Sandstorm Gold Ltd. and Premier Royalty Inc.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- application from subsidiary (Subco) of parent company (Parent) for a decision under section 13.1 of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) exempting Subco from the requirements of NI 51-102, for a decision under section 8.6 of Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (MI 52-109) exempting Subco from the requirements of MI 52-109; for a decision under section 10.1 of National Instrument 55-104 Insider Reporting Requirements and Exemptions (NI 55-104) exempting the insider of Subco from the insider reporting requirements; for a decision under section 121(2)(a)(ii) of the Securities Act (Ontario) exempting the insiders of Subco from the insider reporting requirements of the Act; and for a decision under section 6.1 of National Instrument 55-102 System for Electronic Disclosure by Insiders exempting the insiders of Subco from the requirement to file an insider profile -- Subco is a wholly-owned subsidiary of Parent -- Subco is a reporting issuer and has warrants outstanding -- Warrants entitle holder to acquire common shares of Parent -- Warrants do not qualify as "designated exchangeable securities" under exemption in section 13.3 of NI 51-102 -- relief granted on conditions substantially similar to the conditions contained in section 13.3 of NI 51-102.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 107, 121(2)(a)(ii).

National Instrument 51-102 Continuous Disclosure Obligations, ss. 13.1, 13.3.

Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, s. 4.5.

National Instrument 55-102 System for Electronic Disclosure by Insiders, s. 6.1.

National Instrument 55-104 Insider Reporting Requirements and Exemptions, s. 10.1.

November 8, 2013

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
SANDSTORM GOLD LTD.
(SANDSTORM),
PREMIER ROYALTY INC.
(PREMIER, AND TOGETHER WITH SANDSTORM, THE FILERS)

DECISION

Background

The securities regulatory authority in Ontario (Decision Maker) has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that:

• Premier be exempt from the continuous disclosure obligations under National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) (the Continuous Disclosure Requirements);

• Premier be exempt from the requirements for certification of disclosure in annual and interim filings under Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (MI 52-109) (the Certification Requirements);

• the insiders of Premier be exempt from the requirement to file an insider profile under National Instrument 55-102 System for Electronic Disclosure by Insiders (NI 55-102) in respect of securities of Premier (the Insider Profile Requirement); and

• the insiders of Premier be exempt from the insider reporting requirements under National Instrument 55-104 Insider Reporting Requirements and Exemptions and related Legislation in respect of securities of Premier (the Insider Reporting Requirements)

(collectively, the Exemption Sought)

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;

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

(c) the decision is the decision of the principal regulator and evidences that decision of the securities regulatory authority or regulator in each of the other Jurisdictions.

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. For greater certainty, references to Premier shall be read to include its successor entities.

Representations

1. This decision is based on the following facts represented by the Filers:

Premier

2. Premier was incorporated as an Ontario corporation on May 10, 2007, was amalgamated on July 1, 2013 with Premier Royalty Corporation, and continues to exist under the Business Corporations Act (Ontario) (the OBCA).

3. The head office of Premier is located at 95 Wellington Street West, Suite 925, P.O. Box 43, Toronto, ON, M5J 2N7.

4. Premier is a reporting issuer under the securities legislation of the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland and Labrador.

5. Premier is an electronic filer under National Instrument 13-101 System for Electronic Document Analysis and Retrieval (SEDAR) (NI 13-101).

6. The authorized share capital of Premier consists of an unlimited number of common shares (the Premier Shares). As of October 4, 2013, there were 78,427,236 Premier Shares issued and outstanding.

7. Premier currently has outstanding eight classes of warrants to purchase Premier Shares (collectively, the Premier Warrants):

(a) The Aberdeen Warrants: 3,884,849 warrants to purchase Premier Shares at an exercise price of $1.75 per Premier Share on or prior to December 4, 2014 pursuant to a warrant certificate dated December 4, 2012 issued to Aberdeen International Inc.;

(b) The Broker Warrants: 750,000 broker warrants to purchase Premier Shares at an exercise price of $2.00 per Premier Share on or prior to January 17, 2015 issued to certain underwriters in connection with a prospectus offering by Premier;

(c) The Class II December 2016 Warrants: 8,691,004 warrants to purchase Premier Shares at an exercise price of $2.00 per Premier Share, pursuant to the terms of a warrant indenture dated as of December 4, 2012 between Premier, Premier Royalty Corporation and Valiant Trust Company;

