of Alberta and British Columbia and is not in default of any requirements under the securities legislation in any jurisdiction in Canada;

4. Lomiko's authorized share capital consists of an unlimited number common shares (Shares), of which 46,768,445 Shares were outstanding as at March 23, 2011;

5. the Shares are listed for trading on the TSX Venture Exchange (the Exchange) under the symbol "LMR"; based on the closing price of $0.10 of the Shares on the Exchange on March 23, 2011, the current market capitalization of Lomiko is approximately $4,676,855;

6. upon the filing of an annual information form for the year ended July 31, 2010, Lomiko will be qualified to file a short form prospectus under section 2.2 of NI 44-101 and therefore will be qualified to file a base shelf prospectus under NI 44-102;

7. Lomiko intends to file with the securities regulators in all of the Provinces a base shelf prospectus (such base shelf prospectus and any amendments thereto is referred to as the Base Shelf Prospectus);

8. the statements in subsection 5.5(2) and (3) of NI 44-102 included in the Base Shelf Prospectus will be qualified by adding the following ", except in cases where an exemption from such delivery requirements has been obtained.";

Dutchess and the Manager

9. Dutchess is an investment fund established as a Cayman Islands exempt limited partnership and its head office is located at Codan Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands;

10. Dutchess is managed by the Manager, a limited liability corporation incorporated under the laws of Delaware, having its head office at 50 Commonwealth Ave, Suite 2, Boston, Massachusetts, USA; the Manager is an affiliate of Dutchess under applicable securities laws;

11. Dutchess is one of a number of investment funds managed by the Manager; the Manager is the investment manager for funds which have made direct investments in growth-stage and mature public companies which span a wide array of sectors using various investment structures such as equity line facilities, equity-linked notes and direct placements;

12. neither Dutchess nor the Manager is a reporting issuer or registered as a registered firm as defined in National Instrument 31-103 Registration Requirements and Exemptions in any jurisdiction of Canada;

13. Dutchess and the Manager are not in default of securities legislation in any jurisdiction of Canada;

Proposed Distribution Arrangement

14. Lomiko and Dutchess propose to enter into an equity line facility agreement (the Distribution Agreement), pursuant to which Dutchess will agree to subscribe for, and Lomiko will have the right but not the obligation to issue and sell, up to C$5 million of Shares (the Aggregate Commitment Amount) over a period of 36 months in a series of draw downs; Lomiko will be entitled to request, in respect of each drawdown, a maximum amount equal to the greater of: (i) $500,000; or (ii) 200% of the average daily volume of the Shares as traded on the Exchange, multiplied by the average of the three daily closing prices immediately preceding the date of such put, subject to the Aggregate Commitment Amount;

15. the Distribution Agreement will provide Lomiko with the ability to raise capital as needed from time to time; Dutchess regularly engages in such transactions; Dutchess will, in most cases, finance its commitment to subscribe for Shares on a drawdown through short-sales or resales out of existing holdings of Lomiko's securities;

16. Lomiko will have the sole ability to determine the timing and the amount of each drawdown, subject to certain conditions, including a maximum investment amount per drawdown and the Aggregate Commitment Amount;

17. the subscription price per Share and therefore the number of Shares to be issued to Dutchess for each drawdown will be calculated based on a predetermined percentage discount from the lowest daily volume-weighted average price per Share on the Exchange over a period of five consecutive trading days following a drawdown notice sent by Lomiko (the Drawdown Pricing Period); specifically, the Shares will be issued at a subscription price equal to the lowest daily volume-weighted average price per Share on the Exchange during the Drawdown Pricing Period multiplied by 95%; Lomiko may fix in such drawdown notice a minimum subscription price below which it will not issue any Shares; Lomiko and Dutchess can mutually agree in writing to amend the minimum price set forth in a drawdown notice during the applicable Drawdown Pricing Period; notwithstanding the foregoing, the subscription price per Share may not be lower than the volume-weighted average price per Share on the Exchange over a period of five consecutive trading days immediately preceding the applicable drawdown notice, less the permitted discount under the private placement rules contained in the Exchange Company Manual (the Floor Price);

18. subject to earlier settlement in certain circumstances, on the 7th trading day following the date of each drawdown notice (each, a Settlement Date), the amount of the drawdown will be paid by Dutchess in consideration for the relevant number of newly issued Shares;

19. the Distribution Agreement will provide that, at the time of each drawdown notice and at each Settlement Date, Lomiko will make a representation to Dutchess that the Base Shelf Prospectus, as supplemented (the Prospectus), contains full, true and plain disclosure of all material facts relating to Lomiko and the Shares being distributed; Lomiko would therefore be unable to issue, or decide to issue, Shares when it is in possession of undisclosed information that would constitute a material fact or a material change;

