space financing montreal canada space summit 2008
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John A. Chapman Mining - using the flow-through model for space mineral exploration and development financingTRANSCRIPT
Canadian Space Summit November 21 - 23, 2008
Montreal, Quebec, Canada
CREATING A ROBUST CANADIAN SPACE RESEARCH, EXPLORATION & DEVELOPMENT INDUSTRY - THE CANADIAN MINERAL INDUSTRY FLOW-THROUGH SHARE ANALOG
John Chapman, Nadeem Ghafoor, Christian Sallaberger, Frank Teti
Financing of space research, exploration and development in the past has been mainly by governments. To create a vibrant and sustainable space program, the private sector needs to be aggressively involved, building upon the foundation established mainly by the USA and Soviet Union governments. There is an analog that could point the way to rapidly opening space to private enterprise – that is the Canadian flow-through tax incentive for mineral exploration. The flow-through tax credit program in Canada has facilitated the raising of billions of dollars annually by mineral exploration companies, mainly from wealthy individuals, and this has kept Canada in the forefront of world mineral exploration and mine development. In addition, Canada has, through this tax incentive, developed a large base of experts in science, technology, legal, accounting, finance, etc. for mineral exploration and mine development world wide. Statistics from the 2005 Canadian intergovernmental working group on the mineral industry reported:
1. Canada continues to be the foremost destination for exploration capital globally. In 2004, some 20% of the mineral exploration programs planned by the world’s mining companies were expected to be conducted in Canada. As for Canadian companies, they were expected to undertake 43% of all the exploration programs in the world in 2004, a share that is by far the largest of the global mineral exploration market.
2. In 2003, C$12.7 billion in equity financing was raised for mineral exploration and development projects around the world. More than 45% of the new funds were raised by companies listed on Canadian stock exchanges.
These are amazing statistics as Canada represents only 7% of the land area on Earth and only 0.5% of the world’s population. It is important to understand the details of the tax-driven incentive that encourages the exploration and development of Canadian natural resources. The government allows Canadian natural resource companies to issue common shares that entitle the holder to certain tax benefits. These shares are called flow-through shares. Canadian natural resource companies have certain expenses, known as Canadian Exploration Expenses (CEE), which can be deducted 100% for tax purposes by the purchasers of flow-through shares. The company’s tax deductions are “flowed through” to the investor. In addition to benefiting a taxpayer in the current taxation year, these tax deductions can be carried back three years and carried forward seven years. There is also a 15% tax credit available to Canadian investors for "grass roots" mining exploration expenses incurred in Canada. This applies only to exploration for metals and minerals and not for extraction of oil and gas. For investors in every province and territory of Canada, the tax credit is at least 15% as long as the "grass roots" mining exploration occurs somewhere in Canada. In addition, some (but not all) of the provinces and territories have added their own tax credit, ranging from 5% in Ontario to 20% in British Columbia. The provincial tax credit only applies if the investor is resident in the province and the exploration occurs in the same province. In addition to benefiting a taxpayer in the current taxation year, these tax credits can be carried back three years and carried forward 10 years. Just imagine the impact of countries such as Canada and the USA adopting a similar tax-driven incentive for space research, exploration and development – tens of billions of private dollars could be raised annually for space enterprises.
AUTHORS
John A. Chapman, B.Sc., P.Eng., FCIM, Principal J.A. Chapman Mining Services, is a Professional Mining Engineer (British Columbia). He has worked for 42 years in the mining industry in mineral exploration, mine development, operations, and engineering and as an executive. He has been involved in the financing of many high risk mineral exploration and mine development ventures.
Nadeem Ghafoor, Ph.D., Manager of Planetary Exploration at MDA, Canada’s largest space company. His background is in both planetary science and spacecraft engineering. Christian Sallaberger, Ph.D.,Vice President & Director of Space Exploration at MDA. Previously held positions at the European Space Agency and the Canadian Space Agency, where he initiated Canada's Space Exploration program. Frank Teti, P.Eng., MBA, Manager of Autonomous Robotics at MDA. His background includes the development of manned and unmanned systems for space and terrestrial applications.
CREATING A ROBUST CANADIAN SPACE RESEARCH, EXPLORATION & DEVELOPMENT INDUSTRY
THE CANADIAN MINERAL INDUSTRY FLOW‐THROUGH SHARE ANALOG
CANADIAN SPACE SUMMIT NOVEMBER 21 ‐ 23, 2008
MONTREAL, QUEBEC, CANADA
John Chapman, Principal, J.A. Chapman Mining ServicesFrank Teti, Manager of Autonomous Robotics, MDA
Nadeem Ghafoor, Manager of Planetary Exploration, MDAChristian Sallaberger, VP and Director Space Exploration, MDA
What are Flow‐Through Shares?
