Principal Issues: Whether NRCan can certify that the principal mineral to be extracted from the lithium-bearing spodumene deposits of the taxpayer will be a principal mineral extracted from a non-bedded deposit.
Position: Yes.
Reasons: Positive Opinion provided by NRCan.
XXXXXXXXXX 2023-097168 André Payette
September 19, 2023
Dear XXXXXXXXXX:
Re: Mineral Resource Certification
This is in response to your letter dated April 14, 2023, in which you requested on behalf of XXXXXXXXXX(“XXXXXXXXXX” or “the Company”) certification pursuant to subparagraph (d)(i) of the definition “mineral resource” in subsection 248(1) of the Income Tax Act (the “Act”) with respect to the lithium-bearing spodumene deposits (the “Deposits”) of its XXXXXXXXXX Project (the “Project”) located in the XXXXXXXXXX.
The XXXXXXXXXX Project
The Project is located within the XXXXXXXXXX The Project is made up of XXXXXXXXXX separate claims (the “Property”) spread over a XXXXXXXXXX. Therefore, the Company owns a XXXXXXXXXX% interest in the Property (for a list of the claims, see Appendix I).
Definition of Mineral Resource
In order for subparagraph (d)(i) of the definition of “mineral resource” in subsection 248(1) of the Act to apply, three conditions must be met:
1. a principal mineral must be extracted,
2. that mineral is an industrial mineral; and
3. that mineral is contained in a non-bedded deposit.
We obtained an opinion from the Minister of Natural Resources (“NRCan”) regarding the Deposits located on the Property. NRCan has advised us that the principal mineral to be extracted from the Deposits, the lithium-bearing spodumene, is an industrial mineral contained in non-bedded deposits. It is therefore our view that the Deposits on the Property will qualify as a “mineral resource” pursuant to subparagraph (d)(i) of the definition of this term in subsection 248(1) of the Act.
XXXXXXXXXX.
We note that nothing in this letter should be construed as implying that the CRA has confirmed, reviewed, made any determination, or accepted any method for the determination in respect of whether the proposed exploration expenses will be “Canadian exploration expenses”, “flow-through mining expenditures” or “flow-through critical mineral mining expenditures”, as those terms are defined in the Act.
Yours truly,
Kimberley Wharram
Manager
Resources Section
Reorganizations Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
Appendix I: XXXXXXXXXX