Principal Issues: Whether NRCan can certify that the principal mineral to be extracted from the lithium-bearing spodumene deposits on the property will be a principal mineral extracted from a non-bedded deposit.
Position: Yes.
Reasons: Positive Opinion provided by NRCan.
XXXXXXXXXX 2023-099551 André Payette
March 11, 2025
Dear XXXXXXXXXX:
Re: Mineral Resource Certification
This is in response to your letter dated October 5, 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 XXXXXXXXXX deposit (the “Deposit”) that is part of the XXXXXXXXXX Project (the “Project”), located in the XXXXXXXXXX. The Project is currently owned and operated by XXXXXXXXXX (“ACo”), a wholly-owned Canadian subsidiary of XXXXXXXXXX.
The Project
The Project is located in the province of XXXXXXXXXX. ACo owns 100% of XXXXXXXXXX claims that comprise the Project. The Company owns a XXXXXXXXXX% gross overriding revenue royalty in respect of at least XXXXXXXXXX of those claims and is in the process of confirming whether its royalty includes the additional XXXXXXXXXX claims that were recently acquired by ACo (for a list of all relevant 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 – XXXXXXXXXX