Chai Cha Na Mining Inc.

Headnote

Application for partial revocation of cease trade order -- variation of cease trade order to permit certain trades for the purpose of debt settlement and private placement financing -- partial revocation granted subject to conditions.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 127, 144.

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, CHAPTER S.5, AS AMENDED

(the ACT)

AND

IN THE MATTER OF

CHAI CHA NA MINING INC.

(the Applicant)

DECISION

WHEREAS the securities of the Applicant are subject to a temporary cease trade order made by the Director dated October 4, 2010 pursuant to paragraph 2 of subsection 127(1) and subsection 127(5) of the Act, as extended by a further order made by the Director dated October 15, 2010 pursuant to paragraph 2 of subsection 127(1) of the Act (collectively, the Cease Trade Order), directing that trading in the securities of the Applicant cease until the Cease Trade Order is revoked;

AND WHEREAS the Applicant has made an application to the Ontario Securities Commission (the Commission) pursuant to subsection 144(1) of the Act (the Application) for an order (the Order) partially revoking the Cease Trade Order;

AND WHEREAS the Applicant has represented to the Commission as follows:

1. The Applicant was incorporated on February 12, 2007 under the Canada Business Corporations Act. Its head office is located in Mississauga, Ontario.

2. The Applicant is a reporting issuer in British Columbia, Alberta and Ontario and is also subject to cease trade orders issued by the British Columbia Securities Commission (BCSC) dated October 5, 2010 and the Alberta Securities Commission (ASC) dated January 17, 2011. No revocation application has been made to the BCSC or ASC by the Applicant. A partial revocation application is being made to the BCSC simultaneously with the Application to the Commission.

3. The Applicant is authorized to issue an unlimited number of common shares without par value (the Common Shares), of which 17,342,875 are issued and outstanding.

4. The Applicant's Common Shares are listed on the Canadian National Stock Exchange (the CNSX).

5. The Cease Trade Order was issued as a result of the failure of the Applicant to file its audited annual financial statements and related management's discussion and analysis for the year ended May 31, 2010 (collectively the 2010 Annual Statements) on or before the filing deadline as required by section 4.1 of National Instrument 51-102 Continuous Disclosure Obligations.

6. The Applicant's failure to file the 2010 Annual Statements was a result of financial distress.

7. The Applicant intends to conduct a debt settlement and to conduct a financing, both through the issuance of units (Units). Each Unit will consist of one Common Share and one share purchase warrant (a Warrant). Each Warrant entitles the holder thereof to purchase one additional Common Share at a price of $0.05 per share for five years following the issuance of the Units.

8. The Applicant seeks to vary the Cease Trade Order to allow it to issue Units, to settle up to $200,000 in debt (the Debt Settlement) and to conduct a financing by way of private placement of up to $300,000 (the Financing). The Applicant proposes to issue the Units at a (deemed) price of $0.03 per Unit.

9. As the Debt Settlement and Financing will involve trades in the securities of the Applicant (including for greater certainty, acts in furtherance of trades in securities of the Applicant), it cannot be completed without a variation of the Cease Trade Order.

10. The proceeds from the Financing shall be used to:

(a) prepare and file all outstanding continuous disclosure documents with a view to obtaining a full revocation of the Cease Trade Order and the cease trade orders in effect in British Columbia and Alberta;

(b) pay filing fees to the Commission, the BCSC and the ASC;

(c) fund the preparation of the applications for the revocation of the Cease Trade Order and the cease trade orders in effect in British Columbia and Alberta

(d) pay outstanding accounts, for a property payment and for funding the Applicant's ongoing operations.

11. Specifically, the proceeds from the Financing will be used as follows:

(a)	Legal, accounting and audit fees:	$80,000
(b)	Regulatory filing fees (including penalties for late filings of materials):	$17,175
(c)	Property payment:	$35,000
(d)	Outstanding accounts:	$37,103
(e)	Office and administration (6 months):	$50,000
(f)	General working capital	$80,722
	Total:	$300,000

12. Creditors who participate in the Debt Settlement (the Creditors) will participate pursuant to the exemption in Section 2.14 of National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106).

13. Investors who participate in the Financing (the Subscribers) will participate pursuant to exemptions in either Section 2.3 or 2.5 of NI 45-106.

14. The Applicant reasonably believes that it will have sufficient resources upon completion of the Debt Settlement and Financing to bring its continuous disclosure obligations up to date and pay all related outstanding fees.

15. The Applicant intends to apply to the CNSX for re-instatement for trading after it has brought its continuous disclosure obligations up to date and paid all related outstanding fees.

16. Prior to the completion of the Debt Settlement and Financing, the Creditors in respect of the Debt Settlement and the Subscribers in respect of the Financing will:

(a) receive a copy of the Cease Trade Order;

(b) receive a copy of this Order; and

(c) receive written notice from the Applicant, and will provide a written acknowledgment of such notice to the Applicant, that all of the Applicant's securities, including the Units, Common Shares and Warrants issued in connection with the Financing and Debt Settlement, will remain subject to the Cease Trade Order until it is revoked, and that the granting of this Order does not guarantee the issuance of a full revocation in the future.

17. Upon issuance of this Order, the Applicant will issue a press release and file a material change report announcing the Financing, Debt Settlement and this Order.

18. To bring its continuous disclosure record up to date, the Applicant intends, within a reasonable time following completion of the Financing, to file on SEDAR the following documents (collectively, the Required Documents):

(a) the 2010 Annual Statements;

(b) interim financial statements and related management's discussion and analysis for the three, six and nine month periods ended August 31, 2010, November 30, 2010 and February 28, 2011, respectively (the 2011 Interim Statements);

(c) all certifications by the Chief Executive Officer and the Chief Financial Officer of the Applicant with respect to the Applicant's 2010 Annual Statements and 2011 Interim Statements required by National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings; and

(d) all other continuous disclosure documents required by applicable securities legislation to be filed by the Applicant.

19. Other than the Cease Trade Order, the Applicant has not previously been subject to a cease trade order by the Commission.

20. Upon completion of the Financing and filing of the Required Documents, the Applicant will apply to the Commission and to the other securities regulatory authorities where cease trade orders are in effect for a full revocation of the Cease Trade Order and those other cease trade orders.

21. The Applicant is not considering, nor is it involved in any discussions relating to a reverse take-over, merger, amalgamation or other form of combination or transaction similar to any of the foregoing.

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

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 is partially revoked solely to permit trades in securities of the Applicant (including, for greater certainty, acts in furtherance of trades in securities of the Applicant) that are necessary for and are in connection with the Debt Settlement and Financing, provided that:

(a) prior to completion of the Debt Settlement and Financing, each Creditor in respect of the Debt Settlement and each Subscriber in respect of the Financing will:

(i) receive a copy of the Cease Trade Order;

(ii) receive a copy of this Order; and

(iii) receive written notice from the Applicant, and acknowledge that all of the Applicant's securities, including the securities issued in connection with the Debt Settlement and Financing, will remain subject to the Cease Trade Order until it is revoked, and that the granting of this Order does not guarantee the issuance of a full revocation order in the future;

(b) the Applicant undertakes to make available copies of the written acknowledgements to staff of the Commission on request; and

(c) this Order will terminate on the earlier of:

(i) the date on which the both the Debt Settlement and Financing are completed; and

(ii) 120 days from the date hereof.

DATED at Toronto, Ontario on this 5th day of May, 2011.