Contact Gold Corp.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions --National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107) -- the Filers request relief from the requirements under sections 3.2(1) and 3.3(1) of NI 52-107 that financial statements be prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises to permit the Filers to prepare their financial statements in accordance with the U.S. GAAP and be audited under U.S. GAAS.

Applicable Legislative Provisions

National Instrument 52-107 Acceptable Principles and Auditing Standards, ss. 3.2, 3.3.

December 24, 2019

IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF CONTACT GOLD CORP. (the Filer)

DECISION

Background

¶ 1 The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for an ongoing exemption from the requirement in subsections 3.2(1) and 3.3(1) of National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107) that financial statements of the Filer, other than acquisition statements, be prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises and, if applicable, audited in accordance with Canadian GAAS (the Exemptive Relief Sought).

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

(a) the British Columbia Securities Commission is the principal regulator for this application;

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland, Northwest Territories, Yukon and Nunavut; and

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

Interpretation

¶ 2 Terms defined in National Instrument 14-101 Definitions, NI 52-107 and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

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

Background

1. the Filer is a corporation incorporated under the laws of the State of Nevada; the registered office of the Filer is located at 4625 W. Nevso Drive, Suite 2, Las Vegas, Nevada 89103 and its head office is located at Suite 1050, 400 Burrard Street, Vancouver, British Columbia, V6C 3A6;

2. the Filer is a junior gold exploration company and holds, through its subsidiary Clover Nevada II LLC (Clover Nevada), a 100% interest in a portfolio of gold properties including the Pony Creek, North Star and Dixie Flats properties (the Contact Gold Properties);

3. all the Contact Gold Properties are located in Nevada, United States, and constitute all of the material assets of the Filer;

4. the Filer is an entity resulting from the completion of a reverse take-over transaction completed in June 2017, which involved a court approved statutory plan of arrangement under the Business Corporations Act (British Columbia) and the acquisition of Clover Nevada from Waterton Precious Metals Fund II Cayman, LP (the RTO); as part of the RTO, the Filer was continued from British Columbia into Nevada;

5. the Filer's main focus is advancing its flagship Pony Creek property, located in Nevada and the principal business of the Filer is conducted in the United States; the Filer files United States corporate tax returns with Internal Revenue Services and a number of the Filer's personnel are U.S. persons, employed and residing in the United States;

6. the shares of the Filer are listed on the TSX Venture Exchange (the TSXV);

7. a majority of the Filer's shares are beneficially owned by residents of the United States;

8. the Filer is a reporting issuer in each of the provinces and territories of Canada other than Québec; the Filer is not in default of securities legislation in any jurisdiction of Canada;

United States Securities Laws Matters

9. the Filer is a U.S. domestic issuer as such term is defined in Rule 902(e) of Regulation S under the 1933 Act;

10. the Filer is not and does not intend to be registered or reporting under the 1934 Act;

11. as a U.S. domestic issuer (a) all securities issued by the Filer (including those sold outside of the United States) in private placement transactions are restricted securities under Rule 144 of the 1933 Act (Rule 144) and subject to a one-year hold period unless the Filer registers or qualifies the offer and sale of such securities under the 1933 Act, and (b) resales of restricted securities are not eligible for resale through the facilities of the TSXV under Rule 904 of Regulation S, as is typical for foreign private issuers (i.e., non-U.S. domestic issuers);

12. in order for the Filer to issue securities that are not restricted securities, offerings of securities are required to be qualified either by filing (a) a Form S-1 with the SEC, or (b) a Form 1-A under Regulation A under the 1933 Act (Reg A Offering);

13. Regulation A is intended to assist earlier-stage companies to raise financing in a cost-effective manner and provides an exemption from registration for public offerings; Regulation A has two tiers: (a) Tier 1, for offerings of up to $20 million in a 12-month period and (b) Tier 2, for offerings of up to $50 million in a 12-month period; certain basic requirements apply to both Tier 1 and Tier 2 offerings, including issuer eligibility requirements, bad actor disqualification provisions and disclosure; additional requirements apply to Tier 2 offerings, including requirements for audited financial statements and the filing of ongoing reports;

14. Regulation A is available to both U.S. domestic issuers and Canadian issuers;

15. the Filer completed a Tier 2 Reg A Offering in May 2019 by filing a Form 1-A (the U.S Offering Statement) with the SEC, which was subject to a full review and comment period by the SEC, and which was qualified by the SEC on May 14, 2019;

