Ontario Commission des 22nd Floor 22e étage
Securities valeurs mobilières 20 Queen Street West 20, rue Queen ouest
Commission de l’Ontario Toronto ON M5H 3S8 Toronto ON M5H 3S8
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
SILVER MOUNTAIN RESOURCES INC.
(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) for an exemption from (collectively, the Exemption Sought):
a) The requirements otherwise applicable to the Filer as a reporting issuer who is not a venture issuer in each of the following instruments, including the forms thereof (collectively, the Instruments):
i. National Instrument 41-101 General Prospectus Requirements;
ii. National Instrument 51-102 Continuous Disclosure Obligations;
iii. National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards;
iv. National Instrument 52-109 Certification of Disclosure in Issuer's Annual and Interim Filings;
v. National Instrument 52-110 Audit Committees; and
vi. National Instrument 58-101 Disclosure of Corporate Governance Practices;
b) The formal valuation requirements in sections 4.3 and 5.4 of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (MI 61-101); and
c) The minority approval requirement in section 5.6 of MI 61-101 (the Minority Approval Relief).
Securities legislation imposes obligations for all reporting issuers. There are different obligations applicable to reporting issuers who are venture issuers and to those that are non-venture issuers. The Exemption Sought will permit the Filer to comply with the obligations applicable to venture issuers notwithstanding that the Filer does not meet the criteria in the definition of "venture issuer".
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 the other provinces and territories of Canada.
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:
The Filer is incorporated under the Canada Business Corporations Act and its head office is located at 82 Richmond St. East, Toronto, Ontario, M5C 1P1, Canada. The Filer's principal business objectives are the acquisition, exploration, and development of precious metal resource properties and the Filer's principal asset is a 99.99% interest in a mineral project located near the town of Castrovirreyna, department of Huancavelica, province of Castrovirreyna, Peru.
The Filer is a reporting issuer in each province and territory of Canada (the Reporting Jurisdictions).
The Filer is authorized to issue an unlimited number of class A common shares and an unlimited number of class B non-voting common shares. As of June 10, 2024, the Filer had 367,298,788 class A common shares and nil class B non-voting common shares issued and outstanding.
The Filer's class A common shares are listed on the TSX Venture Exchange (the TSXV) under the symbol "AGMR", the Risk Capital Segment of the Lima Stock Exchange (Segmento de Capital de Riesgo de la Bolsa de Valores de Lima) in Peru (the Lima Exchange) under the symbol "AGMR" and the OTCQB under the symbol "AGMRF".
The Filer's class A common shares were first listed for trading on the Lima Exchange on July 18, 2022. The Filer listed its class A common shares on the Lima Exchange due to the Filer's connection to Peru and to facilitate the sale and transfer of its class A common shares for shareholders domiciled in Peru.
The Filer is not in default of any of the requirements of the Legislation, except that from July 18, 2022 until the date of this decision, the Filer has been in default of any applicable securities legislation requirements in the Reporting Jurisdictions that apply to reporting issuers that are not venture issuers by virtue of its listing on the Lima Exchange.
In the Instruments, the definition of "venture issuer" excludes a reporting issuer who, at the relevant time, has "any of its securities listed or quoted on any of the Toronto Stock Exchange, Aequitas NEO Exchange Inc., a U.S. marketplace or a marketplace outside of Canada and the United States of America other than the Alternative Investment Market of the London Stock Exchange or the PLUS markets operated by PLUS Markets Group plc" (the Venture Issuer Definition).
As the Lima Exchange is a marketplace and hence a "marketplace outside of Canada and the United States of America", the Filer does not, subsequent to July 18, 2022, meet the criteria of the Venture Issuer Definition.
The Filer acknowledges that any right of action, remedy, penalty or sanction available to any person or company or to a securities regulatory authority against the Filer from July 18, 2022 until the date of this decision are not terminated or altered as a result of this decision.
The Lima Exchange has two main segments on which securities may be traded. The Filer's securities are listed on the junior segment of the Lima Exchange -- the Risk Capital Segment of the Lima Exchange (Segmento de Capital de Riesgo de la Bolsa de Valores de Lima) (the Risk Capital Segment). The Risk Capital Segment is a junior segment and is a specialized market implemented by the Lima Exchange to provide junior mining companies the opportunity to obtain funding through the Peruvian capital markets. The listing of a security of an issuer on this segment is automatic (subject to submission and acceptance of the required application forms and sponsorship) if that issuer is already listed on certain stock exchanges, including the TSXV (the Dual Listing Program).
