American Eagle Gold Corp. – s. 6.1 of NI 62-104

Headnote

Section 6.1 of NI 62-104 Issuer bid -- relief from requirements applicable to issuer bids in Part 2 of NI 62-104 -- issuer proposes to repurchase a specified number of its shares from one of its shareholders for a per share purchase price equal to the lower of a 25% discount to the market price of those shares (determined in accordance with NI 62-104) on (i) the date the agreement was entered into, and (ii) the closing date for the transaction -- the selling shareholder is not a related party of the issuer -- issuer's board has unanimously determined that the repurchase is in the best interests of the issuer and its shareholders (other than the selling shareholders), is on reasonable terms, will not adversely affect the issuer's financial position, and will not cause the market for the issuer's shares to be materially less liquid than the market that existed at the time the repurchase was agreed to share repurchase is exempt from the requirements applicable to issuer bids in Part 2 of NI 62-104, subject to conditions.

Statutes Cited

National Instrument 62-104 Take-Over Bids and Issuer Bids, Part 2 and s. 6.1.

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

AND

IN THE MATTER OF
AMERICAN EAGLE GOLD CORP.

ORDER

(Section 6.1 of National Instrument 62-104)

UPON the application (the "Application") of American Eagle Gold Corp. (the "Filer") to the Ontario Securities Commission (the "Commission") for an order pursuant to section 6.1 of National Instrument 62-104 Take-Over Bids and Issuer Bids ("NI 62-104") exempting the Filer from the requirements applicable to issuer bids in Part 2 of NI 62-104 (the "Issuer Bid Requirements") in respect of the proposed purchase by the Filer of 500,000 common shares of the Filer (the "Subject Shares") from Precious Earth Resources Inc. ("Precious", and such purchase the "Share Repurchase");

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

AND UPON the Filer having represented to the Commission that:

1. The Filer is a corporation existing under the Business Corporations Act (Ontario) and is in good standing.

2. The Filer's head office is located at Suite 1102, 141 Adelaide Street West, Toronto, Ontario, M5H 3L5.

3. The Filer is a reporting issuer in the provinces of Ontario, Alberta and British Columbia and is not in default of any requirements of securities legislation in the jurisdictions in which it is a reporting issuer.

4. The Filer's authorized share capital consists of an unlimited number of common shares (the "American Eagle Shares"). As of April 28, 2025, there were 172,071,287 American Eagle Shares issued and outstanding.

5. The American Eagle Shares are listed on the TSX Venture Exchange ("TSXV") under the symbol "AE".

6. The Filer is a mining corporation primarily focused on exploring its NAK copper-gold porphyry project in west-central British Columbia, Canada.

7. The Filer held, indirectly through its wholly-owned subsidiary Kraip Energy Limited ("Kraip"), a 100% interest in a mineral property referred to as Kuta Ridge in Papua New Guinea until the Filer sold Kraip in July 2020. The Filer retained a 3% net smelter returns ("NSR") royalty (the "Royalty") on the Kuta Ridge Property following the sale of Kraip.

8. The Royalty is governed by an agreement dated July 22, 2020 between Pacific Precious Inc., the predecessor entity of the Filer, and Kraip (the "Royalty Agreement"). Pursuant to the terms of the Royalty Agreement, Kraip has the right to purchase two-thirds of the Royalty at any time before the start of commercial production for $500,000 for every 0.5% component thereof, leaving the Filer with a minimum 1% NSR (the "Buy-Back Right").

9. Precious is the successor entity to Kraip and owns Kuta Ridge.

10. Precious is a corporation validly existing under the laws of Canada. The head office of Precious is located in Toronto, Ontario. Precious is not a reporting issuer in any jurisdiction.

11. Precious has beneficial ownership of, or control or direction over, 5,492,490 American Eagle Shares, representing approximately 3.2% of the issued and outstanding American Eagle Shares.

12. Following initial discussions with Precious in August 2024 and subsequent discussion in February 2025, the Filer identified a potential opportunity to realize immediate value from the Royalty for the Filer's shareholders. The Filer has recognized the Royalty as an asset with only nominal value on its financials statements since its audited annual financial statements for the years ended December 31, 2021 and 2020 and the Filer's views regarding the value of the Royalty have not changed.

13. On February 18, 2025, the Filer and Precious entered into a royalty buy-down agreement (the "Agreement") pursuant to which (the "Exchange Transaction"):

(a) the Filer agreed to transfer 2% of the Royalty to Precious in exchange for the Subject Shares; and

(b) the Filer and Precious agreed to amend the Royalty Agreement to reflect that the Filer's Royalty has been reduced from a 3% NSR to a 1% NSR, and that Precious retains no further Buy-Back Right whatsoever.