20. on or after each Settlement Date, Dutchess may seek to sell all or a portion of the Shares subscribed for under the drawdown;

21. during the term of the Distribution Agreement, Dutchess and its affiliates, associates or insiders, as a group, will not own at any time, directly or indirectly, Shares representing more than 9.9% of the issued and outstanding Shares;

22. Dutchess and its affiliates, associates or insiders, will not hold a "net short position" in Shares during the term of the Distribution Agreement; however, Dutchess may, after the receipt of a drawdown notice, seek to short-sell Shares to be subscribed for under the drawdown, or engage in hedging strategies, in order to reduce the economic risk associated with its commitment to subscribe for Shares, provided that:

(a) Dutchess complies with applicable rules of the Exchange and applicable securities regulations;

(b) Dutchess and its affiliates, associates or insiders, will not during the period between a drawdown notice and the corresponding Settlement Date, directly or indirectly, sell Shares or grant any right to purchase or acquire any right to dispose of, nor otherwise dispose for value of, any Shares or any securities convertible into or exchangeable for Shares, in an amount exceeding the number of Shares to be subscribed by Dutchess under the applicable drawdown; and

(c) notwithstanding the foregoing, Dutchess and its affiliates, associates or insiders, will not, directly or indirectly, sell Shares or grant any right to purchase or acquire any right to dispose of, nor otherwise dispose for value of, any Shares or any securities convertible into or exchangeable for Shares, between the time of delivery of a drawdown notice and the filing of the press release announcing the drawdown;

23. disclosure of the activities of Dutchess and its affiliates, associates or insiders, as well as the restrictions thereon, the whole as described in paragraph 22 above, will be included in the Base Shelf Prospectus. In addition, Lomiko will include in the Base Shelf Prospectus a risk factor that explains that Dutchess may engage in short-sales, resales or other hedging strategies to reduce or eliminate investment risks associated with a drawdown and that such risk factor will disclose the possibility that such transactions may result in significant dilution to existing shareholders and could have a significant effect on the price of the Shares;

24. no extraordinary commission or consideration will be paid by Dutchess or the Manager to a person or company in respect of the disposition of Shares by Dutchess to purchasers who purchase them from Dutchess through the dealer(s) engaged by Dutchess through the Exchange (the "Exchange Purchasers");

25. Dutchess and the Manager will also agree, in effecting any disposition of Shares, not to engage in any sales, marketing or solicitation activities of the type undertaken by dealers in the context of a public offering; more specifically, each of Dutchess and the Manager will not (a) advertise or otherwise hold itself out as a dealer, (b) purchase or sell securities as principal from or to customers, (c) carry a dealer inventory in securities, (d) quote a market in securities, (e) extend, or arrange for the extension of credit, in connection with transactions of securities of Lomiko, (f) run a book of repurchase and reverse repurchase agreements, (g) use a carrying broker for securities transactions, (h) lend securities for customers, (i) guarantee contract performance or indemnify Lomiko for any loss or liability from the failure of the transaction to be successfully consummated, (j) participate in a selling group; (k) effect any disposition of Shares which would not be in compliance with Canadian or United States securities legislation, (l) provide investment advice or (m) issue or originate securities;

26. Dutchess and the Manager will not solicit offers to purchase Shares in any jurisdiction of Canada and will sell the Shares to Exchange Purchasers through one or more dealer(s) unaffiliated with Dutchess, the Manager and Lomiko;

The Prospectus Supplements

27. Lomiko intends to file with the securities regulator in all of the Provinces a prospectus supplement to the Base Shelf Prospectus (each, a Prospectus Supplement) within two business days after the Settlement Date for each drawdown under the Distribution Agreement;

28. the Prospectus Supplement will include (i) the number of Shares issued to Dutchess, (ii) the price per Share paid by Dutchess, (iii) the information required by NI 44-102, including the disclosure required by subsection 9.1(3) of NI 44-102, and (iv) the following statement:

Securities legislation in certain of the provinces of Canada provides purchasers with the right to withdraw from an agreement to purchase securities. This right may be exercised within two business days after receipt or deemed receipt of a prospectus and any amendment. In several of the provinces, the securities legislation further provides a purchaser with remedies for rescission or, in some jurisdictions, revisions of the price or damages if the prospectus and any amendment are not delivered to the purchaser, provided that the remedies for rescission, revisions of the price or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province. However, such rights and remedies will not be available to purchasers of common shares distributed under this prospectus because the prospectus will not be delivered to purchasers, as permitted under a decision document issued by the British Columbia Securities Commission on __________, 2011.