• The Canadian Income Tax Act allows mineral exploration (high‐risk) to be funded by wealthy individuals and corporations by way of flow‐through shares that “flow” Canadian mineral exploration expenses to the investor from the exploring company
• The investor gets the tax write offs against any income type and the company gives them up –the company, like most early stage ventures, probably has no source of income to write these expenses off against
Proposal• Canadian government can support space exploration in
Canada without need for new funding or budget request• Apply flow through tax credits to space exploration• Create whole new set of world‐class industries and
capabilities in Canada– High tech jobs– Spinoffs– Tax sources– Education
• Canada is a world‐leader in mining • Canada can be a world leader in space exploration
High Risk / High Reward Ventures
• Mineral Exploration is probably the riskiest business on the planet
• At very long odds, from time to time, immense wealth is created by a mineral deposit discovery
• The Canadian government for many years has recognized that having a tax incentive for mineral exploration creates great wealth for the country
• Success is related to the: project, team and financing
Spin‐Off Benefits
• The Canadian flow‐through policy has created a World‐Class base, in Canada, of:– Mineral finance institutions and stock exchanges– A very large base of internationally respected mineral specialists in the fields of:
• Geosciences• Mining • Exploration and Development Financial Analyses• Accounting• Legal• Manufacturing and Supplies
Importance to Canada (2004 data)
• Canada has 7% of land area on Earth and 0.5% of population
• 20% of World mineral exploration conducted in Canada
• Canadian companies conduct 43% of the World’s mineral exploration
• 45% of the World’s $12.7 billion raised for exploration is via companies listed on Canadian stock exchanges
Aerial PhotographyRadiometricsMultispectralHyperspectralSynthetic Aperture RadarMagneticElectromagneticGravity
REMOTE SENSING
KAOLINITE (ASTER)
IRON OXIDE (ASTER)
AIRBORNE MAGNETICS(helicopter)
VISIBLE COLOUR ANOMOLY
SURFACE EXPLORATION
Claim StakingProspectingSampling
SURFACE EXPLORATIONGeophysicsGeochemistrySurveyingTrenchingDrilling
Example of grid drilling to define a mineral deposit
Space Exploration
Degree of Realism
• Any planetary body (Moon, asteroids)• Already there are existing businesses involved (Shackleton, Lunar Transporation Systems, Jamestown Group, etc)
• MDA is involved – Prime contractor for Odyssey Moon to deliver 5 commercial landed mission to moon
– Prime contractor to another commercial customer for planetary mining mission concept development
• Most large space primes are involved and/or reviewing these opportunities
Planetary Resources
• Use on the Moon– Oxygen from Silicon Oxide
• for use by humans and for fuel
– Water (bring up Hydrogen)
– Methane (fuel source)
– Silicon to build solar power arrays
• Return to Earth– He3 (use in nuclear fusion, extremely rare on Earth)
– Iron, copper
– Precious metals (platinum)
Infrastructure Deployment& Assembly Robotics
Infrastructure Deployment& Assembly Robotics
Human Surface MobilityRobotic Human Field Assistance
Human Surface MobilityRobotic Human Field Assistance
Human-Robotic Infrastructure Assembly & Maintenance
Human-Robotic Infrastructure Assembly & Maintenance
Surface Exploitation &
ISRU
Orbital & Surface
Infrastructure
Human Sortie & Sustained Presence
Surface Sampling & Processing
In‐situSurface
Exploration
In‐situ Science & Prospecting
Orbital Science & Prospecting
Orbit & Transport
infrastructure
Sample Acquisition &Transfer Systems
Sample Acquisition &Transfer Systems
Robotic
Surface Mobility
Robotic
Surface Mobility Sample Processing & ISRU Robotics
Sample Processing & ISRU Robotics
Surface & Subsurface Science
Instruments
Surface & Subsurface Science
Instruments
Shuttle & ISS
Robotics
Shuttle & ISS
Robotics
Robotic RemoteSensing
Robotic RemoteSensing
Rendezvous & Docking Robotics
Rendezvous & Docking Robotics
Autonomous Landing & Hazard
Avoidance
Autonomous Landing & Hazard
Avoidance
Robotic Site Characterisation
Robotic Site Characterisation
System Overview
• Lunar & Planetary SAR
– World leading terrestrial SAR heritage: RADARSAT‐1 & ‐2, Next‐generation SAR constellation
– Planetary surface & subsurface mapping
– Regolith & bedrock topography for landing site selection & resource / ISRU
• Spiral‐scanning Lidar Altimetry Instrument (SALLI)
– Efficient generation of lunar surface topography from polar orbiting spacecraft
– High‐resolution mapping & reconnaissance for sortie and outpost site selection
Prospecting – Remote Sensing
Image: CSA
Image: NASA
Precision Landing
Prospecting & Advance Scouting
• Remote / advance prospecting, mappingand resource assessment– Autonomous field geologist– Surface & subsurface
• Pre‐EVA tele‐op / autonomous scout – Site survey (laser + camera)– Operations planning– Hazard assessment– Time, risk conservation
Mobility ‐ Locomotion
• Need to ensure local soil and environmental challenges can be met– Soil/wheel interaction
– Materials
– Dust mitigation
– Power
Mobility ‐ Autonomous Navigation
• Increased rover autonomy – Terrain assessment & global path planning– Obstacle avoidance & local path planning– Visual Motion Estimation & localization
(slip mitigation)
• “Visual odometry” field demonstrations
Credit: MDA
Credit: MDACredit: MDA
• MDA has successfully developed a software and controls solution for an underground autonomous vehicle to improve safety and productivity
Autonomous Vehicles
Credit: MDA
Advanced Vision ‐ Camera Based• Vision‐based scene modeling
– Rapid in‐situ photo‐real scene modeling
• Handheld & vehicle‐mounted options• Technologies being applied in mining,
forensic & security industries– Autonomous site characterization &
prospecting– Survey & contextual imaging (tele‐op
geology)– 3D sample acquisition monitoring (e.g.