(d) The Class II October 2014 Warrants: 1,457,500 warrants to purchase Premier Shares at an exercise price of $2.00 per Premier Share on or prior to October 7, 2014;

(e) The December 2016 Warrants: 4,788,712 warrants issued and 616,406 warrants issuable (pursuant to the exercise of the October 2014 Warrants) to purchase Premier Shares at an exercise price of $2.00 per Premier Share on or prior to December 4, 2016, all pursuant to the terms of a warrant indenture dated as of December 4, 2012 between Premier and Valiant Trust Company;

(f) The Golden Arrow Warrants: 1,000,000 warrants to purchase Premier Shares at an exercise price of $2.52 per Premier Share on or prior to November 9, 2014 pursuant to a warrant certificate dated as of December 4, 2012 issued to Golden Arrow Inc.;

(g) The October 2014 Warrants: 1,643,750 warrants to purchase Premier Shares and December 2016 Warrants at an exercise price of $2.00 per Premier Share and 0.375 of a December 2016 Warrant, on or prior to October 7, 2014, all pursuant to the terms of an amended and restated warrant indenture dated as of December 4, 2012 between Premier and Valiant Trust Company; and

(h) The Yamana Warrants: 500,000 warrants to purchase Premier Shares at an exercise price of $2.50 per Premier Share on or prior to February 28, 2016 pursuant to a warrant certificate dated February 28, 2013 issued to Yamana Gold Inc..

8. Premier currently has options (the Premier Options) outstanding to purchase an aggregate of 2,873,333 Premier Shares.

9. The Premier Shares were listed on the TSX under the symbol "NSR" and the October 2014 Warrants were listed on the TSX under the symbol "NSR.WT".

Sandstorm

10. Sandstorm was incorporated under the Business Corporations Act (British Columbia) on March 23, 2007 as "Sandstorm Resources Ltd." It changed its name to Sandstorm Gold Ltd. on February 17, 2011.

11. Sandstorm's head, registered and records office is located at Suite 1400, 400 Burrard Street, Vancouver, BC, V6C 3A6.

12. Sandstorm is a reporting issuer in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland and Labrador.

13. Sandstorm is an electronic filer under NI 13-101.

14. The authorized share capital of Sandstorm consists of an unlimited number of common shares (the Sandstorm Shares). As of October 4, 2013, there were issued and outstanding (i) 99,879,343 Sandstorm Shares (on a post-closing basis); (ii) 3,570,500 options to purchase an aggregate of 3,570,500 Sandstorm Shares; (iii) 57,068,826 warrants to purchase an aggregate of 11,413,765 Sandstorm Shares with an expiry date of April 23, 2014 (the Sandstorm 2009 Warrants); (iv) 19,662,599 warrants to purchase an aggregate of 3,932,520 Sandstorm Shares with an expiry date of October 19, 2015 (the Sandstorm 2010 Warrants); and (v) 5,002,500 warrants to purchase an aggregate of 5,002,500 Sandstorm Shares with an expiry date of September 7, 2017 (the Sandstorm 2012 Warrants).

15. The Sandstorm Shares are listed on the TSX under the symbol "SSL" and on the NYSE MKT under the symbol "SAND", the Sandstorm 2009 Warrants are listed on the TSX under the symbol "SSL.WT", the Sandstorm 2010 Warrants are listed on the TSX under the symbol "SSL.WT.A" and the Sandstorm 2012 Warrants are listed on the TSX under the symbol "SSL.WT.B".

The Plan of Arrangement

16. Sandstorm and Premier entered into an arrangement agreement dated August 14, 2013, as amended and restated on August 26, 2013 with effect as of August 14, 2013, (the Arrangement Agreement), pursuant to which all of the outstanding Premier Shares not already owned by Sandstorm were to be acquired by Sandstorm by way of a plan of arrangement under the OBCA (the Plan of Arrangement) that was effective on October 4, 2013. Pursuant to the Plan of Arrangement, in exchange for each Premier Share, Sandstorm will issue 0.145 of a Sandstorm Share (the Share Consideration).

17. Following the effective time of the Plan of Arrangement, the Premier Warrants and the Premier Options, will remain outstanding as warrants or options of Premier that, upon exercise, will entitle the holder thereof to receive the Share Consideration for each Premier Warrant or Premier Option exercised.

18. On August 30, 2013, Premier obtained an interim order from the Ontario Superior Court of Justice (Court) specifying certain requirements and procedures for a special meeting of the Premier Shareholders for the purpose of approving the Plan of Arrangement (the Premier Meeting).

