Learning Library Inc. - s. 144

Headnote

Revocation of cease trade order granted to issuer that is up-to-date on its continuous disclosure filings, and is planning a reorganization.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am., section 144.

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, C. S.5, AS AMENDED (THE ACT)

AND

IN THE MATTER OF

THE LEARNING LIBRARY INC.

ORDER

(Section 144)

WHEREAS the securities of The Learning Library Inc. (the Issuer) are subject to a temporary order of the Director dated June 3, 2003 under paragraph 127(1)2 and subsection 127(5) of the Act (the Temporary Order), and extended by a further order of the Director dated June 13, 2003 (the Further Order and, collectively with the Temporary Order, the Cease Trade Order) directing that trading in the securities of the Issuer cease;

AND WHEREAS, by order of the Director dated May 11, 2004, the Cease Trade Order was partially revoked to facilitate the completion of a private placement by the Issuer;

AND WHEREAS the Issuer has applied to the Ontario Securities Commission (the Commission) for an order pursuant to section 144 of the Act for an order revoking the Cease Trade Order;

AND UPON considering the application and the recommendation of staff of the Commission;

AND UPON the Issuer having represented to the Commission as follows:

1. The Issuer is a corporation formed under the Business Corporations Act (Ontario) on June 25, 2002 by the amalgamation (the Amalgamation) of The Learning Library Inc. with Sydenham Capital Inc. and E-Amigos.com Inc., both capital pool companies listed on the TSX Venture Exchange (the Exchange).

2. Pursuant to the Amalgamation, the Issuer became a reporting issuer in the provinces of British Columbia and Alberta, having inherited the reporting issuer status of both Sydenham Capital Inc. and E-Amigos.com Inc., and was listed on the Exchange. Subsequent to the Amalgamation, the Issuer applied for, and was granted, reporting issuer status in the Province of Ontario.

3. As of December 30, 2004, the authorized capital of the Issuer consists of an unlimited number of common shares and an unlimited number of preferred shares, of which 24,987,199 common shares and 2,661,333 preferred shares are issued and outstanding.

4. As a result of its financial hardship, the Issuer failed to file its unaudited interim financial statements for the three month period ended March 31, 2003 (the Initial Financial Statements in Default).

5. As a result of the Issuer's failure to file the Initial Financial Statements in Default, the Commission issued the Temporary Order.

6. As a result of the imposition of the Temporary Order, the Exchange suspended trading in the Issuer's shares on June 3, 2003.

7. On June 13, 2003, the Commission issued the Further Order.

8. On June 17, 2003, the British Columbia Securities Commission issued a cease trade order against the Issuer (the BC Cease Trade Order) and on October 10, 2003, the Alberta Securities Commission issued a cease trade order against the Issuer (the Alberta Cease Trade Order and, collectively with the Cease Trade Order and the BC Cease Trade Order, the Cease Trade Orders).

9. Since the Cease Trade Order was issued, the Issuer failed to file the following additional financial statements within the timeframes required by applicable securities laws:

(i) unaudited interim financial statements for the six month period June 30, 2003; and

(ii) unaudited interim financial statements for the nine month period ended September 30, 2003,

(collectively, with the Initial Financial Statements in Default, the Financial Statements in Default).

10. On March 25, 2004, the Issuer filed the Financial Statements in Default with the securities regulatory authorities in the provinces of Alberta, British Columbia and Ontario through SEDAR.

11. The Issuer is now up to date in the filing of its financial statements under the requirements of Ontario securities laws. In particular, the Issuer has filed:

• its audited annual financial statements for the year ended December 31, 2003; and

• its unaudited interim financial statements for the periods ended March 31, 2004 and June 30, 2004, and its amended and restated unaudited interim financial statements for the period ended September 30, 2004.

12. In addition, the Issuer has filed Form 13-502F1 with the Commission and paid the appropriate participation fee to the Commission for the year ended December 31, 2004 pursuant to Commission Rule 13-502. The Issuer is not, to its knowledge, in default of any of the requirements of the Act, or the rules and regulations made pursuant thereto.

13. In August 2004, the Issuer applied to have the listing of its common shares transferred from the Exchange to the "NEX" board of the Exchange pending completion of its Change of Business Transaction (as defined below). The Issuer's listing of its common shares was transferred to the "NEX" board on September 3, 2004.

14. Due to the prospects of the Issuer's current business model, the directors of the Issuer have determined that it is in the best interests of the Issuer to undertake a reorganization with the objective of divesting the Issuer's current business and completing a transaction by which the Issuer will acquire an alternative business which has better prospects for its shareholders (the Reorganization).

15. Under the Reorganization, the Issuer proposes to: (i) convert all of the 2,661,333 preferred shares in the capital of the Issuer into 2,661,333 common shares; (ii) consolidate the issued and outstanding common shares of the Issuer so that it will have approximately 10,000,000 common shares issued and outstanding (after giving effect to the conversion of the preferred shares); (iii) discontinue its current business and sell all of its assets; (iv) complete the Change of Business Transaction (as defined below); and (v) concurrent with the Change of Business Transaction, apply to have the Cease Trade Orders revoked and trading in the Issuer's common shares on the Exchange reinstated.

