Flow-Through Committee garners support in Vancouver

The Canadian Save Flow-Through Committee rolled into town last week to garner public support for the retention of flow-through financing. Turnout at the symposium was light and probably reflected the short time frame the committee had in which to organize its road show.

In any event, a number of prominent speakers voiced their support, including two British Columbia mayors: Brian Northup of Smithers and Gloria Stout of Princeton. Employment in their respective communities is heavily dependent on mining and mineral exploration. Stout emphasized that politicians have to be pushed and she urged the committee and its supporters to keep pressure on the government.

Robert Briscoe, conservative MP for Kootenay West, another region where the economy has been bolstered by flow-through, told the meeting there was “a strong body in caucus that supports your concerns.” And he predicted the “flow- through problem will be resolved,`’ adding: “It’s not far from resolution.”

Briscoe said changes to flow- through would have to be structured in such a manner that they avoided counter-measures from the United States. He cited the $134- million purchase of Cominco preferred shares by the federal and provincial governments; these funds will be used by Cominco to develop its new lead smelter at Trail. Briscoe pointed out that the deal drew criticism from at least one large U.S. base metal producer which is in direct competition with Cominco.

Representatives from industry presented the most compelling argument for the retention of flow- through. Northair President Don McLeod said that in the past four years the Northair Group raised $15 million in flow-through. This in turn attracted another $5 million from joint venture partners, he added.

McLeod said the availability of this funding was the main reason they persevered at Sulphurets north of Stewart and at Willa near New Denver, B.C. “Exploration logistics were difficult and costly in both these areas,” he emphasized, adding that Northair “would not have been able to raise this money by conventional ways.”

He said that companies get more capital from flow-through than from normal issues and less dilution because they have to issue fewer shares for the money. McLeod conceded that if he had access to equivalent amounts of non-flow- through dollars he would “head to Nevada” where several major gold discoveries have been announced this year. He denied that flow- through was abused much and suggested if the conservatives were concerned about abuse, it should audit some government agencies. “They might find a lot more there,” he quipped.

Larry Reaugh, president of Rea Gold, claimed that flow-through funding led to the discovery or two orebodies in the Adams Plateau area near Kamloops, B.C. One of these is being developed by joint venture partner Minnova Inc. as a silver-gold base metal producer.

Speaking on behalf of the Prospectors and Developers Association, John May, president of Teck Exploration, noted that 34 new mines have committed to come on stream in 1987 and 1988. This is five times the typical average per year established over the 35-year period prior to 1983. He also said there were 58 projects slated for future production, all because of flow-through. “The spinoff benefits are profound and affect geographic areas where it’s needed most,” he added.