Newmont Mining Corporation (Re), 2011 CanLII 73293

Headnote National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – National Instrument 51-102 Continuous Disclosure Obligations, s. 13.1 – Information circular – Exchangeable security issuer applied for relief from the requirement to include prospectus-level disclosure in an information circular to be circulated in connection with an arrangement, reorganization, acquisition or amalgamation – Issuer is only internally restructuring, not adding or removing any assets or changing the shareholders’ proportionate interest in the issuer’s operations – Issuer will provide sufficient information about the transaction for shareholders to understand the restructuring – Issuer will include prospectus-level disclosure in circular about parent issuer – relief granted subject to conditions Applicable Legislative Provisions National Instrument 51-102 Continuous Disclosure Obligations, s. 13.1 Form 51-102F5 Information Circular, s. 14.2

November 10, 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

NEWMONT MINING CORPORATION

AND

NEWMONT MINING CORPORATION OF CANADA LIMITED (the “FILERS”)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the “Legislation”) for exemptive relief under Section 13.1 of National Instrument 51-102 – Continuous Disclosure Obligations (“NI 51-102”) from the obligation of Newmont Mining Corporation of Canada Limited (“NMCCL”) under Section 14.2 of Form 51-102F5 – Information Circular to include in an information circular (the “NMCCL Circular”) to be sent to holders (“NMCCL Shareholders”) of exchangeable shares in the capital of NMCCL (the “NMCCL Exchangeable Shares”) in connection with a proposed arrangement (the “NMCCL Arrangement”) of NMCCL under the Canada Business Corporations Act (“CBCA”) the Disclosure (defined below) of New Exchangeco (defined below) that would be required if the NMCCL Circular were a prospectus of New Exchangeco (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 (the “Principal Regulator”), and

(b) The Filers have provided notice that pursuant to paragraph 4.7(1)(c) of Multilateral Instrument 11-102 – Passport System (the “Passport Rule”), the Exemption Sought is to be relied upon by the Filers with respect to the equivalent provisions of the legislation of the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.

Interpretation

Terms defined in National Instrument 14-101 – Definitions and the Passport Rule have the same meaning if used in this decision, unless otherwise defined.

Representations

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

Newmont

1. Newmont Mining Corporation (“Newmont”) is a corporation governed by the laws of the State of Delaware with its head office in Denver, Colorado. Newmont is engaged in the production of gold and copper, the exploration for gold and the acquisition and development of gold/copper properties worldwide. Newmont has significant assets and/or operations in Canada, the United States, Australia, Peru, Indonesia, Ghana, New Zealand and Mexico.

2. The shares of common stock in the capital of Newmont (“Newmont Common Stock”) are listed and principally traded on the New York Stock Exchange (the “NYSE”), under the symbol “NEM”. Newmont’s current market capitalization is approximately $30 billion.

3. Newmont is subject to the reporting requirements of securities legislation in the United States and the rules and policies of the NYSE.

4. Newmont became a reporting issuer in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba and Québec on January 10, 2001.

5. Newmont satisfies its continuous disclosure obligations under applicable Canadian securities law through compliance with National Instrument 71-101 – The Multijurisdictional Disclosure System (“NI 71-101”).

6. Newmont is not currently in default of the securities legislation of any Canadian jurisdiction.

The Franco Arrangement

7. On February 16, 2002, Newmont completed its acquisition of Franco-Nevada Mining Corporation Limited (“Franco-Nevada”) pursuant to a plan of arrangement (the “Franco Arrangement”) under the CBCA.

8. Under the Franco Arrangement, holders of Franco-Nevada shares were entitled to elect to receive either shares of Newmont Common Stock or exchangeable shares (the “NMCCL Exchangeable Shares”) in the capital of NMCCL, which are described in greater detail below.

9. Approximately 55.9 million NMCCL Exchangeable Shares and approximately 71.9 million shares of Newmont Common Stock were issued under the Franco Arrangement. There are currently approximately 488.2 million shares of Newmont Common Stock and 6.6 million NMCCL Exchangeable Shares (excluding those held by Newmont and its affiliates) outstanding.

