What is a Flow-Through Share?
Flow-Through Shares are a tax-advantaged investment in the Canadian natural resource sector. Taxpayers in the highest marginal tax rate can reduce their taxable income and receive refundable or non-refundable tax-credits depending on their province of residency.
Essentially, exploration or mining companies who issue flow-through shares renounce the deductions that would normally be available to the company and provide the deduction to the investor. In order for the investor to benefit from the flow-through shares the company must spend the flow-through dollars on exploration in Canada. This includes most non-development stages of mining including ground sampling, geophysics, drilling, etc.
Flow-through shares are available through some funds or directly in a specific company through an investment advisor. Although the majority of flow-through shares are available towards the end of each year, we attempt to complete flow-through financings throughout the year. This often gives us access to what we consider to be the better flow-through offerings in the companies most likely to provide substantial upside potential. There is also a rush towards the end of each year for flow-through shares resulting in what some may consider less quality issues. Just because an issue is flow-through does not mean it is a suitable investment as the fundamentals of the company should be considered first.
From http://www.flow-throughshares.com/flow-throughexplained.htm