B.C. boosts tax credit for exploration in Beetle-kill zone

Vancouver British Columbia is using tax credits in a bid to spur mineral exploration spending in vast areas of the province that are being ravaged by an infestation of mountain pine beetles.

It hopes to attract more activity in beetle ravaged areas by raising to 30% from 20% the credit that is currently available under B.C.s Mining Exploration Tax Credit program.

Measures outlined in the recent provincial budget indicate that the tax credit will be available to investors in flow-through shares of companies who are engaged in grass roots mineral exploration in beetle-affected areas.

Mountain Pine Beetles attack mature Lodgepole Pine trees by laying eggs under the bark. When the eggs hatch, the larvae mine the phloem area beneath the bark and eventually cut off the trees supply of nutrients, eventually killing the trees

As an estimated 9.2 million hectares of B.C. interior forest is currently under threat, the province is preparing to deal with the economic consequences of a sharply reduced timber harvest in the coming years that may effect up to 25,000 families in 30 interior communities.

Part of the solution appears to lie in a diversification plan that aims to attract more mining companies into beetle ravaged areas.

A provincial mining official welcomed the move, saying that the ravaged area encompasses operating mines such as Gibraltar and Highland Valley Copper.

He said he mining sector can benefit from recent efforts to harvest timber before it loses its value, a move that has led to the construction of new access roads in heavily forested aras.

Any time you have new roads, it is a starting point for exploration, said Tom Schroeter, a senior regional geologist with B.C.s Geological Survey Branch.

However, Schroeter warned that exploration efforts in the beetle ravaged forests will be hampered by a thick layer of overburden that has deterred prospectors in the past.

Meanwhile, eligible exploration outside those areas will continue to qualify for the existing 20% tax credit, a B.C. government official said.

The Federal Government has a non-refundable 15% tax credit for specified flow through share-financed grass roots exploration.

That program expired at the end of 2005 and was renewed in the 2006 Federal budget for flow-through share agreements entered into between May 1, 2006 and April 1, 2007.

Current indications are that the March 19 Federal budget will not extend that program.