On March 25 last, the Quebec Minister of Finance unveiled his 2025-2026 budget, which significantly transforms the tax landscape of the mining sector in Quebec. This budget introduces major changes to the flow-through share regime and to the tax credit relating to resources, which will have significant implications for investors and businesses in the natural resources sector. Changes to the flow-through share regime Abolition of both 10% additional deductions As part of the review of its tax expenditures, the government has decided to adjust the flow-through share regime. As a result, the following deductions have been abolished: the additional 10% deduction for certain exploration expenses incurred in Quebec by a mining corporation that does not exploit any mineral resources; the additional 10% deduction for certain surface mining exploration expenses incurred in Quebec by a mining corporation that does not exploit any mineral resources. With some exceptions1, these changes will apply to flow-through shares issued after March 25, 2025. It should also be noted that the budget abolishes the additional capital gains exemption resulting from the divestiture of certain resource-related properties, such as flow-through shares. On the other hand, the additional deduction for certain issuance costs seems to be maintained. Changes to the tax credit relating to resources Despite these abolitions, the budget does include some positive news for the critical and strategic metals sector. The budget provides for a temporary increase in the rates of the tax credit relating to resources for eligible expenses related to critical and strategic minerals. Until December 31, 2029, a 45% tax credit rate will apply to these costs for eligible corporations, that is, those that do not exploit any mineral resources, and 20% for other eligible corporations, that is, those that exploit mineral resources. For the purposes of the tax credit relating to resources, critical minerals will refer to the following minerals: antimony, bismuth, cadmium, cesium, copper, tin, gallium, indium, tellurium and zinc. Strategic minerals are defined as cobalt, rare earth elements, platinum group elements, graphite (natural), lithium, magnesium, nickel, niobium, scandium, tantalum, titanium and vanadium. Several other technical changes have also been made to the tax credit relating to resources. These will be the subject of a more detailed bulletin at a later date. The changes introduced by the 2025-2026 Quebec budget will certainly have an impact on the tax planning of enterprises and investors in the natural resources sector. Our team of mining law and tax professionals is ready to answer all your questions regarding these new measures. We can assist you in developing your mining investment projects in Quebec, maximizing the benefits of the enhanced rates of the tax credit relating to resources, as well as in implementing successful flow-through financing. These amendments will not apply to shares issued after March 25, 2025, but before January 1, 2026, provided that they are issued following an application for a preliminary prospectus receipt made no later than March 25, 2025. Nor will they apply to shares issued after March 25, 2025, if issued following a public announcement made no later than March 25, 2025, and if the report of distribution form is submitted to the Autorité des marchés financiers no later than May 31, 2025.

On March 3rd, 2025, the Department of Finance Canada announced a two-year extension to the 15% Mineral Exploration Tax Credit (“METC”) available to investors in flow-through shares. The extension means that the METC will be effective until March 31, 2027. This announcement came at a time when uncertainty loomed over the industry and some stakeholders feared that the government would not renew the METC. Over time, this tax credit has become a key component of flow-through share financings. It is intended to enhance the tax deductions already available to flow-through share holders and ultimately help companies raise capital for mineral exploration. The METC was last renewed in 2019 for a five-year period, indicating the government’s long-term commitment to the sector at that time. And while this renewal is welcome news for exploration companies, it should be noted that the shorter two-year horizon of the extension does not provide the same assurance regarding the incentive’s future. It is possible that this two-year renewal reflects the government’s intention to promote the new 30% Critical Mineral Exploration Tax Credit (“CMETC”) instead, on which more information can be found here: Federal Budget 2022: Good News for Mining Exploration Companies! In closing, it is important to note that the one-year extension to the 15% METC will not affect the period during which the 30% CMETC is available for critical mineral exploration, which will end on March 31, 2027, and is subject to renewal. If you were planning on financing non-critical mineral exploration, you may want to complete this transaction within the next two years in order to benefit from the 15% METC. Our team of professionals specializing in securities, mining law and taxation is available to answer any questions you may have concerning this new measure and to guide you in arranging a successful flow-through financing.

