China Kingstone Mining Holdings Limited (Re), 2011 CanLII 12553

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions - National Instrument 43-101 - Applicant granted relief from the requirements of NI 43-101 in respect of disclosure made in and in connection with an offering memorandum for a private placement - Relief subject to conditions that offering memorandum contains specified opinions of experts, Canadian resident holdings are de minimus, and all Canadian investors are “accredited investors”.

Applicable Legislative Provisions

National Instrument 43-101 Standards of Disclosure for Mineral Projects, s. 9.1

March 9, 2011

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 CHINA KINGSTONE MINING HOLDINGS LIMITED (the Filer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) pursuant to subsection 9.1(1) of National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101) that the Filer be exempt from the requirements of NI 43-101 with respect to the disclosure made (i) in connection with the Canadian Offering (as defined below); and (ii) in the Preliminary Offering Memorandum (as defined below) and the Offering Memorandum (as defined below) prepared by the Filer for the Canadian Offering (the Exemption Sought);

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (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 each of British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.

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 is a limited liability company incorporated pursuant to the laws of the Cayman Islands with its head office in the People’s Republic of China.

2. The Filer is engaged in marble mining and is at the initial production stage. The Filer currently owns and operates one marble mine, the Jiangyou Limestone Dimension Stone Project located in Jiangyou City, Sichuan Province of the People’s Republic of China (the Zhangjiaba Mine). In addition to marble block mining, the Filer plans to construct large-scale marble slab processing facilities. The Filer’s principal products are marble blocks mined and slabs processed from their marble reserves.

3. The Filer is not a reporting issuer in Ontario or any other Canadian jurisdiction, nor are any of its securities listed or posted for trading on any stock exchange in Canada. The Filer has no present intention of becoming a reporting issuer in Ontario or any other Canadian jurisdiction or of becoming listed on an exchange in Canada.

4. The authorized share capital of the Filer consists of 5,000,000,000 ordinary shares (the Ordinary Shares).

5. Pursuant to an initial public offering, the Filer intends to offer (subject to adjustment) 58,000,000 new Ordinary Shares of the Filer in an underwritten public offering of Ordinary Shares in Hong Kong (the HK Public Offering) pursuant to a prospectus (the HK Prospectus) and (subject to adjustment and an over-allotment option) the Filer intends to offer 442,000,000 Ordinary Shares and a selling shareholder intends to offer 80,000,000 Ordinary Shares, on a private placement basis to purchasers in certain jurisdictions including the United States and Canada (the International Placement and together with the HK Public Offering, the Global Offering).

6. The HK Prospectus will be prepared in accordance with Hong Kong law and the rules and regulations of the Hong Kong Stock Exchange (HKSE) and is required to be approved by the HKSE and the Securities and Futures Commission of Hong Kong.

7. The HK Prospectus and relevant supporting materials and information will be submitted to a listing hearing committee of the HKSE which will review the listing application as well as the HK Prospectus and other accompanying documents, provide comments and, if applicable, grant committee approval for the listing of the Ordinary Shares on the HKSE.

8. As part of the Global Offering, the Company will be offering its Ordinary Shares to accredited investors in Canada on a private placement basis (the Canadian Offering). The Canadian Offering will be made only to accredited investors in reliance on the exemption in section 2.3 of National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106).

9. The Filer has applied to list its shares on the main board of the HKSE and listing is expected to commence on or about March 18, 2011.

10. The Filer intends to use the proceeds of the Global Offering to finance the construction of production and processing facilities at the Zhangjiaba Mine, procure mining and processing equipment, acquire mining rights and land use rights, develop additional marble reserves and establish distribution channels and networks to sell their marble products.

11. Citigroup Global Markets Asia Limited is acting as underwriter for the HK Public Offering and Citigroup Global Markets Ltd. is acting as underwriter for the International Placement.

12. Purchasers in the Global Offering will receive an offering circular (the Offering Circular).

13. An independent technical report (the ITR) on the limestone resources and reserves at the Zhangjiaba Mine has been prepared for the Filer by Behre Dolbear Asia Inc., a wholly owned subsidiary of Behre Dolbear & Company Inc. of Denver, Colorado (Behre Dolbear) and will be included in its entirety in the Offering Circular.

14. The ITR was prepared by a team of Behre Dolbear professionals led by Qingping Deng, a Qualified Professional Member of the Mining and Metallurgical Society of America and a Registered Member of The Society of Mining, Metallurgy and Exploration, Inc., who is a “qualified person” and is independent of the Filer for the purposes NI 43-101.

