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Oilsands Quest Inc – ‘424B3’ on 8/17/07

On:  Friday, 8/17/07, at 10:38am ET   ·   Accession #:  1035704-7-619   ·   File #:  333-142642

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 8/17/07  Oilsands Quest Inc                424B3                  1:182K                                   Bowne BDN/FA

Prospectus   —   Rule 424(b)(3)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B3       Oilsands Quest Inc.                                 HTML    162K 


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  e424b3  

 

Filed Pursuant to Rule 424(b)(3)
Registration No. 333-142642
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 date of this Prospectus is August 17, 2007.
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.

 



 

TABLE OF CONTENTS
         
PROSPECTUS SUMMARY
    1  
    2  
NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS
    2  
RISK FACTORS
    3  
USE OF PROCEEDS
    12  
SELLING SECURITY HOLDERS
    12  
PLAN OF DISTRIBUTION
    22  
DESCRIPTION OF SECURITIES
    23  
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
    25  
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.
 
    Common stock to be outstanding after the offering: 183,723,987 common shares
 
    Use of proceeds. We will not receive any proceeds from the sale of the Common Stock.
 
    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.

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Documents Incorporated By Reference
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 Annual Report on Form 10-KSB for the fiscal year ended April 30, 2007 (filed July 30, 2007)
 
    Our Current Reports on Form 8-K, as amended, reporting events of (filing date in parentheses):
     
  (July 26, 2007)
June 28, 2007   (July 5, 2007)
May 4, 2007   (May 7, 2007)
May 3, 2007   (May 4, 2007)
    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:
    The amount and nature of future capital, development and exploration expenditures;
 
    The timing of exploration activities;
 
    Business strategies and development of our business plan and drilling programs; and
 
    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)
    94,400       14,000       80,400  
Wellington Management Portfolios (Dublin) - Global Smaller Companies Equity Portfolio (nominee: Squidlake & Co.) (7)
    104,700       18,500       86,200  

17



 

                         
    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 Common Trust Funds Trust, Smaller Companies Portfolio (nominee: Finwell & Co.) (7)
    144,700       41,500       103,200  
Stichting Bedrijfstakpensionefonds voor Het Veroepsvervoer Over De Weg (nominee: Booth & Co.) (7)
    156,700       42,500       114,200  
Telstra Superannuation Scheme (nominee: Hare & Co.) (7)
    152,600       26,000       126,600  
Stichting Bedrijfstakpensioenfonds voor de Media PNO (nominee: Mac & Co.) (7)
    203,500       54,000       149,500  
Australian Retirement Fund (nominee: Cudd & Co.) (7)
    177,100       30,000       147,100  
Retail Employees Superannuation Trust (nominee: Cudd & Co.) (7)
    208,900       35,500       173,400  
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

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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.

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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 July 23, 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

This ‘424B3’ Filing    Date    Other Filings
12/31/07
8/31/07
Filed on:8/17/07
8/15/07
7/30/0710KSB
7/26/078-K
7/24/078-K
7/23/07
7/18/07
7/5/073,  8-K
7/1/07
6/28/078-K,  S-3/A
6/14/07
6/1/07
5/7/074,  8-K
5/4/074,  8-K,  S-3
5/3/078-K
4/30/0710KSB,  8-K
4/26/07
4/20/07
3/9/074
3/6/074,  8-K
10/30/06DEF 14A,  PRE 14A
10/19/06
8/14/063,  4,  8-K,  8-K/A
4/30/0610KSB
3/13/068-A12G,  8-K
10/14/9910SB12G
1/12/98
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