Nord Gold S.E. and Cardinal Resources Limited

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Section 6.1 of NI 62-104 -- take-over bid-relief from requirements applicable to take-over bids in Part 2 and Part 3 of NI 62-104 -- take-over bid for issuer not resident in Canada that is a reporting issuer in Canada and publicly listed in Australia and Ontario -- offeror to acquire all outstanding ordinary shares of target issuer that it does not already own -- would be eligible for foreign take-over bid exemption but for the fact that ownership by security holders resident in Canada exceeds 10% -- offeror's bid is a "market" bid subject to laws of Australia -- competing take-over bid outstanding for target issuer's ordinary shares -- published market on which the greatest volume of trading in securities of target issuer occurred during the 12 months immediately preceding the commencement of the bid was not in Canada -- offeror extended offer period for additional 10 days -- offer is exempt from requirements applicable to take-over bids in Part 2 and Part 3 of NI 62-104, subject to conditions, including that the offeror issue a news release in Canada providing details and contact information for security holders in Canada advising them as to how they may accept the bid, that security holders in Canada are entitled to participate on terms at least as favourable as the terms that apply to all other holders of target securities, and that the offeror satisfy the conditions set out in subsections 4.4(e), (f) and (g) of NI 62-104.

Applicable Legislative Provisions

National Instrument 62-104 Take-Over Bids and Issuer Bids, s. 6.1, Parts 2 and 3.

September 3, 2020

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 NORD GOLD S.E. (the Filer) AND CARDINAL RESOURCES LIMITED (the Issuer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application (the Application) from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) pursuant to section 6.1 of National Instrument 62-104 Take-Over Bids and Issuer Bids (NI 62-104), exempting the all-cash on-market take-over bid commenced by the Filer to purchase all of the issued ordinary shares (the Issuer Shares) of the Issuer, as such bid may be amended, supplemented or replaced, including through any subsequent all-cash on-market take-over bid commenced by the Filer to purchase all of the issued Issuer Shares (the Foreign On-Market Bid) through the facilities of the Australian Securities Exchange (the ASX) from the requirements applicable to take-over bids in Part 2 and Part 3 of NI 62-104 (the Take-Over Bid Requirements) (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; and

(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 by the Filer in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, the Northwest Territories and Nunavut.

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.

Representations

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

Nord Gold S.E.

1. The Filer is a European public limited liability company registered under the laws of England and Wales (registered number SE000102).

2. Three related non-Canadian individuals own more than 99.9% of the shares of the Filer.

3. The Filer operates 10 mines in four countries: Russia, Kazakhstan, Burkina Faso and Guinea.

4. At the commencement of the Foreign On-Market Bid, the Filer owned 98,443,593 Issuer Shares, representing approximately 18.71% of the outstanding Issuer Shares, all of which were acquired before the commencement of the Foreign On-Market Bid. The Filer currently controls 149,344,714 Issuer Shares, representing approximately 28.39% of the outstanding Issuer Shares.

5. The Filer is not a reporting issuer in any jurisdiction in Canada.

Cardinal Resources Limited

6. The Issuer is an Australian corporation established under the Australian Corporations Act 2001 (Cth).

7. The head office address of the Issuer is 28 Ord Street, Suite 1, West Perth, Western Australia, 6005.

8. The Issuer is a reporting issuer in all of the provinces of Canada, excluding Québec.

9. The Issuer, through its subsidiaries, owns gold mining projects only in Ghana, West Africa. To the best knowledge of the Filer, the Issuer has no significant assets in Canada.

10. The Issuer Shares are listed for trading on the ASX and listed and posted for trading on the Toronto Stock Exchange (the TSX) under the symbol "CDV".

11. In the 12 months ended May 15, 2020, approximately 11.8% of the ordinary share trading in the Issuer Shares took place on the TSX, with 88.2% taking place on the ASX.

12. To the best knowledge of the Filer, based on the ASX announcements made by the Issuer, the number of issued Issuer Shares is 526,024,522.

13. As at July 16, 2020, the only registered Shareholder of the Issuer resident in Canada is The Canadian Depositary for Securities Limited (CDS) which was the registered holder of 65,875,580 issued Issuer Shares representing approximately 12.5% of the issued Issuer Shares as of such date. CDS used an Australian address for its registration address.

