Struggling junior miners hope Liberals extend exploration tax credit – by Peter Koven (National Post -November 2, 2015)

The National Post is Canada’s second largest national paper.

Canada’s junior mining sector is waiting with bated breath to see if Justin Trudeau’s incoming Liberal government will maintain a tax credit that has helped companies raise billions for exploration.

Miners argue that the 15-per-cent Mineral Exploration Tax Credit (METC) is an invaluable tool that encourages companies to work in Canada and helps keep the sector active during commodity downturns, including the current one. But there are detractors in the academic community who say it is just another inefficient benefit that favours one industry over another.

During the federal election campaign, the Liberals were the one major party that did not form a strong position on the METC, which is set to expire in March. The Conservatives said they would extend the credit for three years, and increase it to 25 per cent for remote projects, like Northern Ontario’s “Ring of Fire.” The NDP mused about making the METC permanent.

Rod Thomas, president of the Prospectors & Developers Association of Canada (PDAC), said he is optimistic the Liberals will continue with it. “I think they recognize it is vital to the industry,” he said in an interview.

The roots of the METC actually date back to the Liberal government of Jean Chrétien, which introduced a similar credit during a mining downturn in 2000. It was seen as a temporary measure to help companies get through tough times, and expired in 2005. But the Conservatives revived the METC in its current form in 2006, and extended it each year they were in office.

The METC is a sweetener to Canada’s flow-through shares program, which has been around for more than three decades. Flow-through is a unique type of stock issue that allows resource companies to pass on (or literally “flow through”) exploration expenses to investors, who can deduct them against their taxable income.

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