PROSPECTUS
DATED AUGUST 17, 2007
OILSANDS QUEST INC
19,211,998 SHARES OF COMMON STOCK
This Prospectus relates to the resale by the selling stockholders of up to 19,211,998 shares of our
Common Stock, all of which are currently outstanding. The selling stockholders purchased these
shares in private placements of our Common Stock that closed in March 2007 and May 2007, as
described below. For purposes of this Prospectus, we refer to ourselves as the “Company” or “OQI.”
The selling stockholders may sell Common Stock from time to time in the principal market on which
the stock is traded at the prevailing market price or in negotiated transactions. The selling
stockholders may be deemed underwriters of the shares of Common Stock which they are offering. We
will pay the expenses of registering these shares.
Our Common Stock is registered under Section 12(b) of the Securities Exchange Act of 1934 (the
“Exchange Act”) and is listed on the American Stock Exchange under the symbol “BQI”. The last
reported sales price per share of our Common Stock as reported by the American Stock Exchange on
August 15, 2007, was $4.50.
INVESTING
IN THESE SECURITIES INVOLVES SIGNIFICANT RISKS. SEE “RISK FACTORS” BEGINNING ON PAGE 3.
Neither the Securities and Exchange Commission nor any state securities commission has approved or
disapproved of these securities or determined if this Prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The information in this Prospectus is not complete and may be changed. This Prospectus is included
in the Registration Statement that was filed by Oilsands Quest Inc. with the Securities and
Exchange Commission. The selling stockholders may not sell these securities until the registration
statement becomes effective. This Prospectus is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any state where the sale is not permitted.
NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS
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RISK FACTORS
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USE OF PROCEEDS
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SELLING SECURITY HOLDERS
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PLAN OF DISTRIBUTION
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DESCRIPTION OF SECURITIES
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INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
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You should rely only on the information contained in this Prospectus or any accompanying
supplemental Prospectus and the information specifically incorporated by reference. We have not
authorized anyone to provide you with different information or make any additional representations.
This is not an offer of these securities in any state or other jurisdiction where the offer in not
permitted. You should not assume that the information contained in or incorporated by reference
into this Prospectus or any Prospectus supplement is accurate as of any date other than the date on
the front of each such document.
PROSPECTUS SUMMARY
The following summary highlights selected information contained in this Prospectus. This summary
does not contain all the information you should consider before investing in the securities. Before
making an investment decision, you should read the entire Prospectus carefully, including the “risk
factors” section, the financial statements and the notes to the financial statements.
OILSANDS QUEST INC.
We operate through six subsidiary corporations and conduct limited joint venture activities
directly. Our primary operating subsidiary is Oilsands Quest Sask Inc. (“OQI Sask”), an Alberta
corporation. We own 100% of the issued and outstanding voting common shares of OQI Sask. OQI Sask
is involved in oil sands exploration focused primarily on its oil sands exploration permits in
Saskatchewan and Alberta. The company has initiated pre-commercialization studies for its Axe Lake
Discovery in the province of Saskatchewan, placing it at the forefront of the development of an oil
sands industry in the province of Saskatchewan.
For the fiscal year ended April 30, 2007, we generated no revenue and had a net loss of
$68,794,741. At April 30, 2007 there was stockholders’ equity and working capital of $386,833,545
and $5,819,466, respectively. There is no assurance that we can generate net income, increase
revenues or successfully explore and exploit our properties.
Our principal offices are located at 205, 707-7th Avenue SW, Calgary, Alberta T2P 3H6,
Canada, and our telephone number is (403) 263-1623. We are a Colorado corporation.
The Offering
Common stock offered by selling stockholders includes up to 19,211,998 shares of Common Stock
outstanding prior to the effective date of this Prospectus. The selling stockholders purchased
these shares in private placements of our Common Stock that closed in March 2007 and May 2007, as
described below.
•
The 19,211,998 common shares represent 10.5% of our outstanding Common Stock.
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Common stock to be outstanding after the offering: 183,723,987 common shares
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Use of proceeds. We will not receive any proceeds from the sale of the Common Stock.
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American Stock Exchange Symbol: BQI
The above information regarding Common Stock to be outstanding after the offering is based on
183,723,987 shares of Common Stock outstanding as of July 23, 2007.
The SEC allows us to “incorporate by reference” the information in documents we file with them,
which means that we can disclose important information to you by referring you to those
documents. The information incorporated by reference is considered to be part of this Prospectus,
and information that we file later with the SEC will automatically update and supersede this
information. These documents provide a significant amount of information about us. We incorporate
by reference the documents listed below and any future filings we will make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 prior to the termination
of this offering.
Our Registration Statement on Form 10-SB filed October 14, 1999, registering our Common
Stock under the Securities Act of 1934, as amended by Form 8-A filed on March 13, 2006.
You may request a copy of these filings or a copy of any or all of the documents referred to above
which have been or may be incorporated in this Prospectus by reference, at no cost, by writing us
or calling us at the following address and telephone number:
Oilsands Quest Inc.
205,707-7th Avenue SW
Calgary, Alberta T2P 3H6
CANADA
Telephone No.: (403) 263-1623
Facsimile No.: (403) 263-9812
Additionally, the documents are available electronically in the EDGAR database on the web site
maintained by the SEC. You can find this information at http://www.sec.gov. You may also
read and copy any materials we have filed with the SEC at the SEC’s public reference room at 100 F
Street, NE, Washington, DC 20549. You may obtain information on the operation of the public
reference room by calling the SEC at 1-800-SEC-0330.
Note of Caution Regarding Forward-Looking Statements
This Prospectus includes certain statements that may be deemed to be “forward-looking statements.”
All statements, other than statements of historical facts, included in this Prospectus
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that address activities, events or developments that our management expects, believes or anticipates will or may
occur in the future are forward-looking statements. All statements other than statements of
historical fact are forward-looking statements within the meanings of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such
forward-looking statements include discussion of such matters as:
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The amount and nature of future capital, development and exploration expenditures;
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The timing of exploration activities;
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Business strategies and development of our business plan and drilling programs; and
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Potential estimates as to the volume and nature of petroleum deposits that are
expected to be found present when lands are developed in a project.
Forward-looking statements also typically include words such as “anticipate”, “estimate”, “expect”,
“potential”, “could” or similar words suggesting future outcomes. These statements are based on
certain assumptions and analyses made by us in light of our experience and our perception of
historical trends, current conditions, expected future developments and other factors we believe
are appropriate in the circumstances. Such statements are subject to a number of assumptions,
risks and uncertainties, including such factors as the volatility and level of oil and natural gas
prices, currency exchange rate fluctuations, uncertainties in cash flow, expected acquisition
benefits, exploration drilling and operating risks, competition, litigation, environmental matters,
the potential impact of government regulations, and other matters discussed under the caption “Risk
Factors,” many of which are beyond our control. Readers are cautioned that forward-looking
statements are not guarantees of future performance and that actual results or developments may
differ materially from those expressed or implied in the forward-looking statements.
RISK FACTORS
This investment has a high degree of risk. Before you invest you should carefully consider the
risks and uncertainties described below and the other information in this Form 10-KSB. If any of
the following risks actually occur, our business, operating results and financial condition could
be harmed and the value of our stock could go down. This means you could lose all or a part of
your investment.
