 Hello everybody, welcome back to Investor Intel. I'm Peter Clausi. Today we have some financial education going on with Peter Nicholson, who's with Foundation WCPD, which stands for Wealth Creation, Protection and Donation. Preservation and Donation. So close. So it's based upon the Flow-Through charity model. Let's break that down into two parts. Flow-Through was invented by the Canadian government to help stimulate investment in Canadian minerals and oil and gas. Tell us a little bit about the history of Just Flow-Through. Right, right. Well, from our digging, we have dated back to 1954, three years older than ours, please. The government of Canada knows that we're blessed with natural resources, not just minerals and oil and gas, but also fish, timber. I mean, we really have been great at rip it and ship it to the world and mainly to America. So they know, though, that especially in the mineral side, very, very high failure rate. One in 10, you don't find anything that exciting on a drill bit. One in 100, you might find something really exciting, but it might have just an average mine and one out of a thousand, you have a super wuzzy bay. So the government, of course, wants us to explore more and they want to shoulder some of that risk by allowing a 100% tax deduction, like an RSV. So whatever money you put in, for example, 100,000, Peter, you got 100,000 off your income. Let's be clear. It's not buying in the market. You have to invest your money directly to the company's treasury who issues securities to you from the company's treasury. Correct. And that's a special share that they call a Flow-Through share that usually becomes a common share at the end of a four-month hold period. Right. And technically, I think they're called Government Incentive Securities. Correct. We call it Flow-Through because it's more fun. So if I have $100,000 at a dollar a share, I have 100,000 shares. That's right. What's my break even point when I sell those shares in the market, assuming the highest marginal tax rate? Yeah, usually you can lose about 40% because there also is some investment tax credits on top if you have a super Flow-Through. So usually you can lose about 40% and still break even. Okay. So now on top of that, we have the charitable Flow-Through, which is what the Foundation specializes in. Correct. Yeah. And that basically started in 2006 when Stephen Harper finished the job that Paul Martin started, which was no cap. And it was, you don't have to pay a capital gain if you donate public shares to your favorite charity. And I immediately knew in 2006, wow, you adjust the cost base of these Flow-Through shares because they come with the 100% tax deduction. The CRA grinds them down to a zero ECB. They're all capital gain. So they became almost founder shares of a public company and would be a perfect tool to donate. So we started to do the risk component immediately. Actually, two days after the change. Sorry to interrupt. So your job is to help find the money. Yes. The reporting issue were in good standing. And then the investor tells you which charity you would like you to donate those shares to. Correct. I mean, what exactly and what we thought to make it easier because these charities are not that sophisticated. We found it fairly quickly. How do we handle a Flow-Through share? How are we going to sell it? So that was the impetus behind starting our own donor advised fund, which is the foundation WCPD, just simply to make it easier. We would take on the liability of getting the valuation correct. And the valuation is simply what we were able to sell the shares for after the four-month hold period for a cash component. And we would then give the charitable receipt to the client. And then the charity would have cash to disperse and do their good works. So that was the risk model. And we started that immediately in 2006. Shortly thereafter, about a year, a year and a half later, our friends at PairTree and Bertoff, Ron Bermbaum and Howard Berglas, said, hmm, why don't we try to de-risk this by finding an institutional investor or someone that likes that particular Flow-Through share company and could buy those shares from one sophisticated accredited investor to another? And thus, that became the charity Flow or the GIC type version of Flows. We simply took a product that was home runs or strikeouts, and that's what venture capital is. And we made it into a GIC where you're not going to get a phenomenal rate of return, but you're not going to lose a phenomenal amount of money either. You're going to be kind of in the middle. So the investor gets government credits on the investor's income tax return. Correct. Direct directions and 15% federal credits if it's a super Flow-Through for individuals. Right. That's right. The reporting issuer gets cash. That's correct. And the charity gets cash. Correct. And the charity would get a discount. So if the shares were dollar, for us to entice a liquidity provider, let's say Eric's Fraud or the AGF Resource Mutual Fund or someone that already likes that stock usually has a position, we would say, would you like to buy all of our clients, our donor shares at 80 cents? They would want 70 cents. Of course, the lower is better for the liquidity provider. The higher is better for the charity. Those deals are negotiated in advance. And usually we have to give a 30% discount is what we're finding is the average to get rid of that stock market risk and transfer it over to the liquidity provider. And now let's talk about the next stage of Flow-Through, which is the critical minerals, special flow-through. Now in the budget announced in April, the government announced that there would be a 30% credit rather than 15, but they haven't yet put the regulations in the Gazette. So until it's in the Gazette, it doesn't really exist. But as proposed, could you walk us through how that would work? Well, I mean, the reading of the budget on April the 7th was the primary target has to be one of these 31 critical minerals. And of course, the biggest of them would be copper, zinc, uranium, lithium, cobalt, scandium, and then they get really, you know, into bigger and bigger alphabetical names. But so as long as that's your primary target, then they should qualify. And this is not unusual. What they put into the budget many times have become, we start acting like it is law. Our concern, though, is what's the fine print going to be like? And look, we've got a fairly good handle. I'm based in Ottawa for a reason. I'm in the tax policy business. And similar to the Super Flow-Throughs, we need the geologist to state for the mining company that this is grassroots exploration. We believe that it'll be the same kind of technique where the geologist will state that the primary target is going after, let's say, copper. Copper, and I'll give you another example of uranium. Copper, as we know, comes in with a lot of gold. So what happens if our primary target is copper, and we end up with a massive gold discovery, but we rode off the deductions as a super sorry, as a critical mineral flow-through. So that's our concern, Peter. We want to make sure that CRA makes it easy for us. I mean, we all have good intentions here. We want to go for the critical mineral. Now, of course, uranium, there is no other minerals around it. We won't get some gold, we won't get anything else. So some silver. So that should be very clean. Yeah. There's another problem we face. A lot of properties in Canada are VMS, which is all metallic and a little bit. It's a ragu of everything. Find me a principal metal in a VMS. Yes. Yeah. These are the things that we need to be crystal clear on because the last thing we want is CRA to come in after the fact and reassess us when we had great good intentions. And when I'm really excited, I mean, I grew up in a political family. Peter, both my father and my grandfather. I'm Peter Nicholson, number three. They were both politicians, elected politicians, and my dad spent a lot of time in the back office. I mean, we are doing the government's good work here. There is no path to zero carbon without these critical minerals. Freeland is backing us, Trudeau is backing us. So please, you know, let's be a good partner, CRA, and not beat us over some technicalities because our primary target is going out to get critical minerals. I agree with you. And that's it for today. Peter Clausey signing off from Investor Intel. Peter Nicholson from Foundation WCPD. Thank you for your time. I learned a lot. My pleasure.