Entity information:
NOTE 13:
INCOME TAXES
 
At July 31, 2017, the Company had U.S. and Canadian net operating loss carry-forwards of approximately $160.7 million and $5.8 million in Canadian dollars, respectively, that may be available to reduce future years’ taxable income. These carry-forwards will begin to expire, if not utilized, commencing in 2023. Future tax benefits which may arise as a result of these losses have not been recognized in these consolidated financial statements, as their realization has been determined not likely to occur and accordingly, the Company has recorded a full valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
 
The Company reviews its valuation allowance requirements on an annual basis based on projected future operations. When circumstances change resulting in a change in management’s judgement about the recoverability of future tax assets, the impact of the change on the valuation allowance will generally be reflected in current income.
 
A reconciliation of income tax computed at the federal and state statutory tax rates including the Company’s effective tax rate is as follows:
 
 
 
Year Ended July 31,
 
 
 
2017
 
2016
 
2015
 
Federal income tax provision rate
 
 
35.00
%
 
35.00
%
 
35.00
%
State income tax provision rate, net of federal income tax effect
 
 
0.43
%
 
0.35
%
 
0.32
%
Total income tax provision rate
 
 
35.43
%
 
35.35
%
 
35.32
%
 
The actual income tax provisions differ from the expected amounts calculated by applying the combined federal and state corporate income tax rates to the Company’s loss before income taxes. The components of these differences are as follows:
 
 
 
Year Ended July 31,
 
 
 
2017
 
2016
 
2015
 
Loss before income taxes
 
$
(18,005,411)
 
$
(17,362,111)
 
$
(23,397,341)
 
Corporate tax rate
 
 
35.43
%
 
35.35
%
 
35.32
%
Expected tax recovery
 
 
(6,379,317)
 
 
(6,137,506)
 
 
(8,263,941)
 
Increase (decrease) resulting from
 
 
 
 
 
 
 
 
 
 
Foreign tax rate differences
 
 
185,700
 
 
230,148
 
 
223,980
 
Permanent differences
 
 
446,377
 
 
806,736
 
 
1,473,225
 
Prior year true-up
 
 
(804,822)
 
 
(647,307)
 
 
50,025
 
State tax rate true-up
 
 
(223,770)
 
 
(105,843)
 
 
(205,285)
 
Property acquisition
 
 
(491,798)
 
 
-
 
 
-
 
Foreign exchange rate differences
 
 
(3,248)
 
 
129,015
 
 
144,242
 
Other
 
 
81,660
 
 
59,705
 
 
62,398
 
Change in valuation allowance
 
 
7,149,654
 
 
5,627,606
 
 
6,474,775
 
Tax adjustment from operations
 
 
(39,564)
 
 
(37,446)
 
 
(40,581)
 
Unrealized loss, other comprehensive loss
 
 
5,209
 
 
5,207
 
 
5,168
 
Deferred income tax benefit
 
 
(34,355)
 
$
(32,239)
 
$
(35,413)
 
 
The Company has incurred taxable losses for all years since inception and accordingly, no provision for current income tax has been recorded for the current or any prior fiscal year. During Fiscal 2017, the Company recorded a deferred income tax benefit of $34,355 (Fiscal 2016: $32,239; Fiscal 2015: $35,413) on the consolidated statements of operations.
 
The components of income (loss) from operations before income taxes, by tax jurisdiction, are as follows:
 
 
 
Year Ended July 31,
 
 
 
2017
 
2016
 
2015
 
United States
 
$
(17,303,682)
 
$
(16,488,447)
 
$
(22,612,974)
 
Canada
 
 
45,316
 
 
54,216
 
 
158,616
 
Paraguay
 
$
(747,045)
 
 
(927,880)
 
 
(942,983)
 
 
 
 
(18,005,411)
 
$
(17,362,111)
 
$
(23,397,341)
 
 
The Company’s deferred tax assets (liabilities) are as follows:
 
 
 
July 31, 2017
 
July 31, 2016
 
Deferred tax assets (liabilities)
 
 
 
 
 
 
 
Mineral property acquisitions
 
$
2,533,819
 
$
1,917,796
 
Exploration costs
 
 
10,950,241
 
 
10,648,043
 
Stock option expense
 
 
7,031,732
 
 
7,081,853
 
Depreciable property
 
 
(367,164)
 
 
(66,912)
 
Inventories
 
 
(5,471,486)
 
 
(3,632,178)
 
Asset retirement obligations
 
 
(130,740)
 
 
(220,209)
 
Other
 
 
179,518
 
 
271,468
 
Loss carry forward
 
 
57,989,069
 
 
49,565,476
 
 
 
 
72,714,989
 
 
65,565,337
 
Valuation allowance
 
 
(72,720,198)
 
 
(65,570,544)
 
Deferred tax assets
 
 
(5,209)
 
 
(5,207)
 
Deferred tax assets, other comprehensive loss
 
 
5,209
 
 
5,207
 
 
 
 
 
 
 
 
 
Deferred tax liabilities
 
 
 
 
 
 
 
Mineral property acquisition
 
 
(609,470)
 
 
(643,825)
 
Net deferred tax liabilities
 
$
(609,470)
 
$
(643,825)
 
 
As the criteria for recognizing future income tax assets have not been met due to the uncertainty of realization, a valuation allowance of 100% has been recorded for the current and prior years.
 
The Company’s U.S. net operating loss carry-forwards expire as follows:
 
July 31, 2023
 
$
180,892
 
July 31, 2024
 
 
228,757
 
July 31, 2025
 
 
507,833
 
July 31, 2026
 
 
5,895,221
 
July 31, 2027
 
 
3,892,722
 
July 31, 2028
 
 
9,913,533
 
July 31, 2029
 
 
8,469,032
 
July 31, 2030
 
 
7,319,644
 
July 31, 2031
 
 
14,420,187
 
July 31, 2032
 
 
15,014,013
 
July 31, 2033
 
 
16,332,007
 
July 31, 2034
 
 
21,605,546
 
July 31, 2035
 
 
19,357,683
 
July 31, 2036
 
 
18,490,648
 
July 31, 2037
 
 
19,087,066
 
 
 
$
160,714,784
 
 
For U.S. federal income tax purposes, a change in ownership under IRC Section 382 may have occurred in a prior year. If an ownership change has occurred, the utilization of these losses against future income would be subject to an annual limitation. The annual limitation would be equal to the value of the Company immediately prior to the change in ownership multiplied by the IRC Section 382 rate in effect during the month of the change.
 
The Company’s Canadian net operating loss carry-forwards in Canadian dollars expire as follows:
 
July 31, 2027
 
$
183,105
 
July 31, 2028
 
 
629,788
 
July 31, 2029
 
 
769,072
 
July 31, 2030
 
 
1,035,403
 
July 31, 2031
 
 
2,210,551
 
July 31, 2032
 
 
761,843
 
July 31, 2033
 
 
69,854
 
July 31, 2034
 
 
61,769
 
July 31, 2035
 
 
41,173
 
July 31, 2036
 
 
9,917
 
 
 
$
5,772,475