Words and Phrases - "value"

The taxpayer incurred various pre-feasibility expenses in relation to a large and complex gold-bearing deposit in BC including for engineering services related to the geotechnical stability of rock (relevant to any open pit slope design), modelling of costs of any mine, studies of water management control and of mine waste management and tailings impoundment, underground mine analysis and design, detailed design and operating cost estimates to assess whether the project might potentially be economically viable, geotechnical drilling services and studies regarding access roads and slurry systems.

The “qualified mining exploration expense” definition in s. 25.1(1) of the BC Income Tax Act relevantly referred (like (f) in the Canadian exploration expense definition in ITA s. 66.1(6)) to “the purpose of determining the existence, location, extent or quality of a mineral resource” in B.C. In finding that such expenses so qualified, Maisonville J stated (at para. 146):

An interpretation of the word “quality” that includes economic viability is required by the text, context and purpose of the legislation. Therefore, mineral resource depends not only on the direct physical characteristics of the mineral resource, but also the broad range of factors that inform the economic viability of its extraction. Thus expenses that assist in the determination of the economic viability of a mineral resource are captured under the “quality” term of the purpose test, subject to the limitation that the expenses must be specific to a mineral resource in British Columbia being explored.