RISKS RELATED TO OUR BUSINESS:
Due to Our History of Operating Losses, We are Uncertain That We Will Be Able to Maintain
Sufficient Cash to Accomplish Our Business Objectives
The consolidated financial statements have been prepared assuming that we will continue as a going
concern. During the fiscal years ended April 30, 2007 and 2006 we suffered net losses of
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$68,794,741 and $52,640,903, respectively. At April 30, 2007, there was stockholders’ equity and
working capital of $386,833,545 and $5,819,466, respectively. There is no assurance that we can
generate net income, increase revenues or successfully explore and exploit our properties.
See the “Plan of Operation” for a description of management’s plans in regard to this issue. The
financial statements do not include any adjustments relating to the recoverability and
classification of assets or the amounts and classification of liabilities that might be necessary
should we be unsuccessful in implementing these plans.
Our Business Plan is Highly Speculative and its Success Depends, In Part, On Exploration Success on
the Permit Lands
Our business plan is focused primarily on the exploration for oil sands deposits on our Permit
Lands in the Provinces of Saskatchewan and Alberta. Exploration itself is highly speculative. We
are subject to all of the risks inherent in oil sands exploration and development, including
identification of commercial projects, operation and revenue uncertainties, market sizes,
profitability, market demand, commodity price fluctuations and the ability to raise further capital
to fund activities. There can be no assurance that we will be successful in overcoming these
risks. These risks are further exacerbated by our dependence on OQI Sask as our primary asset.
THE BUSINESS OF OIL SANDS EXPLORATION IS SUBJECT TO MANY RISKS:
Nature of Oil Sands Exploration and Development
Oil sands exploration and development is very competitive and involves many risks that even a
combination of experience, knowledge and careful evaluation may not be able to overcome. As with
any petroleum property, there can be no assurance that commercial deposits of bitumen will be
produced from the OQI Sask Permit Lands in Saskatchewan, the Alberta Permits, or the Eagles Nest
Prospect. Furthermore, the marketability of any discovered resource will be affected by numerous
factors beyond our control. These factors include, but are not limited to, market fluctuations of
prices, proximity and capacity of pipelines and processing equipment, equipment availability and
government regulations (including, without limitation, regulations relating to prices, taxes,
royalties, land tenure, allowable production, importing and exporting of oil and gas and
environmental protection). The extent of these factors cannot be accurately predicted, but the
combination of these factors may result in us not receiving an adequate return on invested capital.
Reserves and Resources
We have not yet established any reserves. There are numerous uncertainties inherent in estimating
quantities of bitumen resources, including many factors beyond our control, and no assurance can be
given that the recovery of bitumen will be realized. In general, estimates of recoverable bitumen
resources are based upon a number of factors and assumptions made as of the date on which the
resource estimates were determined, such as geological and engineering estimates which have
inherent uncertainties, the assumed effects of regulation by governmental agencies and estimates of
future commodity prices and operating costs, all of which may vary considerably from estimated
results. All such estimates are, to some degree, uncertain and
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classifications of resources are only attempts to define the degree of uncertainty involved. For these reasons, estimates of the
recoverable bitumen, the classification of such resources based on risk of recovery, prepared by
different engineers or by the same engineers at different times, may vary substantially. No estimates
of commerciality or recoverable bitumen resources can be made at this time, if ever.
Capital Requirements and Liquidity
Significant amounts of capital will be required to explore the OQI Sask Permit Lands in
Saskatchewan, the Alberta Permits, the Eagles Nest Prospect and the Pasquia Hills Oil Shale
Prospect. The only source of future funding presently available to us is through the sale of
additional equity capital and borrowing funds or selling a portion of our interest in our assets.
There is no assurance that any additional equity capital or borrowings required will be obtainable
on terms acceptable to us, if at all. Failure to obtain such additional financing could result in
delays or indefinite postponement of further exploration and development of our projects. Equity
financing, if available, may result in substantial dilution to existing stockholders.
Government Regulations, Permits, Leases and Licenses
The business of resource exploration and development is subject to substantial regulation under
Canadian provincial and federal laws relating to the exploration for, and the development,
upgrading, marketing, pricing, taxation, and transportation of oil sands bitumen and related
products and other matters. Amendments to current laws and regulations governing operations and
activities of oil sands exploration and development operations could have a material adverse impact
on our business. In addition, there can be no assurance that income tax laws, royalty regulations
and government incentive programs related to the OQI Sask Permit Lands in Saskatchewan, the Alberta
Permits, the Eagles Nest Prospect and the Pasquia Hills Oil Shale Prospect and the oil sands
industry generally, will not be changed in a manner which may adversely affect our progress and
cause delays, or cause the inability to explore and develop, resulting in the abandonment of these
interests.
Permits, leases, licenses, and approvals are required from a variety of regulatory authorities at
various stages of exploration and development. There can be no assurance that the various
government permits, leases, licenses and approvals sought will be granted in respect of our
activities or, if granted, will not be cancelled or will be renewed upon expiry. There is no
assurance that such permits, leases, licenses, and approvals will not contain terms and provisions
which may adversely affect our exploration and development activities.
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Third Party Liability and Environmental Liability
The Company’s operations could result in liability for personal injuries, property damage, oil
spills, discharge of hazardous materials, remediation and clean-up costs and other environmental
damages. We could be liable for environmental damages caused by previous owners. As a result,
substantial liabilities to third parties or governmental entities may be incurred, and the payment
of such liabilities could have a material adverse effect on our financial condition and results of
operations. We currently have a limited amount of insurance and, at such time as we commence
additional operations, we expect to obtain and maintain additional insurance coverage for our
operations, including limited coverage for sudden environmental damages, but we do not believe that
insurance coverage for environmental damage that occurs over time is available at a reasonable
cost. Moreover, we do not believe that insurance coverage for the full potential liability that
could be caused by sudden environmental damages is available at a reasonable cost. Accordingly, we
may be subject to liability or may lose substantial portions of our properties in the event of
certain environmental damages. The Company could incur substantial costs to comply with
environmental laws and regulations which could affect our ability to operate as planned.
Royalty Regime
Any development project of our resource assets will be directly affected by the royalty regime
applicable. The economic benefit of future capital expenditures for the project is, in many cases,
dependent on a satisfactory royalty regime. There can be no assurance that the provincial
governments will not adopt a new royalty regime that will make capital expenditures uneconomic or
that the royalty regime currently in place will remain unchanged. In February 2007, the Government
of Alberta announced the creation of an independent Royalty Review Panel formed to examine the
province’s royalty and tax regime relating to oil sands, conventional oil and gas, and coal bed
methane. It is scheduled to conduct a series of public meetings in Calgary, Edmonton, Fort
McMurray and Grande Prairie which began in April 2007 and is to present its final report with
recommendations to the Minister of Finance by August 31, 2007. There can be no assurance that the
Government of Alberta or Saskatchewan or the Canadian Federal Government will not adopt a new
royalty regime or modify the methodology of royalty calculation which could increase the royalties
paid by oil sands producers in Alberta and Saskatchewan.
