<<<PVG bought deal at $18.50 vs current price around $16. That's a heck of a premium. Could this be a mistake?>>>
It's not a mistake, stock peeker, as flow through shares are almost always sold at a premium to the current pps because the Canadian tax code allows the Canadian purchasers of "flow through" shares to take full tax write offs of the amount they paid.
"Flow-through provides tax incentives for Canadian resident investors who are able to deduct the full amount invested from their income for the year. Companies receiving the investment can only use flow-through funds for “in-the-ground” expense, meaning none can be used for administrative costs.
Only companies with properties in Canada qualify. Excessive flow-though financing places downward pressure on share prices, because there is a strong incentive to blow out flow-through shares at any price, since the Adjusted Cost Base of a flow-through share is essentially $0.
Many investors don’t fully understand that Flow-through financings represent a major disadvantage to other investors in the same company who do not reside in Canada"
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