Securities Law & Instruments

Headnote

Ruling under subsection 74(1) of the Act - Sections25 and 53 of the Act will not apply to the issuance of 300,000common shares of the issuer to a creditor of the issuer subjectto conditions, including that the first trade of such shareswill be a distribution unless such trade is made in accordancewith the provisions of subsections (2) or (3) of section 2.5of Multilateral Instrument 45-102 - Resale of Securities.

Ontario Statutes

Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 74(1), 25, 53.

Ontario Rules

Multilateral Instrument 45-102 - Resale of Securities,subsections (2) or (3) of section 2.5.

IN THE MATTER OF

THE SECURITIES ACT

R.S.O. 1990, c. S. 5, AS AMENDED(the "Act")

AND

IN THE MATTER OF

GLIMMER RESOURCES INC.

 

RULING

(Subsection 74(1) of the Act)

UPON the application (the "Application")of Glimmer Resources Inc. (the "Corporation") to theOntario Securities Commission (the "Commission") fora ruling pursuant to section 74(1) of the Act that sections25 and 53 of the Act will not apply to the issuance of 300,000common shares of the Corporation (the "Settlement Shares")to a creditor of the Corporation, subject to certain conditions;

AND UPON considering the Applicationand the recommendation of the staff of the Commission;

AND UPON the Corporation having representedto the Commission that:

1. The Corporation was incorporated underthe Business Corporations Act (Ontario) on March 10,1986. The head office of the Corporation is located at Suite500, 56 Temperance Street, Toronto, Ontario, M5H 3V5.

2. The Corporation is a reporting issuer underthe Act and is not on the list of defaulting reporting issuersmaintained pursuant to section 72(9) of the Act.

3. The authorized capital of the Corporationconsists of an unlimited number of common shares (the "CommonShares"), of which 6,098,962 Common Shares are currentlyissued and outstanding. The Common Shares are listed on theTSX Venture Exchange (the "TSXV") under the symbol"GME".

4. The Corporation is a mining and explorationcompany. Together with Exall Resources Inc. ("Exall"),its joint venture partner, the Corporation brought the GlimmerMine, a ramp-access underground gold mining operation locatednear Matheson, Ontario, into production in 1998.

5. The Glimmer Mine was operated as a jointventure (the "Joint Venture"). The Corporation helda forty-eight per cent interest in the Joint Venture. Pursuantto a joint venture agreement dated November 20, 2000 (the"Joint Venture Agreement"), Exall was named the"operator" of the Joint Venture, and was responsiblefor the day-to-day operations of the Glimmer Mine, includingthe payment of creditors of the Glimmer Mine. The Joint VentureAgreement required the Corporation to reimburse Exall forforty-eight per cent of the expenses of the Joint Venture.

6. On May 10, 2001, production at the GlimmerMine was halted, and the Glimmer Mine was placed on care andmaintenance. On May 30, 2002, the Corporation and Exall enteredinto an agreement with International Pursuit Corporation (nowApollo Gold Corporation) ("Apollo") to sell allof their right, title and interest in and to the Joint Ventureto Apollo.

7. The sale of the Joint Venture was completedon September 6, 2002. As consideration, the Corporation receivedcash in the amount of $1,516,416, together with 960,000 commonshares in the capital of Apollo. The Corporation also hasthe right, contingent upon the Glimmer Mine reaching certainspecified levels of commercial production, to receive an additional$1,440,000 from Apollo. The Glimmer Mine has not yet resumedcommercial production.

8. As a result of the sale by the Corporationof its only significant asset, its interest in the Joint Venture,the Corporation has been designated "Inactive" bythe TSXV.

9. During the period between May 10, 2001and May 30, 2002, the Joint Venture incurred expenses of $347,111.50.Exall, as the operator of the Joint Venture, paid these expenses.The Corporation's proportionate share of the Joint Ventureexpenses incurred during this period is $166,613.52.

10. The Corporation has been experiencingfinancial difficulty for some time. The Corporation's auditedfinancial statements for the year ended December 31, 2002showed total assets of $2,293,408, and total liabilities of$3,636,113. The Corporation reported a total loss of $1,870,525,or $0.31 per Common Share, for the year ended December 31,2002. The Corporation has no revenue-producing assets.

11. All of the cash consideration receivedby the Corporation for the sale of its interest in the JointVenture was used by the Corporation to satisfy creditors ofthe Joint Venture and the Corporation.

12. Since September 6, 2002, Exall and theCorporation have negotiated a settlement of the amounts owingby the Corporation to Exall pursuant to the Joint VentureAgreement. On December 18, 2002, Exall agreed to accept 38,400common shares of Apollo in partial satisfaction of the amountsowing to it by the Corporation. The closing price of the Apollocommon shares on December 18, 2002 was $2.50; therefore, Exalland the Corporation have valued these Apollo common sharesat $96,000.00. The Corporation currently owes Exall the sumof $70,613.52 in respect of its proportionate share of theJoint Venture expenses.

13. In satisfaction of its remaining debtto Exall, the Corporation has offered, subject to receiptof all necessary regulatory approvals, to issue the SettlementShares to Exall (one Common Share for each $0.2353 of indebtedness).Exall has accepted this offer.

14. Exall is at arm's length to the Corporationand is a genuine creditor of the Corporation.

15. The issuance of the Settlement Sharesto Exall will represent approximately 4.92% of the currentlyissued and outstanding Common Shares. Following the issuanceof the Settlement Shares to Exall, the Corporation will havea total of 6,398,962 Common Shares issued and outstanding,of which approximately 4.69% will be held by Exall.

16. The Corporation has applied to the TSXVfor approval of the issuance of the Settlement Shares to Exallin satisfaction of the debt owed to it.

AND UPON the Commission being satisfiedthat to do so would not be prejudicial to the public interest;

IT IS RULED pursuant to section 74(1)of the Act that section 25 and 53 of the Act will not applyto the issuance of the Settlement Shares to Exall provided that:

(a) prior to or concurrently with the issuanceof the Settlement Shares to Exall, the Corporation providesExall with a copy of this ruling together with a statementexplaining that, as a consequence of the ruling, certain protections,rights and remedies provided under the Act to purchasers ofsecurities distributed by way of prospectus, including statutoryrights of rescission and damages, are not available; and

(b) the first trade in Settlement Shares issuedto Exall pursuant to this ruling will be a distribution unlesssuch trade is made in accordance with the provisions of subsections(2) or (3) of section 2.5 of Multilateral Instrument 45-102- Resale of Securities.

May 26, 2003.

"Harold P. Hands"

"Robert W. Korthals"