Québec mines

Bulletin d'information minière

novembre 2001

 

 

 

 

 

 



November 2001
 


New fiscal measures to promote mining exploration in Québec
Luc Chouinard and Jean Désilets
Direction de la politique et de l'économie minérales

In addition to offering extremely attractive tax treatment with regard to mining, the gouvernement du Québec has continued to innovate by creating a new refundable corporate tax credit for mining exploration expenses incurred by companies in Québec after March 30, 2001.

This new measure will lend increased financial support to mining companies by significantly decreasing investment costs, i.e. the risk they assume in carrying out exploration activities.

The new tax credit will also have the advantage of attracting foreign investment, notably strategic inter-company alliances for exploration projects in Québec. The tax benefit is granted regardless of the funding source.

Under Québec's Taxation Act, this fiscal measure corresponds to:

  • 40% of the eligible exploration expenses incurred by an exploration company in Québec and 45% if the expenses are incurred in Québec's Mid-North or Far North regions;
  • 20% of the eligible exploration expenses incurred by a producer and 25% if the expenses are incurred in Québec's Mid-North or Far North regions.

Exploration expenses eligible for the tax credit under Québec's Taxation Act also allow a company to claim the refundable credit for losses available under the Mining Duties Act.

THE NEW REFUNDABLE TAX CREDIT
for mining exploration expenses

 

Taux du crédit

Eligible expenses

Type of company

General

Enriched for the Mid-North and Far North

Exploration costs

Non-producing firm

40%

45%

 

Producing
firm

20%

25%


Refundable credit for losses… still available

The gouvernement du Québec continues to assist operators (companies and individuals) with their exploration and development expenses by refunding a portion of the costs incurred in the form of a refundable credit for losses.
Under the Mining Duties Act, and throughout Québec, this credit represents a refund of 12% of the lesser of:

  • the amount of the annual operating loss;
  • mining exploration, mineral deposit evaluation or mine development expenses.

This refund is increased to 15% if the expenses are incurred in Québec's Mid-North or Far North regions.

REFUNDABLE CREDIT FOR LOSSES

Tax credit rate

Eligible expenses

12%

(of the lesser of)

  • mining exploration, mineral deposit evaluation or mine development expenses

or

  • annual operating loss

Publication:

The reimbursable tax credit: new fiscal support to stimulate mining exploration in Québec (PDF Format, 514 Kb)





November 2001
 


Two-year extension of tax benefits related
to flow-through shares

Luc Chouinard and Jean Désilets
Direction de la politique et de l'économie minérales

A flow-through share is a share issued by a resource corporation, which foregoes deducting its exploration expenses in favour of the investor in a context of public funding. The gouvernement du Québec has extended tax benefits related to flow-through shares until December 31, 2003.

Québec tax

Québec's Taxation Act states that an individual investor may enjoy a significant tax deduction in calculating his taxable income.

The Québec taxation system provides for a basic deduction of 100% of the cost of flow-through shares. Further, the individual may enjoy an additional 25% deduction when the exploration expenses are incurred in Québec by a company that does not earn mineral resources income.
Added to this is another 50% deduction, bringing the total to 175% of the investment cost when surface exploration is involved.

The company may also forego deducting the cost involved in issuing the flow-through shares, in which case the individual may claim up to 15% of the investment cost that same year-the surplus being deductible over five other years.

When the share is sold, Québec's taxation system also provides for an exemption of the deemed capital gain, i.e. the difference in the share acquisition cost and its nil adjusted cost price.

Federal tax

Where federal measures are concerned, an individual investor may, under the Income Tax Act, claim a basic deduction of 100% of the investment cost incurred to issue flow-though shares. Moreover, the federal government grants a non-refundable tax credit in the amount of 15% of the surface exploration costs incurred before 2004.

When the flow-through share is sold, the individual pays tax on the capital gain on the entire sales price, since the base price of the share is deemed to be zero.

A highly lucrative net tax cost

For the 2001 taxation year, the net tax cost of $1,000 in flow-through shares is $215 for an individual subject to the highest marginal tax rate.

