Yes, the TSX Venture Exchange has allowed a temporary hardship relief period (from Aug 17 2012 to April 2013) in which a share / unit offering with an offering price below 5 cts is permitted (excerpts of this temporary measure will be posted separatedly for FYI).
Now let's come back to the case of MIna Hydrocarbons.
So let's see:
1) This is a PP of 2 cts per unit (which is not 1 ct like in your idea)
2) The total number of unit = 25M (not 116M like in your idea)
3) The total number of 25M units = 11% of the o/s share count of 232M shares (not like 100% of the share count as in your idea)
4) 25% of the offering will go to an insider (Director Magdy Bassaly and interim President & CEO) and the rest to third parties. This is not the same logistic nightmare like doubling the holding of every single shareholder like in your idea). The issuance costs would be a lot less for MIna
Btw, this PP was announced on Dec 14th 2012 and as of today it has not been completed yet.