LAKE SHORE GOLD CORP 6.25 PCT DEBS T.LSG.DB

RE:RE:RE:RE:RE:RE:RE:RE:The next year should be exciting

[Mongoose123]

 

"You can get a lot of mileage out of a $5 million exploration program. That will be only about 10% of the profit and it is tax deductable."

Goldhappy - the $5 million that LSG has raised for this exploration program is not tax deductible.  LSG have issued flow through shares to fund this program which means that the tax deduction is passed to the purchasers of the shares.  This is why flow through shares typically are issued at a premium to the going market share price.  It will be interesting to see what the issue price is for these shares.

If LSG funded this program out of their revenue the cost would be tax deductible.  Over the last 25 years the Flow Through Share mechanism  has been a great tool for smaller companies to raise exploration funds but most large companies that have significant taxable income will not use the Flow Through Share  method so that that they can deduct the exploration expense from their taxable revenue.