19. On September 30, 2013, Premier Shareholders approved the Plan of Arrangement with an affirmative vote of 99.95% of the votes validly cast at the Premier Meeting, and with an affirmative vote of 99.80% of the votes validly cast in respect of the minority approval of the Plan of Arrangement under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions.

20. On October 3, 2013, Premier received final approval of the Court for the Plan of Arrangement.

21. The Plan of Arrangement was completed on October 4, 2013.

22. Under the Plan of Arrangement, among other things, Sandstorm acquired all of the issued and outstanding Premier Shares not already owned by Sandstorm in exchange for the payment to Premier Shareholders of the Share Consideration.

23. As a result of the Plan of Arrangement Premier became a wholly-owned subsidiary of Sandstorm.

24. Following the effective time of the Plan of Arrangement, Premier remained a reporting issuer in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador. Consequently, Premier is required to comply with the Continuous Disclosure Requirements, the Certification Requirement and the Insider Reporting Requirement.

25. Each holder of a Premier Warrant outstanding immediately before the effective time of the Plan of Arrangement, became entitled to receive upon the subsequent exercise of such holder's Premier Warrant in accordance with its terms, in lieu of each Premier Share (and in certain cases warrants of Premier) and to which such holder was theretofore entitled, the Share Consideration.

26. Each holder of a Premier Option outstanding immediately before the effective time of the Plan of Arrangement became entitled to receive upon the subsequent exercise of such holder's Premier Option in accordance with its terms, in lieu of each Premier Share which such holder was theretofore entitled, the Share Consideration.

27. On September 19, 2013, the TSX approved the listing of up to a maximum of an additional 8,328,534 Sandstorm Shares issued or to be issued as a result of the Plan of Arrangement (including those Sandstorm Shares to be issued on the exercise of Premier Options and Premier Warrants).

28. Sandstorm has reserved 25,589,148 Sandstorm Shares for issuance upon the exercise of the outstanding Premier Options and Premier Warrants.

29. In connection with the Plan of Arrangement, Premier mailed to the Premier Shareholders a management information circular (Circular) containing information on the Plan of Arrangement and Premier and prospectus-level disclosure of the business and affairs of Sandstorm, a copy of which has been posted on SEDAR under Premier's profile.

30. Premier provided the holders of all Premier Warrants that would remain outstanding following the effective time of the Plan of Arrangement with prior notice of the Plan of Arrangement and the impact on the Premier Warrants.

31. On October 9, 2013 the Premier Shares and the October 2014 Warrants were delisted from the TSX.

32. The October 2014 Warrants were relisted by TSX as warrants of Sandstorm under the symbol SSL.WT.C on October 10, 2013. The only Premier Warrants that are listed for trading on a published market are the October 2014 Warrants.

33. Pursuant to either supplemental indentures or the Arrangement Agreement, Sandstorm explicitly assumed the obligation to issue the Share Consideration upon exercise of the Premier Warrants and the Premier Options.

34. As a result of the Plan of Arrangement, the only securities of Premier that are held by persons other than Sandstorm are the Premier Options and the Premier Warrants, all of which are exercisable into Sandstorm Shares.

35. Premier cannot rely on the exemption available in s. 13.3 of NI 51-102 for issuers of exchangeable securities because the Premier Warrants and the Premier Options are not "designated exchangeable securities" as defined in NI 51-102; none of the holders of the Premier Warrants or the Premier Options will have voting rights in respect of Sandstorm, in their capacity as warrantholders or optionholders, respectively.

36. Neither the warrant indentures nor the certificates governing the Premier Warrants specifically require Premier or any successor to deliver to holders of Premier Warrants any continuous disclosure materials of Premier or any successor.

37. Each of the Filers is not in default of any requirement under securities legislation in the jurisdictions in which it is a reporting issuer.

38. Premier has no intention of accessing the capital markets in the future by issuing any further securities to the public and has no intention of issuing any securities to the public other than those that are outstanding on the effective time of the Plan of Arrangement.

39. It is information relating to Sandstorm, and not to Premier, that is of primary importance to holders of Premier Warrants and Premier Options as each of these securities is exercisable into Sandstorm Shares; in addition, as Premier is a wholly-owned subsidiary of Sandstorm, Sandstorm will consolidate Premier with Sandstorm for the purposes of financial statement reporting; as such, the disclosure required by the Continuous Disclosure Requirements and the Insider Reporting Requirements would not be meaningful or of any significant benefit to the holders of the Premier Warrants or Premier Options and would impose a significant cost on Sandstorm.

