What proportion of the $1.5 million will be raised via flow‑through shares versus regular units, and what tax benefits does the FT component provide investors? | RSG (Aug 11, 2025) | Candlesense
RSG

What proportion of the $1.5 million will be raised via flow‑through shares versus regular units, and what tax benefits does the FT component provide investors?

Proportion of the $1.5 million raised via FT shares vs. regular units

Rocky Shore’s private placement is structured to raise up to C$1.5 million through a mix of regular units and flow‑through (FT) shares, but the filing does not disclose the exact split between the two components. In practice, issuers of this size often allocate roughly 30‑50 % of the target to FT shares because they are attractive to Canadian investors seeking tax‑efficient exposure to early‑stage mining. Until Rocky Shore releases a detailed allocation table, traders should assume the split is undisclosed and model scenarios (e.g., 40 % FT / 60 % units) when sizing positions.

Tax benefits of the FT component

FT shares are “flow‑through” instruments under Canada’s Income Tax Act, which means the exploration expenditures associated with each share are transferred to the purchaser. The primary benefits to investors are:

  1. Immediate tax deduction – The purchaser can deduct the full amount of the purchase price (up to the eligible portion of the $1.5 m) from taxable income in the year of acquisition, lowering the effective cost of the investment.
  2. Refundable tax credits – The deduction is often accompanied by a federal refundable tax credit (typically 15 % of the qualifying expenditure) and, depending on the province, additional credits (e.g., Ontario’s 30 % mineral exploration credit). These credits can be used to offset other tax liabilities and are often refundable, providing a direct cash benefit.

Trading implications

Because FT shares deliver an immediate tax shield, they usually trade at a modest premium to regular units, especially when the Canadian tax environment remains favorable. Traders should monitor the allocation announcement: a larger FT component can increase demand from high‑income Canadian investors, potentially supporting the unit price in the short‑term. Conversely, if the allocation leans heavily toward regular units, the price may be more sensitive to pure market sentiment and technical support levels. In the current environment (C$0.05 per unit/FT share, modest volume), a buy‑the‑rumor approach could be justified if you expect the allocation to be FT‑heavy, while a cautious stance is prudent until the precise mix is disclosed. Watch for volume spikes and price action around the press release date (Aug 11) to gauge market appetite.

Other Questions About This News

How will the dilution from issuing up to $1.5 million in new units and FT shares affect existing shareholders? What is the expected price impact on RSG’s stock once the private placement is announced and when it closes? How does the $0.05 per unit pricing compare to Rocky Shore’s recent trading range and to similar financing deals in the sector? Will the proceeds be used for specific projects (e.g., exploration, acquisition) and how might that influence the company’s near‑term cash‑flow and long‑term valuation? What is the timeline for closing the private placement and any associated lock‑up or redemption provisions? How does this financing round affect Rocky Shore’s capital structure and leverage ratios? Are there any covenants or restrictions attached to the private placement that could impact future financing flexibility? What is the market’s perception of the company’s need for capital—does this suggest liquidity stress or growth opportunities? How might the issuance of flow‑through shares impact the company’s eligibility for future Canadian tax incentives or SR&ED credits?