Diamond flow-through fund withdrawn

Having failed to attract sufficient support, Caratax Diamond Exploration Limited Partnership 1993 has been withdrawn.

“Investors perceived the fund as being too risky,” said Jean-Pierre Colin, president of Caratax Management, the general partner of the fund. In an interview with The Northern Miner, he added: “The public just doesn’t understand what is happening with the diamond industry in Canada.” He said less then half of the $5-million minimum placement was sold. The flow-through fund was set up to provide exploration financing for junior companies involved in diamond exploration. It was also intended to serve as a tax shelter for investors. Marketed across Canada, the fund was aimed at the public.

Flow-through share funding for mineral exploration was popular in the late 1980s, during the gold boom.

At that time, the writeoff scheme carried extra incentives; currently investors are allowed to claim deductions of 100%.

More than 30 companies with combined interests in 32 million acres of diamond exploration property across Canada had entered into share-purchase agreements with the fund.