RE:RE:RE:RE:Westhaven Announces C$5.0 Million Bought Deal Private PlacemScarpetki wrote: Flow-through shares are strangely undillutive. I remember them being described as Canada's gift for us. I'm looking for an explanation that a five year old can understand, ...
5 year olds generally don't understand taxes, but, here goes...
Exploration expenses are tax deductable. Exploration companies don't make profits, so a tax deduction is of no immediate value to them (they can carry them forward until they are profitable, but that's a long way down the road, if ever). Flow through shares allow them to pass that tax deduction on to the investor, who can use it against other income. That makes those shares more valuable to the investor, so they are willing to pay a bit of a premium for them.