16. concurrently with the qualification of the U.S. Offering Statement, the Filer also filed a prospectus supplement dated May 13, 2019 (the Supplement) to the short form base shelf prospectus dated October 24, 2018 (the Base Shelf Prospectus and together with the Supplement, the Canadian Prospectus) with the Canadian securities regulatory authorities;

17. the Filer's auditor is Ernst & Young LLP, Certified Public Accountants;

18. Regulation A permits Canadian issuers to prepare financial statements in accordance with IFRS; this exemption is not available to the Filer because it is a U.S. domestic issuer;

19. as a U.S. domestic issuer, Regulation A requires the Filer to prepare financial statements in accordance with U.S. GAAP, and Tier 2 requires that annual financial statements be audited in accordance with either U.S. AICPA GAAS or U.S. PCAOB GAAS, and the report and qualifications of the independent accountant must comply with the requirements of Article 2 of Regulation S-X; the U.S. Offering Statement filed with the SEC in the Reg A Offering contained annual and interim financial statements prepared in accordance with U.S. GAAP and audited or reviewed, as applicable, in accordance with U.S. PCAOB GAAS standards; the audit report of the Filer's auditor complied with the requirements of Article 2 of Regulation S-X;

20. the Canadian Prospectus contained annual and interim financial statements prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises and audited or reviewed, as applicable, in accordance with Canadian GAAS;

Financial Statement Requirements and SEC Disclosure Obligations

21. the Filer is a reporting issuer in Canada and does not meet the definition of "SEC issuer" under NI 52-107 and is therefore required under Canadian securities legislation to prepare and audit its financial statements in compliance with Canadian GAAP applicable to publicly accountable enterprises and in accordance with Canadian GAAS;

22. as a U.S. domestic issuer relying on Tier 2 of Regulation A, the Filer is subject to ongoing reporting obligations requiring the Filer to file the following ongoing reports:

(a) Form 1-K annual reports within 120 calendar days after the end of the Filer's financial year, which must include, among other things, certain information relating to the business of the issuer as well as a management's discussion and analysis of financial condition and results of operations (MD&A) and financial statements for the year end prepared in accordance with U.S. GAAP and audited in accordance with U.S. AICPA GAAS or U.S. PCAOB GAAS;

(b) Form 1-SA semi-annual reports within 90 calendar days after the end of the six-month period covered by such report, which must include MD&A and financial statements prepared in accordance with U.S. GAAP; and

(c) Form 1-U current reports within four business days following a disclosable event, which includes, among other things, fundamental changes, bankruptcy or receivership, material modifications to rights of securityholders, changes in control, departure of certain officers, certain unregistered sales of equity securities and other events deemed by an issuer to be important to its securityholders;

23. the Filer intends to voluntarily submit on Form 1-U its U.S. GAAP quarterly financial statements and MD&A for the first and third fiscal quarters to satisfy the "adequate public information" or "reasonably current information" requirements under Rule 144 and Rule 144A of the 1933 Act in order to rely on exemptions which permit public resales of restricted or control securities without registering such resales with the SEC;

24. SEC issuers may prepare and file their financial statements in accordance with U.S. GAAP to meet their continuous disclosure obligations under Canadian securities legislation;

25. the accounting differences between U.S. GAAP and Canadian GAAP applicable to publicly accountable enterprises for the Filer are currently relatively minimal, and due to the nature of its current business, the Filer does not anticipate the extent of accounting differences between U.S. GAAP and Canadian GAAP to be significant in the future; however, there are differences in characterization or classification that can occur on corporate transactions which can have recurring impacts, for example, the accounting for a reverse takeover transaction, or in relation to the valuation of assets acquired; where elections, policy choices or judgment have been permitted under Canadian GAAP applicable to publicly accountable enterprises, the Filer has sought to align its accounting treatment and disclosures to align with those required under U.S. GAAP so as to minimize the differences;

26. the Filer is a junior mineral exploration company that anticipates undertaking future offerings under Regulation A to finance its exploration activities; and

27. the Filer will continue filing all other continuous disclosure documents in compliance with NI 51-102 Continuous Disclosure Obligations and file audited annual financial statements accompanied by an auditor's report prepared by a public accounting firm in compliance with NI 52-108 Auditor Oversight.

Decision

¶ 4 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 Exemptive Relief Sought is granted provided that, at the time of filing the financial statements, the Filer is a U.S. domestic issuer relying on Tier 2 of Regulation A and is required to file with the SEC the ongoing reports set out in section 22.

This relief will expire on the date that is 36 months plus one day after the date of qualification of the most recent Reg A Offering by the Filer that was subject to review by the SEC.

"Nigel P. Cave"

Vice Chair

British Columbia Securities Commission