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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 financing

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Space financing montreal canada space summit 2008

  1. 1. 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 TetiFinancing of space research, exploration and development in the past has been mainly by governments. To createa vibrant and sustainable space program, the private sector needs to be aggressively involved, building upon thefoundation established mainly by the USA and Soviet Union governments. There is an analog that could point theway to rapidly opening space to private enterprise – that is the Canadian flow-through tax incentive for mineralexploration. The flow-through tax credit program in Canada has facilitated the raising of billions of dollarsannually by mineral exploration companies, mainly from wealthy individuals, and this has kept Canada in theforefront 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 explorationand mine development world wide. Statistics from the 2005 Canadian intergovernmental working group on themineral 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’spopulation. It is important to understand the details of the tax-driven incentive that encourages the explorationand development of Canadian natural resources. The government allows Canadian natural resource companies toissue 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 taxdeductions 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% taxcredit available to Canadian investors for "grass roots" mining exploration expenses incurred in Canada. Thisapplies only to exploration for metals and minerals and not for extraction of oil and gas. For investors in everyprovince and territory of Canada, the tax credit is at least 15% as long as the "grass roots" mining explorationoccurs somewhere in Canada. In addition, some (but not all) of the provinces and territories have added their owntax credit, ranging from 5% in Ontario to 20% in British Columbia. The provincial tax credit only applies if theinvestor is resident in the province and the exploration occurs in the same province. In addition to benefiting ataxpayer in the current taxation year, these tax credits can be carried back three years and carried forward 10years. Just imagine the impact of countries such as Canada and the USA adopting a similar tax-driven incentivefor space research, exploration and development – tens of billions of private dollars could be raised annually forspace enterprises. AUTHORSJohn A. Chapman, B.Sc., P.Eng., FCIM, Principal J.A. Chapman Mining Services, is a Professional MiningEngineer (British Columbia). He has worked for 42 years in the mining industry in mineral exploration, minedevelopment, operations, and engineering and as an executive. He has been involved in the financing of manyhigh risk mineral exploration and mine development ventures.
  2. 2. Nadeem Ghafoor, Ph.D., Manager of Planetary Exploration at MDA, Canada’s largest space company. Hisbackground is in both planetary science and spacecraft engineering.Christian Sallaberger, Ph.D.,Vice President & Director of Space Exploration at MDA. Previously held positions atthe European Space Agency and the Canadian Space Agency, where he initiated Canadas Space Explorationprogram.Frank Teti, P.Eng., MBA, Manager of Autonomous Robotics at MDA. His background includes the developmentof manned and unmanned systems for space and terrestrial applications.
  3. 3. CREATING A ROBUST CANADIAN SPACE RESEARCH,  EXPLORATION & DEVELOPMENT INDUSTRYTHE CANADIAN MINERAL INDUSTRY FLOW‐THROUGH  SHARE ANALOG John Chapman, Principal, J.A. Chapman Mining Services Frank Teti, Manager of Autonomous Robotics, MDA Nadeem Ghafoor, Manager of Planetary Exploration, MDA Christian Sallaberger, VP and Director Space Exploration, MDA CANADIAN SPACE SUMMIT  NOVEMBER 21 ‐ 23, 2008 MONTREAL, QUEBEC, CANADA 
  4. 4. 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
  5. 5. 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
  6. 6. 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
  7. 7. 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
  8. 8. 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
  9. 9. REMOTE SENSINGAerial PhotographyRadiometricsMultispectralHyperspectralSynthetic Aperture RadarMagneticElectromagneticGravity
  10. 10. KAOLINITE (ASTER)
  11. 11. IRON OXIDE (ASTER)
  12. 12. AIRBORNE MAGNETICS (helicopter)
  13. 13. VISIBLE COLOUR ANOMOLY
  14. 14. SURFACE EXPLORATIONClaim StakingProspectingSampling
  15. 15. SURFACE EXPLORATION Geophysics Geochemistry Surveying Trenching Drilling
