2021-0892971E5 Mineral Resource - Gold and Gravel Deposits

Principal Issues: Whether the gold deposit and the gravel deposit on the property fall within the definition of "mineral resource" in subsection 248(1).

Position: The gold deposit is a mineral resource but the gravel deposit is not.

Reasons: Since gold is a precious metal, the gold deposit qualifies as a "mineral resource" under paragraph (a) of that defined term in subsection 248(1). The gravel deposit is not eligible for certification as a "mineral resource" under subparagraph (d)(i) of that defined term because there is no principal mineral being extracted from the gravel deposit and because it is a bedded deposit.

Author: Wharram, Kimberley
Section: Definition of "mineral resource" in subsection 248(1)

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                                                                                         2021-089297
                                                                                         Kimberley Wharram

June 21, 2021

Dear XXXXXXXXXX:

Re:   XXXXXXXXXX (“Taxpayer”)
        Request for Mineral Resource Certification

This is in response to your letter dated April 13, 2021, in which you requested certification of the Taxpayer’s Union Bar placer gold and gravel property (the “Property”) as a “mineral resource” as that term is defined subsection 248(1) of the Income Tax Act (the “Act”). The request relates to two different deposits on the Property, a placer gold deposit and a gravel deposit.

The Property is located in XXXXXXXXXX.

“Mineral resource” is defined in subsection 248(1) of the Act as follows:

“ mineral resource” means

            (a) a base or precious metal deposit,

            (b) a coal deposit,

            (c) a bituminous sands deposit or oil shale deposit, or

          (d) a mineral deposit in respect of which

(i) the Minister of Natural Resources has certified that the principal mineral extracted is an industrial mineral contained in a non-bedded deposit,

(ii) the principal mineral extracted is ammonite gemstone, calcium chloride, diamond, gypsum, halite, kaolin or sylvite, or

(iii) the principal mineral extracted is silica that is extracted from sandstone or quartzite

Since gold is a precious metal, the gold deposit on the Property qualifies as a “mineral resource” under paragraph (a) of that definition and no certification is required.

However, the gravel deposit could only potentially qualify as a mineral resource if it fell within subparagraph (d)(i) of that definition. In order for subparagraph (d)(i) of the definition of “mineral resource” in subsection 248(1) of the Act to apply, two conditions must be met:

1. a principal mineral must be extracted, and

2. that mineral is an industrial mineral contained in a non-bedded deposit.

We obtained an opinion from the Minister of Natural Resources regarding the gravel deposit on the Property. The Minister of Natural Resources has advised us that no principal mineral will be extracted from the gravel deposit, In addition, the Minister of National Resources has advised us that the gravel rock that is to be extracted is contained in a bedded deposit, rather than a non-bedded deposit. Therefore, the gravel deposit on the Property does not qualify as a “mineral resource” pursuant to subparagraph (d)(i) of the definition of this term in subsection 248(1) of the Act.

Yours truly,

Kimberley Wharram
Acting Manager
Resources Section
Reorganizations Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

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