Aardvark Capital Corp.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- An issuer (a capital pool company) proposes to complete a reverse take-over transaction with a target company -- The proposed transaction, if completed, will serve as the issuer's qualifying transaction under Policy 2.4 Capital Pool Companies of the TSX Venture Exchange (TSXV) -- The issuer applied for relief from the requirements in section 4.10(2)(a)(ii) of National Instrument 51-102 Continuous Disclosure Obligations(NI 51-102) and Item 5.2 of Form 51-102F3 Material Change Report to file, in respect of the proposed transaction, historical audited financial statements of a predecessor entity that ire not material to the issuer. Relief granted, subject to conditions.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations, s. 4.10(2)(a)(ii).

Form 51-102F3 Material Change Report, Item 5.2.

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF AARDVARK CAPITAL CORP. (the Filer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application (the Application) from the Filer for a decision under the securities legislation of the Jurisdiction (the Legislation) for an exemption from the requirements of subparagraph 4.10(2)(a)(ii) of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) and item 5.2 of Form 51-102F3 Material Change Report (Form 51-102F3) to file all of the financial statements of 2766604 Ontario Ltd. (the Target) (being, the reverse takeover acquirer) that would be required to be included in the form of prospectus that the reverse takeover acquirer was eligible to use prior to the reverse takeover for a distribution of securities in the Jurisdictions (as defined below) (the Requested Relief).

Under National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions (NP 11-203) (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this Application; and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta, British Columbia, New Brunswick, and Nova Scotia (collectively with Ontario, the Jurisdictions).

Interpretation

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

Representations

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

1. The Filer was incorporated under the Business Corporations Act (Ontario) on January 29, 2021. The Filer is a capital pool company whose common shares are listed on the TSX Venture Exchange (the TSXV). As a result, the principal business of the Filer to date has been to identify and evaluate businesses and assets with a view to completing a "Qualifying Transaction", as that term is defined in Policy 2.4 -- Capital Pool Companies of the Corporate Finance Manual of the TSXV (TSXV Policy 2.4).

2. The head office of the Filer is located at Suite 400 -- 77 King Street West, Toronto, Ontario, M5K 0A1.

3. The Filer is a reporting issuer in the Jurisdictions, and to the knowledge of the Filer, it is not in default of any of its obligations as a reporting issuer under the securities laws of the Jurisdictions.

4. The common shares of the Filer are listed and posted for trading on the TSXV under the trading symbol "ACCA.P". The common shares of the Filer have been halted since July 16, 2021, and are intended to remain halted until the completion of the Proposed Transaction (as defined below).

5. The Target is a private company incorporated under the Business Corporations Act (Ontario) on July 16, 2020, with its head and registered offices located at Suite 200 -- 1100 Russell Street, Thunder Bay, Ontario, P7B 5N2.

6. The Target is not a reporting issuer in any province or territory of Canada and no securities of the Target are listed or posted for trading on any stock exchange.

7. The Target's principal business activity to date has been the entering into of the Option Agreement (as defined below) in respect of the FAD Property (as defined below) and conducting certain exploration work thereon since mid-2021, in accordance with the terms of the Option Agreement.

8. The financial year end of the Target is December 31.

9. On December 24, 2021, the Filer and the Target entered into a business combination agreement pursuant to which the Filer agreed to acquire all of the issued and outstanding common shares of the Target, by way of an amalgamation of the Target and a wholly-owned subsidiary of the Filer pursuant to the Business Corporations Act (Ontario) (the Proposed Transaction).

10. On December 29, 2021, in connection with the Proposed Transaction, the Target closed a private placement of subscription receipts of the Target, (the Subscription Receipts) at a price of C$2.10 per Subscription Receipt for aggregate gross proceeds of C$15,660,779.40.

11. The Proposed Transaction will constitute a "reverse takeover" as defined in NI 51-102 and will serve as the Filer's "Qualifying Transaction" under TSXV Policy 2.4. In connection with the Proposed Transaction, the Filer intends to file a filing statement (the Filing Statement) in the form of Form 3B2 -- Information Required in a Filing Statement for a Qualifying Transaction (TSXV Form 3B2) pursuant to the policies of the TSXV. TSXV Form 3B2 requires disclosure of financial statements of the Filer and the Target prescribed by National Instrument 41-101 General Prospectus Requirements (NI 41-101) and Form 41-101F1 Information Required in a Prospectus (Form 41-101F1). In addition to applying to the principal regulator for the exemptive relief requested herein, the Filer has also applied to the TSXV for a waiver from the equivalent financial statement requirements in TSXV Form 3B2.

12. As of the date hereof, the Target, through its indirect, wholly owned subsidiary, Golden Hill Mining LLC (Golden Hill), holds an option (the FAD Property Option) to acquire a 100% ownership interest in the "FAD Property" (the FAD Property) located on the Eureka-Battle Mountain trend in Nevada, USA. The FAD Property consists of 156 unpatented lode mining claims, and 110 fee land parcels (also called patented claims), totaling approximately 3,627 acres.

13. The FAD Property is currently 100%-owned by Waterton Nevada Splitter, LLC, Waterton Nevada Splitter II, LLC, and FAD Mining Company LLC (collectively, Waterton). Waterton purchased the FAD mineral concessions, the Spring Valley project, and the Ruby Hill Mine from a third party in 2015. Following the acquisition, Waterton separated the acquired project into two different claim packages: the northern package (which was subsequently sold to another third party in 2021) and the FAD Property (which forms the subject matter of the FAD Property Option).

