QME trying to raise flow-through funds

The QME (1989) Mineral Exploration partnership is hoping to raise up to $10 million in flow-through financing this year for exploration work by partnership members. Key to the offering is the availability to investors of a 166.7% tax writeoff. First closing of the offering is expected during the first week of December, said Robert Levesque, Excan vice-president.

Similar funds enjoyed boom times in 1987 and 1988, with about $1 billion in flow-through financing raised across Canada in each year. Changes to the flow-through scheme at the beginning of 1989 by the federal government acted to cool the market considerably; an earned depletion allowance was drop ped, leaving a $1 writeoff for each $1 invested.

In Quebec, the provincial government sought to maintain exploration spending and instituted additional tax benefits, mainly a 33.3% writeoff for investments in companies undertaking underground development work and a 66.7% writeoff for investments in companies doing surface exploration work.

The QME partnership can offer investors a 166.7% benefit because its participating juniors plan only surface exploration work.

General fund partner is Excan Management, the president of which is Jack Kentish. During 1986-89, Excan partnerships have raised more than $100 million, and have contributed to the exploration programs of 44 junior companies.

In addition to being able to raise funds through the sale of flow-thr ough shares, junior companies have been eligible, since the beginning of 1989, to share in cash grants equal to 30% of their exploration expenses. An annual ceiling of $10 million in eligible exploration expenses has been applied under the Canadian Exploration Incentive Program.

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