PPX Mining Corp.
Headnote
National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions -- section 144 of the Securities Act (Ontario) -- application for a partial revocation of a cease trade order -- issuer cease traded due to failure to file audited annual financial statements -- issuer has applied for a partial revocation of the cease trade order to permit the issuer to proceed with a private placement under prospectus exemptions -- issuer will use proceeds from private placement to prepare and file continuous disclosure documents and pay related fees -- partial revocation granted subject to conditions.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 127, 144.
National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions.
Citation: 2021 BCSECCOM 250
PPX MINING CORP.
PARTIAL REVOCATION ORDER Under the securities legislation of British Columbia and Ontario (the Legislation)
Background
¶ 1 PPX Mining Corp. (the Issuer) is subject to a failure-to-file cease trade order (the FFCTO) issued by the regulator or securities regulatory authority in each of British Columbia (the Principal Regulator) and Ontario (each a Decision Maker) on February 3, 2021.
¶ 2 The Issuer has applied to each of the Decision Makers for a partial revocation order of the FFCTO.
¶ 3 This order is the order of the Principal Regulator and evidences the decision of the Decision Maker in Ontario.
Interpretation
Terms defined in National Instrument 14-101 Definitions or in National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions have the same meaning if used in this order, unless otherwise defined.
Representations
¶ 4 This decision is based on the following facts represented by the Issuer:
a. The Issuer was incorporated under the Business Corporations Act (Alberta) on July 28, 1987.
b. The Issuer's head office is located in the province of British Columbia.
c. The Issuer is a reporting issuer in the provinces of British Columbia, Ontario, Alberta, Manitoba and Saskatchewan.
d. The Issuer's authorized share capital consists of an unlimited number of common shares without par value (the Common Shares). The Issuer currently has 501,415,848 Common Shares outstanding. The Issuer also has incentive stock options, share purchase warrants and convertible debentures outstanding. Other than as disclosed herein, the Issuer has no other outstanding securities (including debt securities).
e. The Common Shares are listed for trading on the TSX Venture Exchange (the Exchange) and the Lima Stock Exchange with the trading symbol "PPX". Pursuant to the FFCTO, the Common Shares have been suspended from trading on the Exchange. The Common Shares have also been suspended from trading on the Lima Stock Exchange.
f. The FFCTO was issued as a result of the Issuer's failure to file the following documents by January 28, 2021:
(i) annual audited financial statements for the year ended September 30, 2020;
(ii) annual management's discussion and analysis for the year ended September 30, 2020; and
(iii) certification of the annual filings for the year ended September 30, 2020
(collectively, the Annual Filings).
g. The Issuer was unable to prepare and file the Annual Filings by January 28, 2021 due in part to logistical challenges related to the COVID-19 pandemic in the 2020 calendar year.
h. Subsequent to the failure to file the Annual Filings, the Issuer also failed to file the following continuous disclosure documents (collectively, the Interim Filings, together with the Annual Filings, the Required Filings) since the Issuer is unable to file the Interim Filings before it files the Annual Filings:
(i) interim financial statements for the periods ended December 31, 2020 and March 31, 2021;
(ii) interim management's discussion and analysis for the periods ended December 31, 2020 and March 31, 2021; and
(iii) certification of the interim filings for the periods ended December 31, 2020 and March 31, 2021.
i. Other than the Issuer's failure to file the Required Filings, as set out in paragraphs (f) and (h) above, the Issuer is not in default of any requirements under the Legislation.
j. The Issuer's SEDAR and SEDI profiles are up to date.
k. On November 20, 2020, the Issuer announced a non-brokered private placement (the Private Placement) of up to 8,501,876 Common Shares to subscribers (the Subscribers) at a purchase price of $0.06 per Share to raise aggregate gross proceeds to the Issuer of up to $510,112.56. The Issuer is seeking a partial revocation of the FFCTO in order to complete $438,452.52 (7,307,542 Common Shares) of the Private Placement. The Private Placement has been conditionally approved by the Exchange and will be completed in accordance with all applicable securities laws.
l. The Private Placement will take place in British Columbia, Peru and Texas, USA.
m. In connection therewith, the Issuer will pay a cash finder's fee of $26,307.16 to certain finders, all of whom are not Non-Arm's Length Parties (as defined by the Exchange's policies). The Issuer will also pay a finder's fee of 146,151 Common Shares to a finder (the Finder) residing in Texas, USA and who is not a Non-Arm's Length Party.
n. As the Issuer is a junior mineral exploration company, it has historically relied upon the issuance of securities to fund its expenditures. The Issuer seeks to conduct the Private Placement to enable it to raise the funds necessary to prepare and file the Annual Filings and provide it with sufficient working capital in order to continue its operations until it can apply for a full revocation of the FFCTO.
o. For each distribution made in respect of the Private Placement, the Issuer will comply with the accredited investor exemption contained in section 2.3 of National Instrument 45-106 Prospectus Exemptions.
p. The Issuer intends to prepare and file the Required Filings and pay all outstanding fees within a reasonable period of time following the completion of the Private Placement. The Issuer also intends to apply to the Decision Makers for a full revocation of the FFCTO.
q. The Issuer intends to allocate the proceeds from the Private Placement as follows:
Description
Cost
Accounting fees
$68,566.26
Audit fees for 2019 and 2020
$260,031.26
Legal fees
$59,013.84
Filing fees and penalties
$7,300.00
Office expenses
$12,234.00
Transfer agent fees
$5,000.00
Finder's fees
$26,307.16
Total
$438,452.52
r. The Issuer reasonably believes that the proceeds from the Private 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 continue its business.
s. The Private Placement would involve a trade of securities and acts in furtherance of trades and cannot be completed without a partial revocation of the FFCTO.
t. Upon issuance of this order, the Issuer will issue a press release announcing this order and the intention to complete the Private Placement. As material events transpire, the Issuer may issue appropriate press releases and file material change reports as applicable.
Order
¶ 5 Each of the Decision Makers is satisfied that a partial revocation order of the FFCTO meets the test set out in the Legislation for the Decision Maker to make the decision.
¶ 6 The decision of the Decision Makers under the Legislation is that the FFCTO is partially revoked as it applies to the Issuer solely to permit the Private Placement, provided that prior to completing the Private Placement, the Issuer will:
a. provide each Subscriber receiving Common Shares under the Private Placement and the Finder with a copy of the FFCTO;
b. provide each Subscriber receiving Common Shares under the Private Placement and the Finder with a copy of this partial revocation order; and
c. obtain a signed and dated acknowledgement from each Subscriber receiving Common Shares under the Private Placement and the Finder that clearly states that the securities of the Issuer acquired by the Subscribers and the Finder under the Private Placement will remain subject to the FFCTO until a full revocation order is granted, and that a partial revocation of the FFCTO does not guarantee the issuance of a full revocation order in the future.