10. In connection with the Franco Arrangement, Franco-Nevada obtained exemptive relief from the then applicable requirement of Section 2.1(1) of former OSC Rule 54-501 – Prospectus Disclosure in Certain Information Circulars to include in the information circular that was sent to Franco-Nevada shareholders the financial statements of NMCCL that would be required in a prospectus if the Franco Circular were a prospectus of NMCCL. A copy of the order (the “Franco Order”) granting the exemptive relief is attached as Appendix “B” hereto.

NMCCL and the NMCCL Exchangeable Shares

11. NMCCL is a corporation governed by the federal laws of Canada, was incorporated for the purpose of issuing the NMCCL Exchangeable Shares and is the continuing corporation following its amalgamation with Franco-Nevada and others in connection with the Franco Arrangement.

12. The NMCCL Exchangeable Shares were, and still are:

(a) listed on the Toronto Stock Exchange (the “TSX”) under the symbol “NEM”;

(b) exchangeable for shares of Newmont Common Stock at the option of the holder on a one-for-one basis; and

(c) securities with rights (including economic and voting rights) that are, as nearly as practicable, equivalent to the shares of Newmont Common Stock.

13. The NMCCL Exchangeable Shares have no residual equity entitlement to the assets of NMCCL.

14. While NMCCL holds interests, direct and indirect, in certain mineral properties, holding entities and investment assets (the “NMCCL Assets”), NMCCL Shareholders do not have any interest in such properties, holdings or assets that is distinct from their economic interest in Newmont Common Stock.

15. As a result of the Franco Arrangement and the issuance of the NMCCL Exchangeable Shares, NMCCL became a reporting issuer the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador (the “Reporting Jurisdictions”).

16. On January 30, 2002, NMCCL was granted an order under National Policy 12-201 – Mutual Reliance Review System (the “NMCCL Order”), which provides NMCCL with exemptive relief from, among other things, the continuous disclosure obligations under applicable Canadian securities laws provided that it, in essence, files and sends to holders of NMCCL Shareholders all disclosure material furnished to holders of shares of Newmont Common Stock in the United States including, without limitation, copies of annual and interim financial statements, all proxy-related materials and all materials required to be filed by Newmont with the United States Securities and Exchange Commission under the United States Securities Exchange Act of 1934. The relief granted in the NMCCL Order is, in substance, equivalent to the exemption currently contained in Section 13.3 of NI 51-102. NMCCL and Newmont are, and have been, in compliance with all applicable conditions contained in Section 13.3(2) of NI 51-102.

17. NMCCL is not currently in default of the securities legislation of any Canadian jurisdiction.

The NMCCL Arrangement

18. Newmont and certain of its affiliates propose to implement the NMCCL Arrangement under the CBCA. The proposed NMCCL Arrangement would involve a series of transactions intended to provide Newmont with a more flexible and efficient corporate structure, without substantively affecting the rights of NMCCL Shareholders. The proposed NMCCL Arrangement would also include minor amendments to the terms of the NMCCL Exchangeable Shares to clarify their terms, specifically by (i) providing that if on any payment date for any dividends declared on the shares of Newmont Common Stock equivalent dividends are not paid in full on all of the NMCCL Exchangeable Shares, interest will accrue on any such dividends that remain unpaid at a rate of 6%, compounded annually, from the applicable payment date up to and including the date on which such unpaid dividends are paid, and (ii) providing that if the NMCCL Exchangeable Shares are not redeemed before February 16, 2024 (the ten-year anniversary of the first date on which they can be redeemed if no early redemption event occurs prior to that time) then those shares would be redeemed on that date.

19. Under the NMCCL Arrangement, NMCCL Shareholders (other than Newmont and its affiliates and NMCCL Shareholders who exercise dissent rights in connection with the NMCCL Arrangement) would be entitled to receive (directly or indirectly), in exchange for each of their NMCCL Exchangeable Shares, either one New Exchangeable Share (the “New Exchangeable Shares”) in the capital of a company (“New Exchangeco”) to be incorporated by an affiliate of Newmont, or the one share of Newmont Common Stock for which the NMCCL Exchangeable Share currently is exchangeable. As described in greater detail below, the New Exchangeable Shares will have substantively identical attributes as the NMCCL Exchangeable Shares, including the same economic equivalence to shares of Newmont Common Stock, the same voting rights and the same terms as outlined in paragraph 18 above.

