Alternative capital

Canadian resource exploration companies act as the engine driving the Canadian resource extraction industry into the future. Eventually, working resource deposits run empty, so exploration needs to keep going to ensure the long-term viability of the industry. Unfortunately exploration companies – juniors with little to no actual revenue – are usually the first to feel the capital squeeze in tight financial markets.

Through PearTree Securities, however, Canadian resource exploration firms have an avenue available to tap into an expanded universe of capital sources that wouldn’t otherwise be available.

PearTree Securities is an exempt market dealer specializing in arranging and closing flow through donation financing placements for junior resource exploration firms across Canada. In many cases, we can arrange financings in which institutional and offshore capital pools can be tapped into.

We do this by structuring flow through deals to reduce the financial risk to investors and increase deal certainty for issuers, banks and investors. In so doing, we eliminate the downside of flow through financing, including eliminating downward market selling pressure. We also help secure the highest price possible for the share issuer, with less dilution to existing shareholders.

Overall, our financing process provides a compelling win-win scenario in which share issuers and investors gain a competitive edge in the capital market and benefit accordingly.

Issuer Benefits

While there are many advantages to junior resource exploration firms seeking flow through capital through conventional financing channels, participation in PearTree’s Flow Through Share Donation program can give juniors an immediate advantage over their competitors, particularly in a tight capital market environment.

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Specifically, the PearTree Flow Through Share Donation program offers juniors the opportunity to:

  • Gain access to an expanded universe of domestic and foreign institutional capital sources.
  • Enjoy the flexibility of being able to source capital through public or private placements.
  • Reduce financial risk by participating in flow through deals with firmly committed subscribers.
  • Eliminate downward market selling pressure and other drawbacks typically associated with flow through financing.
  • Secure the highest share sell price possible – at a market premium - with less dilution to existing shareholders.
  • Work with Canada’s leading experts in arranging and closing flow through donation financing placements, with no fees or charge-backs.

Mining

Grassroots exploration expenditures incurred to determine the existence, location, extent or quality of a mineral resource in Canada are entitled to 100% tax deduction in the year of the investment. PearTree’s flow through donation financing arrangement enables Canadian mineral exploration companies to pass qualifying Canadian Exploration Expenses (CEE), Canadian Development Expenses (CDE) and Super Flow Through investment tax credits (ITCs) on to pre-arranged institutional investors.

Since 2007, PearTree has facilitated more than CDN$600 million in flow through donation financing placements with dozens of Canadian mining exploration firms.

Oil & Gas

Despite traditionally low market demand for Canadian Development Expense (CDE) flow through share offerings in the Oil & Gas sector, PearTree’s flow through donation financing structure creates incentive  – and builds demand – for institutional investors to purchase such shares. Both 30-per-cent deductible CDE and 100-per-cent deductible CEE flow through share offerings are included within our alternative structured finance package.
PearTree currently has in excess of CDN$250 million in available investment capital for qualifying flow through financings in the Canadian Oil & Gas and Mineral Exploration sectors.

Seeking Resource Exploration Capital?

CEE – Canadian Exploration Expenses

CEE includes in the course of prospecting, surveying (geological, geophysical & geochemical), drilling, trenching, digging test pits or sampling. Excluded from CEE are expenses included in CDE, included in the cost of depreciable property or related to a mine in commercial production.

Super Flow Through

Expenditures that are CEE and are conducted from surface to determine the existence, location, extent or quality of a mineral resource other than coal are eligible for an additional “investment tax credit” (ITC) of 15%

CDE – Canadian Development Expense

Expenditures incurred for the development of a new mine are entitled to a 100% tax deduction calculated on an annual 30% declining balance basis.