Calgary MEGS’ Post

Flow-through shares (FTSs) are an important financing tool that enables Canadian resource companies, including those exploring for much needed critical minerals, to raise capital for exploration and development activities. In 2023 alone, nearly $1B in FTSs was raised to help develop Canada’s mineral endowment. These shares have the same attributes as common shares, and allow investors to claim a tax deduction equal to the amount invested. In turn, the company’s exploration expenses “flow through”to the investor. On top of that, FTSs can be donated to a registered charity when they vest, which produces a charitable tax credit in addition to the resource deduction. Here’s a link for more information on this investment strategy: https://lnkd.in/g7J3GCZh #flowthroughshares #mininginvestment #sustainablemineralresourcedevelopment

When you think of Canada, mining, taxes and equity markets all rolled into one, the natural combination is flow-through shares, a unique Canadian tax driven equity offering model. What better way to find out more about it than from a director of the Prospectors & Developers Association of Canada (PDAC)? While it fortunately is still a financial creature that exists in our markets, it really is coming into its own now with the extension of benefits for critical mineral exploration.

The Government of Canada has listened to PDAC’s call and renewed the Mineral Exploration Tax Credit (METC) before its expiry next week. The 1-year renewal falls short of our recommended 5-year term but is a positive step in bolstering investment into early-stage mineral exploration in Canada. The METC is a made-in-Canada financial incentive that provides flow-through share (FTS) investors with an additional 15% non-refundable tax credit when funds are directed towards greenfield exploration. Over the last two decades, the METC has played a pivotal role in the competitiveness of Canada's mineral exploration sector. Thank you Minister Jonathan Wilkinson for supporting the METC's renewal. Learn more: https://lnkd.in/egkEtHWe

Renewal of the Mineral Exploration Tax Credit (METC) plays a crucial role in fostering sustainability and innovation within our sector. Why is this important? 🤔 The METC not only incentivizes investment in exploration projects, which are critical for the discovery of new mineral deposits, but also ensures the long-term viability of the mining industry. By reducing the financial risk associated with exploration, the tax credit encourages both small and large investors to contribute to the growth of our sector. What does this mean for us? 1. Increased exploration activities across the country. 2. Enhanced attractiveness of the Canadian mining sector to foreign investors. 3. Support for sustainable and responsible mining practices. Let's embrace this opportunity to innovate, explore, and lead in the responsible development of our natural resources. #MiningIndustry #Sustainability #Innovation #METC #InvestmentOpportunity

In co-operation with the C.D. Howe Institute, a non-partisan Canadian public policy think-tank, please see our note the Minister of Finance on the problems with the ways and means the government of Canada is using to try to encourage investment into the exploration for, and on-shoring of, critical minerals investment. In a nutshell, the government is trying to pick and chose which "critical minerals" are more critical than others, and it is not going well. The current method just creates more issues that need resolving. We would advise a more inclusive approach. We hope to have more comments going forward with regard to critical minerals, flow-through shares, tax credits and related tax policy concerns. https://lnkd.in/g58awcWX

Flow-through share financings for mineral exploration in Canada at risk in this week's federal budget due to changes to alternative minimum tax (AMT) rules. About 90% of total financing value could be affected. https://lnkd.in/gJZYSM6S

The 2024 federal budget in Canada brings both opportunities and challenges for the mining sector: 1. Clean Technology Tax Credit Adjustments: The expansion of the CTM-ITC is beneficial, but its practical impact and coverage of upfront costs remain uncertain. 2. Streamlined Permitting Processes: Reducing timelines for Impact Assessments and permitting is a step forward, but achieving these ambitious goals without compromising environmental standards will be challenging. 3. Loan Guarantees for Indigenous Communities: This initiative promotes inclusivity but requires mining companies to invest heavily in building relationships and aligning projects with Indigenous priorities, which can be complex. 4. Changes to Mineral Exploration Tax Credit (METC): While the METC extension supports exploration, adjustments to tax credits may deter investment by affecting the appeal of flow-through shares. 5. Work-Integrated Learning Opportunities: Increased funding for student placements is positive for future workforce development but doesn't address the immediate skills shortage. Overall, the effectiveness of these budget measures will depend on their implementation and how well mining companies can adapt to these new regulatory and economic environments, balancing growth with sustainable practices.

As we are approaching the delivery of the National Budget speech, here is my view on opportunities for tax reform in Tanzania: 2024/25 National Budget: My Perspective – Part 1/3 Deductibility of mineral royalty costs has been an area of dispute over the years. Last year, the Income Tax Act 2004 (ITA), was amended to make clear that royalty paid under the Mining Act is a non-deductible expenditure. The disallowance of the royalty cost results in an additional 30% cost such that if the royalty payable under the Mining Act is 6%, on disallowance, the effective cost becomes 7.8%. Since the general deduction principle is for an expenditure to be incurred wholly and exclusively for the production of income, it would be prudent that the ITA is amended to make the royalty cost a deductible expenditure because mineral royalty is a mandatory payment to the Government. #budget2024

NSW Budget 2024-25 📊 The NSW Treasurer announced a projected deficit of $3.6 billion for 2024-25, stating the main contributors as changes to GST allocations, weaker payroll tax and higher depreciation and interest costs. With few highlights for the exploration and mining sector, the commitment to spend $37.7 million to support regional communities and protect workers in the mining sector is welcomed by AMEC. However, there was an opportunity missed to actively nurture a growing critical minerals sector. Aside from the regional communities initiative, there is little in the budget that meets industry requests. This includes continued silence on a long-awaited Critical Minerals Strategy. AMEC Chief Executive Warren Pearce said, “More support for exploration would help NSW diversify and grow their economy. With the discovery of new mineral deposits that progress to productive and operational mines, the Government would see a significant increase in jobs, investment and government revenues.” AMEC will continue to advocate to promote NSW and the mineral and exploration industry.

Papua New Guinea (PNG) Prime Minister James Marape's address for this year's inaugural PNG Resources Week on the first of July 2024 at the University of Papua New Guinea will not be as easy as it was in the 2023 Community Affairs and National Content Conference and Expo (CANCONEX) held in Lae last year. A lot has happened in the last 12 months including Black Wednesday which cost billions of Kina in losses and the highly controversial 2022 Gold Bullion Bill that has been shelved until further notice. At the back of the controversial bill, the PNG Chamber of Resources & Energy and other relevant industry bodies ran an aggressive campaign to stop the bill. But all isn't doom and gloom with some positive developments in the resource sector including the reopening of the Porgera Gold mine and others that Prime Minister Marape will be delighted to highlight in his highly anticipated National Content address in an effort to boost investor confidence which is very low at the moment. The PNGCORE President Anthony Smaré says that PM Marape’s engagement with the resources sector and its stakeholders is important for building confidence in our sector from both investors and local stakeholders.” “We are pleased that over the last 12 months, the Government has made progress in dealing with several of these issues, among them, National Content and its implications for the resources sector. The Prime Minister will be provided an update on what the industry and its stakeholders, including landcos and landowner groups, have done as well in these areas so that our efforts complement the efforts by the Government.” “The Prime Minister will lead a high-level delegation, which includes Mining and Petroleum Ministers and Governors and MPs for resource provinces who will interact with industry, PNG business community, SMEs and landowners at PNG Resources Week. This is part of our efforts to provide a domestic platform for more engagement between all stakeholders in the resources sector.” A strong delegation from AROB led by President Ishmael Toroama, will also deliver a highly anticipated address regarding the lessons of Panguna and the road ahead.