https://www.miningweekly.com
Exploration|Flow|Gas|Mining|Oil And Gas|Oil-and-gas|PROJECT|Resources|Flow
Exploration|Flow|Gas|Mining|Oil And Gas|Oil-and-gas|PROJECT|Resources|Flow
exploration|flow-company|gas|mining|oil-and-gas|oilandgas|project|resources|flow-industry-term

Canada's planned capital gains tax hike may choke mining startups, dealmakers say

Sayona Mining raised cash through flow-through shares for its Quebec exploration project

Sayona Mining raised cash through flow-through shares for its Quebec exploration project

23rd April 2024

By: Reuters

  

Font size: - +

TORONTO - Canada's capital gains tax hike for wealthy individuals and corporations in last week's federal budget risks turning away investments from mineral exploration by reducing incentives, the country's leading stock exchange operator and dealmakers told Reuters.

Prime Minister Justin Trudeau's Liberal government proposed increasing the share of capital gains subject to taxation to two-thirds for individuals with annual investment profits greater than C$250 000, companies and trusts, as it seeks to raise revenue to fund public programs.

The measure will be effective on June 25. The government could consider amendments.

Mining, oil and gas exploration companies listed on the TSX Venture Exchange have raised funds by issuing flow-through shares, at a premium to the trading price, that allow high net-worth buyers to take tax deductions renounced by issuers.

The minimum flow-through investment is C$250 000.

"The increase in the inclusion rate on capital gains has been characterized as 'a tax on the rich,' but it is in fact a tax hike on investing in Canada that will serve as yet another barrier to economic growth," said John McKenzie, CEO of TMX Group, parent of the Toronto Stock Exchange.

Flow-through shares account for 65% of all funds raised in Canadian stock exchanges by exploration mining companies, said the Prospectors and Developers Association of Canada, a mining lobby group.

In 2023 junior mining companies, which are still in the exploration stage, raised about C$1-billion through flow-through shares in Canada. Lithium miner Sayona Mining raised C$50-million this way for its Quebec exploration project and investors paid a 40% premium from the stock's average listed price, public filings showed.

"Exploring for resources is venture capital at its riskiest," said Ron Bernbaum, CEO of PearTree Canada, an investment manager which facilitates flow-through share salesby mining companies, noting that flow-through shares offer a "successful incentive."

Canada's exploration companies have raised only C$240-million in March, down from 79% a year ago, according to the Toronto Stock Exchange, which is home to over 40% of world's resource companies.

Industry lobby groups are hoping that the government will offer an exemption for flow-through share investors.

"If not it means the likely end of more than 70% of all resource exploration in Canada," Bernbaum of PearTree warned.

Edited by Creamer Media Reporter

Comments

Showroom

Hanna Instruments Image
Hanna Instruments (Pty) Ltd

We supply customers with practical affordable solutions for their testing needs. Our products include benchtop, portable, in-line process control...

VISIT SHOWROOM 
WearCheck
WearCheck

Leading condition monitoring specialists, WearCheck, help boost machinery lifespan and reduce catastrophic component failure through the scientific...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Magazine round up | 10 May 2024
Magazine round up | 17 May 2024
17th May 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.186 0.222s - 108pq - 2rq
1:
1: United States
Subscribe Now
2: United States
2: