News from the North
28th July 2021
There was an important court ruling for miners in Canada last week, as the British Columbian government’s appeal was dismissed in a tax case against Teck Resources (TSX:TECK.B). The stouche arose over the 2010 and 2011 tax years, when Teck claimed the full cost of exploration work on the Galore Creek copper-gold-silver project in the Golden Triangle.
The way it works is pretty simple in a broad view; mining companies in BC are allowed to claim exploration expenses at one project as tax write-offs for another mine in the province, so Teck claimed its exploration expenses at Galore Creek against its huge Highland Valley mine. But the BC Ministry of Finance thought that Teck should only have claimed 50% of those expenses, due to the fact that it only had a 50% stake in the Galore Creek project, with the remaining 50% being owned at the time by NovaGold (TSX:NG) and later being bought by Newmont (TSX:NGT). The company argued, however, that it alone had provided the money for exploration, with NovaGold bringing to the table mineral claims and infrastructure, but not actually spending cash. Therefore, Teck said, since the expenditure was 100% theirs, they should be able to claim 100% of the expenditure against their tax.
In January, the BC Supreme Court ruled in Teck’s favour, helped by the fact that NovaGold itself did not claim any exploration expenses for Galore Creek during the period in question. The BC government appealed that ruling, and they’ve just lost again. Here at Spotlight we are very much for miners paying their fair share, but in this case it seems absolutely reasonable that the company that spent the money should be able to claim the actual amount that it spent, rather than an a percentage that does not reflect the actual contributions it made to exploration at the site. It might be something of a rort that expenses at one project can be claimed against another, but that’s not the issue here. As the law stands, Teck would seem to have both the moral and legal victory. Because of the fact that NovaGold did not make any claims on those expenses, the remaining 50% of Teck’s expenditure would have gone unclaimed, which is just free money for the government. The judge, Justice Laura Gerow, noted in her ruling that this case would be unlikely to serve as a model for future cases, since the proportion of tax responsibility in shared projects would always depend on the particular partnership agreement.
Despite clearing this hurdle, it’s still mothballs for Galore Creek for now. A Prefeasibility Study was supposed to get underway in 2020, but the pandemic put paid to that and the project was placed in Care and Maintenance. This is a bit of a shame, given Galore Creek’s potential significance, and it seems to be well-supported by local communities, including the indigenous Tahltan people. I’m sure this project will see the light of day at some stage, but when that happens will depend heavily on the same factors affecting every other project – the regulatory and taxation environment, the lingering effects of the pandemic and, of course, metals prices. There’s some great geology up there, and you should keep an eye out over the next week if you’d like to hear more about it, because I’ll be writing an article on Galore Creek for Spotlight then. Watch this space!
Around the Traps
Still in the Golden Triangle, Goldplay (TSXV:AUC) has announced a summer exploration program for its flagship Scottie West project. It’s already underway, and the team up there will be ground truthing a lot of extrapolated data, and of course sampling their hearts out. This is particularly exciting because this is all fresh exploration territory only recently exposed by retreating glaciers.
Not leaving the Golden Triangle yet, Mountain Boy Minerals (TSXV:MTB) have announced some great assay results on their flagship American Creek project, including one sample of 949 g/t silver. The exceptionally cool part of this is that special rock-climbing geologist have been scaling cliffs to get these results. Drilling has already started on the project, with two pads constructed to test the known High-Grade Zone and the new extension of that area.
Sun Summit (TSXV:SMN, OTCQB:SMREF) has exciting news, with the announcement last week that the company would start trading on the OTCQB. This follows the announcement of a brokered private placement for up to CAD $4 million earlier in the month. Sun Summit will use the funds raised mostly for exploration on its flagship Buck gold-silver-zinc project in British Columbia.
Finally moving out of BC, Fireweed Zinc (TSXV:FWZ) has announced the start of the 2021 drill program on its Macmillan Pass zinc-lead-silver program in the Yukon. The company has two drill rigs turning, as well as ground gravity survey and geological crews on site, and the early holes have intersected significant widths of mineralisation.
That's all from me, enjoy your week everyone!
- Jane Lockwood