20. Other than the exchange of NMCCL Exchangeable Shares for New Exchangeable Shares or the shares of Newmont Common Stock into which the NMCCL Exchangeable Shares are currently exchangeable, the NMCCL Arrangement is essentially an “internal corporate reorganization” and does not involve the direct or indirect acquisition or disposition by Newmont or any of its affiliates of any mineral property or any other asset (and, without limiting the generality of the foregoing, the NMCCL Arrangement does not involve the transfer of the NMCCL Assets to New Exchangeco).

21. Subject to obtaining all applicable approvals, it is currently anticipated that the NMCCL Arrangement would be completed in mid-December, 2011.

New Exchangeco and the New Exchangeable Shares

22. New Exchangeco will be incorporated as a special purpose entity for the purpose of issuing the New Exchangeable Shares in connection with the NMCCL Arrangement.

23. Upon the completion of the NMCCL Arrangement, New Exchangeco would become a reporting issuer in each of the Reporting Jurisdictions.

24. The authorized share capital of New Exchangeco will consist of an unlimited number of common shares and an unlimited number of New Exchangeable Shares. Upon completion of the NMCCL Arrangement, all of the outstanding common shares would be indirectly held by Newmont and all of the outstanding New Exchangeable Shares would be held by former NMCCL Shareholders who receive New Exchangeable Shares in exchange for their NMCCL Exchangeable Shares under the NMCCL Arrangement.

25. The terms and conditions of, and the contractual rights associated with, the New Exchangeable Shares would be substantively identical to the terms and conditions of, and the contractual rights associated with, the NMCCL Exchangeable Shares. In particular, the New Exchangeable Shares would:

(a) be exchangeable for shares of Newmont Common Stock at the option of the holder on a one-for-one basis; and

(b) have rights (including economic and voting rights) that are, as nearly as practicable, equivalent to the shares of Newmont Common Stock.

26. Like the NMCCL Exchangeable Shares, the New Exchangeable Shares would have no residual equity entitlement.

27. Application will be made for the New Exchangeable Shares to be listed, like the NMCCL Exchangeable Shares that they will replace, on the TSX.

28. As it did in respect of NMCCL and the NMCCL Exchangeable Shares, Newmont will enter into a support agreement (the “New Support Agreement”) with New Exchangeco pursuant to which, among other things, Newmont will:

(a) not declare or pay any dividend on the shares of Newmont Common Stock unless (i) on the same day New Exchangeco declares or pays, as the case may be, an equivalent dividend on the New Exchangeable Shares and (ii) New Exchangeco has sufficient money or other assets of authorized but unissued securities available to enable the due declaration and the due and punctual payment, in accordance with applicable law, of an equivalent dividend on the New Exchangeable Shares;

(b) advise New Exchangeco in advance of the declaration of any dividend on the shares of Newmont Common Stock and take other actions reasonably necessary to ensure that the declaration date, record date and payment date for dividends on the New Exchangeable Shares are the same as those for any corresponding dividends on the shares of Newmont Common Stock;

(c) ensure that the record date for any dividend declared on the shares of Newmont Common Stock is not less than seven days after the declaration date of such dividend; and

(d) take all actions and do all things reasonably necessary or desirable to enable and permit New Exchangeco, in accordance with applicable law, to deliver or cause to be delivered shares of Newmont Common Stock (together with a cash payment in respect of any declared and unpaid dividends) in the event of a liquidation, dissolution or winding-up of New Exchangeco, a retraction request by a holder of New Exchangeable Shares or a redemption of New Exchangeable Shares by New Exchangeco, as the case may be.

Implementation of the NMCCL Arrangement

29. Subject to the terms and conditions of the interim order (the “Interim Order”) that will be obtained from the Ontario Superior Court of Justice (the “Court”) in connection with the NMCCL Arrangement, the NMCCL Arrangement will require (a) the approval of NMCCL Shareholders (other than Newmont and its affiliates) holding not less than 66²/₃% of the NMCCL Exchangeable Shares voted (either in person or by proxy) at a special meeting (the “Meeting”) of the NMCCL Shareholders (currently anticipated to be held on or about December 9, 2011), and (b) the final approval of the Court. At the Meeting, each NMCCL Shareholder will be entitled to one vote for each NMCCL Exchangeable Share held.

