Peregrine Diamonds Ltd. PGDIF

RE:RE:RE:RE:RE:RE:What if...

[ekim]

Hey Kid,

I asked specifically about this area at the AGM and the CFO was happy to clarify my questions.
You will notice in this recent news release...they specificcally included the line  item:

"Peregrine's eligible Canadian exploration expense and Canadian development expense tax pools were utilized in the posttax calculations."

So, the tax beneift pool would be included in the calculations.

PGD has spent over CAD$100 million at the various projects, DO27, Chidliak, etc.

Down the line when Chidliak starts producing, they  will Revenue from that and an Expense from that. The difference is the profit. 
If you have a capital expense, you depreciate that over 5 years or whatvever the accountant says and that will be included in the  expenses in each year.

After Revenue, after expense, after depreciation expenses, you are left with a cash flow.

That cash flow then needs to pay tax on it. Between the Nunavut government and the federal govvernment, that adds up to about 30%. But the tax benefits only apply to the federal portion. The federal government will receive 12 or 13% of that cash flow.

By PGD using the tax benefits, they get basically a federal tax vacation for the first CAD$100 million of cash flow. They don't have to pay federal tax until that is used up.

So, that CAD$100 million in tax benefits will save then basically CAD$12 to CAD$13 million in taxes very early on in the project.

With the heavy cash flow from CH-6 in the first couple years of production, that tax benefit will be used up quite quickly.

There are timelines to use them up...but those are long timelines (15+ years) before expiry.
You can check the annuals as they have the tax benefits split up into different buckets.

Anyone who wants to do DD...jsut read some accounting/exploration tax credit papers from the federal government, go to SEDAR and download the annuals from PGD. All public information available to anyone, anywhere.

This was very specific to MPVD taking over KDI in an all paper transaction...they are now able to use that CAD$110 million in tax benefits that KDI has and apply directly to Gahcho Kue cash flow that is applicable to MPVD's portion of the mine. Even if KDI's mill feed is going to be used for 10+ more years...there was an accretive benefit to MPVD in the near term.

LONG...PGD

EKIM