An annual junior mining and exploration conference in Ontario kicked off with news that the federal government will extend a flow-through tax credit for exploration projects.
The 15% mineral exploration tax credit, implemented in 2006, was due to expire at the end of this month.
The federal government announced March 2 that the tax credit will be extended for another year. It will apply to flow-through share agreements signed on or before March 31, 2016.
All new mines require costly environmental studies and community consultations. But provincial and territorial governments have been increasingly requiring those studies and consultations before even issuing an exploration permit.
The government announced it was expanding the credit to include expenses related to the environmental studies and community consultation that are required as part of the permitting for exploration and development.
“This means companies can deduct these costs immediately, making it easier for them to raise capital, create jobs and contribute to the economy,” a federal government press release states.
The announcement was made at the Prospectors and Developers Association of Canada (PDAC), which runs through March 4.
At a similar conference at the end of January – the Association of Mineral Exploration BC’s mineral exploration roundup – the B.C. government also made announcements aimed at helping the junior mining sector by cutting red tape.
It included $6 million in new funding to hire more inspections and geotechnical staff to speed up permitting. It also announced that it too will extend a 20% tax credit for flow-through share agreements through 2015.
Flow through shares encourage investment in exploration because they allow exploration companies to pass on the deductions they would make to the investors who buy flow-through shares.
The junior mining and exploration sector is in its second year of a major downturn, thanks to low commodity prices and equities markets that have soured on the junior sector. The junior mining and exploration sector spends roughly $500 million per year in B.C.