Emissions Regulations
In late 2002 the Government of Canada ratified the Kyoto Protocol, an international agreement
designed to set legally binding targets to reduce certain emissions of carbon dioxide, methane and
other greenhouse gasses, or “GHGs”. On October 19, 2006 the Canadian Federal Government introduced
into Parliament the Clean Air Act (Bill C-30) and released its accompanying Notice of Intent to
Develop and Implement Regulations and Other Measures to Reduce Air Emissions, or the “Notice.” The
Bill and the Notice were intended to reflect the Government’s “made in Canada” approach to Canada’s
Kyoto Protocol obligations and reduce certain industrial air pollutants and GHG emissions in
Canada. The Notice announced the Canadian Federal Government’s intent to set emission intensity
based reduction targets for GHGs
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for certain industries to come into effect by the end of 2010 and long term GHG emission reduction
targets from 2003 levels by 2050. As of July 18, 2007, Bill C-30 has not been passed.
On April 26, 2007, the Federal Government announced a Regulatory Framework for Air Emissions and
Other Measures to Reduce Air Emissions, or the “Framework”, which outlines proposed new
requirements governing the emission of GHGs and other industrial air pollutants, including sulphur
oxides, volatile organic compounds, particulate matter and possibly additional sector-specific
pollutants in accordance with the Notice. The Framework introduces further, but not full, detail
on new GHG and industrial air pollutant limits and compliance mechanisms that will apply to various
industrial sectors, including oil sands extraction, starting in 2010. The Framework proposes GHG
emission-intensity reduction targets of six percent per year from 2007 to 2010, followed by annual
reductions of two percent through 2015. The Federal Government is in the process of consulting
stakeholders about the emission-intensity targets which are contemplated to form the basis of new
draft regulations scheduled to be released in early 2008. Industry may meet the reduction
obligations through in-house GHG emission reductions, the purchase of offset credits, payments to a
federal technology fund and some limited credits for emission reductions created between 1992 and
2006. The regulations implementing these changes are not in force as of July 23, 2007.
On April 20, 2007 the Government of Alberta passed the Climate Change and Emissions Management
Amendment Act establishing a framework for GHG emission reductions similar to the proposed federal
Framework. The Specified Gas Emitters Regulation created under the Act came into effect on July 1,2007. The Specified Gas Emitter Regulation requires facilities that emit more than 100,000 tonnes
of carbon dioxide equivalent annually to reduce their emission intensity for the July 1, 2007 to
December 31, 2007 period by 12 percent from 2003-2005 levels. New facilities in operation less
than eight years will be required to achieve these reductions over the fourth to eighth years of
operation. These obligations may be met by in-house reductions, the purchase of certain emission
reductions or offset credits or a contribution of $15 per tonne of GHG emissions to a provincial
technology fund.
On June 14, 2007, the Government of Saskatchewan announced the Saskatchewan Energy and Climate
Change Plan. The Plan’s main targets include a 32 percent reduction in GHG emissions from 2004
levels by 2020, and a reduction of 80 percent by 2050. In the non-renewable energy sector, the
Government of Saskatchewan indicates that it will work with the industry to reduce emissions from
flaring and venting, and to develop carbon capture and storage alternatives. As of July 23, 2007,
the Government of Saskatchewan has not made any regulatory changes to implement the Energy and
Climate Change Plan in the non-renewable energy sector.
Future legislated GHG and industrial air pollutant emission reduction requirements and emission
intensity requirements, or GHG and industrial air pollutant emission reduction or intensity
requirements in future regulatory approvals, may require the restriction or reduction of GHG and
industrial air pollutant emissions or emissions intensity from our future operations and
facilities, payments to technology funds or purchase of emission reductions or offset credits. The
reductions may not be technically or economically feasible for our operations and the failure to
meet such emission reduction or emission intensity reduction requirements or other compliance
mechanisms may materially adversely affect our business and result in fines, penalties and the
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suspension of operations. As well, equipment from suppliers which can meet future emission
standards may not be available on an economic basis and other compliance methods of reducing
emissions or emission intensity to levels required in the future may significantly increase our
operating costs or reduce output. Emission reductions or offset credits may not be available for
acquisition or may not be available on an economic basis. There is also the risk that provincial
or federal governments, or both, could pass legislation which would tax such emissions.
Abandonment and Reclamation Costs
We are responsible for compliance with terms and conditions of environmental and regulatory
approvals and all laws and regulations regarding the abandonment of the project and reclamation of
its lands at the end of its economic life, which abandonment and reclamation costs may be
substantial. A breach of such legislation and/or regulations may result in the issuance of
remedial orders, the suspension of approvals, or the imposition of fines and penalties, including
an order for cessation of operations at the site until satisfactory remedies are made. We have not
yet incurred any significant retirement, abandonment or reclamation costs to date. However, it is
not possible to estimate with certainty the abandonment and reclamation costs since they will be a
function of regulatory requirements at the time.
Title Risks
None of the OQI Sask exploration permits in Saskatchewan, nor the Alberta Permits, nor the Pasquia
Hills Oil Shale Prospect permits has been converted to development leases. In the event that we do
not meet the regulated requirements, or development conditions to convert our permits to leases or
obtain an extension of such development requirements, our right to explore for bitumen or oil
shale, as applicable, may be lost. We are satisfied that we have good and proper right, title and
interest in and to the permits that we intend to exploit. However, we have not obtained title
opinions on any of our interests. Accordingly, ownership of the oil sands and oil shale
exploration rights could be subject to prior unregistered agreements or interests or undetected
claims or interests.
Aboriginal peoples have claimed aboriginal title and rights to a substantial portion of western
Canada. Certain aboriginal peoples have filed a claim against the Government of Canada, the
Province of Alberta, certain governmental entitles and the regional municipality of Wood Buffalo
(which includes the City of Fort McMurray, Alberta) claiming, among other things, aboriginal title
to large areas of lands surrounding Fort McMurray. Similar claims have been and could be made in
the Province of Saskatchewan and elsewhere. If any such claim relating to lands on which we have
rights was successful, it could have a significant adverse effect on our ability to conduct our
business.
Operational Hazards
Our exploration and development activities are subject to the customary hazards of operation in
remote areas. A casualty occurrence might result in the loss of equipment or life, as well as
injury, property damage or other liability. While we maintain limited insurance to cover current
operations, our property and liability insurance may not be sufficient to cover any such casualty
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occurrences or disruptions. Equipment failures could result in damage to our facilities and
liability to third parties against which we may not be able to fully insure or may elect not to
insure because of high premium costs or for other reasons. Our operations could be interrupted by
natural disasters or other events beyond our control. Losses and liabilities arising from
uninsured or under-insured events could have a material adverse effect on the business, our
financial condition and results of our operations.
Competitive Risks
The Canadian and international petroleum industry is highly competitive in all aspects, including
the exploration for, and the development of, new sources of supply, the acquisition of oil
interests and the distribution and marketing of petroleum products. A number of companies other
than our company are engaged in the oil sands business and are actively exploring for and
delineating their resource bases. Some companies have announced plans to begin production of
synthetic crude oil, or to expand existing operations. Expansion of existing operations and
development of new projects could materially increase the supply of synthetic crude oil and other
competing crude oil products in the marketplace and adversely affect plans for development of our
lands.
ENVIRONMENTAL AND REGULATORY COMPLIANCE MAY IMPOSE SUBSTANTIAL COSTS ON US
Our operations are or will be subject to stringent federal, provincial and local laws and
regulations relating to improving or maintaining environmental quality. Environmental laws often
require parties to pay for remedial action or to pay damages regardless of fault. Environmental
laws also often impose liability with respect to divested or terminated operations, even if the
operations were terminated or divested many years ago.
