Monarch Gold Corporation

Headnote

National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- Application for an order that the issuer is not a reporting issuer under applicable securities laws -- issuer has outstanding warrants exercisable into securities of acquirer and another reporting issuer -- warrant holders no longer require public disclosure in respect of the issuer -- relief granted.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss.1(10)(a)(ii).

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR CEASE TO BE A REPORTING ISSUER APPLICATIONS AND IN THE MATTER OF MONARCH GOLD CORPORATION (the Filer)

ORDER

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the Legislation) that the Filer has ceased to be a reporting issuer in all jurisdictions of Canada in which it is a reporting issuer (the Order Sought).

Under the Process for Cease to be a Reporting Issuer Applications (for a passport application):

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

(b) the Filer has provided notice that subsection 4C.5(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta and Quebec.

Interpretation

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

Representations

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

1. The Filer is a corporation existing under the federal laws of Canada with its head office located in Toronto, Ontario.

2. The Filer is a reporting issuer or the equivalent in each of the Provinces of Québec, British Columbia, Alberta and Ontario and the common shares of the Filer (the Filer Shares) were listed and traded on the Toronto Stock Exchange (the TSX) under the symbol "MQR".

3. All of the issued and outstanding Filer Shares are owned by Yamana Gold Inc. (Yamana).

4. Yamana, the parent company of the Filer, is a corporation existing under the federal laws of Canada. Yamana is a reporting issuer or the equivalent in all of the Provinces and Territories of Canada, and the common shares of Yamana (the Yamana Shares) are listed and traded on the TSX under the symbol "YRI", on the New York Stock Exchange (NYSE) under the symbol "AUY" and on the London Stock Exchange (LSE) under the symbol "AUY".

5. Upon completion of the court approved plan of arrangement (the Arrangement) under section 192 of the Canada Business Corporations Act (the CBCA), that was made effective at 12:01 a.m. (Toronto time) (the Effective Time) on January 21, 2021 (the Effective Date), pursuant to the arrangement agreement between Yamana and the Filer dated November 1, 2020, as amended (the Arrangement Agreement), Yamana acquired all of the outstanding Filer Shares not already held by Yamana, in exchange for: (i) 0.0376 of a Yamana Share; (ii) C$0.192 in cash from Yamana (the Cash Consideration); and (iii) 0.2 of a common share (each whole share, a SpinCo Share) of Monarch Mining Corporation (SpinCo) for each Filer Share (collectively, the Consideration).

6. SpinCo is a corporation existing under the federal laws of Canada. SpinCo is a reporting issuer in British Columbia, Alberta, Ontario and Québec. The SpinCo Shares are listed on the TSX under the symbol "GBAR".

7. Immediately prior to the Effective Time, the Filer had the following issued and outstanding securities: (a) 327,811,090 Filer Shares; (b) 11,975,000 stock options (the Filer Options); (c) 11,289,473 common share purchase warrants (the Filer Certificated Warrants) expiring between September 17, 2022 and June 10, 2023, each exercisable to acquire one Filer Share at prices ranging from $0.29 to $0.60 per Filer Share, and (d) 10,042,000 common share purchase warrants (the Filer Indenture Warrants) expiring on September 17, 2022, each exercisable to acquire one Filer Share at a price of $0.60 per Filer Share.

8. Pursuant to the Arrangement, each outstanding Filer Option that was in-the-money at the Effective Time was surrendered and cancelled by the Filer in exchange for Filer Shares having a fair market value equal to the in-the-money amount of the Filer Option. Each Filer Option that was not in-the-money at the Effective Time was cancelled without any payment in respect thereof.

9. At the Effective Time, Yamana acquired all of the issued and outstanding Filer Shares, including Filer Shares that were issued in exchange for in-the-money Filer Options, in exchange for the Consideration pursuant to the Arrangement. Pursuant to the Arrangement Agreement, (i) each Filer Certificated Warrant was replaced with a warrant to purchase 0.0376 of a Yamana Share (a Yamana Replacement Warrant) and a warrant to purchase 0.2 of a SpinCo Share (a SpinCo Replacement Warrant); and (ii) each Filer Indenture Warrant became exercisable to acquire the Consideration, with the value of the Cash Consideration being offset against the exercise price thereof.

10. As was required pursuant to the terms of the Arrangement:

(a) the resolution approving the Arrangement was approved by the holders of Filer Shares and Filer Options (collectively, the Filer Securityholders) at the special meeting of Filer Securityholders held on December 30, 2020 called for such purpose (the Filer Meeting) by an affirmative vote of at least 66 2/3% of the votes cast in person or by proxy at the Filer Meeting; and

(b) the Superior Court of Québec granted its final approval of the Arrangement on January 20, 2021.

