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									                                                                      Super Flow-through Shares                                                                                                                                                                                                               WhAT’S NEW
                                                                                                                                                                                                                                                                                             FOR INVESTORS: You may now invest in qualifying super
After-Tax Cost of a $1,000 Investment by an Individual Investor by Province in 2011                                                                                                                                                                                                            flow-through shares – extended until March 31, 2012.

(based on existing and proposed legislation, as well as administrative positions, as of September 30, 2011)                                                                                                                                                                                  FOR ISSUERS: Funds raised with the credit can support
                                                                                                                                                                                                                                                                                                   eligible exploration until the end of 2013.
                                                                                                                                        B.C.      Nova                                                           New       Northwest                    Nfld. &
                                                                            Notes                        Quebec   Manitoba          (Note 7)     Scotia          Sask.       Ontario             P.E.I.     Brunswick      Territories     Yukon      Labrador      Nunavut        Alta.
Combined federal/provincial tax rate                                                     A               48.22%      46.40%         43.70%       50.00%       44.00%          46.41%         47.37%            43.30%         43.05%       42.40%       42.30%       40.50%      39.00%

Federal tax rate                                                                         B               24.22%      29.00%         29.00%       29.00%       29.00%          29.00%         29.00%            29.00%         29.00%       29.00%       29.00%       29.00%      29.00%
Provincial tax rate                                                                      C               24.00%      17.40%         14.70%       21.00%       15.00%          17.41%         18.37%            14.30%         14.05%       13.40%       13.30%       11.50%      10.00%

Federal tax credit                                                                       D                 15%          15%              15%       15%            15%            15%              15%            15%             15%         15%           15%         15%         15%           Flow-
Provincial tax credit                                                                    E                   -          30%              20%         -            10%             5%                -              -               -          -             -           -            -
Amount of investment                                                                     F          $ 1,000            1,000         1,000        1,000         1,000          1,000             1,000          1,000           1,000       1,000        1,000        1,000       1,000
Less: tax benefit of deduction of flow-through investment – federal                      FxB              (242)         (290)            (290)     (290)          (290)          (290)            (290)          (290)            (290)      (290)        (290)         (290)     (290)                Mineral exploration
Less: tax benefit of deduction of flow-through investment – provincial       (1)         FxC              (360)         (174)            (147)     (210)          (150)          (174)            (184)          (143)            (141)      (134)         (133)        (115)     (100)
subtotal                                                                                                  (602)         (464)            (437)     (500)          (440)          (464)            (474)          (433)            (431)      (424)         (423)        (405)     (390)
                                                                                                                                                                                                                                                                                                       tax Credit [MetC]
Less: 15% non-refundable federal investment tax credit                       (2)         G=Fx(1-E)xD (150)              (105)            (120)     (150)          (135)          (143)            (150)          (150)            (150)      (150)         (150)        (150)     (150)
Less: provincial tax credit                                                  (3)         H=ExF               -          (300)            (200)           -        (100)           (50)                  -              -               -          -             -            -           -

