Securities Law & Instruments

Headnote

Section 144 - partial revocation of a ceasetrade order solely to permit shareholders to vote on proposedreverse takeover transaction and amalgamation.

Ontario Statutes Cited

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

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

GRAND OAKES RESOURCES CORP.(the Corporation)

 

ORDER

(SECTION 144)

WHEREAS the securities of the Corporationare subject to a temporary order of the Manager, Corporate Finance(the Manager) of the Ontario Securities Commission (theCommission) dated July 23, 2002 and extended by an theorder of the Manager dated August 2, 2002 made under section127 of the Act (collectively referred to as the Cease TradeOrder) directing that trading in the securities of the Corporationcease until it is revoked by a further order of revocation.

AND WHEREAS the Corporation has appliedto the Commission pursuant to section 144 of the Act (the Application)for a partial revocation of the Cease Trade Order.

AND UPON the Corporation having representedto the Commission as follows:

1. The Corporation was incorporated underthe Business Corporations Act (Ontario) on February23, 1988 and is a reporting issuer under the Act. The Corporationis not a reporting issuer or the equivalent in any other jurisdiction.

2. The authorized capital of the Corporationconsists of an unlimited number of common shares of which2,575,005 are issued and outstanding.

3. The Cease Trade Order was issued as a resultof the Corporation's failure to file its audited financialstatements for the fiscal year ended February 28, 2002. Subsequently,the Corporation failed to file its audited financial statementsfor the fiscal year ended February 28, 2003, and its interimfinancial statements for the three-month period ended May31, 2002, the six-month period ended August 31, 2002, andthe nine-month period ended November 30, 2002.

4. On January 23, 2003, the Corporation filedon SEDAR its audited financial statements for the fiscal yearended February 28, 2002, and its interim financial statementsfor the three-month period ended May 31, 2002, the six-monthperiod ended August 31, 2002, and the nine-month period endedNovember 30, 2002. On June 26, 2003 the Corporation filedon SEDAR its audited financial statements for the fiscal yearended February 28, 2003. On June 3, 2003, the Corporationsent its audited financial statements for the fiscal yearended February 28, 2003 to its shareholders. On June 27, 2003,the Corporation filed on SEDAR its amended audited financialstatements for the fiscal year ended February 28, 2002 andthe fiscal year ended February 28, 2003 (the Amended AnnualStatements). On June 27, 2003, the Corporation filed onSEDAR its amended interim financial statements for the three-monthperiod ended May 31, 2002, the six-month period ended August31, 2002, and the nine month period ended November 30, 2002(together with the Amended Annual Statements, the AmendedStatements).

5. The Corporation is contemplating a reversetake-over transaction (the RTO) with Midlands MineralsCorporation (Midlands), a private Ontario corporationthat has been exploring its mineral resource properties inTanzania and Ghana.

6. The RTO is to be accomplished by an amalgamation(the Amalgamation) between the Corporation and Midlandsunder which the shareholders of each of the amalgamating corporationsare to exchange their shares for shares of the amalgamatedcorporation. The shareholders of the Corporation are to receiveone share of the amalgamated corporation for each 4.5 sharesof the Corporation; the shareholders of Midlands are to receiveone share of the amalgamated corporation for each share ofMidlands; this will result in the shareholders of Midlandsholding about 92% of the issued shares of the amalgamatedcorporation.

7. The amalgamated corporation would becomea reporting issuer in Ontario under the Act by virtue of theAmalgamation. Following the RTO and the Amalgamation, unlessthe Commission grants a full revocation of the Cease TradeOrder, the securities of the amalgamated corporation wouldbe subject to the Cease Trade Order.

8. The RTO and the Amalgamation will be subjectto the approval of the shareholders of the Corporation. Theapproval of the shareholders will be sought at a special meetingof the shareholders to be held at 10:00 am on Monday, June30, 2003 at Equity Transfer Services Inc., Suite 420, 120Adelaide Street West, Toronto, Ontario. The Corporation sentan information circular (the Circular) to its shareholderson June 3, 2003. The Corporation filed the Circular (includingthe related brochure) on SEDAR on June 25, 2003. The Circulardoes not contain prospectus-level disclosure about the RTO,the Amalgamation, the Corporation and Midlands.

9. The Amended Statements were completed afterthe Corporation sent the Circular to its shareholders andwere not included in the Circular.

10. The common shares of the Corporation arenot listed or quoted on any exchange or market in Canada orelsewhere.

11. Other than its common shares, the Corporationhas no securities, including debt securities, outstanding.

12. The Corporation does not intend to seekfinancing until after the completion of the RTO and the Amalgamation,subject to the Commission granting a full revocation of theCease Trade Order.

13. The Corporation has applied for a partialrevocation of the Cease Trade Order solely to permit the shareholdersof the Corporation to consider the RTO and the Amalgamationon substantially the terms described in this order, and ifthought fit approve the RTO and the Amalgamation, subjectto the following conditions:

(a) the Corporation shall send the followingdocuments to its shareholders:

(i) the Amended Statements,

(ii) a document (the Amended Circular)containing prospectus-level disclosure about the RTO,the Amalgamation, the Corporation and Midlands, and

(ii) a new proxy form allowing its shareholdersto change their vote within 21 days of receipt of theAmended Statements and the Amended Circular, and,

(b) the Commission granting a full revocationof the Cease Trade Order.

14. Following such approval by its shareholders,the Corporation intends to make a further application fora full revocation of the Cease Trade Order to permit the tradingof its securities generally. As soon as practicable and beforemaking a further application for a full revocation of theCease Trade Order, the Corporation will send the Amended Statementsand the Amended Circular to its shareholders.

15. Other than:

(a) the Cease Trade Order,

(b) the Corporation's failure to send itsaudited financial statements for the fiscal year ended February28, 2002, and its interim financial statements for the three-monthperiod ended May 31, 2002, the six-month period ended August31, 2002, and the nine-month period ended November 30, 2002,to its shareholders,

(c) the Corporation's failure to send theAmended Statements to its shareholders,

(d) the Corporation's failure to file theCircular with the Commission when it sent the Circular toits shareholders, and

(e) the failure of the Circular to provideprospectus-level disclosure about the RTO, the Amalgamation,the Corporation and Midlands,

the Corporation is not in default of any requirementsof the Act or the rules or regulations thereunder.

AND UPON considering the applicationand the recommendation of the staff of the Commission.

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

IT IS ORDERED, pursuant to section 144of the Act, that the Cease Trade Order is partially revokedsolely to permit the shareholders of the Corporation to voteon the RTO and the Amalgamation as set out in this Order.

June 27, 2003.

"John Hughes"