Our exploration activities and drilling programs are or will be subject to extensive laws and
regulations governing prospecting, development, production, exports, taxes, labor standards,
occupational health, waste disposal, protection and remediation of the environment, protection of
endangered and protected species, operational safety, toxic substances and other matters.
Exploration and drilling is also subject to risks and liabilities associated with pollution of the
environment and disposal of waste products. Compliance with these laws and regulations will impose
substantial costs on us and will subject us to significant potential liabilities.
Costs associated with environmental liabilities and compliance have increased over time, and we
expect these costs to continue to increase in the future. We will be required to book reserves for
the costs of environmental obligations on our financial statements for such liabilities as our
exploration operations proceed.
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THE LOSS OF CURRENT MANAGEMENT MAY MAKE IT DIFFICULT FOR US TO OPERATE
Reliance on Key Personnel
Investors must rely upon the ability, expertise, judgment, discretion, integrity and good faith of
our management and directors. The Company’s success is dependent upon its management and key
personnel. The unexpected loss or departure of any of our key officers and employees could be
detrimental to our future success. Except for a key man insurance policy of $5 million CDN
on our President and Chief Executive Officer, we do not maintain key man insurance on our
management.
FLUCTUATIONS IN U.S. AND CANADIAN DOLLAR EXCHANGE RATES MAY HAVE A MATERIAL ADVERSE IMPACT
Commodity prices and costs related to the Company’s activities, if and when applicable, will
generally be based on a U.S. dollar market price. Fluctuations in the U.S. and Canadian dollar
exchange rate may cause a negative impact on revenue and costs and could have a material adverse
impact on the Company.
RISKS RELATING TO OUR COMMON STOCK
We Have Numerous Outstanding Options, Warrants and Commitments to Issue Shares, Which May Adversely
Affect The Price of Our Common Stock
We have reserved 18,981,067 shares of our Common Stock for issuance upon exercise of outstanding
options under plans and warrants at prices as low as $0.55 per share. The Company has also
reserved 1,961,900 shares to be issued on settlement of debt of a former subsidiary. Pursuant to
the Reorganization Agreement with OQI Sask dated August 14, 2006, the Company is required to issue
up to 76,504,304 shares of its Common Stock for all of the OQI Sask Exchangeable Shares (including
warrants and options to acquire) issued upon the closing (the “Reorganization”). As of July 23,2007, 31,015,708 OQI Sask Exchangeable Shares have already been exchanged for our Common Stock and
up to an additional 45,488,596 OQI Sask Exchangeable Shares may be issued and exchanged for Common
Stock. Any sale into the public market of our Common Stock purchased privately at prices below the
current market price could be expected to have a depressive effect on the market price of our
Common Stock.
Future Sales of our Common Stock May Cause our Stock Price to Decline
Our stock price may decline by future sales of our shares or the perception that such sales may
occur. If we issue additional shares of Common Stock in private financings under an exemption from
the registration laws, then those shares will constitute “restricted shares” as defined in Rule 144
under the Securities Act of 1933 (the “Act”). The restricted shares may only be sold if they are
registered under the Act, or sold under Rule 144, or another exemption from registration under the
Act.
Some of our outstanding restricted shares of Common Stock are either eligible for sale pursuant to
Rule 144 or have been registered under the Act for resale by the holders. We are unable to
estimate the amount, timing, or nature of future sales of outstanding Common Stock. Sales of
substantial amounts of our Common Stock in the public market may cause the stock’s market price to
decline.
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Dividend Policy
The Company did not declare or pay cash or other dividends on its Common Stock during the past two
fiscal years. Payment of dividends by the Company will depend upon the Company’s
financial condition, results of operations, capital requirements and such other factors as the
board of directors of the Company may deem relevant.
Our Stock Price Can Be Extremely Volatile
The trading price of our Common Stock has been and could continue to be subject to wide
fluctuations in response to announcements of our business developments or those of our competitors,
world commodity prices, periodic updates on our resource assessments, quarterly variations in
operating results, and other events or factors. In addition, stock markets have experienced
extreme price volatility in recent years. This volatility has had a substantial effect on the
market prices of companies, at times for reasons unrelated to their operating performance. Such
broad market fluctuations may adversely affect the price of our Common Stock.
Issuance of Preferred Stock and Our Anti-Takeover Provisions Could Delay or Prevent a Change in
Control and May Adversely Affect our Common Stock.
We are authorized to issue 10,000,000 shares of preferred stock which may be issued in series from
time to time with such designations, rights, preferences and limitations as our Board of Directors
may determine by resolution. The rights of the holders of our Common Stock will be subject to and
may be adversely affected by the rights of the holders of any of our preferred stock that may be
issued in the future. Issuance of a new series of preferred stock, or providing desirable
flexibility in connection with possible acquisitions and other corporate purposes, could make it
more difficult for a third party to acquire, or discourage a third party from acquiring our
outstanding shares of Common Stock. On October 30, 2006, the Company’s shareholders approved
staggered terms for the Board of Directors, which could make removal of the Board of Directors more
difficult for a third party. The Class A directors will serve until the annual meeting in 2009,
the Class B directors until the annual meeting in 2008, and the Class A directors until the annual
meeting in 2007, or each until their successors are duly elected or appointed or until their
earlier death, resignation or removal. After the respective annual meetings in 2007, 2008 and
2009, each term for directors will be three years. In addition to a staggered board, our Board of
Directors adopted a stockholders rights plan in March 2006 and reserved 250,000 shares of Series A
Junior Participating Preferred Stock. This stockholders rights plan could have the effect of
discouraging, delaying or preventing an acquisition. In addition, the Company has designated one
share as Series B Preferred Stock, which is issued and outstanding and represents 31,028,486 voting
shares as of July 23, 2007, and upon the exercise of options to acquire Exchangeable Shares, will
represent up to 45,488,596 voting shares (see, “Description of Securities”). The Company has no
present plans to issue any additional shares of preferred stock.
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USE OF PROCEEDS
This Prospectus relates to shares of our Common Stock that may be offered and sold from time to
time by the selling stockholders. We will not receive any proceeds from the sale of shares of
Common Stock in this offering.
SELLING SECURITY HOLDERS
The selling stockholders purchased the shares of Common Stock that may be offered and sold pursuant
to this Prospectus in private placements that closed in March 2007 and May 2007.
In March 2007, the Company and OQI Sask entered into an underwriting agreement for a private
placement (the “Underwriting Agreement”) with a syndicate of underwriters of up to 5,320,000 shares
of the Company’s Common Stock issued on a “flow-through” basis (the “Flow-Through Shares”).
Under the terms and conditions of the Underwriting Agreement, the syndicate of underwriters agreed
to sell the Flow-Through Shares at a price of $4.82 per share for an aggregate gross proceeds of
$25,642,400. The Company closed on the sale of 3,097,534 Flow-Through Shares on March 6, 2007 and
58,300 Flow-Through Shares on March 9, 2007 pursuant to subscription agreements with the
subscribers.
On May 3, 2007, the parties amended the Underwriting Agreement (the “Amending Agreement”), and
pursuant to the terms of the Amending Agreement, the Purchase Price was reduced to Cdn. $3.85 per
share. The Underwriters agreed to pay the Company the difference between Cdn. $3.85 and the
original Purchase Price per Flow-Through Share purchased pursuant to the Underwriting Agreement as
amended. Concurrently with the Amending Agreement, and under the terms and conditions of the
Underwriting Agreement, as amended, the Company closed on the sale of 2,164,166 Flow-Through Shares
pursuant to subscription agreements with the subscribers.
