First up, thank you for a genuine response. I will endeavour to return the favour.
Topper wrote:For a start UK
ukcanuck wrote:I believe that taxes are due on profits.
ukcanuck wrote:The point was already made that mining is speculative.
ukcanuck wrote:They know the total worth of the ore in that mine and they can calculate world prices
Topper wrote:
How so, as you say, mining is speculative, as as you also note in the quote below, prices fluctuate. I would also add that labour, energy and taxation costs also fluctuate. You only need to look at mines that were profitable several years ago at $500/oz Au but are uneconomic now at $1200/oz Au.
ukcanuck wrote:Obviously, the price one gets on market day fluctuates but the inherent value remains. So whether you sell it today, tomorrow, next week or next year it's never actually a loss.
Unless of course you count a profit you didn't make today as a loss...
If the price fluctuates, how does the inherent value remain? Would it not fluctuate also? What happens when that value drops below mining, exploration and permitting costs.
Okay so when you say fluctuates.. And honestly I don't know the answer to this but do you mean the price of gold actually drops significantly?
Because I remember in 1979 during the Iran revolution the price of gold shot up from 35 dollars an ounce and people were selling their jewelry in a mad scramble.
I also remember that one of the reasons bandied about as to why the price of gold spiked so precipitously was that the US government (read interest groups here, nudge nudge ) was buying up gold in order to drive up the price to destabilize OPEC which beggars a question about a free markets but that's another story...
Anyway, from 35 dollars an ounce in 1979, to 1200 dollars in 2014...
That's a pretty healthy increase not a necessarily a fluctuation.
Of course the costs have changed and that's your point ...
Topper wrote:
Oh that's right, it cost money to explore and permit a mine. Do not forget the success rate of an exploration project becoming a mine? Upwards of $1- $2 billion for a porphyry copper mine these days. No revenue is received from that project during exploration and permitting. Remember you did say it is a speculative business.[/quote ]
Fair point, but can not all of the above be explained by inflation and the decrease in the spending power of the dollar?
The price of everything ( except wages, hello BCTF ) has easily doubled and tripled
What was a great wage at 50,000 a year is uneconomic know
And isn't the speculative nature of any business exactly the responsibility of the investor?
You play you pay?
Topper wrote:
ukcanuck wrote:I believe that when a company secures the mineral rights whether by lease or title or claim they have obtained an inherent value that is a tradable commodity.
and therefore have the right to claim exploration costs against that value. If it is an active mine then they can also claim their operational costs against their profits.
You have lost the track of you speculative belief here. The company or individual prospector is assuming all the risk, not the public.
I don't think I have lost the plot.
Of course all costs must be weighed against profits but I think that the potential, in a mine exactly because every ounce in the ground belongs to all of us and the public needs to see a return as well.
In this case manifestly as taxes or royalties if you prefer, but presently there is an unaccounted for profit by the very fact the deposit exists
Yeah I'm hearing you scream in disgust at this point...
Topper wrote:
ukcanuck wrote:Except we aren't talking about the tax a mining company should pay for what it physically produces. We are talking about why should a mine get to defer tax on the profit they make off of what amounts to the people's savings account.
How are they deferring profit on something that has yet to be extracted at unknown costs and an unknown sale price? You have acknowledged the speculative nature of the business and have acknowledged prices fluctuate, also you have acknowledged that taxes should be paid on profits.
I'm finding it hard to believe that tech would devote such resources as you describe with the heavy lift helicopter
Without knowing what's in the ground and without hard science to back up their estimates.
That's a sellable commodity in of itself and tech must surely being drawing investment and shareholder profits must improve without taking an ounce out of the ground.
And that's what I'm talking about.
You said yourself that mines take options on each other so there is a buying and selling of risk
Much like big banks selling debt to each other that caused the last global collapse.
Topper wrote:
Should governments be required to refund tax revenues on forward paid taxes of the in situ value when operational costs increase or commodity prices decrease?
I don't know, maybe that would be reasonable, people get tax rebates
Topper wrote:
As for the teachers, since their binding arbitration vote was an overwhelming success, I hear they will vote next week on holding negotiations on Mars, but only conditional on the government dropping E.
Haha that's a good one
I'm pretty much spitballing about this mine thing. It's clear something has changed in this province
Another great premier WAC Bennett wouldn't accept that we aren't wealthy enough to build a bridge without tolls
Pretty soon you won't be able to cross the fraser without paying one
We can't limit class sizes and provide resources for all of our kids
We can't raise taxes on the middle class, blobber will explode
We can't touch multinationals so it's got to be business here that can't leave.
The idea that big business gets a free ride because they provide jobs and wealth isn't working out too well
On my way back here I stopped in at Canadian tire to pick up a couple of hockey sticks I could find none made in Canada and they averaged over a hundred dollars each
They are all graphite and Kevlar now so somewhere in Malaysia is a high tech hockey stick factory making sticks that we should be making
When I got home I looked closer at the labels of all my gear... Nothing made in Canada