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 2023-098904 André Payette
April 15, 2024
Dear XXXXXXXXXX:
Re: Mineral Resource Certification
This is in response to your letter dated August 25, 2023, in which you requested on behalf of XXXXXXXXXX (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 spodumene deposit (the “Deposit”) that is part of the XXXXXXXXXX Project (the “Project”), located XXXXXXXXXX.
The Project
The Project location XXXXXXXXXX. The Project comprises XXXXXXXXXX contiguous mineral claims (the “Property”) totaling XXXXXXXXXX hectares. The claims are held by a wholly owned subsidiary of the Company (XXXXXXXXXX). By way of a joint venture, the Project is owned XXXXXXXXXX% by the Company and XXXXXXXXXX% by XXXXXXXXXX (for a list of claims, see Appendix A).
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 Deposit located on the Property. NRCan has advised us that the principal mineral to be extracted from the Deposit, spodumene, is an industrial mineral contained in a non-bedded deposit (pegmatite). It is therefore our view that the Deposit will qualify as a “mineral resource” pursuant to subparagraph (d)(i) of the definition of this term in subsection 248(1) of the Act.
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 any proposed exploration expenses will be “Canadian exploration expenses”, “flow-through mining expenditures” or “flow-through critical mineral mining expenditures”, or whether any property will be a “Canadian resource property”, 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 A – Mining Claims List
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