2022-0955241E5 Mineral Resource Certification

Principal Issues: Does lithium-bearing spodumene deposits in question meet the definition of mineral resource under subparagraph (d)(i)?

Position: Yes.

Reasons: Favourable opinion issued by NRCan.

Author: Christov, Boriana
Section: Definition of mineral resource in s. 248(1)

XXXXXXXXXX                                                                    2022-095524
                                                                                            Boriana Christov

November 15 2023

XXXXXXXXXX

This is in response to your letter (received on October 31, 2022) in which you requested on behalf of XXXXXXXXXX (“XXXXXXXXXX” or the “Company”) a certification pursuant to subparagraph (d)(i) of the definition “mineral resource” in subsection 248(1) of the Income Tax Act (the “Act”) with respect to the XXXXXXXXXX deposits (the “Deposits”) of its XXXXXXXXXX Project (the “Project”) located in XXXXXXXXXX.

The XXXXXXXXXX Project

The Project is located in the XXXXXXXXXX. The Municipality of XXXXXXXXXX the Project. Mineral rights for the Project are secured through XXXXXXXXXX(for a list of the claims, see Appendix). The Company maintains a XXXXXXXXXX% interest in these tenures, with a select minority of claims subject to a net smelter return type royalty.

Definition of Mineral Resource

In order for subparagraph (d)(i) of the definition of “mineral resource” in subsection 248(1) of the Act to apply, three conditions must be met:

1. a principal mineral must be extracted,

2. that mineral is an industrial mineral; and

3. that mineral is contained in a non-bedded deposit.

We obtained an opinion from the Minister of Natural Resources (“NRCan”) regarding the Deposits located on the Property. NRCan has advised us that the principal mineral to be extracted from the Deposits, the XXXXXXXXXX, is an industrial mineral contained in non-bedded deposits (pegmatites). It is therefore our view that the Deposits on the Property will qualify as a “mineral resource” pursuant to subparagraph (d)(i) of the definition of this term in subsection 248(1) of the Act.

We note that nothing in this letter should be construed as implying that the CRA has confirmed, reviewed, made any determination, or accepted any method for the determination in respect of whether the proposed exploration expenses will be “Canadian exploration expenses,” “flow-through mining expenditures” or “flow-through critical mineral mining expenditures,” as those terms are defined in the Act.

Yours truly,

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

All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without the prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5.

© His Majesty the King in Right of Canada, 2025

Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistribuer de l'information, sous quelque forme ou par quelque moyen que ce soit, de façon électronique, mécanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.

© Sa Majesté le Roi du Chef du Canada, 2025