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Flow-through shares back on the agenda 
 
THE Australian Institute of Mining and Metallurgy has renewed its call for the federal government to introduce a flow-through share scheme as a priority in the 2009 Budget in a bid to secure the current and future health of Australia’s junior exploration sector.

In a statement, AusIMM president Greg Chalmers said the need for a flow- through shares scheme was more important than ever as traditional sources of finance and investment for the junior mining companies have dried up.

“A flow-through share policy is now essential to the survival of an important part of Australia’s minerals sector,” he said.

“The primary market has become a very difficult place for raising exploration capital, and the shortage of capital has potentially devastating implications for junior exploration companies.

“A flow-through share scheme will provide a buffer for junior exploration companies, which are the engine room of one of our economy’s most lucrative industries, from the worst impacts of the economic crisis.”

Flow-through shares would allow mining companies to pass tax deductions on to investors – who do want to offset income, often, via tax credits – and in theory boost the level of interest these investors have in taking on shares in smaller mining companies.

Chalmers said the lack of investor support has had significant short-term impact on jobs, exploration spending and new initial public offerings in the junior mining sector.

“However what the bare statistics fail to capture are the longer term economic impacts – loss of talent and of geoscientific knowledge about Australia’s terrain, and loss of infrastructure,” he said.

“These losses will directly impact upon our ability to restock Australia’s mineral inventory through exploration.”

“Without forward looking and effective policy measures in the 2009-10 Budget, decisions that are made in the next 24 months could do irreversible damage to the economic sustainability of the minerals sector for decades to come.”

Chalmers added that a flow-through share scheme would also increase Australia’s competitiveness as a destination for exploration and mining investment and also give Australia policy parity with Canada, which has had a successful flow-through share scheme in place since 2000.