Canadian Flow Through Funding raises are a positive IMO, the...

Canadian Flow Through Funding raises are a positive IMO, the company receives cash with less dilution to SH. Importantly the funds raised must be spent on exploration drilling within 12 months, it can’t be wasted on corporate overheads. Another positive for SH.

It was set up by the Canadian government to encourage and support exploration companies. To qualify the company issuing the shares needs to be in the business of mineral exploration, and it needs to be their main business (not just 20%.) Christian Calabrese said last year CFT was 90% of funds raised in Canada.

The process was explained to me at one point as thus:
Company (here LLI) -> Broker -> Broker looks for donors -> donors buy -> donor gets tax benefit -> donates shares to a charity -> charity wants cash not shares, gives shares back to broker -> broker sell shares to Aussies at AUD Flow through price (here $0.23) -> broker give $ to charity.

You can get a gauge of the investor's interest in the project (vs projects in the similar region) by the raise's % premium, as the qualifiers are the location (eg Quebec), the mineral (eg Lithium) and the project. Here's a few I've watched:

• SYA March 23, $50 mill at 41% premium
• CY5 Aug 23, $11.1 mill at 67.7% premium
• WR1 Oct 23 $34 mill at 74% premium
• WR1 Feb 23 $19 mill at 79% premium
• LLI May 24 $3.3 mill at 77% premium

It's worth noting that donors are not always available and so companies that want to utilise the mechanism might have to act when it is available. It was due end this year, but it got an extension to 31 March 25 in the recent budget.