SilverBirch Energy Corporation

Decision

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- exemption granted from the requirement to include audited carve-out financial statements for acquired assets in information circular -- the assets will comprise the primary business of a new reporting issuer.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations.

Citation: SilverBirch Energy Corporation, Re, 2012 ABASC 63

February 16, 2012

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

(THE JURISDICTIONS)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

SILVERBIRCH ENERGY CORPORATION

(SBE OR THE FILER)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application (the Application) from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) exempting the Filer from the requirement under Item 14.2 of Form 51-102F5 Information Circular (the Circular Form) to provide the financial statements for the Spin-Off Assets (as defined below) for the financial years ended 31 December 2010, 31 December 2009 and 31 December 2008 and the nine month periods ended 30 September 2011 and 30 September 2010 along with the management's discussion and analysis for the corresponding periods in the management information circular (the Circular) to be prepared by SBE and delivered to the holders (SBE Shareholders) of common shares of SBE (SBE Shares) in connection with a special meeting (SBE Meeting) of SBE Shareholders expected to be held in late March 2012 for the purposes of considering a plan of arrangement under the Canada Business Corporations Act (the CBCA) (the Arrangement) resulting in the exchange of the SBE Shares for $8.50 cash from a wholly-owned subsidiary of Teck Resources Limited (Teck) and one common share (a SilverWillow Share) of SilverWillow Energy Corporation (SilverWillow) for each SBE Share and the transfer from SBE to SilverWillow of the Spin-Off Assets (collectively, the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for this Application;

(b) SBE has provided notice that Subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Saskatchewan, Manitoba, Ontario, Québec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador; and

(c) this decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

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

Representations

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

SBE, SILVERWILLOW AND TECK

SBE

1. SBE is a corporation established under the CBCA on 25 June 2010. The principal office of SBE is located in Calgary, Alberta.

2. SBE is a reporting issuer or the equivalent under the securities legislation of each of the provinces of Canada. To its knowledge, SBE is not in default of securities legislation in any jurisdiction of Canada.

3. SBE's financial year end is 31 December.

4. SBE is presently engaged in the development of oil sands projects located in Alberta's Athabasca oil sands area through its ownership of the SBE Spin-Off Assets (as defined below) and through an interest in other oil sands projects not comprised within the SBE Spin-Off Assets.

5. SBE is currently in the development stage and has earned no operating revenue, including in respect of the SBE Spin-Off Assets, within any of the fiscal years ended 31 December 2010, 2009 or 2008 or for the nine months ended 30 September 2011.

6. There are no "reserves" within the meaning of National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (NI 51-101) attributable to the Spin-Off Assets (as defined below) and there has been no oil and gas production from the Spin-Off Assets.

7. The SBE Shares are listed on the TSX Venture Exchange (the TSX-V) under the symbol "SBE".

8. Following completion of the Arrangement, the SBE Shares will be delisted from the TSX-V.

SILVERWILLOW

9. SilverWillow is a corporation established under the CBCA on 5 January 2012 for the sole purpose of participating in the Arrangement.

10. SilverWillow has not carried on any active business since the date of its incorporation up to the date of this Application other than in connection with the Arrangement and related matters.

11. The principal office of SilverWillow is located in Calgary, Alberta.

12. SilverWillow's financial year end is 31 December.

13. SilverWillow is a wholly-owned subsidiary of SBE which holds the one outstanding SilverWillow Share.

14. SilverWillow is not a reporting issuer in any jurisdiction and, to its knowledge, is not in default of applicable securities legislation in any jurisdiction of Canada.

15. The SilverWillow Shares are not listed or posted for trading on any exchange or quotation and trade reporting system.

16. On 27 January 2012, SilverWillow submitted its initial application to list the SilverWillow Shares on the TSX-V.

TECK

17. Teck is a corporation continued under the CBCA in 1987. The registered and principal offices of Teck are located in Vancouver, British Columbia.

18. Teck is a reporting issuer or the equivalent under the securities legislation of each of the provinces of Canada.

19. Teck's business is exploring for, developing and producing natural resources. Its activities are organized into business units focused on copper, coal, zinc and energy.

20. Teck's Class A common shares are listed on the Toronto Stock Exchange (the TSX) under the symbol "TCK.A"; its Class B subordinate voting shares are listed on the TSX under the symbol "TCK.B" and on the New York Stock Exchange under the symbol "TCK".