Flow-Through Shares are Common Stock that provides certain tax benefits only to the initial
subscribers pursuant to a contractual arrangement between the Company and the subscribers.
Investors who purchase shares pursuant to this Prospectus will not receive “flow-through” tax
benefits. The securities purchased by investors are Common Stock of the Company and they have the
features as described below (See “Description of Securities”).
Also on May 3, 2007, the Company entered into an agency agreement for a private placement (the
“Agency Agreement”) with a syndicate of agents of up to 14,000,000 shares of the Company’s Common
Stock at a price of US$2.75 per share for an aggregate gross proceeds of US$38,500,000.
Concurrently with the Agency Agreement, and under the terms and conditions of the Agency Agreement,
the Company closed on the sale of 13,900,000 Common Shares pursuant to subscription agreements with
the subscribers.
The following table also sets forth the name of each person who is offering the resale of shares of
Common Stock by this Prospectus, the number of shares of Common Stock beneficially owned by each
person, the number of shares of Common Stock that may be sold in this offering and the
12
number of shares of Common Stock each person will own after the offering, assuming they sell all of the
shares offered. We will not receive any proceeds from the resale of the Common Stock by the
selling stockholders.
A
B
C
Total Shares
Beneficially Owned
Shares Offered
Shares Owned After
Name
Prior to Offering (1)
Hereby (1)
Offering (1) (2)
Kenneth Froh or Deborah
Froh
7,400
5,400
2,000
Randy Ulrich
2,700
2,700
0
Paul Bookhalter
5,400
5,400
0
Robert Nemy
27,000
27,000
0
Robert & Jill Dingwall
15,000
7,500
7,500
Richard Patricio
40,000
20,000
20,000
David Michael Einstein
2,000
2,000
0
Irfan Dhanani (6)
4,500
4,500
0
Magdalena Herold
2,200
2,200
0
Doug McPhee
8,700
3,100
5,600
David Bannatyne
5,300
3,000
2,300
Steve Herold
2,200
2,200
0
Mary McPhee
5,300
3,000
2,300
Frank Weiler
7,500
7,500
0
Patricia Cowtan
5,000
5,000
0
Harry Ostrander
5,000
5,000
0
Sheila Foster
2,000
2,000
0
Jeremy Gill
2,000
2,000
0
Gary Neinstein
11,116
10,000
1,116
Sirinivason Chandran (6)
2,000
2,000
0
Scott Jeffrey (6)
8,865
8,865
0
Ian Morrison
10,000
2,000
8,000
Grant Maglis
15,000
15,000
0
Gordon Lee (6)
3,500
3,500
0
David Roberts
30,000
15,000
15,000
Lewis Levin
1,000
1,000
0
Paul Worster
30,000
20,000
10,000
Elizabeth & Richard Potter
5,000
5,000
0
Joe Tullo
10,000
10,000
0
James E. Osler
1,800
1,800
0
Rick McGrath
1,773
1,773
0
John Horwood
18,307
18,307
0
Charles William David
Birchall
5,320
5,320
0
13
A
B
C
Total Shares
Beneficially Owned
Shares Offered
Shares Owned After
Name
Prior to Offering (1)
Hereby (1)
Offering (1) (2)
Rena Mayer
243,000
10,000
173,000
Frank Mayer
243,000
50,000
173,000
Eva Mayer
243,000
10,000
173,000
Ian D. Bruce (6)
50,000
50,000
0
Jonathan Buick and/or
Antoinette Speranza-Buick
(4)
420,000
10,000
410,000
Cougar Assets Ltd. (6)
15,000
15,000
0
Sheldon and/or Shauna
Gardiner
10,000
10,000
0
Mark Zivot and/or Rose
Zivot
29,336
3,000
26,336
Canadian Dominion
Resources 2007 Limited
Partnership-UTA (3)
531,900
531,900
0
CMP 2007 Resource Limited
Partnership-UTA (3)
354,600
354,600
0
Mavrix a/c 207 (3)
874,600
354,600
520,000
Front Street FT 2007 LP (3)
622,400
622,400
0
MRF 2007 Resource Limited
Partnership
177,300
177,300
0
Michael Regan
25,000
5,000
20,000
Dixie Hagerman
8,000
8,000
0
Shirley Hagerman
20,000
20,000
0
Tom Hagerman
12,000
12,000
0
Harold Rands
9,800
2,000
7,800
Michael Bensky (6)
2,000
2,000
0
Paul James Hill
35,400
35,400
0
Bob Caie
3,000
3,000
0
Kerry Tychonick
18,045
2,000
16,045
Gust Kolias (6)
9,000
9,000
0
Anne McNamara (6)
1,775
1,775
0
Patricia Beatch (4)
48,150
4,400
43,750
Barry Lakusta
500
500
0
Christopher H. Hopkins
(4), (10)
20,807,982
8,866
20,790,250
Edna Hopkins (10)
20,807,982
8,866
20,790,250
Brian Devlin (6)
17,730
17,730
0
Simon Raven (4)
2,500
2,000
500
Gordon Tallman (4)
125,000
50,000
75,000
14
A
B
C
Total Shares
Beneficially Owned
Shares Offered
Shares Owned After
Name
Prior to Offering (1)
Hereby (1)
Offering (1) (2)
Brian Bertram
28,300
13,300
15,000
Darrell Bertram
28,300
13,300
15,000
Shirley Bertram
8,870
8,870
0
Grafton Bertram
361,930
17,730
344,200
Debra J. Pitman & H. Ross
Pitman
4,000
4,000
0
Barbara Mullane (4)
16,000
3,500
12,500
Craig Hoskins (4)
4,200
2,700
1,500
Elma L. Wilson (6)
17,732
17,732
0
Stephen C. Bosma
5,400
5,400
0
Quarere Holdings Ltd. (3)
5,000
5,000
0
Robert K. Schulz (6)
2,000
2,000
0
Mary Werers
38,000
8,000
30,000
Bryan Kelly
21,200
6,000
15,200
Menno Hulshof (6)
2,000
2,000
0
Patricia Forrest
2,000
2,000
0
Terry Medd
5,400
5,400
0
Denise Gagne
4,500
4,500
0
James Kosmas (6)
1,000
1,000
0
R. Glen Shackleton
3,000
3,000
0
James L Epp
1,800
1,800
0
Charles Britton (6)
2,000
2,000
0
Keith Morton (6)
3,000
3,000
0
George Lagodontis
3,000
3,000
0
Robert Kent Gould
2,200
2,200
0
Andrew Foster (6)
2,000
2,000
0
Chris Stewart (6)
6,500
6,500
0
Robert Klenk (6)
17,730
17,730
0
Martin Karcz
4,433
4,433
0
Paul Calvin (6)
8,000
8,000
0
Marjorie Kelemen
3,000
3,000
0
Louis Kelemen
3,000
3,000
0
Jack Hudec (6)
6,500
6,500
0
Edwin Graboski (6)
3,250
3,250
0
Colleen Jeske
4,000
4,000
0
Mitch Jeske
4,000
4,000
0
Roy G. Wilson
13,000
13,000
0
Robert Nieuwesteeg (6)
6,500
6,500
0
Trevor Churoy (6)
3,900
3,900
0
Ann Beattie (6)
4,000
4,000
0
15
A
B
C
Total Shares
Beneficially Owned