  16. 16. Example of grid drilling to define a mineral deposit
  17. 17. Space Exploration
  18. 18. 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
  19. 19. 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)
  20. 20. System Overview Orbit &  Orbital  In‐situ  In‐situ Surface  Orbital &  Human Sortie &  Surface Sampling  Transport  Science &  Science &  Surface  Exploitation &  Surface  Sustained  & Processinginfrastructure Prospecting Prospecting Exploration ISRU Infrastructure Presence Robotic Site Robotic Site Characterisation Characterisation Robotic Remote Robotic Remote Sensing Sensing Shuttle & ISS  Shuttle & ISS  Rendezvous Rendezvous Robotics Robotics & Docking & Docking Autonomous Surface & Surface & Autonomous Robotics Robotics Landing & Hazard Landing & Hazard Subsurface Science Subsurface Science Avoidance Avoidance Instruments Instruments Robotic  Robotic  Sample Acquisition & Sample Acquisition & Surface Mobility Surface Mobility Sample Processing Sample Processing Transfer Systems Transfer Systems & ISRU Robotics & ISRU Robotics Human Surface Mobility Human Surface Mobility Infrastructure Deployment Infrastructure Deployment Human-Robotic Infrastructure Human-Robotic Infrastructure Robotic Human Field Assistance Robotic Human Field Assistance & Assembly Robotics & Assembly Robotics Assembly & Maintenance Assembly & Maintenance
  21. 21. Prospecting – Remote Sensing• 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
  22. 22. Precision Landing Image: CSA Image: NASA
  23. 23. Prospecting & Advance Scouting• Remote / advance prospecting,  mapping and resource assessment – Autonomous field geologist – Surface & subsurface• Pre‐EVA tele‐op / autonomous scout  – Site survey (laser + camera) – Operations planning – Hazard assessment – Time, risk conservation
  24. 24. Mobility ‐ Locomotion• Need to ensure local soil and  environmental challenges can be  met – Soil/wheel interaction – Materials – Dust mitigation – Power
  25. 25. Mobility ‐ Autonomous Navigation Credit: MDA Credit: MDA• 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
  26. 26. Autonomous Vehicles• MDA has successfully developed a software and controls solution for an underground autonomous vehicle to improve safety and productivity
  27. 27. 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)  Credit: MDA – Cost mapping for autonomous navigation – Data‐storage & bandwidth efficiency Triangular Mesh QuickTime™ and a QuickTime™ and a (no texture) YUV420 codec decompressor are needed to see this picture. YUV420 codec decompressor are needed to see this picture. Triangular Mesh (texture added)
  28. 28. 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 Credit: Optech• Optech lidar recently utilized at Haughton Crater with  NASA Ames Human‐Robot Site Survey Project Credit: CSA Credit: Optech Credit: UNB / Optech Credit: Optech / NASA
  29. 29. Sample Handling & Acquisition• 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
  30. 30. Sub‐Surface 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
  31. 31. Processing and Transfer• 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
  32. 32. 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
  33. 33. 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
  34. 34. Orbit &  Orbital  In‐situ  In‐situ Surface  Orbital &  Human Sortie &  Surface Sampling  Transport  Science &  Science &  Surface  Exploitation &  Surface  Sustained  & Processinginfrastructure Prospecting Prospecting Exploration ISRU Infrastructure Presence Robotic Site Robotic Site Characterisation Characterisation Robotic Remote Robotic Remote Sensing Sensing Shuttle & ISS  Shuttle & ISS  Rendezvous Rendezvous Robotics Robotics & Docking & Docking Autonomous Surface & Surface & Autonomous Robotics Robotics Landing & Hazard Landing & Hazard Subsurface Science Subsurface Science Avoidance Avoidance Instruments Instruments Robotic  Robotic  Sample Acquisition & Sample Acquisition & Surface Mobility Surface Mobility Sample Processing Sample Processing Transfer Systems Transfer Systems & ISRU Robotics & ISRU Robotics Human Surface Mobility Human Surface Mobility Infrastructure Deployment Infrastructure Deployment Human-Robotic Infrastructure Human-Robotic Infrastructure Robotic Human Field Assistance Robotic Human Field Assistance & Assembly Robotics & Assembly Robotics Assembly & Maintenance Assembly & Maintenance
  35. 35. 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
  36. 36. 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

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