PDAC member engagement on flow-through financing

Dear members of the Canadian mineral exploration industry,

Following up on its announcement in the 2016 Federal Budget, the Government of Canada is undertaking a wide-ranging review of all tax-expenditures incurred by the federal government. The tax policy merits of renouncing exploration expenses incurred to investors in flow-through shares and the renewal of the federal 15% Mineral Exploration Tax Credit (METC) are each being reviewed as part of this tax policy exercise. Both are potentially at risk.

As the voice of Canada’s mineral exploration and development community, the Prospectors & Developers Association of Canada (PDAC) is actively involved in preparing a submission to Finance Canada on the importance of flow-through shares and the METC to the industry and to Canada. As part of this response we are also mobilizing members, stakeholders and partners to engage the government on this issue.

At this stage, our focus is on gathering information on how flow-through funds are used, and the importance of such shares in funding discoveries of new deposits, advancing the development of mineral deposits and the creation of economic opportunities across the country.

If your company has raised money through the issuance of flow-through shares, I am reaching out to seek your assistance in our efforts. I invite you to support our efforts, and the industry, by filling out this survey in as much detail as you can.

The information you provide (or parts thereof) will be included in our submission and will play a critical role in assisting the panel of experts (engaged by Finance Canada to undertake the review of tax expenditures) in understanding the value of flow-through shares and the METC to the mining industry, and to Canada. 

It will be particularly important for the industry to highlight the benefits generated for remote and Aboriginal communities where resource development is one of the only sources of economic opportunity.

If you have consciously made a decision not raise flow-through funds, we would also be interested in hearing why. We would welcome critical feedback on the flow-through system, including suggestions on how to tweak it to make it more effective. If you have other ideas on how the government can support companies to raise money for exploration (e.g. establishing a venture capital fund, akin to the SIDEX fund in Quebec) we would like to hear them.

Please do not hesitate to contact me with your thoughts.

Sincerely,

Andrew Cheatle
Executive Director, Prospectors & Developers Association of Canada (PDAC)
info@pdac.ca


[1] A full list of all federal tax expenditures is available here: http://www.fin.gc.ca/taxexp-depfisc/2016/taxexp16-eng.asp

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