Brian Zinchuk is editor and owner of Pipeline Online
Panther Drilling drilled Royal Helium’s Climax-4 well in the summer of 2021. That area will soon see the installation of its first processing facility in Saskatchewan, after the completion of one at Steveville, Alberta. Photos by Brian Zinchuk
One small change from the feds would mean a world of difference
SASKATOON – Saskatchewan’s Critical Mineral Strategy announced on March 27 will help out helium explorers like Royal Helium in attracting capital to the province, but not in flow through shares. At least, not yet. Things might change on Tuesday.
Royal Helium president and CEO Andrew Davidson noted that a key portion of the strategy – flow-through shares – does not apply to helium producers. That’s because helium is not considered a “mineral” under the federal Income Tax Act. It is, however, considered a critical mineral, along with lithium, potash copper, and several others, under the Saskatchewan Critical Mineral Strategy.
“Until the feds change their position on it, we stay in limbo,” he said from Saskatoon on March 27.
There’s a bit of waiting with bated breath for the federal budget, which will be tabled the afternoon of Tuesday, March 28. Asked if he was expecting anything in that budget, Davidson responded, “We’re certainly hoping so. I mean, we’ve heard sort of mixed reports. Some say they hear it’s coming, and others say they hear it’s not coming. I think tomorrow, what you’ll see, more than anything else, is complete elimination of anything oil and gas as it relates to flow-through, even deep hole. Hopefully they have the foresight to not do the same thing to helium, but we’ll see.
“In general, the entire update put up by the province this morning is incredibly bullish on all things Saskatchewan. So, even without flow through share credits being eligible for helium projects, just the extra capital is going to attract into the province will benefit us.”
Davidson said a one-sentence change in the Income Tax Act could solve the whole problem. And if such a change did happen, he said, “Anyone who raises money for exploration-stage companies, flow-through shares and the ability to issue them just opens up a whole other wing of finance. It lets things move along at a much quicker pace. I mean, it would be it’d be a game changer for every exploration stage helium company in Saskatchewan.”
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He noted lithium is considered a mineral in this context, so it’s now included under the federal flow-through shares.
Royal Helium has recently posted photos on its social media showing the assembly of the hardware soon be installed at its Steveville, Alberta, helium processing plant. That will be the company’s first helium processing plant, to be followed by one at Climax, Saskatchewan. Davidson said there will be updates coming soon.
Assembly of a skid for Royal Helium’s Steveville plant. Royal Helium/LinkedIn
Broader concern
Other helium explorers are also concerned about the flow-through issue. Helium Evolution Inc. (HEVI) noted in a March 1 press release, “HEVI and other helium developers, through a third-party, have been actively lobbying the Canadian Government to have helium be eligible under the Critical Mineral Exploration Tax Credit (CMETC) and thereby helium be included as a resource eligible for flow-through share financing. A flow-through share is a type of common share that permits the initial purchaser to claim a tax deduction for a portion of the amount invested, positioning companies who produce the eligible resources more attractive to investors.”
(Royal Helium is among those “other helium developers,” according to Davidson.)
“Additionally, HEVI is aware that other third parties, such as PearTree Financial Services Ltd., have made similar submissions to the Canadian Government recommending that all 31 critical minerals identified by Natural Resources Canada, including helium, be eligible products under the CMETC and eligible for Flow-through. This is supported by the fact that all critical minerals are essential to Canada’s economic and national security, and required for Canada’s transition to a low-carbon economy.”
Helium Evolution noted a decision on the matter is expected to be included in the 2023 federal budget.
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