Algold Resources Ltd.
Headnote
National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., s. 144.
May 31, 2021
IN THE MATTER OF THE SECURITIES LEGISLATION OF QUÉBEC AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF A REVOCATION OF A FAILURE-TO-FILE CEASE TRADE ORDER AND IN THE MATTER OF THE PROCESS FOR CEASE TO BE A REPORTING ISSUER APPLICATIONS AND IN THE MATTER OF ALGOLD RESOURCES LTD.
ORDER
Background
Algold Resources Ltd. (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 Québec (the Principal Regulator) and Ontario (each a Decision Maker) on June 22, 2020.
The Issuer has applied to each of the Decision Makers under National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions (NI 11-207) for an order of the FFCTO (FFCTO Revocation Order) to take effect as at the Effective Time (as defined below).
The FFCTO Revocation Order is the order of the Principal Regulator and evidences the decision of the Decision Maker in Ontario.
The Decision Makers in each of the Jurisdictions have also received an application (Cease to be a Reporting Issuer Application) from the Issuer for an order under the securities legislation of the Jurisdictions (the Legislation) that the Issuer has ceased to be a reporting issuer in all jurisdictions of Canada in which it is a reporting issuer (the Cease to be a Reporting Issuer Order) to take effect at the Effective Time.
Under the Process for Cease to be a Reporting Issuer Applications (for a dual application):
(a) the Autorité des marchés financiers of Québec is the principal regulator for this application;
(b) the Issuer has provided notice that subsection 4C.5(1) of Regulation 11-102 respecting Passport System (Regulation 11-102) is intended to be relied upon in Alberta, British Columbia, Saskatchewan, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, Northwest Territories, Nunavut and Yukon; and
(c) this order is the order of the Principal Regulator and evidences the decision of the securities regulatory authority in Ontario.
Interpretation
Terms defined in National Instrument 14-101 Definitions, NP 11-206 Process for Cease to be a Reporting Issuer (NP 11-206) and NP 11-207 have the same meanings if used in this Order, unless otherwise defined.
Representations
This decision is based upon the following facts represented by the Issuer:
1. The Issuer is a corporation existing under the Canada Business Corporations Act (CBCA) and its registered and principal office is in the Province of Québec.
2. The Issuer is a gold exploration company whose main asset is the Tijirit Permit in Mauritania.
3. The Issuer is authorized to issue an unlimited number of common shares (the Common Shares), of which 27,830,525 are issued and outstanding as at the date hereof.
4. The Issuer had no securities issued and outstanding immediately prior to the Effective Time;
5. The Common Shares of the Issuer are listed on the TSX Venture Exchange (TSXV) under the symbol ALG.
6. The Issuer is a reporting issuer in all provinces of Canada.
7. The FFCTO was issued on June 22, 2020 due to the failure of the Issuer to file (i) the annual financial statements and accompanying management's discussion and analysis for the financial year ended December 31, 2019; and (ii) the related CEO and CFO certifications (the Annual filings for the financial year ended December 31, 2019), and since the date of the FFCTO, the Issuer has not filed any further interim and annual filings required under applicable securities laws (collectively, the Required Filings).
8. The Issuer was unable to file the Annual filings for the financial year ended December 31, 2019, due to financial hardship resulting from the unprecedent challenges created by the COVID-19 pandemic and the conditions of the markets, with the consequence that the Issuer was unable to pay the fees of various service providers, including the auditors.
BIA proceedings
9. On January 15, 2021, the Issuer signed a Notice of intention to make a proposal (NOI) under the relevant provisions of the Bankruptcy and Insolvency Act (Canada) (BIA) and on January 15, 2021, Raymond Chabot Inc. filed the NOI with the Office of the Superintendent of Bankruptcy and was appointed trustee (the Trustee).
10. The Trustee filed under the BIA and submitted to the Issuer's creditors a Proposal and Plan of Reorganization under the relevant provisions of the BIA and of the CBCA pursuant to which, inter alia, all of the issued and outstanding Common Shares will be redeemed in consideration for shares of Aya Gold & Silver Inc. (Aya) with Aya becoming the sole shareholder of the Issuer.
11. Aya is a reporting issuer in British Columbia, Alberta, Ontario and Québec.
12. The common shares of Aya are listed on the Toronto Stock Exchange (TSX) under the symbol AYA.
13. On March 5, 2021, the creditors of the Issuer approved the Proposal (as defined below), which is conditional upon the completion of the Reorganization (as defined below).
14. The TSX has conditionally approved the issuance and listing of the Aya Reorganization Shares (as defined below) and of the Aya Proposal Shares (as defined below) while the TSXV has conditionally approved the Issuer's notice regarding the Reorganization (as defined below).
