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This article appeared in the March 2008 Listed@ASX email newsletter. To subscribe to this newsletter please register with the MyASX section or visit the About MyASX page for past editions and more details.
ASX supports Flow-Through Shares
Noting the importance of the mining industry to the Australian economy and the need for continued investment in exploration to ensure its long term sustainability, ASX’s submission is based on the following premises:
- Australia’s share of global exploration expenditure has been declining for a number of years while that of our major competitors, notably Canada, Latin America and Africa have been increasing significantly.
- While published ABS data on exploration shows a pick-up in nominal exploration expenditure in Australia over the last two years there has been an increased concentration on brownfields exploration (near mine site exploration ) rather than greenfields exploration (exploration in new areas). Greenfields exploration is neccessary if discoveries of new deposits and mineral provinces are to be made.
- A significant decline in total mineral exploration metres drilled over the last ten years indicates that increased expenditure hasn’t translated into increased exploration activity.
- The Canadian Government’s introduction in October 2000 of a FTS scheme to provide an incentive for exploration within Canada has directly contributed to Canada’s increased share of global exploration activity.
The submission argues for an arrangement that would allow investors in mining exploration companies to access tax deductions normally available to a company for exploration expenditure but which, under the current tax treatment, cannot be accessed until the company begins to earn income.
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