15. Behre Dolbear has prepared the ITR (including the estimates of limestone resources and reserves set out therein) in accordance with, among other things, the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code) published by the Joint Ore Reserves Committee (JORC) of the Australasian Institute of Mining & Metallurgy, Australian Institute of Geoscientists, and the Minerals Council of Australia.

16. In connection with the Canadian Offering, the Filer intends to distribute to accredited investors in Canada a preliminary offering memorandum (the Preliminary Offering Memorandum) and a final offering memorandum (the Offering Memorandum) containing the Offering Circular and any additional disclosure required pursuant to the laws of the provinces of Canada, including disclosure relating to resale restrictions and statutory rights of action.

17. The Preliminary Offering Memorandum contains the following cautionary statement:

The scientific and technical information on the Zhangjiaba Mine, Sichuan Province, the People’s Republic of China, which is contained in this offering memorandum, was prepared in compliance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the “JORC Code”) published by the Joint Ore Reserves Committee of the Australasian Institute of Mining & Metallurgy, Australian Institute of Geoscientists, and Minerals Council of Australia. In the opinion of Behre Dolbear Asia, Inc., a wholly owned subsidiary of Behre Dolbear & Company Inc. in the context of the Zhangjiaba Mine (i) the definitions and standards of the JORC Code are substantively similar to the definitions and standards of the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM Standards”) which are recognised by the Canadian regulatory authorities and contained in National Instrument 43-101 - Standards for Disclosure of Mineral Projects (“NI 43-101”); and (ii) a reconciliation of mineral resources and mineral reserves prepared in compliance with the JORC Code would not result in a materially different mineral resources and mineral reserves as prepared in compliance with the CIM Standards.

The issuer has applied to the Canadian regulatory authorities for a decision exempting the offering from the requirements of NI 43-101. The offer being made in Canada is conditional upon receipt of a decision from the Canadian regulatory authorities exempting the offering from the provisions of NI 43-101. While the issuer does not anticipate any difficulty in obtaining such a decision, if this decision is not received from the applicable regulator in an investor's province of residence prior to the closing of the private placement, investors in that province will be advised and subscriptions will not be accepted from such investors.

18. Immediately after the Global Offering, less than 10% of the Ordinary Shares will be held by residents of Canada.

19. The Filer expects that the majority of its Canadian security holders will be resident in Ontario on the completion of the Canadian Offering.

20. The Filer will file the Offering Memorandum in each jurisdiction and within the time limit specified in NI 45-106.

21. The Filer is not in default of securities legislation in any of the jurisdictions of Canada.

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 Exemption Sought is granted provided that:

(a) Behre Dolbear will provide an opinion, to be set out in the Offering Memorandum, that, in the context of the Zhangjiaba Mine, Sichuan Province, the People’s Republic of China (i) the definitions and standards of the JORC Code are substantively similar to the definitions and standards of the Canadian Institute of Mining, Metallurgy and Petroleum which are recognised by the Canadian regulatory authorities and contained in NI 43-101; and (ii) a reconciliation of mineral resources and mineral reserves prepared in compliance with the JORC Code would not result in a materially different mineral resources and mineral reserves as prepared in compliance with the CIM Standards.

(b) less than 10% of the Ordinary Shares will be held by residents of Canada after the Global Offering;

(c) all purchasers under the Canadian Offering will be “accredited investors” as defined in NI 45-106;

(d) the Offering Memorandum includes the following statement:

The Canadian regulatory authorities have exempted the issuer from the requirements of NI 43-101 with respect to the disclosure made in connection with this offering and in this Offering Memorandum.

The scientific and technical information on the Zhangjiaba Mine, Sichuan Province, the People’s Republic of China, which is contained in this offering memorandum, was prepared in compliance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the "JORC Code") published by the Joint Ore Reserves Committee of the Australasian Institute of Mining & Metallurgy, Australian Institute of Geoscientists, and Minerals Council of Australia. In the opinion of Behre Dolbear Asia, Inc., a wholly owned subsidiary of Behre Dolbear & Company, Inc. in the context of the Zhangjiaba Mine (i) the definitions and standards of the JORC Code are substantively similar to the definitions and standards of the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM Standards") which are recognised by the Canadian regulatory authorities and contained in National Instrument 43-101 - Standards for Disclosure of Mineral Projects ("NI 43-101"); and (ii) a reconciliation of mineral resources and mineral reserves prepared in compliance with the JORC Code would not result in a materially different mineral resources and mineral reserves as prepared in compliance with the CIM Standards.

“Jo-Anne Matear”

Jo-Anne Matear

Assistant Manager, Corporate Finance

Ontario Securities Commission