Flow-through share tax system

 

Funding

Tax credit rate

Québec tax

Federal tax

Exploration company

  • 100% of the cost of flow-through shares (basic deduction)

    plus

  • 25% for exploration in Québec

    plus

  • 50% for surface exploration
  • 100% of the cost of flow-through shares (basic deduction)

    plus

  • Investment tax credit of 15% of surface exploration costs

Mining producer

  • 100% of the cost of flow-through shares
  • 100% of the cost of flow-through shares

    plus

  • Investment tax credit of 15% of surface exploration costs

Publication:

Flowthrough shares - To stimulate mining exploration within Québec
(PDF Format, 497 kb)







November 2001
 


SIDEX: $50M for diversifying exploration activities
Luc Chouinard and Jean Désilets
Direction de la politique et de l'économie minérales

The gouvernement du Québec, working with the Fonds de solidarité des travailleurs de la FTQ, founded the Société d'investissement dans la diversification de l'exploration (SIDEX) in order to promote exploration for mineral substances that have been neglected in the past and to create a leverage effect to encourage further investment by partners and private investors.

SIDEX invests in the capital stock of small companies involved in mining exploration in Québec. With nominal capital of $50 million for a five-year period, SIDEX promotes projects that contribute to:

  • exploring in order to diversify current mine production;
  • exploring new territories;
  • promoting exploration for substances that offer a promising market outlook.

With signed investment agreements totalling more than $1 million, SIDEX will invest $400 000 in Mines Cancor inc., $150 000 in Ressources Strateco inc., $100 000 in Ressources Appalaches inc. and $380 000 in Ressources Majescor inc.

Publication:

Sidex: A $50M fund - To stimulate diversification of mineral exploration activities in Québec (PDF Format, 446 kb)





November 2001
 


GESTIM: First anniversary… a promising future
Ghyslain Roy and Roch Gaudreau
Direction du développement minéral

GESTIM is a highly innovative management tool that provides instant access to all the information contained in the register of Québec mining titles (350,000 titles), and also makes it possible to apply for or renew a mining title on-line. Since coming into operation, the advantages of GESTIM have been recognized by mining title managers and other players in the mining field. With traditional staking methods now replaced by map designation, the acquisition of a claim cannot be challenged.

When GESTIM came into operation November 22, 2000, all the descriptive data was accessible, but not all the geographical data had been loaded. However, this problem did not prevent the implementation of the map designation method to cover the whole of Québec.

The loading of all the graphical elements into the GESTIM system is now complete. This colossal task required the input of over 11,200 files, including 1,901 NTS sheet files, 7,604 files indicating map designation cells, 1,558 township files and 224 seigniory files. Between November 22, 2000 and September 30, 2001, 34,573 new map-designated claims were registered, representing an increase of almost 10% in the proportion of Québec land covered by mining titles.

During the coming three months, the GESTIM team will concentrate on accelerating the update procedure and making a number of corrections suggested by system users. In addition, the GESTIM system will be transferred to a new geomatic support medium, GeoMedia, allowing a better match between products and the needs of users, and quicker delivery.

GESTIM makes its presence felt

GESTIM has become an increasingly indispensable tool for use in the mineral sector. This user-friendly system, based on cutting-edge technology, has given the MRN an enviable level of expertise in the field of land management.

Last March, GESTIM was a prizewinner in the Hommages 2001 contest organized as part of the Computer-Business trade show for Eastern Québec, winning first prize in the "government department" category and a special prize awarded by the panel of judges for the evening's best finalist. The objective of the contest was to highlight the applied use of information technologies in the public and parapublic sectors.

More recently, on October 15, GESTIM was honoured at the Canadian level during the Technology in Government week held at the Canadian Museum of Civilization in Hull. GESTIM won a gold medal for Innovative Service Delivery in the Provinces, a category that recognizes and honours excellence and leadership in the use of information management and information technologies in the public sector. These recent successes reward the on-going efforts of the whole GESTIM team.

Direct access to GESTIM:


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Resin 2.1.11 (built Mon Sep 8 09:36:19 PDT 2003)