16. In order to pursue the Reorganization, between June and September 2004, the Issuer completed a non-brokered private placement (the Private Placement) of 10,160,000 special units of the Issuer (the Special Units) at a price of $0.10 per Special Unit for gross proceeds of $1,016,000. Each Special Unit is exercisable to acquire, for no additional consideration, one common share of the Issuer and one common share purchase warrant (a Warrant) (after giving effect to the proposed share consolidation described below). Each Warrant entitles the holder to acquire one common share at a price of $0.15 for a period of two years (after giving effect to the proposed share consolidation described below). On May 11, 2004, the Issuer obtained a partial revocation of the Cease Trade Order under Section 144 of the Act in order to complete the Private Placement.

17. In connection with the Reorganization, the Issuer called an annual and special meeting of shareholders, which was held on November 30, 2004 (the Meeting). Copies of the audited annual financial statements of the Issuer for the years ended December 31, 2002 and December 31, 2003 and of the unaudited interim financial statements for the six-months ended June 30, 2004 were mailed to shareholders of the Issuer with the proxy materials for the Meeting.

18. As disclosed in the management information circular of the Issuer dated October 29, 2004 prepared in connection with the Meeting (the Information Circular), and the press releases of the Issuer dated August 19, 2004 and September 24, 2004, the Issuer intends to complete two change of business transactions as part of the Reorganization. First, the Issuer has entered into an arm's length agreement to acquire a 100% interest in certain contiguous mining claims located at Street Township, Ontario (the Street Township Transaction). Second, the Issuer has entered into an arm's length agreement with EXMIN, Inc. (Exmin), a private gold exploration company, pursuant to which the Issuer and Exmin have agreed to a potential business combination (the Exmin Transaction and, together with the Street Township Transaction, the Change of Business Transaction). Following the sale of the Issuer's existing business, the conversion of the preferred shares and the consolidation of the common shares, the Issuer proposes to complete these transactions to become engaged in the business of exploring and developing mineral resource properties.

19. As disclosed in the Information Circular, pursuant to the Street Township Transaction, the Issuer proposes to acquire up to a 100% interest in certain contiguous mining claims located at Street Township, Ontario pursuant to an option agreement in consideration of: (a) issuing 1,000,000 common shares to the optionor; and (b) within thirty six months, paying $40,000 and issuing 600,000 common shares to the optionor and incurring a maximum of $700,000 in exploration expenditures on the mining claims as follows: (i) a minimum of $75,000 to a maximum of $100,000 on the Phase 1 work program, which must be completed within three months and, provided the Issuer has issued to the optionor the 1,000,000 common shares referred to above, the Issuer will earn a 50% interest in the mining claims; (ii) $250,000 of exploration expenditures on the Phase 2 work program, and payment of $15,000 and the issuance of 300,000 common shares to the optionor within 24 months, at which point the Issuer will earn an additional 25% interest in the mining claims; and (iii) $350,000 of exploration expenditures on the Phase 3 work program, and payment of $25,000 and the issuance of 300,000 common shares to the optionor within 36 months, whereupon the Issuer will earn a further 25% interest in the mining claims. All common shares issuable under the Street Township Agreement would be issued on a post-consolidation basis.

20. As disclosed in the Information Circular, pursuant to the Exmin Transaction, the Issuer has paid $500,000 to Exmin to acquire a 10% carried interest in Exmin's Reina de Oro concession (the Interest) and an option (the Option) to purchase all of the shares of Exmin. Exmin has agreed use the $500,000 paid to it to perform certain exploration drilling on its properties. Upon review of the drilling results, the Issuer has 60 days to exercise the Option and, in the event that it does so, it will acquire all of the shares of Exmin (the Acquisition) in consideration of: (i) 12,000,000 common shares; (ii) 2,000,000 share purchase warrants exercisable for a period of five years to acquire 2,000,000 common shares at a price of $0.75 per share; and (iii) 2,000,000 share purchase warrants exercisable for a period of five years to acquire 2,000,000 common shares at a price of $1.00 per share, to be issued to Exmin's shareholders. In the event that the Issuer does not exercise the Option, it will retain the Interest, which shall convert into a working interest in the event that Exmin enters into an arm's length third party joint venture in respect of the Reina de Oro gold prospect. In the event that the Issuer exercises the Option, the completion of the Acquisition will be subject to the successful completion of a minimum $3,000,000 equity financing by the Issuer.

21. At the Meeting, the Issuer obtained shareholder approvals for the various steps involved in the Reorganization. In particular, shareholders approved the sale of the Issuer's assets pursuant to a management buy-out, the consolidation of the common shares, the Street Township Transaction and the Exmin Transaction.

22. In order to proceed with the Reorganization, it is necessary to obtain the revocation of the Cease Trade Order.

23. In connection with the completion of the Street Township Transaction and the Exmin Transaction and the Issuer's application to have trading in its common shares on the Exchange reinstated, the Issuer will comply with all applicable rules of the Exchange and will provide all required prospectus-level disclosure to its shareholders about the Street Township Transaction and the Exmin Transaction.

24. Concurrent with the filing of this application with the Commission, the Issuer is applying to the British Columbia Securities Commission and the Alberta Securities Commission for orders revoking the BC Cease Trade Order and the Alberta Cease Trade Order, respectively

AND WHEREAS the Commission's power to make the Order has been assigned to the Director;

AND UPON the Director being satisfied that to do so would not be prejudicial to the public interest;

IT IS ORDERED, pursuant to section 144 of the Act, that the Cease Trade Order be revoked.

December 31, 2004.

"Iva Vranic"