The securities legislation further provides a purchaser with remedies for rescission or, in some jurisdictions, revisions of the price or damages if the prospectus and any amendment contain a misrepresentation, provided that the remedies for rescission, revisions of the price or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province. Such remedies remain unaffected by the non-delivery of the prospectus, as permitted under the decision document referred to above.

The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province for the particulars of these rights or consult with a legal adviser.

(the Amended Statement of Rights);

29. the Base Shelf Prospectus, as supplemented by each Prospectus Supplement, will (a) qualify the distribution of Shares to Dutchess on the Settlement Date of the drawdown disclosed in the relevant Prospectus Supplement, and (b) qualify the distribution of Shares to Exchange Purchasers during the period that commences on the date of issuance of a drawdown notice to Dutchess and ends on the earlier of (i) the date on which the distribution of such Shares has ended or (ii) the 40th day following the Settlement Date (collectively, a Distribution);

30. the Prospectus Delivery Requirement is not workable in the context of the Distribution because the Exchange Purchasers will not be readily identifiable as the dealer(s) acting on behalf of Dutchess may combine the sell orders made under the Prospectus with other sell orders and the dealer(s) acting on behalf of the Exchange Purchasers may combine a number of purchase orders;

31. the Prospectus Supplement will contain an underwriter's certificate in the form set out in section 2.2 of Appendix B to NI 44-102, signed by Dutchess;

32. at least three business days prior to the filing of the first Prospectus Supplement filed in connection with a distribution pursuant to the equity line facility under the Distribution Agreement, Lomiko will provide for comment to the Decision Makers a draft of such Prospectus Supplement;

Press Releases / Continuous Disclosure

33. following the execution of the Distribution Agreement, Lomiko will:

(a) promptly issue and file a press release on SEDAR disclosing the material terms of the Distribution Agreement, including the Aggregate Commitment Amount; and

(b) within ten days after said execution:

(i) file a copy of the Distribution Agreement on SEDAR; and

(ii) file a material change report on SEDAR disclosing at a minimum the information required in subparagraph (i) above.

34. Lomiko will promptly issue and file a press release on SEDAR upon the issuance of each drawdown notice, regardless of the size of the drawdown, disclosing the aggregate amount of the drawdown, the maximum number of Shares to be issued, the minimum price per Share, if any, the Floor Price as well as the fact that the Base Shelf Prospectus is available on SEDAR and specifying how a copy of this document can be obtained;

35. Lomiko will promptly issue and file a press release on SEDAR upon amending the minimum price set forth in a drawdown notice disclosing the amended minimum price per Share and the maximum number of Shares to be issued;

36. Lomiko will:

(a) issue and file a press release on SEDAR on, or as soon as practicable after, the last day of the Drawdown Pricing Period, disclosing:

(i) the number of Shares issued to, and the price per Share paid by, Dutchess;

(ii) that the Base Shelf Prospectus and the relevant Prospectus Supplement will be available on SEDAR and specifying how a copy of these documents can be obtained; and

(iii) the Amended Statement of Rights; and

(b) file a material change report on SEDAR within ten days of the Settlement Date, if the relevant Distribution constitutes a material change under applicable securities legislation, disclosing at a minimum the information required in subparagraph (i) above;

37. Lomiko will also disclose in its financial statements and management's discussion and analysis filed on SEDAR under National Instrument 51-102 Continuous Disclosure Obligations, for each financial period, the number and price of Shares issued to Dutchess pursuant to the Distribution Agreement;

Deliveries upon Request

38. Lomiko will deliver to the Decision Makers and to the Exchange, upon request, a copy of each drawdown notice delivered by Lomiko to Dutchess under the Distribution Agreement;

39. Dutchess and the Manager will provide to the Decision Makers, upon request, full particulars of trading and hedging activities by Dutchess or the Manager (and, if required, trading and hedging activities by their respective affiliates, associates or insiders) in relation to securities of Lomiko during the term of the Distribution Agreement.

Decision

4 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 Exemptive Relief Sought is granted provided that:

(a) as it relates to the Prospectus Disclosure Requirement:

(i) Lomiko comply with the representations in paragraphs 8, 23, 28, 29, 33, 34, 35, 36 and 38; and

(ii) the number of Shares distributed by Lomiko under the Distribution Agreement does not exceed, in any 12 month period, 19.9% of the aggregate number of Shares outstanding calculated at the beginning of such period;

(b) as it relates to the Prospectus Delivery Requirement and the Dealer Registration Requirement, Dutchess and/or the Manager, as the case may be, comply with the representations in paragraph 22, 24, 25, 26, 31 and 39; and

(c) this decision will terminate 25 months after the date of the Base Shelf Prospectus.