14. The Agreement contemplated that the Exchange Transaction would occur no later than February 28, 2025, upon receipt of, and conditional upon, this order. The Filer and Precious have agreed to extend the outside date for the closing of the Exchange Transaction until such time as the Share Repurchase can be completed upon the terms of this order.

15. The Agreement was the result of arm's length negotiations between the Filer and Precious.

16. Precious: (a) is not a "related party" of the Filer (as such term is defined in Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"); (b) is not in possession of material non-public information in respect of the Filer; and (c) does not have any representation on the Filer's board of directors (the "Board").

17. All of the members of the Board are independent (within the meaning of MI 61-101) in respect of the Exchange Transaction.

18. The Board has unanimously determined, acting in good faith, that:

(a) the Agreement, Exchange Transaction, and Share Repurchase are in the best interests of the Filer and its shareholders (other than Precious and its affiliates);

(b) the terms of the Agreement, Exchange Transaction, and Share Repurchase are fair and reasonable, even if the terms of the Royalty Agreement and Buy-Back Right contemplated that the repurchase of a 2% NSR would occur on the basis of consideration of $2,000,000 cash;

(c) the value of the 2% NSR is not greater than the economic value represented by the Subject Shares;

(d) there is no requirement, corporate or otherwise, to obtain shareholder approval for the Share Repurchase or the Exchange Transaction;

(e) the Share Repurchase will not materially affect control of the Filer;

(f) the Exchange Transaction will not adversely affect the financial position of the Filer and, upon completion, will increase the value of the equity ownership positions of the Filer's other securityholders; and

(g) it is reasonable to conclude that, following the completion of the Share Repurchase there will be a market for holders of American Eagle Shares that is not materially less liquid than the market that existed at the time the Agreement was entered into.

19. The Subject Shares represent approximately 0.29% of the issued and outstanding American Eagle Shares.

20. The Subject Shares are being returned to the Filer for cancellation at a deemed purchase price equal to the lower of a 25% discount to the market price (as determined in accordance with NI 62-104) on (a) the date the Agreement was entered into, and (b) the closing date for the Exchange Transaction.

21. The Share Repurchase will constitute an "issuer bid" for the purposes of NI 62-104, to which the Issuer Bid Requirements would apply. The Share Repurchase cannot be made in reliance upon any of the exemptions from the Issuer Bid Requirements contained in Part 4 of NI 62-104.

22. All of the Subject Shares are held in the Province of Ontario.

23. The Share Repurchase is an integral part of the Exchange Transaction and Precious is not receiving any cash in exchange for the Subject Shares or in connection with the Exchange Transaction.

24. The purpose of the Share Repurchase is not to give preferential treatment to Precious or to provide a method for the Filer to purchase the Subject Shares, but rather to facilitate the sale of 2% of the Royalty and realize the value of such asset for the benefit of the Filer and its shareholders.

25. As a result of the fact that no holders of American Eagle Shares other than Precious is a party to the Agreement, it is impossible for the Filer to offer to acquire American Eagle Shares from all shareholders on the same terms and conditions as those contemplated by the Agreement.

26. Holders of American Eagle Shares who are not offered the opportunity to sell their American Eagle Shares under the Exchange Transaction are otherwise entitled to sell their American Eagle Shares into the market for cash proceeds.

27. The Exchange Transaction is conditional on receipt of this order. The Filer has determined that no other regulatory or third party approvals and/or consents are required in respect of the Exchange Transaction.

28. Following the completion of the Exchange Transaction, Precious will have beneficial ownership of, or control or direction over, 4,992,490 American Eagle Shares.

29. Other than the Subject Shares, the Filer has no plans to repurchase any American Eagle Shares, including from Precious or any of its associates.

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

IT IS ORDERED pursuant to section 6.1 of NI 62-104 that the Filer be exempt from the Issuer Bid Requirements in connection with the Share Repurchase, provided that

(a) the Filer issues and files a news release on SEDAR+ at least five (5) business days prior to the closing of the Exchange Transaction that discloses that the Filer has been granted exemptive relief from the Issuer Bid Requirements for the Share Repurchase;

(b) as at the time of the closing of the Share Repurchase, the Board remains of the view that the Share Repurchase and Exchange Transaction are in the best interests of the Filer and its shareholders, and that the terms of each of them are fair and reasonable;

(c) all approvals and/or consents required in respect of the Exchange Transaction, have been obtained and not revoked; and

(d) there are no approvals required in respect of the Exchange Transaction (including the Share Repurchase) that must be obtained at a meeting of securityholders of the Filer.

DATED at Toronto, Ontario this 6th day of May, 2025.

"David Mendicino"
Manager, Corporate Finance Division
Ontario Securities Commission