TSX: TML OTCQX:
TSRMF
TORONTO, May 15, 2018 /CNW/ - Treasury Metals Inc.
(TSX: TML) (OTCQX: TSRMF) (the "Company") is providing
additional information further to its 2017 year-end financial
statements regarding notification by the Canada Revenue Agency
(the "CRA") of its determination in respect of the
flow-through spending audit (the "Audit") commenced by the
CRA in December 2016 regarding certain expenditures incurred
by the Company in the years 2012, 2013, and 2014 that were
characterized by the Company as "Canadian Exploration Expenses"
("CEE") for purposes of the Income Tax Act
(Canada).
Specifically, on March 7, 2018 the
Company was advised by the CRA that the CRA had reclassified
approximately $1.8 million of CEE to
operating expenses, out of the total $12.5
million the Company raised through "flow-through share"
offerings (within the meaning of such term in the Income Tax
Act (Canada)) completed on
December 6, 2011, September 21, 2012, May 1,
2013, and December 20, 2013
(the "Flow-Through Financings") and renounced to
subscribers (the "Subscribers") by the Company pursuant to
the applicable subscription and renunciation agreements entered
into with Subscribers. The Company understands from the Part
XII.6 assessment described below that a further approximately
$2.2 million of CEE has been
reclassified by the CRA to Canadian Development Expenses
("CDE"). The CRA has advised the Company that a review
of the financings completed prior to, or subsequent to, the
Flow-Through Financings is not contemplated at this time.
In addition, pursuant to the Audit, the CRA has notified the
Company that it is liable for Part XII.6 tax in the amount of
$477,726 in connection with the
shortfall from the disallowed CEE. The Company understands that
this amount reflects a reclassification by the CRA of the
approximately $4.0 million of CEE
renounced to Subscribers in connection with the Flow-Through
Financings to either operating expenses or CDE.
The Company disputes the CRA's proposed recharacterizations of
expenses from CEE to either CDE or operating expenses and
consequently intends to object to such CRA determinations.
Background
The Company raised the flow-through funds in the Flow-Through
Financings to facilitate exploration of its Goliath Gold Project in
northwestern Ontario. All of the
funds raised pursuant to these Flow-Through Financings were
expended by the Company on exploration and other ancillary
activities in respect of the Goliath Gold Project and were
subsequently renounced to Subscribers in accordance with the
subscription and renunciation agreements entered into with
Subscribers.
This reclassification, subject to the Company's objection (as
discussed above), could result in each Subscriber that claimed a
deduction for such renounced CEE potentially being assessed with
tax and interest owing on the disallowed amount, subject to the
particulars of such assessment (if any) being dependent on the
applicable tax rate and individual tax circumstances of each
Subscriber. Pursuant to the terms of the subscription and
renunciation agreements entered into by the Company and the
Subscribers pursuant to the Flow-Through Financings, the Company
has agreed to indemnify the Subscribers for certain amounts should
the CRA reassess such Subscribers for tax attributable to the
disallowed renunciation of CEE. The ultimate quantum of the
Company's liability with respect to this indemnification obligation
cannot currently be accurately determined.
This press release and the accompanying material change report
have been filed in connection with a continuous disclosure review
conducted by the Ontario Securities Commission and it remedies the
non-filing of this press release and accompanying material change
report as of the date of receipt of the March 7, 2018 letter from the CRA.
About Treasury Metals Inc.
Treasury Metals is a gold focused exploration and development
company with assets in Ontario,
Canada and is listed on the TSX under the symbol "TML".
Treasury Metals Inc.'s 100% owned Goliath Gold Project in
northwestern Ontario is slated to
become one of Canada's next
producing gold mines. With first-rate infrastructure currently in
place and gold mineralization extending to surface, Treasury Metals
plans on the initial development of an open pit gold mine to feed a
2,500 tonne per day processing plant with subsequent underground
operations in the latter years of the mine life. Treasury Metals is
currently in the mine permit process on the Goliath Gold
Project.
For more information about Treasury Metals, please visit the
Company's website at: http://www.treasurymetals.com
Follow us on Twitter @TreasuryMetals
Forward-looking Statements
This release includes certain statements that may be deemed
to be "forward-looking statements". All statements in this release,
other than statements of historical facts, that address events or
developments that have yet to occur, including those pertaining to
the status and potential liability associated with the CRA audit
are forward-looking statements. Actual results or developments may
differ materially from those in forward-looking statements. The
Company disclaims any intention or obligation to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise, save and except as may be
required by applicable securities laws.
SOURCE Treasury Metals Inc.