Shares Offered
Shares Owned After
Name
Prior to Offering (1)
Hereby (1)
Offering (1) (2)
Doug McPhee
7,500
7,500
0
David G. Bannatyne
9,300
4,000
5,300
James A. Ralston
12,500
12,500
0
Jack Wootliff
12,500
12,500
0
Margaret Coleman
2,500
2,500
Rosalie Graboski (6)
3,250
3,250
0
Grant Daunheimer
20,000
10,000
10,000
David Beattie
4,000
4,000
0
Bryan Kelly
13,000
13,000
0
Nick Colvin (6)
8,000
8,000
0
Greg Kuran
6,500
6,500
0
Steven Sawchuck (6)
6,000
6,000
0
Aposherm Inc. (6)
1,189,664
1,189,664
0
Stuart Mark Golvin (6)
38,889
38,889
0
George Hofstedter (6)
155,557
155,557
0
Gibor Holdings Inc. (6)
38,889
38,889
0
Ilene Glovin (6)
38,889
38,889
0
J.A. Macfarlane Co. (6)
194,805
194,805
0
Phineas Schwartz
50,556
50,556
0
Robert Nemy
27,000
27,000
0
Royden Ritz
10,000
10,000
0
Robert Bruggeman
20,000
14,000
6,000
Kanak Chopra
8,000
8,000
0
Michael Colpitts
2,500
2,500
0
David Cole (6)
2,500
2,500
0
Steve Demestihas
4,000
4,000
0
Steve & Eva Sofianidis
3,000
3,000
0
Rocky Zannella
3,900
3,900
0
Angelo Guido
217,781
14,500
203,281
Ongaro Investments (3)
4,000
4,000
0
Stephanie McLuhan
2,600
2,600
0
Kishore Punwani
8,100
5,000
3,100
Martin Foster
1,000
1,000
0
Charles Kucey
135,000
50,000
85,000
James R. Poole
5,000
5,000
0
Bryan Baker
6,500
6,500
0
John R. Barton or Barbara
A. Barton
5,000
5,000
0
Patricia Kert
8,000
3,000
5,000
Wilroche Investments (3)
6,000
6,000
0
16
A
B
C
Total Shares
Beneficially Owned
Shares Offered
Shares Owned After
Name
Prior to Offering (1)
Hereby (1)
Offering (1) (2)
Bernard Ross or Ruth Ross
19,000
6,000
13,000
Diane Cristall
16,000
6,000
10,000
Alvin Dickstein
43,000
8,000
35,000
Manousos Vourkoutiotis
65,852
65,852
0
1702939 Ontario Ltd. (6)
3,000
3,000
0
Karen Gavan
6,000
6,000
0
Stephen Chesney
3,000
3,000
0
ING Capital LLC (5) (3)
1,022,700
415,000
607,700
Goldman, Sachs & Co. (8)
2,177,753
550,000
1,627,753
ING Schuyler Bay Master
Ltd (5) (3)
202,300
85,000
117,300
RBC Capital Markets (6)
250,000
250,000
Talvest Small Cap Cdn.
Equity Fund (nominee: Mac
& Co.) (7)
17,400
3,000
14,400
Small/Mid Cap Diversified
Alpha Fund (nominee: Band
& Co.) (7)
37,700
10,000
27,700
TELUS Foreign Equity
Active Beta Pool (nominee: Mac &
Co.) (7)
29,700
5,000
24,700
New Zealand Administration
Services Limited — Global
Equity Small Companies
Pool (nominee: Gerlach &
Co.) (7)
48,400
14,000
34,400
Talvest Global Small Cap
Fund (nominee: Mac & Co.)
(7)
46,800
8,500
38,300
TELUS Foreign Equity
Active Alpha Pool
(nominee: Mac & Co.) (7)
61,800
10,500
51,300
The SEI US Small Companies
Fund (nominee: SEI U.S.
Small Companies Fund c/o
BBH & Co.) (7)
74,300
12,500
61,800
Maritime Life Discovery
Fund (nominee: Mac & Co.)
(7)
Seligman Global Smaller
Companies Fund
(nominee: Cudd & Co.) (7)
247,400
39,500
207,900
JBWere Global Small
Companies Pooled Fund
(nominee: Gerlach & Co.)
(7)
165,300
52,000
113,300
SEI Institutional
Investments Trust -
Small/Mid Cap Fund
(nominee: Hare & Co.) (7)
375,300
63,500
311,800
SEI Institutional
Investments Trust — Small
Cap Fund (nominee: Hare &
Co.) (7)
476,300
74,000
402,300
SEI Institutional Managed
Trust — Small Cap Growth
Fund (nominee: Hare & Co.)
(7)
507,000
89,500
417,500
18
A
B
C
Total Shares
Beneficially Owned
Shares Offered
Shares Owned After
Name
Prior to Offering (1)
Hereby (1)
Offering (1) (2)
Radian Group Inc.
(nominee: Ell & Co.) (7)
89,500
89,500
0
Goldman Sachs JBWere Small
Companies Pooled Fund
(nominee: Hare & Co.) (7)
783,400
132,500
650,900
New York State Nurses
Association Pension Plan
(nominee: Ell & Co.) (7)
169,500
169,500
0
Retirement Plan for
Employees of Union Carbide
Corporation and its
Participating Subsidiary
Companies (nominee: Kane &
Co.) (7)
258,500
258,500
0
Government of Singapore
Investment Corporation Pte
Ltd. (nominee: Ell & Co.)
(7)
309,000
309,000
0
The Robert Wood Johnson
Foundation (nominee: Benchworthy & Co.) (7)
381,500
381,500
0
Dow Employees’ Pension
Plan (nominee: Kane & Co.)
(7)
473,000
473,000
0
Wellington Trust Company,
National Association
Multiple Common Trust
Funds Trust, Emerging
Companies Portfolio
(nominee: Landwatch & Co.)
(7)
513,500
513,500
0
Oregon Public Employees
Retirement Fund (nominee: Westcoast & Co.) (7)
635,000
635,000
0
Public Sector Pension
Investment Board (nominee: Mac & Co.) (7)
776,500
776,500
0
Government of Singapore
Investment Corporation Pte
Ltd. (nominee: Ell & Co.)
(7)
883,000
883,000
0
19
A
B
C
Total Shares
Beneficially Owned
Shares Offered
Shares Owned After
Name
Prior to Offering (1)
Hereby (1)
Offering (1) (2)
Wellington Trust Company,
National Association
Multiple Collective
Investment Funds Trust,
Emerging Companies
Portfolio
(nominee: Finwell & Co.) (7)
934,500
934,500
0
Bruce Mitchell
200,000
200,000
0
Dynamic Power Hedge Fund
(3)
1,500,000
1,500,000
0
Goldman Sachs Canada Inc.
(9)
2,900,000
2,900,000
0
Pinetree Resource
Partnership (3)
750,000
750,000
0
2035718 Ontario Inc. (6)
75,000
75,000
0
Resolute Performance Fund
(3)
3,500,000
1,000,000
2,500,000
David Copeland (6)
5,000
5,000
0
Gerard Boucher (6)
5,000
5,000
0
John Gillberry (6)
5,000
5,000
0
1376124 Ontario LTD. (3)
5,000
5,000
0
The Saul A. Silverman
Family Foundation (3)
65,000
50,000
15,000
Linda Kitagawa Holdings
Inc. (3)
30,000
25,000
5,000
Tim Shearly
3,000
3,000
0
Peter D. Richardson or
Margaret Kinghorn
25,000
25,000
0
Overbank Limited (3)
28,500
25,000
3,500
David Sereny (6)
35,000
35,000
0
Daniel Bereskin
35,000
35,000
0
Dr. Howard Dombrower Med.