30. In connection with the Meeting, NMCCL will mail the NMCCL Circular to NMCCL Shareholders (other than Newmont and its affiliates) that complies with applicable Canadian securities laws. Notwithstanding that the NMCCL Arrangement will result in holders of NMCCL Exchangeable Shares receiving either the shares of Newmont Common Stock for which such NMCCL Exchangeable Shares currently may be exchanged or New Exchangeable Shares that are substantively identical to the NMCCL Exchangeable Shares (including being exchangeable for the same number of Newmont Common Shares), by virtue of Section 14.2 of Form 51-102F5 – Information Circular, the NMCCL Circular technically is required to include prospectus-level disclosure (including financial statements) regarding New Exchangeco and NMCCL.

31. New Exchangeco will be a newly incorporated entity that will not have carried on any business other than performing its obligations as issuer of the New Exchangeable Shares. It will have had no income, cash flow or retained earnings to permit preparation of operating statements. Additionally, New Exchangeco will have no assets, liabilities or shareholders’ equity at the time of the NMCCL Arrangement, other than a nominal amount of capital to be contributed to New Exchangeco in consideration of the issuance of common shares in the capital of New Exchangeco.

32. Without the Exemption Sought, the NMCCL Circular would be required to include:

(a) an opening balance sheet (the “Balance Sheet”) of New Exchangeco (which, in this context, would show only the nominal contribution of capital on incorporation); and

(b) the financial statements (the “NMCCL Statements”) and corresponding management’s discussion and analysis (“MD&A”, and collectively with the Balance Sheet and the NMCCL Statements, the “Disclosure”) of NMCCL (the predecessor entity for New Exchangeco within the meaning of Section 32.1 of Form 41-101F1 – Information Required in a Prospectus).

33. As the New Exchangeable Shares will be economically equivalent to the shares of Newmont Common Stock (and the holders of New Exchangeable Shares economic interests are therefore at the Newmont level) and the obligations of New Exchangeco will be supported by the Newmont pursuant to the New Support Agreement, the NMCCL Circular would also include (or incorporate by reference) prospectus level disclosure (including financial statements) regarding Newmont, the issuer of the shares of Newmont Common Stock. As Newmont is eligible to distribute securities in Canada under NI 71-101, it is proposed that the NMCCL Circular would include (or incorporate by reference) the disclosure (including financial statements) prescribed by a form of prospectus that Newmont would be eligible to use under NI 71-101. The NMCCL Circular would not be required to include prospectus-level information for NMCCL itself, in that NMCCL has filed all documents required under NI 51-102.

34. In order to be able to include the Balance Sheet in the NMCCL Circular, New Exchangeco would have to be incorporated prior to sending the NMCCL Circular to NMCCL Shareholders. However, it is proposed that New Exchangeco would be incorporated on or after December 1, 2011.

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) immediately before the completion of the NMCCL Arrangement:

(i) NMCCL and Newmont satisfy, and have satisfied since the NMCCL Exchangeable Shares were distributed in Canada, all applicable conditions of the exchangeable security issuer exemption in section 13.3 of NI 51-102; and

(ii) Newmont satisfies all of the applicable general eligibility criteria for a northbound MJDS issuer set out in section 3.1 of NI 71-101;

(b) immediately following the completion of the NMCCL Arrangement:

(i) New Exchangeco and Newmont will satisfy all applicable conditions of the exchangeable security exemption in section 13.3 of NI 51-102; and

(ii) Newmont will satisfy all of the applicable general eligibility criteria for a northbound MJDS issuer set out in section 3.1 of NI 71-101;

(c) the NMCCL Circular includes (or incorporates by reference disclosure which includes):

(i) disclosure that substantively addresses the substance of the representations in paragraphs 1, 2, 14 and 18-31 in this decision;

(ii) prospectus-level disclosure about Newmont prescribed by a form of prospectus that Newmont would be eligible to use under NI 71-101;

(iii) disclosure that New Exchangeco will be a newly incorporated entity that will, immediately prior to completion of the NMCCL Arrangement, have no material assets, income or liabilities; and

(iv) the description of the NMCCL Assets in representation in paragraph 14 in this decision, and disclosure that the NMCCL Assets will not be transferred to New Exchangeco; and

(d) the NMCCL Circular is sent to NMCCL Shareholders no later than November 30, 2011.

“Jo-Anne Matear”

______________________

Jo-Anne Matear

Manager, Corporate Finance

Ontario Securities Commission