15. On March 26, 2021, an order (the Order) approving the Reorganization and the Proposal (as defined below) was issued by the Superior Court (Québec).
Reorganization
16. The Reorganization is to be made under section 191 of the CBCA and its principal steps that were approved by the Order include the following (the Reorganization):
a) creating an unlimited number of shares of a class designated as "Redeemable Shares" with the rights, privileges, restrictions and conditions described in articles of reorganization to be filed with Corporations Canada (the Articles of Reorganization);
b) changing the Common Shares into Redeemable Shares on the basis of one Redeemable Share for one Common Share;
c) redeeming all of the issued and outstanding Redeemable Shares in accordance with the Articles of Reorganization in consideration for the issuance of Aya Reorganization Shares (as described below);
d) declaring that, immediately after the redemption of all of the issued and outstanding Redeemable Shares in accordance with the Articles of Reorganization, the authorized (but non-issued) capital of the Issuer shall consist only of an unlimited number of common shares and the Redeemable Shares;
e) removing the authorized (but non-issued) common shares and Redeemable Shares as classes of shares and all rights, privileges, restrictions and conditions attaching thereto; and
f) creating an unlimited number of shares of a class designated as "Class A Common Shares" with the rights, privileges, restrictions and conditions attaching thereto as described in the Articles of Reorganization.
17. In connection with the Reorganization, Aya proposes to issue to the shareholders of the Issuer, as consideration for their respective Common Shares, an aggregate value of $2,400,000 in common shares from Aya's share capital (the "Aya Reorganization Shares"), calculated using the five-day volume weighted average price (the "5-day VWAP") of Aya's common shares during the five trading days immediately preceding the issuance, registration and delivery of the Aya Reorganization Shares.
18. The TSX has conditionally approved the issuance and listing of the Aya Reorganization Shares and of the Aya Proposal Shares (as defined below) while the TSX Venture Exchange has conditionally approved Issuer's notice regarding the Reorganization.
Proposal
19. The Proposal was made under sections 50, 59(4) and 66(1.4) of the BIA. Under the Proposal, Aya would issue to Issuer's creditors an aggregate value of $2,500,000 in common shares from Aya's share capital (the "Aya Proposal Shares"), calculated using the 5-day VWAP immediately before the issuance, registration and delivery of the Aya Proposal Shares. At the request of Revenu Québec, the proposal was later slightly amended before the Superior Court issued the Order (the "Proposal").
20. The Reorganization and Proposal are expected to close (Effective Time) on or around May 28, 2021.
21. As of the Effective Date, the Issuer will not be an OTC reporting issuer under Regulation 51-105 respecting Issuers Quoted in the U.S. Over-the-Counter Markets.
22. As of the Effective Date, no securities of the Issuer will be traded on a "marketplace" as defined in Regulation 21-101 respecting Marketplace Operation and there is currently no intention on the part of the shareholders, directors or officers of the Issuer to cause the Issuer to seek financing by way of a public offering of its securities in Canada or elsewhere.
23. The Reorganization cannot be completed without the Issuer obtaining the FFCTO revocation order.
24. After the Reorganization Aya will be the sole shareholder of the Issuer.
25. The Issuer is applying to cease to be a reporting issuer in all the jurisdictions of Canada in which it is a reporting issuer.
26. As a consequence of the Issuer being in default of securities legislation as evidenced by the FFCTO being in effect, the Issuer is not eligible to use the "simplified procedure" under NP 11-206.
27. In acting in compliance with the Order regarding the Reorganization, the Issuer may have engaged in certain acts in furtherance of trades in securities of the Issuer (Acts), which Acts were taken at the direction and with the approval of, and under the supervision of, the Court. Except for any Acts and the outstanding continuous disclosure filings the Issuer is not in default of any of the requirements of the FFCTO, the Legislation or the rules and regulations made pursuant thereto.
28. The Issuer acknowledges that, in granting the requested relief, the Decision Makers are not expressing any opinion or approval as to the terms of the Reorganization.
Orders
Each of the Decision Makers is satisfied that the order to revoke the FFCTO meets the test set out in the Legislation for the Decision Maker to make the decision.
The decision of the Decision Makers for the FFCTO Revocation Order under the Legislation is that the FFCTO Revocation Order is granted.
Each of the Decision Makers for the Cease to be a Reporting Issuer Order is satisfied that the test set out in the Legislation for the Decision Makers to make the Cease to be a Reporting Issuer Order is met.
The decision of the Decision Makers for the Cease to be a Reporting Issuer Order under the Legislation is that the Cease to be a Reporting Issuer Order is granted.