Saskatchewan resources--a prime wealth creation industry.

It is widely known that Saskatchewan has been blessed with considerable resources: potash, uranium, oil and gas, rare earths, precious metals, base metals to name just a few. These resources provide an ever-increasing base to our overall economy. Mining, oil and gas provide jobs, cash flow and wealth creation. The province of Saskatchewan for example received over $1.1 billion from royalties, taxes and sale of petroleum leases in fiscal 2004/2005. Developing our resources must be one of the central methods of wealth creation in this province.

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Crude oil production in 2004 averaged 422,000 barrels of oil per day. That is over double the production of the early 1990s. There are a number of reasons for the increased production, however, the bottom line is the estimated $1.4 billion of capital investment.

Saskatchewan is the major supplier of uranium to a power-hungry world. Cameco is a world leader in uranium production producing over 20 million pounds of uranium per year. Many companies have staked property in the Athabasca basin to be able to explore for some of the richest uranium in the world.

"Saskatchewan is the Saudi Arabia of potash" says Steven Halabura, PGeo and CEO of Northrim Exploration of Saskatoon. "Saskatchewan has the largest, richest deposits of potash and well over 100 years of resource and reserves. In the late 1960s there were many junior potash companies operating in Saskatchewan. Perhaps we will see that again."

Gary Billingsley is the president and CEO of Great Western Minerals who are developing a rare earth deposit at Hoidas Lake. "We believe that the Hoidas Lake project is an opportunity to develop a new industry in Saskatchewan. The rare earth elements that are expected to be mined at Hoidas Lake are critical for the rapidly growing hybrid vehicle market which you hear so much about today."

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What is less widely known is how to invest in this sector. There are many junior companies that have exploration programs that are focused on Saskatchewan mineral and petroleum resources. You have to do your research and work with a knowledgeable investment advisor.

Flow-through shares can represent an excellent way to participate in this sector and reduce personal investment risk as the tax deductions are flowed through to investors.

Here's how they work. A resource company will expend capital to look for additional resource deposits and incur what is known as Canadian Exploration Expense (CEE). Since most junior resource companies are not taxable they have little benefit in being able to deduct these expenses from their tax payable. Therefore, through a provision in the Canadian Income Tax Act, the company can raise capital by selling equity shares and then flowing through the CEE to the investors.

The investor has a common equity share plus a deduction equal to the CEE. The deduction is generally 100 per cent of the investment and can save the investor up to 44 per cent (your marginal tax rate) of your investment as the income tax payable is reduced.

In the case of Mining Canadian Exploration Expense there are additional tax credits: a 15 per cent Federal Tax Credit and in Saskatchewan there is a 10 per cent Provincial Tax Credit to further reduce income tax payable. As you might expect, there are considerable risks associated with Junior resource companies and are not suitable investments for everyone.

49 North Resource flow through limited partnership is a new prospectus offering that is available only in Saskatchewan. "Saskatchewan is an incredibly resource-rich province but relatively few Saskatchewan investors have participated in this wealth creation," says Tom MacNeill portfolio manager and general partner for 49 North Resource Fund. "49 North is designed to provide investors with a portfolio of promising resource companies that have interests in uranium, diamonds, rare earths, base and precious metals, oil and gas and potentially potash."

There's no question that considerable resource opportunities exist here in our own backyard. Much has been done to demonstrate our capabilities so far, however, this may prove to be just the beginning. Much more is being done to identify new opportunities and a new confidence about our future is emerging.

This is not meant as a solicitation of securities. Securities mentioned are traded on various stock exchanges or are available by prospectus. The views expressed herein are only those of the author and not necessarily those of Union Securities Ltd. Investing in junior resource stocks is inherently risky and is not suitable for all investors. Tax deductions may vary according to issuer or taxpayer circumstances. Obtain a copy of the prospectus and read carefully before investing. Union Securities Ltd. Is a member of the Canadian Investor protection fund.

Alan Cruickshank is the Vice-President of Union Securities Ltd.

He can be reached at 343-5225 or [e-mail].