Profession (6)
15,000
15,000
0
1274099 Ontario Inc. (6)
15,000
15,000
0
Connie Colpitts
5,500
5,500
0
Sheldon Fainer
9,000
9,000
0
Richard Scott
15,000
15,000
0
Frank Anthony and Jine
Anthony (6)
8,000
8,000
0
20
A
B
C
Total Shares
Beneficially Owned
Shares Offered
Shares Owned After
Name
Prior to Offering (1)
Hereby (1)
Offering (1) (2)
Stephen Turvey (6)
8,000
8,000
0
C. Peter Turvey
8,000
8,000
0
Bohdan Romaniuk
5,150
3,650
1,500
1202588 Alberta Ltd. (3)
4,200
4,200
0
Dan Allen (6)
3,650
3,650
0
Yan Qing Liu (6)
9,100
9,100
0
Yu Hong Zhao
9,100
9,100
0
Wei Xing Guo and
Hong Wen Shen (6)
10,000
10,000
0
Hai Lin Hu
5,000
5,000
0
Shu-We Kuo (6)
10,000
10,000
0
Wen Sen Liu
Qi Yin
6,800
6,800
0
Ted Bartrim
4,000
4,000
0
TOTAL
71,686,211
19,211,998
52,316,481
(1) The beneficial ownership of the common stock by the selling stockholder set forth in the
table is determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, and the information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rule, beneficial ownership includes any shares as to which the selling
stockholders has sole or shared voting power or investment power and also any shares, which the
selling stockholders has the right to acquire within 60 days.
(2) Assumes that all securities registered will be sold.
(3) The natural person(s) who exercise voting and/or dispositive and investing powers are the
following individuals: Quarere Holdings Ltd. is controlled by J. and L. Somoga; 1376124 Ontario Ltd.
is controlled by David Sutin; 1202588 Alberta Ltd. is controlled by Ameen Allidina, Franz
Granacher, Gordon Marr, and Franz Gruener; The Saul A. Silverman Family Foundation is controlled by
Peter A. Silverman, Larry F. Levine, David Levine and Arnold Noyek; Linda Kitagawa Holdings Inc. is
controlled by Linda Nailor; Overbank Limited is controlled by Bernard Ross and Ruth Ross; Ongaro
Investments is controlled by Otello Ongaro and Alberta Ongaro; Wilroche Investments is controlled
by Marc Moll; Resolute Performance Fund is controlled by Tom Stanley; Pinetree Resource Partnership
is controlled by Sheldon Inwentash; Front Street FT 2007 LP is controlled by Craig Porter; ING
Capital LLC is controlled by Directors: Graeme Dewar, John Egan, David Hudson and Charles O’Neil;
ING Schuyler Bay Master Ltd. is controlled by ING Schuyler Bay L.P., ING Capital LLC; Mavrix a/c
207 is controlled by Malvin Spooner and Roy Steele; Canadian Dominion Resources 2007 Limited
Partnership-UTA is controlled by its General Partner Canadian Dominion Resources 2007 Corporation,
by its manager, UTA Asset Management Corp.; CMP 2007 Resource Limited Partnership-UTA is controlled
by its general partner CMP 2007 Corporation, by its manager, UTA Asset Management Corp.; Dynamic
Power Hedge Fund is controlled by Goodman & Company, Investment Counsel Ltd. on behalf of the
Dynamic Power Hedge Fund.
(4) Relationships between selling securityholders and the Company are as follows: Christopher H.
Hopkins is President and Chief Executive Officer of the Company; Patricia A. Beatch was Vice
President, Corporate and Strategic, of the Company prior to June 1, 2007; Simon Raven is Chief
Geologist of the Company; Barbara Mullane is Corporate Controller of the Company; Gordon Tallman is
a director of the Company; Craig Hoskins is a partner at Macleod Dixon LLP, legal counsel to the
Company; and Jonathan Buick is a principal of the Buick Group, which is engaged by the Company.
(5) ING Schuyler Bay Master Ltd. and ING Capital LLC are affiliates of registered broker-dealers.
These selling stockholders have represented to the Company that they purchased the Securities on
their own behalf in the ordinary course of business, and at
21
the time of the purchase of the
Securities, they had no agreements or understandings, directly or indirectly, with any party to
distribute the Securities. All other selling stockholders (except as provided in footnote 6) have
represented that they are not registered broker-dealers or an affiliate of a registered
broker-dealer.
(6) Based on reasonable inquiry, we have never received disclosure on these selling stockholders.
(7) Wellington Management Company, LLP (“Wellington”) is an investment adviser registered under
the Investment Advisers Act of 1940, as amended. Wellington, in such capacity, may be deemed to
share beneficial ownership over the shares held by its client accounts.
(8) Goldman, Sachs & Co is a direct and indirect, wholly-owned subsidiary of The Goldman Sachs
Group, Inc., a publicly-traded company. No individual within Goldman, Sachs & Co. has sole voting
and investment power with respect to the securities. In accordance with Securities and Exchange
Commission Release No. 34-395538 (January 12, 1998) (the “Release”), this filing reflects the
securities beneficially owned by certain operating units (collectively, the “Goldman Sachs
Reporting Units”) of GS Group and its subsidiaries and affiliates (collectively, “GSG”). This
filing does not reflect securities, if any, beneficially owned by any operating units of GSG whose
ownership of securities is disaggregated from that of the Goldman Sachs Reporting Units in
accordance with the Release. The Goldman Sachs Reporting Units disclaim beneficial ownership of the
securities beneficially owned by (i) any client accounts with respect to which the Goldman Sachs
Reporting Units or their employees have voting or investment discretion, or both, and (ii) certain
investment entities of which the Goldman Sachs Reporting Units acts as the general partner,
managing general partner or other manager, to the extent interests in such entities are held by
persons other than the Goldman Sachs Reporting Units.
(9) Goldman Sachs Canada Inc. is a direct, wholly-owned subsidiary of the Goldman Sachs Group,
Inc., a publicly traded company. No individual within Goldman Sachs Canada Inc. has sole voting
and investment power with respect to the securities.
(10) Christopher H. Hopkins, and his spouse, Edna Hopkins, each beneficially own 10.4% of the
Company’s shares of Common Stock outstanding after completion of the offering.
PLAN OF DISTRIBUTION
Each selling stockholder of our Common Stock and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on
the trading market or any other stock exchange, market or trading facility on which the shares are
traded or in private transactions. These sales may be at fixed or negotiated prices. A selling
stockholder may use any one or more of the following methods when selling shares:
•
ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
•
block trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to facilitate
the transaction;
•
purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;
•
an exchange distribution in accordance with the rules of the applicable exchange;
•
privately negotiated transactions;
•
settlement of short sales entered into after the date of this prospectus;
•
Broker-dealers may agree with the Selling Stockholders to sell a specified
number of such shares at a stipulated price per share;
•
a combination of any such methods of sale;
•
through the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise; or
•
any other method permitted pursuant to applicable law.