ARRANGEMENT

21. Pursuant to the Arrangement, subject to certain conditions:

(a) Teck would indirectly acquire all of the SBE Shares, not already owned directly or indirectly by it, for cash consideration of $8.50 per SBE Share;

(b) Teck will, through a series of transactions, transfer the Teck Spin-Off Assets (as defined below) to SBE;

(c) SBE will transfer the Spin-Off Assets (as defined below) to SilverWillow and SilverWillow will assume certain liabilities pursuant to the terms of a transfer agreement to be entered into among SBE, Frontier Energy Partnership, a partnership to be created by SBE, and SilverWillow (the Transfer Agreement); and

(d) The SBE Shareholders will receive (directly or indirectly) one SilverWillow Share per SBE Share.

22. Pursuant to the Arrangement and in accordance with the Transfer Agreement, SBE will transfer to SilverWillow certain assets (the Spin-Off Assets) as follows:

(a) a 50% working interest held by SBE in 117,120 acres of oil sands leases located in the Athabasca Oil Sands Area of Alberta (including oil sands leases 003, 422, 423, 469, 471, 513, 514, 611, 614, 615 and 915 (collectively, the Jordan and Birch Mountain Leases));

(b) a 100% working interest in 23,040 acres of undeveloped lands also in the Athabasca oil sands area of Alberta comprised of oil sands leases 418 and 271 (the Audet Lands) with in-situ oil sands potential and in 34,560 acres of undeveloped lands also in the Athabasca oil sands area of Alberta comprised of oil sands leases 042, 043 and 044;

(collectively, the assets described in paragraphs 22(a) and (b) being the SBE Spin-Off Assets);

(c) the remaining 50% working interest in the Jordan and Birch Mountain Leases held by Teck and to be transferred from Teck to SBE pursuant to the Arrangement (the Teck Spin-Off Assets);

(d) approximately $25 million in working capital (subject to adjustment) in the form of cash consideration, being a significant proportion of the Spin-Off Assets; and

(e) certain other minor assets as specified in the Transfer Agreement.

23. Following the completion of the Arrangement:

(a) SBE would become an indirect wholly-owned subsidiary of Teck;

(b) the Spin-Off Assets would become the principal business of SilverWillow;

(c) beneficial ownership of the SilverWillow Shares upon completion of the Arrangement will be identical to the beneficial ownership of the SBE Shares immediately prior to the Arrangement meaning the indirect interest in the SBE Spin-Off Assets will remain unaffected by the Arrangement; and

(d) the beneficial owners of the SilverWillow Shares upon completion of the Arrangement will have had the benefit of SBE's continuous disclosure relating to the SBE Spin-Off Assets (which effectively equates to disclosure relating to the Spin-Off Assets given SBE's ownership of a 50% working interest in the Jordan and Birch Mountain Leases, the other 50% of which makes up the Teck Spin-Off Assets) since the time that they were initially acquired by SBE and accordingly, already have the benefit of existing public disclosure regarding the Spin-Off Assets and the nature of an investment therein.

24. Pursuant to SBE's constating documents, the CBCA and applicable securities laws, the SBE Shareholders will be required to approve the Arrangement at the SBE Meeting.

25. The Arrangement must be approved by not less than two-thirds of the votes cast by SBE Shareholders at the SBE Meeting and a majority of the votes cast by the SBE Shareholders other than those required to be excluded pursuant to Multilateral Instrument 61-101Protection of Minority Security Holders in Special Transactions. The SBE Meeting is anticipated to take place in late March 2012 and the Circular is expected to be mailed by SBE to the SBE Shareholders in early March 2012, subject to receipt of, among other things, the Exemption Sought.

26. The Arrangement will be a "restructuring transaction" under National Instrument 51-102 Continuous Disclosure Obligations in respect of SBE and therefore would require compliance with Item 14.2 of the Circular Form.

FINANCIAL STATEMENT AND MD&A DISCLOSURE IN THE CIRCULAR

27. Item 14.2 of the Circular Form requires, among other items, that the Circular contain the disclosure (including financial statements) prescribed under securities legislation and described in the form of prospectus that SilverWillow would be eligible to use immediately prior to the filing and sending of the Circular to SBE Shareholders for a distribution of SilverWillow securities. Therefore, the Circular must contain the disclosure in respect of SilverWillow prescribed by Form 41-101F1 Information Required in a Prospectus (the Prospectus Form) and by National Instrument 41-101 General Prospectus Requirements (NI 41-101).

