Sluggish economy hampers Manitoba incentives program

Manitoba’s new Mineral Exploration Incentives Program (MEIP) is off to a slow start. The 3-year, $12.5-million grant program, designed to stimulate petroleum and mineral exploration and development in the province, appears to have been hampered by a sluggish economy and a poor investment market.

MEIP is one of several initiatives that were unveiled by the Manitoba government in March, 1992. The program, administered by Manitoba’s Energy and Mines Branch, targets new exploration activities by junior companies working in the province.

To date, 14 applications have been received.

Investors are offered a 25% taxable grant on investments in junior companies active in mineral and petroleum exploration. Only investments in ventures financed under a flow-through share agreement or limited partnership interest qualify. The grants supplement the Canadian Exploration Expense deductions allowed under the federal Income Tax Act.

Grant incentives of up to $10 million are available for metallic and non-metallic mineral exploration.

Under the program, companies file an exploration program with a proposed budget, the program is reviewed by the government and, if approved, the investment capital is raised by a private-sector Manitoba Exploration Investment Corp. (MEIC). The MEIC monitors the distribution of funds between investors and the program. A junior exploration company may act as its own MEIC.

The program is scheduled to operate until March 31, 1995. Program administrator Mark Francis says the $12.5 million to be spent over three years, if fully subscribed, will equate to $50 million in exploration. Most of this would be new exploration since senior mining companies are not eligible under the program.

While approvals of incentive programs are given once a year in other provinces, they are made on a quarterly basis in Manitoba.

Francis attributes the lack of applications to a poor investment climate and the sluggish economy. Ten programs have been approved and confirmed, two have been approved and are attempting to raise funds, and two programs have approval pending. The 10 approved grants have a value of $1.2 million. Of the 14 projects, three are for oil and gas, three are for base metals, seven are for gold, and one is for industrial minerals.

Registry Resources (ME) has two base metal projects that have received grant approval. The company is spending $275,000 on its Wellmet Lake property, which is a joint venture with Manitoba Mineral Resources, and $200,000 on its Thunder project west of Lynn Lake.

Registry President Harry Hodge is surprised by the lack of applications for the MEIP program. He feels Manitoba’s exploration opportunities, when combined with the available grants, make it an attractive place to search for minerals.

Hodge says that although the investment climate is tough, Registry has been able to raise money from a core group of investors.

Canmine Resources (CDN) is another grant recipient that is exploring for base metals north of Flin Flon. The company has raised just over $200,000 to fund a gravity survey and drill program on its Fer property. Ted Ellwood, Canmine’s director of investor relations, touts the Manitoba program as one of the best in Canada, apart from Quebec’s incentives.

Cazador Explorations (VSE) has a grant for its Keystone gold project in northern Manitoba. The company is carrying out exploration on several deposits in the Lynn Lake area, and hopes to reopen the past-producing MacLellan mine. John Chapman, Cazador’s president, told The Northern Miner that he thinks the new Manitoba exploration incentives are excellent, but the government needs to revise some of its other policies such as the fuel tax and the environmental permitting process.

Among Manitoba’s other initiatives are a tax holiday for new mines, incentives for operators who increase their exploration budgets and a prospectors assistance program.

The prospectors assistance program which began in September, 1992, is similar to the Ontario Prospectors Assistance Program (OPAP), except that in Manitoba funding is not available until the project is completed. Currently, 28 prospecting grants for up to $7,500 have been approved. Manitoba has allocated $100,000 per year for the prospecting program.