14. To the best knowledge of the Filer, holders of Issuer Shares (Shareholders) resident in Canada were constituted as follows:

(a) as at July 15, 2020, MM Asset Management Inc. held 48,415,566 Issuer Shares, representing approximately 9.20% of the issued Issuer Shares;

(b) as at July 14, 2020, Bank of Nova Scotia and 1832 Asset Management L.P. held 26,000,000 Issuer Shares, representing approximately 4.94% of the issued Issuer Shares;

(c) not more than 2% of the holders of Issuer Shares are "retail" shareholders resident in Canada; and

(d) all of the foregoing held their Issuer Shares beneficially or exercised control or direction over their Issuer Shares.

15. On August 11, 2020, Shandong Gold Mining (HongKong) Co., Limited commenced an "off-market bid" under the Australian Corporations Act 2001 (Cth) for all of the issued Issuer Shares.

The Foreign On-Market Bid

16. The Filer announced the Foreign On-Market Bid on July 15, 2020. The Foreign On-Market Bid:

(a) is unconditional;

(b) is a "market bid" for the purposes of the Australian Corporations Act 2001 (Cth);

(c) became open for acceptance on July 30, 2020 until its initial expiry date of August 31, 2020;

(d) was given effect to by an Australian broker retained by the Filer placing a "buy-order" through the trading platform of the ASX, which is the only procedure that can be used to give effect to the Foreign On-Market Bid;

(e) as required by the Australian Corporations Act 2001 (Cth), is and can only be made in relation to "quoted securities" (as that term is defined in the Australian Corporations Act 2001 (Cth)), being all of the issued Issuer Shares;

(f) may be accepted by Shareholders only through brokers who are participants on the ASX only and by no other means;

(g) could be accepted by any Shareholder by transferring or dematerializing its Issuer Shares to an account in Australia and instructing an Australian broker to place a "sell-order" through the ASX trading platform in order to accept the Foreign On-Market Bid; and

(h) may be a "take-over bid" for purposes of NI 62-104 by the application of Section 1.10 of NI 62-104.

17. Under the current terms of the Foreign On-Market Bid, Shareholders will receive AUD$0.90 in cash for each Issuer Share that they deposit to the Foreign On-Market Bid.

18. The Foreign On-Market Bid has been made by the Filer in compliance with the requirements of the Australian Corporations Act 2001 (Cth), the operating rules of the ASX, and the applicable requirements of the Australian Securities and Investments Commission.

19. Section 4.4 of NI 62-104 provides an exemption (the Foreign Take-Over Bid Exemption) from the Take-Over Bid Requirements where, among other things, the following conditions are satisfied:

(a) security holders whose last address as shown on the books of the offeree issuer is in Canada hold less than 10% of the outstanding securities of the class subject to the bid at the commencement of the bid; and

(b) the offeror reasonably believes that security holders in Canada beneficially own less than 10% of the outstanding securities of the class subject to the bid at the commencement of the bid.

20. If the Foreign On-Market Bid is a "take-over bid" for purposes of NI 62-104 by the application of Section 1.10 of NI 62-104, the Foreign On-Market Bid would not have the benefit of the Foreign Take-Over Bid Exemption because Canadian beneficial and registered Shareholder ownership was not less than 10% of the outstanding Issuer Shares at the commencement of the Foreign On-Market Bid.

21. The published market on which the greatest volume of trading in Issuer Shares occurred during the 12 months immediately preceding the commencement of the Foreign On-Market Bid was not in Canada.

22. Details concerning the Foreign On-Market Bid are contained in a bidder's statement prepared by the Filer and despatched to each registered Shareholder as is required by the Australian Corporations Act 2001 (Cth).

23. As of September 3, 2020, 44,983,095 Issuer Shares have been accepted into the Foreign On-Market Bid.

24. On August 24, 2020, the Foreign On-Market Bid was extended in accordance with the Australian Corporations Act 2001 (Cth) such that it is open for acceptance until close of trade on the ASX on September 10, 2020.

Decision

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

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:

(a) the Filer issues a news release in Canada providing details and contact information for Shareholders resident in Canada advising them as to how they may accept the Foreign On-Market Bid;

(b) Shareholders in Canada are entitled to participate in the Foreign On-Market Bid on terms at least as favourable as the terms that apply to the general body of Shareholders; and

(c) the Filer satisfies the conditions set out in subsections 4.4(e), (f) and (g), as may be applicable, of NI 62-104.

"Jason Koskela"

Manager, Office of Mergers & Acquisitions

Ontario Securities Commission