The Lima Exchange defers to the requirements of the issuer's primary stock exchange for issuers that list on the Risk Capital Segment through the Dual Listing Program. The Risk Capital Segment of the Lima Exchange is junior or equivalent to the TSXV in terms of its requirements and does not have any minimum listing, listing maintenance or continuous disclosure requirements for TSXV-listed issuers that are more onerous as compared with the TSXV as it defers to the requirements of the TSXV with respect to TSXV-listed issuers, including the Filer. For a listing application, a TSXV-listed issuer must file a sponsorship report by a local broker dealer acting as a sponsor for the listing. In addition, an issuer must file all public disclosure documents filed in its home jurisdiction with the Lima Exchange. The Lima Exchange does not have any requirements for a mining issuer to hold a significant interest in a qualifying property, expenditure requirements or work program or exploration work limits.
The Lima Exchange requires the Filer to, and the Filer does and will continue to, comply with applicable laws and regulations of the Filer's home jurisdiction, including the policies of the TSXV.
The information that the Filer has provided regarding the Risk Capital Segment of the Lima Exchange and its status as a junior market for the purposes of review by staff of the principal regulator is accurate as of the date of this decision.
The Filer monitors the requirements of the Risk Capital Segment of the Lima Exchange on an ongoing basis, through both its Peruvian sponsor, Kallpa SAB (the Peruvian Sponsor) and its Chief Executive Officer, Mr. Alvaro Espinoza Vargas, and its Chief Financial Officer, Ms. Patricia Alejandra Soto Rengifo, both of whom are designated to act as the Filer's Stock Exchange Representatives (Representantes Bursátiles) with the Lima Exchange (the Lima Representatives).
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) The Filer complies with the conditions and requirements of Canadian securities legislation applicable to a reporting issuer that satisfies the Venture Issuer Definition, including the rules and policies of the TSXV;
(b) The representations listed in paragraphs 10 through 13 above continue to be true;
(c) The Filer will monitor the representations made in paragraphs 10 through 13 above on an ongoing basis through both its Peruvian Sponsor, Kallpa SAB, and the Lima Representatives, Mr. Alvaro Espinoza Vargas and Ms. Patricia Alejandra Soto Rengifo, including periodic reviews of the requirements of the Risk Capital Segment of the Lima Exchange and its status as a junior market, and inform the principal regulator of any material change affecting the truth of said representations;
(d) The Filer will inform the principal regulator of any material change regarding the Risk Capital Segment of the Lima Exchange in terms of its requirements, the minimum listing requirements, the listing maintenance requirements or any other changes which relate to its status as a junior market and inform the principal regulator of whether any such change impacts its status as a junior market;
(e) The Risk Capital Segment of the Lima Exchange is not restructured in a manner that makes it unreasonable to conclude that it is still a junior market and that the representations listed in paragraphs 10 through 13 above continue to be true;
(f) The Filer continues to have its class A common shares listed on the TSXV;
(g) The Filer does not graduate from the Risk Capital Segment of the Lima Exchange to a more senior segment of the Lima Exchange;
(h) The Filer does not have any of its securities listed or quoted on any of the Toronto Stock Exchange, Aequitas NEO Exchange Inc., a U.S. marketplace or a marketplace outside of Canada and United Stated of America other than the Lima Exchange, the Alternative Investment Market of the London Stock Exchange or the PLUS markets operated by PLUS Markets Group plc;
(i) In the event an exemption under Canadian securities legislation applies to a requirement in the Instruments applicable to the Filer, and a condition to the exemption requires the issuer to be a venture issuer, the Filer may invoke the benefit of that exemption if the Filer meets the conditions required by the exemption except for the condition that the Filer be a venture issuer;
(j) In the event an exemption under Canadian securities legislation applies to a requirement applicable to the Filer as a reporting issuer who is not a venture issuer in the Instruments, and a condition to the exemption requires the issuer to not be a venture issuer, the Filer does not invoke the benefit of that exemption; and
(k) For the purposes of the Minority Approval Relief, in addition to conditions (a) through (j) above, the Filer complies with the requirement to obtain minority approval in section 5.6 of MI 61-101, except that the Filer is entitled to rely on the exemption from the requirement to obtain minority approval set out in subsection 5.7(1)(b) of MI 61-101, despite subsection 5.7(1)(b)(i) of MI 61-101, provided that the other conditions of subsection 5.7(1)(b) of MI 61-101 are satisfied.
_”Marie-France Bourret”
Marie-France Bourret
Manager, Corporate Finance
Ontario Securities Commission OSC File# 2024/0353