11. As a result of the completion of the Arrangement, 11,608,195 additional Yamana Shares were issued and listed and posted for trading on the TSX, NYSE and LSE, up to 95,480 Yamana Shares were reserved for issuance upon exercise of the Yamana Replacement Warrants and up to 288,279 Yamana Shares were reserved for issuance upon exercise of the Filer Indenture Warrants. As a result of the completion of the Arrangement, 66,195,889 SpinCo Shares were issued and listed and posted for trading on the TSX, up to 2,257,893 SpinCo Shares were reserved for issuance upon exercise of the SpinCo Replacement Warrants and up to 2,008,400 SpinCo Shares were reserved for issuance upon exercise of the Filer Indenture Warrants.

12. The Filer Shares were delisted from the TSX at the close of business on January 25, 2021.

13. On completion of the Arrangement, the Filer Indenture Warrants continued to exist as warrants of the Filer, which are the only securities of the Filer that are not held by Yamana. The Filer Indenture Warrants are not, and were not, listed on the TSX for trading.

14. Pursuant to the Arrangement and the terms of the Filer Indenture Warrants, each holder of a Filer Indenture Warrant outstanding immediately prior to the Effective Date, became entitled upon completion of the Arrangement, to receive, upon the exercise of such holder's warrant, in lieu of each Filer Share to which such holder was previously entitled, 0.0376 of a Yamana Share and 0.2 of a SpinCo Share, with the value of the Cash Consideration being offset against the exercise price of each Filer Indenture Warrant. As a result of the Arrangement and the terms of the Filer Indenture Warrants, each of Yamana and SpinCo is now obligated to issue the number of Yamana Shares and SpinCo Shares, respectively, necessary to satisfy, and in lieu of, the Filer's obligations upon the exercise of an Filer Indenture Warrant.

15. To the Filer's knowledge, there are a maximum of 37 beneficial holders of Filer Indenture Warrants. Yamana, on behalf of the Filer, has made diligent enquiry (the Investigation) to determine the number and jurisdiction of the beneficial holders of the Filer Indenture Warrants. The Investigation included the review of reports of exempt distribution available online. Based on the Investigation, to the Filer's knowledge: (a) two beneficial holders of Filer Indenture Warrants are resident in British Columbia; (b) four holders of Filer Indenture Warrants are resident in Ontario; and (c) the remaining 31 beneficial holders Filer Indenture Warrants are resident in Quebec.

16. The Filer is not required to remain a reporting issuer in any jurisdiction under any contractual arrangement between the Filer and the holders of the Filer Indenture Warrants.

17. The Filer cannot rely on the exemption available in Section 13.3 of National Instrument 51-102 -- Continuous Disclosure Obligations (NI 51-102) for issuers of exchangeable securities because the Filer Indenture Warrants are not "designated exchangeable securities" as defined in NI 51-102. The Filer Indenture Warrants do not provide their holders with voting rights in respect of Yamana or SpinCo.

18. The Filer is not eligible to surrender its status as a reporting issuer pursuant to the simplified procedure under section 19 of National Policy 11-206 Process for Cease to be a Reporting Issuer Applications as the Filer Indenture Warrants are not beneficially owned, directly or indirectly, by fewer than 15 securityholders in each of the jurisdictions of Canada and fewer than 51 securityholders in total worldwide.

19. The Filer is not an OTC reporting issuer under Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets.

20. No securities of the Filer, including debt securities, are traded in Canada or another country on a marketplace as defined in National Instrument 21-101 Marketplace Operation or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported.

21. The Filer is not a reporting issuer in any jurisdiction of Canada other than the jurisdictions identified in this order. The Filer is applying for an order that it has ceased to be a reporting issuer in all of the jurisdictions of Canada in which it is a reporting issuer.

22. The Filer, Yamana and SpinCo are not in default of any requirement under securities legislation in any jurisdiction.

23. The Filer has no intention to seek public financing by way of an offering of securities and has no intention of issuing any securities other than the issuance of securities to Yamana or its affiliates.

24. Upon the granting of the Order Sought, the Filer will not be a reporting issuer or the equivalent in any jurisdiction of Canada.

Order

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

The decision of the principal regulator under the Legislation is that the Order Sought is granted.

DATED at Toronto on this 13th day of February, 2021.