28. Items 8.2(1)(a) and (b) and 8.2(2) of the Prospectus Form require SBE to include the MD&A in the Circular.

29. Item 32.1(b) of the Prospectus Form requires SBE to include certain annual financial statements for the Spin-Off Assets in the Circular, including, in accordance with Items 32.2(1) and 32.3(1) of the Prospectus Form: (i) a statement of comprehensive income, a statement of changes in equity and a statement of cash flows relating to the Spin-Off Assets for each of the financial years ended 31 December 2010, 31 December 2009 and 31 December 2008 and for the nine month periods ended 30 September 2011 and 30 September 2010; (ii) a statement of financial position relating to the Spin-Off Assets as at 31 December 2010 and 31 December 2009 and as at 30 September 2011 and 30 September 2010; (iii) a statement of financial position as at the beginning of the earliest comparative period for which financial statements that are included comply with IFRS; and (iv) an opening IFRS statement of financial position at the date of transition to IFRS (collectively, the Financial Statements).

30. Subsection 4.2(1) of NI 41-101 requires that the Financial Statements required to be included in the Circular must be audited in accordance with National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency.

Alternative Disclosure

31. The Circular will include:

(a) an audited statement of financial position of SilverWillow as at 5 January 2012;

(b) an audited schedule of exploration and evaluation assets and property and equipment comprised in the SBE Spin-Off Assets as at 30 September 2011, including a breakdown of the material components thereof;

(c) a pro forma statement of financial position of SilverWillow as at 30 September 2011, giving effect to the acquisition of the Spin-Off Assets, including a pro forma adjustment for the Teck Spin-Off Assets, as at that date,

(collectively, the Alternative Financial Statements);

(d) with respect to the oil sands leases comprised in the Spin-Off Assets, detailed disclosure, with the assistance of maps and tables where appropriate, of:

(i) the location and nature of the oil sands leases;

(ii) a chronology of the history and development of the Spin-Off Assets since 1 January 2008;

(iii) a description of any arrangements with counterparties relating to the exploration and evaluation of the oil sands leases;

(iv) a summary of drilling conducted to date on the oil sands leases;

(v) information about the nature of any preliminary engineering and in situ development planning conducted with respect to the oil sands leases; and

(vi) a description of any regulatory activities undertaken with respect to the oil sands leases;

(e) a summary of the report prepared by Sproule Unconventional Limited (Sproule) in accordance with the requirements of NI 51-101 and the policies of the TSX-V in respect of the Audet Lands providing Sproule's independent evaluation of discovered bitumen initially in place effective 30 September 2011;

(f) disclosure of capital expenditures (including costs that were capitalized or charged to expense when incurred) incurred by SBE with respect to the SBE Spin-Off Assets for the year ended 31 December 2010 and the nine months ended 30 September 2011, in accordance with Item 6.6 of Form 51-101F1 Statement of Reserves Data and Other Oil and Gas Information;

(g) disclosure of the fact there has been no production, gross revenue, royalty expenses, production costs and operating income for the Spin-Off Assets for each of the relevant financial periods;

(h) disclosure regarding SilverWillow and the Spin-Off Assets that otherwise complies with the Prospectus Form; and

(i) with respect to the working capital comprised in the Spin-Off Assets, a summary of how the working capital amount to be transferred to SilverWillow will be calculated and the intentions of SilverWillow as to the uses of its working capital for 12 months,

(the items comprising (d) to (i) being referred to collectively as the Proposed Disclosure).

32. The Alternative Financial Statements and the Proposed Disclosure will provide full, true and plain disclosure of all material facts relating to the Spin-Off Assets, and will provide information in respect of the Spin-Off Assets that is sufficient to enable an investor to make an informed investment decision regarding the Spin-Off Assets and the Arrangement generally.

33. Disclosure of the Financial Statements and MD&A is not necessary to allow SBE Shareholders to form a reasoned judgement concerning the nature and effect of the Arrangement.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted provided that the Circular includes the Alternative Financial Statements and the Proposed Disclosure.

"Blaine Young"
Associate Director, Corporate Finance