14. Concurrently with the completion of the Proposed Transaction, the Target intends to exercise the FAD Property Option and acquire a 100% ownership interest in the FAD Property from Waterton, in accordance with the terms of the master transaction agreement dated March 31, 2021 (as amended from time to time, the Option Agreement) between Waterton, Golden Hill and the Target. Upon completion of the exercise of the FAD Property Option, the FAD Property will become 100%-owned by the entity resulting from the Proposed Transaction (the Resulting Issuer), through Golden Hill, and will constitute the Resulting Issuer's "material property" for purposes of applicable Canadian securities laws.

15. The FAD Property has been dormant for a number of years, including from 2015, when Waterton acquired the FAD mineral concessions, until mid-2021, when the Target undertook and completed certain exploration work on the FAD Property in connection with the Option Agreement.

16. The relevant expenditures incurred by the Target in respect of the FAD Property have been included in the notes to the audited financial statements of the Target for the period from incorporation on July 16, 2020 to December 31, 2020 (the Target 2020 Audited Financial Statements) and will be reflected in the audited financial statements of the Target for the year ended December 31, 2021 (the Target 2021 Audited Financial Statements).

17. With respect to reverse takeover transactions, Section 4.10(2)(a)(ii) of NI 51-102 and item 5.2 of 51-102F3 require that a reporting issuer file, within specified periods, the financial statements as prescribed by the appropriate prospectus form for the reverse takeover acquirer, being Form 41-101F1. The reverse takeover acquirer in respect of the Filer is the Target.

18. In addition to the required financial statements and management's discussion and analysis (MD&A) of the Filer, the Filing Statement will include the following financial statements and MD&A of the Target:

(a) the Target 2020 Audited Financial Statements;

(b) the MD&A of the Target for the period from incorporation on July 16, 2020 to December 31, 2020;

(c) the Target 2021 Audited Financial Statements; and

(d) the MD&A of the Target for the year ended December 31, 2021

(collectively, the Target Financial Information).

19. The Target Financial Information includes financial information in respect of the FAD Property and provides capitalized exploration expenditures in respect of the FAD Property. In addition, the Target Financial Information, together with the other disclosure prescribed by TSXV Form 3B2 that will be included in the Filing Statement, will provide disclosure of all material facts relating to the Filer, the Target and the FAD Property and will contain sufficient information to permit investors to make a reasoned assessment of the Resulting Issuer's business following completion of the Proposed Transaction.

20. The financial statement requirements for a prospectus (which TSXV Form 3B2 references and relies upon) are found in NI 41-101 and Form 41-101F1. Item 32.1 of Form 41-101F1 includes the following requirements:

The financial statements of an issuer required under this item to be included in a prospectus must include:

(a) the financial statements of any predecessor entity that formed, or will form, the basis of the business of the issuer, even though the predecessor entity is, or may have been, a different legal entity, if the issuer has not existed for 3 years,

(b) the financial statements of a business or businesses acquired by the issuer within 3 years before the date of the prospectus or proposed to be acquired, if a reasonable investor reading the prospectus would regard the primary business of the issuer to be the business or businesses acquired, or proposed to be acquired, by the issuer, [emphasis added] and

(c) ...

21. Subsection 5.3(1) of the Companion Policy to NI 41-101 notes that both a reverse takeover and a qualifying transaction for a capital pool company are examples of when a reasonable investor might regard the primary business of the issuer to be the acquired business.

22. Accordingly, to the extent that the FAD Property is deemed to constitute the primary business of the Filer upon completion of the Proposed Transaction, the Filing Statement would also have to include, in addition to the Target 2020 Audited Financial Statements and the Target 2021 Audited Financial Statements, audited carve-out financial statements for the FAD Property (the FAD Property Carve-Out Financial Statements) for the period from January 1, 2019 to March 30, 2021.

23. Subsection 4.10(2)(a) of NI 51-102 provides that if a reporting issuer completes a reverse takeover, it must file the following financial statements for the reverse takeover acquirer, unless the financial statements have already been filed:

(a) financial statements for all annual and interim periods ending before the date of the reverse takeover and after the date of the financial statements included in an information circular or similar document, or under item 5.2 of the Form 51-102F3 Material Change Report, prepared in connection with the transaction; or

(b) if the reporting issuer did not file a document referred to in subparagraph (i), or the document does not include the financial statements for the reverse takeover acquirer that would be required to be included in a prospectus, the financial statements prescribed under securities legislation and described in the form of prospectus that the reverse takeover acquirer was eligible to use prior to the reverse takeover for a distribution of securities in the jurisdiction. [emphasis added]

24. Item 5.2 of Form 51-103F3 requires a material change report filed in respect of a closing of the Proposed Transaction to include, for each entity that results from the Proposed Transaction, disclosure (including financial statements) prescribed under securities legislation and described in the form of prospectus that the entity would be eligible to use.

25. Provided the Requested Relief is granted, the Filing Statement will not include the FAD Property Carve-Out Financial Statements.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Requested Relief is granted provided that:

(a) the Filing Statement includes the Target Financial Information; and

(b) the Filing Statement is filed on SEDAR forthwith following acceptance by the TSXV.

DATED at Toronto, Ontario on this 31st day of March, 2022.

"Lina Creta"

Manager, Corporate Finance

Ontario Securities Commission

OSC File #: 2022/0112