Add: income tax on inclusion of federal tax credit                           (4)         GxA               36             50               52        75             59             66               71             65              65          64           63              61       59
Add: income tax on inclusion of provincial tax credit                                    HxA                 -           139              87             -          44             23                   -              -               -          -             -            -           -
                                                                                                          (716)         (680)            (618)     (575)          (572)          (568)            (553)          (518)           (516)       (510)         (510)       (494)      (481)                    • What they are
                                                                                                                                                                                                                                                                                                   • What they mean for investors
Net cost of $1,000 investment in flow-through shares                         (5),(6)                 $    284            320             382       425             428           432              447             482             484         490          490          506         519
                                                                                                                                                                                                                                                                                                The Mineral Exploration Tax Credit program is a boon
                                                                                                                                                                                                                                                                                               to Canada’s economy. Since its introduction in October
                                                                                                                                                                                                                                                                                                2000, the federal tax credit program has helped keep
Notes                                                                                                                                            Assumptions                                                                                                                                     investment in Canada and has provided an incentive
                                                                                                                                                                                                                                                                                                 for Canadian investors to put money into one of this
(1)   The province of Quebec deduction is 150%.                       (6)    Alternative minimum tax is ignored in this analysis.                • Taxpayers are subject to income taxes at top marginal rates.
                                                                                                                                                                                                                                                                                                      country’s most important resource industries.
(2)   The federal government allows a credit of 15% of qualifying     (7)    The British Columbia credit applies until the end of 2014           • Canadian exploration expenses are 100% eligible for federal                                                                                    The METC has helped Canada capture and maintain
      expenditures incurred (or deemed incurred under the                    (using the “look-back” rule).                                         and provincial tax credits.                                                                                                                    its position as the number one country in the world
      “look-back” rule) before January 1, 2013. However, flow-                                                                                   • Available tax deductions are taken in full.                                                                                                              for mineral exploration spending.
      through share subscription agreements must be signed
                                                                                                                                                 • Exploration expenditures are made in the applicable province
      before April 1, 2012.
                                                                                                                                                   and the taxpayer is a resident of that province for tax purposes.
(3)   Provincial tax credits reduce the amount of expenditures
      qualifying for the federal tax credit.
(4)   In the case of Quebec, the formula is “GxB” since the federal
      investment tax credit is not taxed in Quebec.
(5)   Capital gains tax applicable when the shares are sold is
      ignored in this analysis.                                                                                                                                                                                                                                                                                                         October 2011
                                                                                                    For taxpayers
 shares are:
                                                                                            at the highest marginal tax rate:

                                                                                    • The federal 15% non-refundable tax
                                                                                                                                                                 Facts for investors:                                                                           Discoveries
                                                                                                                                                                                                                                                                    made with the
                                                                                      credit, when added to the regular and
                                                                                      ongoing 100% deduction, is equivalent
                                                                                                                                Income tax benefits to individual investors will vary,
                                                                                                                                                                                                                                                                assistance of flow-
a type of common share that permits the initial purchaser
                                                                                      to a 137% exploration expense deduction
                                                                                      for federal tax purposes.                 depending on the taxpayer’s jurisdiction of residence         Flow-through tax incentives work                                    through financing:
to claim a deduction up to the amount of the share                                                                              and marginal tax rate for income tax purposes.                                                                                  DIAMONDS at Lac de Gras, NWT,
                                                                                                                                                                                              Canada has ranked number one in the world for mineral             Ekati and Diavik diamond mines
subscription price against any income in respect of resource                                                                    at present, Quebec offers the largest potential tax
                                                                                                                                                                                              exploration spending since 2002, according to the Metals
expenses renounced by a publicly-traded issuer.                                                                                 savings for flow-through share investments, followed          Economics Group (MEG). In 2010, 19% of total world exploration
                                                                                                                                                                                                                                                                GOLD at hemlo, ON, Golden Giant mine

there are two types of flow-through share investments:                                                                          by Manitoba.                                                  expenditures were for projects in Canada. The flow-through        NICkEL/COPPER at Voisey’s Bay, NL,
                                                                                                                                                                                              share program and the Mineral Exploration Tax Credit are unique   Diamond Fields Resources
REGULAR – 100% deduction write-off for exploration                                                                              The deductions and tax credits apply only to eligible
(net of federal and provincial credits)                           additional provincial                                         expenditures in the applicable province and territory
                                                                                                                                                                                              to Canada and encourage investors and companies to focus on
                                                                                                                                                                                              Canadian-based projects.
                                                                                                                                                                                                                                                                hEAVY RARE EARThS at Thor Lake,
                                                                                                                                                                                                                                                                NWT, Avalon Rare Metals
SUPER – as above, plus an additional 15% federal tax
credits for grassroots exploration                                tax incentives                                                and are only available to taxpayers residing within,
                                                                                                                                or otherwise taxable in, the jurisdiction where the
                                                                                                                                                                                                                                                                GOLD at Malarctic, QC, Osisko Mining
                                                                                                                                                                                                                                                                GOLD at Timmins, ON, Lake Shore Gold
                                                                                                                                exploration is taking place.
…plus provincial and territorial deductions and tax credits       British Columbia, Saskatchewan, Manitoba and Ontario
                                                                  offer additional tax credits that apply to the provincial     Tax deductions vs tax credits
                                                                                                                                                                                              Features of the 15%                                               URANIUM in the Athabaska Basin, Sk,
                                                                                                                                                                                                                                                                Hathor Exploration