22
The selling stockholders may also sell shares under Rule 144 under the Securities Act of 1933, as
amended (the “Securities Act”), if available, rather than under the Prospectus.
Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from the selling
stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the
purchaser) in amounts to be negotiated. Each selling stockholder does not expect these commissions
and discounts relating to its sales of shares to exceed what is customary in the types of
transactions involved.
The selling stockholders and any broker-dealers or agents that are involved in selling our Common
Stock may be deemed to be “underwriters” within the meaning of the Securities Act in connection
with such sales. In such event, any commissions received by such broker-dealers or agents and any
profit on the resale of the Common Stock purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Each selling stockholder has informed us that it
does not have any agreement or understanding, directly or indirectly, with any person to distribute
the Common Stock.
The resale shares will be sold only through registered or licensed brokers or dealers if required
under applicable state or provincial securities laws. In addition, in certain states or provinces,
the resale shares may not be sold unless they have been registered or qualified for sale in the
applicable state or an exemption from the registration or qualification requirement is available
and is complied with.
Under applicable rules and regulations under the Exchange Act, any person engaged in the
distribution of the resale shares may not simultaneously engage in market making activities with
respect to our Common Stock for a period of two business days prior to the commencement of the
distribution. In addition, the selling stockholders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the
timing of purchases and sales of shares of our Common Stock by the selling stockholders or any
other person.
DESCRIPTION OF SECURITIES
Common Stock
The following summary description of our securities is not complete and is qualified in its
entirety by reference to our Articles of Incorporation and Bylaws.
Our authorized capital stock consists of 500,000,000 shares of $0.001 par value Common Stock and
10,000,000 shares of $0.001 par value preferred stock, which we may issue in one or more series as
determined by our Board of Directors. As of July 23, 2007, there were 183,723,987 shares of Common
Stock issued and outstanding that are held of record by approximately 329 shareholders.
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Each holder of record of shares of our Common Stock is entitled to one vote for each share held on
all matters properly submitted to the shareholders for their vote. Cumulative voting or the
election of directors is not authorized by the Articles of Incorporation.
Holders of outstanding shares of our Common Stock are entitled to those dividends declared by the
Board of Directors out of legally available funds, and, in the event of our liquidation,
dissolution or winding up of our affairs, holders are entitled to receive ratably our net assets
available to the shareholders. Holders of our outstanding Common Stock have no preemptive,
conversion or redemption rights. All of the issued and outstanding shares of our Common Stock are,
and all unissued shares of our Common Stock, when offered and sold will be, duly authorized,
validly issued, fully paid and nonassessable. To the extent that additional shares of our Common
Stock may be issued in the future, the relative interests of the then existing shareholders may be
diluted.
Preferred Stock
Our Board of Directors is authorized to issue from time to time, without shareholder authorization,
in one or more designated series, any or all of the authorized but unissued shares of our preferred
stock with such dividend, redemption, conversion and exchange provisions as may be provided by the
Board of Directors with regard to such particular series. Any series of preferred stock may
possess voting, dividend, liquidation and redemption rights superior to those of our Common Stock.
The rights of the holders of our Common Stock will be subject to and may be adversely affected by
the rights of the holders of any of our preferred stock that may be issued in the future. Issuance
of a new series of preferred stock, or providing desirable flexibility in connection with possible
acquisitions and other corporate purposes, could make it more difficult for a third party to
acquire, or discourage a third party from acquiring our outstanding shares of Common Stock and make
removal of the Board of Directors more difficult.
Our Board of Directors adopted a shareholders rights plan in March 2006 and reserved 250,000 shares
of Series A Junior Participating Preferred Stock. At the Company’s annual shareholders meeting
held on October 30, 2006, the shareholders adopted the shareholders rights plan. This shareholders
rights plan could have the effect of discouraging, delaying or preventing an acquisition.
In addition, the Company has designated one preferred share as Series B Preferred Stock (the
“Series B Preferred Share”), which is held by Computershare Trust Company of Canada (“CTC”). The
one Series B Preferred Share represents a number of votes equal to the total outstanding
Exchangeable Shares on the applicable record date for the vote submitted to the Company’s
shareholders. The Exchangeable Shares were issued by OQI Sask as part of the Reorganization, and
are exchangeable at any time on a one-for-one basis, at the option of the holder, for shares of the
Company’s Common Stock. An OQI Sask Exchangeable Share provides a holder with economic terms and
voting rights which are, as nearly as practicable, effectively equivalent to those of a share of
the Company’s Common Stock. The holders of the OQI Sask Exchangeable Shares will receive up to an
aggregate of 76,504,304 shares of the Company’s Common Stock at each holder’s election. As of July23, 2007, the Series B
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Preferred Shares represents 31,028,486 voting shares, and upon the exercise
of options to acquire Exchangeable Shares, will represent up to 45,488,596 voting shares. CTC will
vote the one Series B Preferred Share as indicated by the individual holders of OQI Sask
Exchangeable Shares.
The Company has no present plans to issue any additional shares of preferred
stock.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our Articles of Incorporation provide that we shall indemnify any officer, employee, agent or
director against liabilities (including the obligation to pay a judgment, settlement, penalty, fine
or expense), incurred in a proceeding (including any civil, criminal or investigative proceeding)
to which the person was a party by reason of such status. Such indemnity may be provided if the
person’s actions resulting in the liabilities: (i) were taken in good faith; (ii) were reasonably
believed to have been in our best interest with respect to actions taken in the person’s official
capacity; (iii) were reasonably believed not to be opposed to our best interest with respect to
other actions; and (iv) with respect to any criminal action, the director had no reasonable grounds
to believe the actions were unlawful. Unless the person is successful upon the merits in such an
action, indemnification may generally be awarded only after a determination of independent members
of the Board of Directors or a committee thereof, by independent legal counsel or by vote of the
shareholders that the applicable standard of conduct was met by the director to be indemnified. A
director, employee, agent, or officer who is wholly successful, on the merits or otherwise, in
defense of any proceeding to which he or she was a party, is entitled to receive indemnification
against reasonable expenses, including attorneys’ fees, incurred in connection with the proceeding.
We may also indemnify or advance expenses to an officer, employee or agent who is not a director
to a greater extent than permitted for indemnification of directors, if consistent with law and if
provided for by its articles of incorporation, bylaws, resolution of its shareholders or directors
or in a contract.
In addition to our Articles of Incorporation, the Company entered into indemnity agreements with
our officers and directors. The agreement is a contractual supplement to the corporate indemnity
provisions of the Company’s Articles of Incorporation. The material terms and conditions of the
agreement are: (a) the Company shall indemnify and advance expenses to the indemnitee against
claims if the indemnitee acted honestly and in good faith with a view to the best interests of the
Company, and, with respect to any criminal proceeding, had no reasonable grounds to believe the
indemnitee’s conduct was unlawful; (b) a description of how the Company will determine if
indemnification is appropriate including the procedure for obtaining indemnification; (c) the
procedure to authorize advancing expenses; (d) the indemnitee’s rights under the indemnity
agreement will survive any merger or other consolidation; and (e) the indemnitee will be entitled
to attorney’s fees and disbursements incurred in any suit against the Company for breach of the
agreement, if the indemnitee prevails in whole or in part in such a suit.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to
directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Securities Act and is,
therefore, unenforceable.
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Dates Referenced Herein and Documents Incorporated by Reference