Manitoba woos mineral exploration with grants, tax holiday for

Manitoba is introducing new incentives designed to stimulate mineral exploration and development in the province.

Unveiled recently at the annual Prospectors and Developers Association of Canada (PDAC) conference in Toronto, the initiatives include a tax holiday for new mines, incentives for operators who increase their exploration budgets, and investment grants tied to junior companies. A prospector’s assistance program modelled on Ontario’s OMIP program is also in the works. Today, despite an abundance of prospective greenstone belts and proven deposits, the province of Manito-

ba ranks sixth in the country in terms of exploration expenditures. Last year, mine finders spent an estimated $124 million in Ontario compared with $35 million in Manitoba, even though the two provinces share similar geology. Industry representatives blame Manitoba’s mining tax burden, the highest in the country, for the imbalance. The province’s failure to introduce exploration incentives after a federal program collapsed also encouraged an exodus of prospectors and junior companies.

But, according to Ray Band, district exploration manager for Falconbridge, three years of industry lobbying have finally paid off.

“The present government, which has a very pro-business stance, has listened to us and, within the limited scope it has under present economic conditions, has begun to respond to the challenge,” he told his audience at a PDAC-sponsored seminar on mining legislation. “The climate for mining and mineral exploration in Manitoba appears to be on an up-swing, in contrast to other provinces, such as Ontario and British Columbia.”

The new incentives, to be introduced this year in concert with Manitoba’s new Mines and Minerals Act, include:

— A tax holiday for new mines: After Jan. 1, 1993, qualifying new operators will be exempt from mining tax until profits for mining tax purposes equal the capital outlays required to open the mine. At the end of the holiday, the operator will inherit the undepreciated balance of its asset. Mining tax is equivalent to about 20% of net profit in Manitoba.

— A mining tax exploration incentive: Designed for producers that conduct exploration in the province. Expenditures that exceed the company’s average exploration budget for the previous three years will be eligible for a 150% tax deduction. For example, if a producer increases its budget to $1.5 million after spending $1 million per year for three years, that producer would be able to deduct an additional $750,000 from operating revenue. Non-producers can bank these deductions for future use.

— Mineral Exploration Incentive Program (MEIP): Investors are eligible for a 25% grant on investments in junior companies active in mineral exploration. The total amount available for grants under MEIP is $10 million. — Prospectors Assistance Program: Still in the proposal stage, this program is expected to be introduced by summer. Under the program, self- employed prospectors are eligible for a maximum annual grant of $7,500. Companies operating and exploring in Manitoba expressed a generally positive response to the initiatives.

“Its going to have a major effect when we come around to allocating our funding for projects,” said John Harvey, president of Noranda Exploration. “We will reap some benefits from some of the programs, and we’re looking at ways to take advantage of them,” added Frederick Felder, senior vice-president of exploration for Granges (TSE).

MEIP co-ordinator Mark Francis says he has received expressions of interest in the incentive program from at least 10 listed companies and a number of private companies. He said most would choose to make private placements in order to avoid the expense associated with public offerings. But Falconbridge’s Band stressed that although the Manitoba government “has its heart in the right place,” the industry has a number of concerns, especially related to land access, that still need to be addressed.