Decision

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

1. The decision of the Decision Maker under the Legislation is that the Continuous Disclosure Requirements do not apply to Premier provided that:

(a) Sandstorm is the beneficial owner of all of the issued and outstanding voting securities of Premier;

(b) Sandstorm is a reporting issuer in a designated Canadian jurisdiction (as defined in NI 51-102) and has filed all documents it is required to file under NI 51-102;

(c) Premier does not issue any securities, and does not have any securities outstanding other than:

(i) the Premier Warrants;

(ii) the Premier Options;

(iii) securities issued to and held by Sandstorm or an affiliate of Sandstorm;

(iv) debt securities issued to and held by banks, loan corporations, loan and investment corporations, savings companies, trust corporations, treasury branches, savings or credit unions, financial services cooperatives, insurance companies or other financial institutions; or

(v) securities issued under exemptions from the registration requirement and prospectus requirement in section 2.35 of National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106);

(d) Premier files in electronic format:

(i) if Sandstorm is a reporting issuer in the local jurisdiction, a notice indicating that it is relying on the continuous disclosure documents filed by Sandstorm and setting out where those documents can be found in electronic format; or

(ii) copies of all documents Sandstorm is required to file under securities legislation, other than in connection with a distribution, at the same time as the filing by Sandstorm of those documents with a securities regulatory authority or regulator;

(e) Sandstorm concurrently sends to all holders of Premier Warrants and Premier Options all disclosure materials that would be required to be sent to holders of similar warrants or options of Sandstorm in the manner and at the time required by securities legislation;

(f) Sandstorm complies with securities legislation in respect of making public disclosure of material information on a timely basis; and

(g) Sandstorm immediately issues in Canada and files any news release that discloses a material change in its affairs.

2. The further decision of the Decision Maker under the Legislation is that the Certification Requirements do not apply to Premier provided that:

(a) Premier is not required to, and does not, file its own Interim Filings and Annual Filings (as those terms are defined under NI 52-109);

(b) Premier files in electronic format under its SEDAR profile either: (i) copies of Sandstorm's annual certificates and interim certificates at the same time as Sandstorm is required under NI 52-109 to file such documents; or (ii) a notice indicating that it is relying on Sandstorm's annual certificates and interim certificates and setting out where those documents can be found for viewing on SEDAR; and

(c) Premier is exempt from or otherwise not subject to the Continuous Disclosure Requirements and Premier and Sandstorm are in compliance with the conditions set out in paragraph 1 above.

3. The further decision of the Decision Maker under the Legislation is that the Insider Reporting Requirements do not apply to any insider of Premier in respect of securities of Premier provided that:

(a) if the insider is not Sandstorm;

(i) the insider does not receive, in the ordinary course, information as to material facts or material changes concerning Premier before the material facts or material changes are generally disclosed; and

(ii) the insider is not an insider of Sandstorm in any capacity other than by virtue of being an insider of Premier;

(b) Sandstorm is the beneficial owner of all of the issued and outstanding voting securities of Premier;

(c) if the insider is Sandstorm, the insider does not beneficially own any Premier Warrants other than securities acquired through the exercise of the Premier Warrants and not subsequently traded by the insider or those beneficially owned as of the closing of the Plan of Arrangement;

(d) Sandstorm is a reporting issuer in a designated Canadian jurisdiction;

(e) Premier has not issued any securities, and does not have any securities outstanding, other than:

(i) the Premier Warrants;

(ii) the Premier Options;

(iii) securities issued to and held by Sandstorm or an affiliate of Sandstorm;

(iv) debt securities issued to and held by banks, loan corporations, loan and investment corporations, savings companies, trust corporations, treasury branches, savings or credit unions, financial services cooperatives, insurance companies or other financial institutions; or

(v) securities issued under exemptions from the registration requirement and prospectus requirement in Section 2.35 of NI 45-106; and

(f) Premier is exempt from or otherwise not subject to the Continuous Disclosure Requirements and Premier and Sandstorm are in compliance with the conditions set out in paragraph 1 above.

As to the Exemption Sought (other than from the statutory Insider Reporting Requirements):

"Sonny Randhawa"

Manager, Corporate Finance

As to the Exemption Sought from the statutory Insider Reporting Requirements:

"Vern Krishna"

Commissioner

Ontario Securities Commission

 

"Sarah Kavanagh"

Commissioner

Ontario Securities Commission