Securities Law & Instruments

Headnote

Related party transaction under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions -- exemption from holding shareholders' meeting and from sending an information circular granted -- issuer entered into an agreement with one of its directors, constituting a related party transaction subject to minority approval requirement under MI 61-101 -- issuer disclosed the details of the transaction in a material change report and in a disclosure document filed on SEDAR -- disinterested shareholders holding a majority of the common shares of the issuer eligible to be counted in determining minority approval under Part 8 of MI 61-101 provided signed written consents approving the proposed related party transaction -- disclosure document was provided to each shareholder from whom consent was sought -- disclosure document and material change report filed on SEDAR more than 14 days before closing.

Applicable Legislative Provisions

Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, ss. 5.3, 5.6, 8.1, 9.1(2).

Companion Policy 61-101CP to Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, s. 3.1.

IN THE MATTER OF THE SECURITIES ACT, R.S.O. 1990, c. S.5, AS AMENDED

AND

IN THE MATTER OF MULTILATERAL INSTRUMENT 61-101 -- PROTECTION OF MINORITY SECURITY HOLDERS IN SPECIAL TRANSACTIONS ("MI 61-101")

AND

IN THE MATTER OF SAMCO GOLD LIMITED (the "Filer")

ORDER (Section 9.1 of MI 61-101)

UPON the application (the "Application") of the Filer to the Ontario Securities Commission (the "Commission") for a decision pursuant to section 9.1(2) of MI 61-101 for discretionary relief from the requirements in MI 61-101 that the Filer call a shareholders' meeting to consider a proposed related party transaction (the Transaction, as defined below) and send an information circular to shareholders in connection with such meeting (the "Requested Relief");

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

AND WHEREAS the Filer has represented to the Commission that:

1. The Filer is a corporation existing under the laws of the British Virgin Islands. The principal executive offices of the Filer are located at 2 -- 4 Noel Street, London, England, W1F 8GB.

2. The Filer is a reporting issuer in the provinces of Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, Nova Scotia, New Brunswick, Prince Edward Island, and Newfoundland and Labrador and is not in default of securities legislation in any such jurisdiction.

3. The authorized capital of the Filer consists of an unlimited number of common shares (the "Common Shares"). Each Common Share carries the right to one vote at all meetings of shareholders of the Filer. As of the date hereof, a total of 65,076,075

4. Common Shares are issued and outstanding. The Common Shares are listed and posted for trading on the TSX Venture Exchange (the "Exchange") under the symbol "SGA".

5. Pursuant to a participation and option agreement (the "Agreement") dated January 10, 2014 among the Filer and Ricardo A. Auriemma (the "Grantor"), a director of the Filer, the Filer has agreed to acquire the right to participate on a sliding scale basis in the benefits arising from the enforcement of an Argentinean court judgment (the "Argentinean Court Awarded Rights") relating to the breach of a regional alliance agreement between the Grantor and Northern Orion Resources Inc. (since acquired by Yamana Gold Inc. and renamed 0805346 B.C. Ltd.), which regional alliance agreement provides the Grantor with a right (the "Priority Right") to participate equally in certain mining opportunities (collectively, the "Transaction").

6. Under the Agreement, the Filer is to pay the Grantor US$1,400,000 (the "Option Payment") within three (3) business days from when the Filer obtains the necessary approvals for the Agreement and the transactions contemplated therein.

7. The Filer also has a right under the Agreement to acquire from the Grantor the sole and exclusive right to the Argentinean Court Awarded Rights and the Priority Right by paying the Grantor US$50 million (the "Buy-out"), provided these purchase funds are not raised through the issue of shares or convertible securities of the Filer or its affiliates.

8. The Exchange requested that the Filer provide an undertaking to obtain prior Exchange acceptance if the Filer chooses to exercise the Buy-out or if the Grantor chooses to pay the sliding scale award payment under the Agreement in a form of consideration other than cash, and the Filer provided such undertaking to the Exchange on January 30, 2014.

9. The material terms of the Transaction were disclosed in the press release (the "Press Release") and material change report (the "Material Change Report") of the Filer each dated January 10, 2014 and publicly filed on SEDAR on January 10, 2014.

