Revenue Canada recently advised Terra Mines (TSE) that certain exploration expenditures incurred on the Bullmoose Lake project were invalid. Revenue Canada intends to notify investors in flow-through issues for 1986 and 1987 that their deductions for those years will be adjusted. Some investors were indemnified by Terra at the time of the issue against such an occurrence, which indicates the company will be liable for those expenditures.
The total amount of the invalid expenditures was not disclosed.
The Bullmoose Lake project, about 100 km northeast of Yellowknife, N.W.T., was shut down in mid-1987 after the company was unsuccessful in developing enough gold reserves.
Revenue Canada’s claim stems from pilot milling operations on the Bullmoose site during the two years which Terra claims were required to test the grade of the deposit. The mill, capable of processing 250 tons per day, generated revenues of about $4.9 million in each of the two years.
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