On March 28, 2024, the Department of Finance Canada announced a one-year extension to the 15% Mineral Exploration Tax Credit (“METC”) available to investors in flow-through shares. The extension means that the METC will be effective until March 31, 2025. This announcement came at a time when uncertainty loomed over the industry and some stakeholders feared that the government would not renew the METC. Over time, this tax credit has become a key component of flow-through share financings. It is intended to enhance the tax deductions already available to flow-through share holders and ultimately help companies raise capital for mineral exploration. The METC was last renewed in 2019 for a five-year period, indicating the government’s long-term commitment to the sector at that time. And while this renewal is welcome news for exploration companies, it should be noted that the shorter one-year horizon of the extension does not provide the same assurance regarding the incentive’s future. It is possible that this one-year renewal reflects the government’s intention to promote the new 30% Critical Mineral Exploration Tax Credit (“CMETC”) instead, on which more information can be found here: Federal Budget 2022: Good News for Mining Exploration Companies! In closing, it is important to note that the one-year extension to the 15% METC will not affect the period during which the 30% CMETC is available for critical mineral exploration, which will end on March 31, 2027, and is subject to renewal. If you were planning on financing non-critical mineral exploration, you may want to complete this transaction in the coming year in order to benefit from the 15% METC. Our team of professionals specializing in securities, mining law and taxation is available to answer any questions you may have concerning this new measure and to guide you in arranging a successful flow-through financing.

On November 25, 2015, the Investment Industry Regulatory Organization of Canada (IIROC) published a White Paper for consultation. It is seeking comment on two proposals which, if approved and implemented, would change the current structure for distributing mutual funds in Canada. A “restricted practice” policy and a policy involving directed commissions are being proposed. RESTRICTED PRACTICE POLICY The proposal would allow an IIROC dealer member to use representatives who would not advise and would only offer mutual funds and exchange-traded funds (restricted dealing representatives). To do so, they would not have to be trained and qualified to advise or trade the other categories of securities normally offered by the dealer. An IIROC dealer member who wishes to hire restricted dealing representatives currently must ask IIROC for an exemption from the proficiency upgrade requirement for a mutual fund representative who will work for it. The considerations described in the White Paper stem from such an exemption request. According to a survey of around forty brokerage firms, the conclusions of which are described in the White Paper, this proposal raises the issue once again of a possible merger between the Mutual Fund Dealers Association of Canada (MFDA) and IIROC. It would also harmonize the respective missions of these self-regulatory organizations (SROs) regarding the regulation of mutual fund representatives, at least those who are registered as restricted dealing representatives by IIROC. DIRECTED COMMISSION POLICY The proposed directed commission policy would allow an IIROC dealer member to pay commissions directly to an unregistered personal corporation controlled by a representative. This proposal is being put forward to support the restricted practice proposal since the survey mentioned above showed that “for many registered firms and individuals, eliminating the proficiency upgrade requirement on the IIROC platform is of limited interest unless directed commissions are also allowed”. The MFDA already allows commissions to be directed to unregistered corporations provided a written agreement is signed by the mutual fund dealer, the representative and the representative’s personal corporation stating that the dealer and the representative must comply with MFDA requirements and the representative and the personal corporation must both provide the mutual fund dealer full access to their books and records. ISSUES SPECIFIC TO QUEBEC In Quebec, the Chambre de la sécurité financière has exclusive responsibility for self-regulating mutual fund representatives under An Act respecting the distribution of financial products and services (Distribution Act). This means that a new IIROC category of restricted dealing representatives would require legislative changes in Quebec to allow a mutual fund representative to only be a member of IIROC through a dealer member of that organi- zation. Such changes to the Distribution Act are unlikely in the foreseeable future, at least until the Department of Finance has completed its review of the enforcement of the Distribution Act. We would also add to this list of conditions the approval of changes to the orders recognizing IIROC as a securities self- regulatory organization and the possible re-examination of exemptions from certain requirements of Regulation 31-103 which are granted to IIROC and MFDA dealer members. Such a re- examination would be required since such orders and exemptions are not issued based on an overlapping of the regulation of mutual fund representatives attached to these respective categories of dealers. MFDA CONSULTATION Further to the publication of the White Paper, the MFDA recently released the results of a consultation held with 79% of its members on the potential impacts of the application of IIROC’s proposed policies. If the restricted practice policy is adopted, most MFDA member firms believe that they would either go out of business or be forced to merge with firms registered with IIROC. Such a step would only benefit MFDA member corporations that are also affiliated with an IIROC member corporation, which would allow them to reduce their operational costs, increase efficiency and be more competitive. MFDA members generally agree that the current SRO structure adequately protects investors and that the inevitable restructuring of this system that would result from the adoption of the restricted practice policy should be aimed at protecting investors, not reducing costs. MFDA members are therefore leaning in favour of the status quo with respect to the new policies discussed in the IIROC White Paper. The White Paper consultation will end on March 31, 2016.