10. The contents of the Material Change Report comply with the disclosure requirements contained in Section 5.2 of MI 61-101.

11. The Transaction will not require the issuance of any Common Shares of the Filer.

12. The Filer's board of directors consists of a total of five directors, four of whom are "independent directors" as defined in MI 61-101, being Charles Koppel, Kevin Tomlinson, Michel Marier and Estanislao Auriemma. On November 27, 2013, the board of directors of the Filer appointed Kevin Tomlinson and Michel Marier to form a special committee of directors (the "Special Committee") to review the Agreement and report to the Filer's board of directors. Approval of the Agreement and the terms of the Transaction by the Special Committee and the Filer's board of directors, including unanimous approval of the independent directors, was received on January 9, 2014 and January 10, 2014, respectively.

13. Pursuant to the terms of the Agreement, completion of the Transaction is subject to certain conditions, including receipt of necessary Exchange and regulatory approvals (including the exemptive relief hereby granted) and the disinterested minority shareholder approval required by Section 5.6 of MI 61-101. Subject to the satisfaction of such conditions, the Transaction is scheduled to close on or about January 31, 2014.

14. The Transaction falls within the definition of "related party transaction", as set out in MI 61-101, as, at the date that the Transaction was agreed to, the Grantor was and remains a director, and thus a "related party", of the Filer.

15. Pursuant to section 5.5(b) of MI 61-101, the Transaction is exempt from the requirement to obtain a formal valuation set out in Section 5.4 of MI 61-101; however, there are no exemptions available in respect of the Transaction from the disinterested minority approval requirement of Section 5.6 of MI 61-101.

16. The Filer sought minority approval for the Transaction, as that term is defined in MI 61-101, and calculated in accordance with the terms of Part 8 of MI 61-101 ("Minority Approval"), albeit not a shareholder's meeting, but by way of written consent.

17. None of the shareholders of the Filer from whom written consent for the Transaction was sought are (i) the Filer, (ii) an "interested party", as such term is defined in MI 61-101, (iii) a related party of an interested party, unless the related party meets that description solely in its capacity as a director or senior officer of one or more entities that are neither interested parties nor issuer insiders of the Filer, or (iv) a joint actor with a person or company referred to in (ii) or (iii) in respect of the Transaction.

18. The Filer provided each shareholder from whom written consent for the Transaction was sought a disclosure document, including the Press Release and Agreement, pertaining to the Transaction (the "Disclosure Document"), the contents of which comply with the disclosure requirements set out in Section 5.3(3) of MI 61-101, along with a form of written consent (the "Consent") seeking approval of the Transaction. The Disclosure Document and Consent provide all relevant details of the Transaction and include an acknowledgement that the Disclosure Document describes the Transaction in sufficient detail to allow shareholders to make an informed decision regarding approval of the Transaction.

19. The form of Consent and Disclosure Document were filed publicly on SEDAR on January 10, 2014.

20. On January 21, 2014, the Exchange requested that the form of Consent be updated to include acknowledgements that (i) satisfactory evidence of value for the Transaction was not provided to the Exchange and, as such, disinterested shareholder approval is being sought in connection with the Option Payment to the Grantor under the Agreement, and (ii) there is no security or other interest provided by the Grantor to the Filer to secure repayment of the US$1.4 million in the case that the award payment under the Agreement is less than US$50 million (the "Updated Consent"). The Filer made these changes and provided the form of Updated Consent to each shareholder from whom written consent for the Transaction was sought.

21. The form of Updated Consent was filed publicly on SEDAR on January 30, 2014.

22. The Filer has received signed Updated Consents from shareholders representing approximately 68.4% of Common Shares held by shareholders eligible to provide the Minority Approval required for the Transaction under Part 8 of MI 61-101, which exceeds the simple majority requirement set out in MI 61-101 for such approval.

23. A copy of the Disclosure Document will be sent to any shareholder of the Filer who requests a copy.

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

IT IS ORDERED pursuant to section 9.1(2) of MI 61-101 that the Requested Relief is hereby granted.

DATED at Toronto this 31st day of January, 2014.

"Naizam Kanji"
Deputy Director, Corporate Finance
Ontario Securities Commission