"The Company will renounce such CEE with an effective date of no later than December 31, 2014"

This is my understanding of flow through shares; you can correct my if I'm wrong.

This has to do with the company forgoing Canadian Exploration Expenses as those deductions flow through to the buyer of the flow through shares.

Effectively, the buyer of the shares, by being able to claim those expenditures, reduces their effective cost of the shares to Nil. Therefore, when those shares are subsequently sold, the full proceeds becomes a capital gain.

Example:

I buy 100 shares at $3.10 per share; total cost $310.

I get to claim $310 as a Canadian exploration expense. Assuming about 50% tax rate, this will save me $155 in taxes. Now my cost becomes $155.

I then sell my shares for $310. Therefore, since my cost has been reduced to nil, the full amount is a capital gain. This gets taxed at 50%; thereby adding $155 to my taxable income, for which I pay 50% or about $78

In summary: Assuming a 50% tax rate

Out of pocked $310 (initial purchase)

In pocket $155 (tax advantage -- extra refund or less owing)

In pocket $310 (sold shares for same amount)

Out of pocket $78 (taxes owing on capital gain)

Net $78 advantage

I believe the effective cost comes out around 75% of the flow through price (so .75 X $310 = $2.32, which is exactly where we opened this morning)

Two positives from the news that I like:

1) No finder's fees will be paid with respect to the Financing.
2) No warrants were issued with respect to the Financing

This to me demonstrates a strong position for the company to enter such financing. They would not be so fortunate if they waited until they needed the money.

Overall....I like the deal

My opinion of course

Disclosure...I have a few hundred shares and other family members hold about 20,000 shares.