Categories: General Market Commentary
Topics: General Market Commentary

Call for three-year renewal of Canada’s exploration tax scheme to arrest signs of decline

The Mineral Exploration Tax Credit (METC), which incentivises exploration financing by providing individuals investing in companies exploring for minerals in Canada with a 15% tax credit on eligible expenditures, has to be renewed for at least three years to provide greater certainty and boost confidence for investors in Canadian projects.

This is the view of the Prospectors and Developers Association of Canada (PDAC), which on Wednesday published a document containing its recommendations for the 2019 federal Budget.

Finance Minister Bill Morneau renewed the METC for one year in the 2018 federal Budget, but the PDAC feels that companies require a longer time frame as exploration programmes are carried out in stages over an extended period of time.

“Exploration companies and investors need certainty that they can finance not only the current year of their exploration programmes, but also any subsequent exploration necessary to fully scope the mineral potential of a particular property,” stated the PDAC.

The organisation pointed out that the METC catalysed investor interest in flow-through shares and that it could play an important part in arresting the decline in the country’s attractiveness as a destination for mineral investment.

According to PDAC, Canada’s domestic share of mineral exploration investment has declined by nearly one-third over the last decade, relative to the rest of the world. Other indicators of Canada’s waning mineral industry competitiveness include declining base metals reserves, increasing discovery costs and protracted timelines to move discoveries into production.

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