                                                                  portion of income tax relating to eligible expenses.          under tax legislation governing flow-through shares,              federal Mineral
                                                                  The effect of these incentives varies depending on the
                                                                  jurisdiction as shown on the accompanying table.
                                                                                                                                eligible exploration expenditures have been 100%
                                                                                                                                deductible from income from any source for more               exploration
                                                                                                                                than two decades. these deductions effectively
                                                                                                                                reduce or shelter before-tax income. tax credits
                                                                                                                                                                                                    tax Credit
                                                                                                                                apply directly to reduce taxes payable.
                                                                  British Columbia (20%), Saskatchewan (10%),                   • A non-refundable tax credit reduces taxes to the            Super Flow-throughs:
                                                                  Manitoba (30%), and ontario (5%) offer                             extent of taxes payable.
                                                                  harmonizing tax credits. the ontario tax credits are                                                                        For investors:
                                                                                                                                • A refundable tax credit reduces taxes payable and
                                                                  refundable; the other tax credits are non-refundable.                                                                       •   Allows unused tax credits to be carried back
                                                                                                                                     then, if there is an excess, results in a cash refund.
                                                                  the British Columbia credits apply even after the proposed                                                                      three years or forward 20 years
                                                                  federal deadline.                                             the federal tax credit is non-refundable (the taxpayer
                                                                                                                                                                                              •   Is available the year the investment is made
                                                                                                                                has to pay taxes in order to use the claim). however,
                                                                                                                                                                                                                                                                               For further information contact
                                                                  Quebec allows a deduction to investors of up to 150%
Super Flow-through                                                of the cost of certain qualifying exploration expenses in
                                                                                                                                it can be carried back and applied against taxes paid
                                                                                                                                in the previous three years. unused tax credits may
                                                                                                                                                                                              •   Is non-refundable (reduces tax payable but no
                                                                                                                                                                                                  cash refund)
                                                                                                                                                                                                                                                                               Philip Bousquet
                                                                                                                                                                                                                                                                               Senior Program Director,
  continues                                                       certain locations for provincial tax purposes.                also be carried forward for a period of twenty years.         •   Is taxable in the year following the claim                                   Regulatory Affairs

                                                                                                                                Most taxpayers can deduct the full amount of                                                                                                   Prospectors & Developers
 the federal government has again extended the super                                                                                                                                          For companies issuing flow-through shares:                                       Association of Canada
 flow-through tax credit, a 15% non-refundable tax credit                                                                       renounced expenses in the year incurred, but the tax
                                                                                                                                                                                              •   Expenses eligible for the tax credit are more                                135 King St. East
 applicable to eligible grassroots exploration in Canada.                                                                       credits claimed are effectively taxed as income in the
                                                                                                                                                                                                  restricted than those for regular flow-through                               Toronto, ON M5C 1G6
 the credit is deductible from federal income taxes payable                                                                     following year. For example, an investor resident in
 and is in addition to the existing 100% deduction of eligible                                                                  B.C. would add $320, being $200 (provincial) and                  share issues                                                                 Tel: 416-362-1969 Ext. 230
 exploration expenditures through the regular flow-through.                                                                                                                                                                                                                    Fax: 416-362-0101
                                                                                                                                $120 (federal) in 2012 for every eligible $1,000              •   Can be applied under the current program
 under proposed legislation (Bill C-13), an investor                                                                                                                                                                                                                           Email:
                                                                                                                                invested in 2011.                                                 to eligible expenditures incurred by
 must subscribe for the flow-through shares before april 1,
                                                                                                                                                                                                  December 31, 2013                                                            Visit our website at
 2012 to be eligible for the super flow-through tax credit.
                                                                                                                                                                                                                                                                      for further details
 In addition, the issuer of the shares, if it qualifies for the
“look-back rules”, must spend the proceeds on qualifying                                                                                                                                                                                                                           Printed on recycled paper
 exploration activities before January 1, 2014.

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