drilling) – Cost mapping for autonomous navigation– Data‐storage & bandwidth efficiency
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Triangular Mesh(no texture)
Triangular Mesh(texture added)
Credit: Optech
Credit: CSA
Credit: UNB / Optech
Advanced Vision ‐ Laser based
• Lidar‐based scene modeling– Ultra‐high accuracy
– Range independent
– Lighting and contrast independent
• Applications – Lunar shadowed region scene modelling
– Lunar shadowed region rover navigation
– Geological sample classification
• Optech lidar recently utilized at Haughton Crater with NASA Ames Human‐Robot Site Survey Project
Credit: Optech Credit: Optech / NASA
• MDA‐CSA Exploration Arm:
– Rover / lander mountable
– Low power, low mass, high tip load
– DOF: 4 ‐ 7
– Length: 1 ‐ 4m
– Range of end effectors (scoop shown)
– Regolith simulant tested
Sample Handling & Acquisition
• Lunar & Planetary Exploration coring & drilling systems
• Collaborations– hard‐rock mining partners– ice‐drilling partners
• Proof of principle breadboarding– Low mass, power, down force, rpm & comminution– Rock‐bit interface characterisation– Cuttings transport & core capture
• Drill architecture & control scheme trades
• Future exploration– Autonomous lander & rover deployed systems– Astronaut deployed systems
Sub‐Surface Acquisition
• Sample handling design activities for CSA, ESA & NASA missions (most recently MSR)
• Sample processing, sample transfer and sample containment concept development
• Crusher breadboarding:– Sample reduction investigation
– Low mass, low power
• Delivery to instruments, sample storage, inter‐vehicle transfer, sample return transfer
Image: NASA
Processing and Transfer
ISRU Robotics
• Prime contractor for US (DARPA) Phase A lunar resource utilisation study– Lunar surface prospector
– Mobile regolith processor & orbital delivery
• Sample processing systems– Sample reduction
Return Minerals to Orbit
• 25 yrs of robotic deployment & assembly of large‐scale human space infrastructure on Shuttle & ISS
– Heavy cargo transport & deployment
– Vehicle docking & berthing
Credit: NASA
Infrastructure Deployment& Assembly Robotics
Infrastructure Deployment& Assembly Robotics
Human Surface MobilityRobotic Human Field Assistance
Human Surface MobilityRobotic Human Field Assistance
Human-Robotic Infrastructure Assembly & Maintenance
Human-Robotic Infrastructure Assembly & Maintenance
Surface Exploitation &
ISRU
Orbital & Surface
Infrastructure
Human Sortie & Sustained Presence
Surface Sampling & Processing
In‐situSurface
Exploration
In‐situ Science & Prospecting
Orbital Science & Prospecting
Orbit & Transport
infrastructure
Sample Acquisition &Transfer Systems
Sample Acquisition &Transfer Systems
Robotic
Surface Mobility
Robotic
Surface Mobility Sample Processing & ISRU Robotics
Sample Processing & ISRU Robotics
Surface & Subsurface Science
Instruments
Surface & Subsurface Science
Instruments
Shuttle & ISS
Robotics
Shuttle & ISS
Robotics
Robotic RemoteSensing
Robotic RemoteSensing
Rendezvous & Docking Robotics
Rendezvous & Docking Robotics
Autonomous Landing & Hazard
Avoidance
Autonomous Landing & Hazard
Avoidance
Robotic Site Characterisation
Robotic Site Characterisation
Conclusion
• Robotics systems have supported sustainable human space exploration infrastructure for 30 yrs
• Scouts, field‐scientists and prospectors for planetary have been provided by robotic systems
• Many key technologies exist now that will form the basis of the early human‐robotic activities on the lunar surface
RECOMMENDATION
• Canada has a large and successful mineral exploration science, technology and financial base already established, that could be used as a solid foundation for human lunar and planetary mineral exploration and development
• The Canadian federal government should now extend the mineral flow‐through financing tax incentive to space research, exploration and development
• This tax policy would position Canada as a leader in space research, exploration and development, with all its spin‐off benefits, similar to those accrued from the present Canadian mineral industry tax policy