14.Income Taxes

The Company accounts for income taxes in accordance with the provisions of ASC 740 “Income Taxes” (“ASC 740”) on a tax jurisdictional basis.

The provision for income taxes consists of the following:

	For the Year Ended December 31,
	2014		2013
	(in thousands)
CURRENT TAXES:
United States	$	—	$	—
Other Countries	—		(2,450		)
	$	—	$	(2,450	)
DEFERRED TAXES:
United States	$	—	$	—
Other Countries	—		(47,236		)
	$	—	$	(47,236	)
Total Income Tax Provision (Benefit)	$	—	$	(49,686	)

Income (loss) from operations before income taxes by country consists of the following:

	For the Year Ended December 31,
	2014			2013
	(in thousands)
United States	$	(8,207	)	$	(8,632	)
Other Countries	(10,615		)	(281,434		)
	$	(18,822	)	$	(290,066	)

In 2014 the Company recorded no current or deferred tax expense or benefit, as any tax expense or benefit incurred during the year has been offset against a change in the valuation allowance against prior year net operating losses in each country. In 2013 the Company recorded a $47.2 million deferred tax benefit related primarily to the impairment of long lived assets of the Velardeña Properties, and recorded a current tax benefit of $2.5 million related to the effective settlement of an unrecognized tax benefit in Mexico.

A reconciliation of the provision for income taxes computed at the statutory rate to the provision for income taxes as shown in the consolidated statements of operations and comprehensive income (loss) is summarized below.

	For the Year Ended December 31,
	2014			2013
	(in thousands)
Tax expense (benefit) at US rate of 34%	$	(6,400	)	$	(98,623	)

Other adjustments:
Non-deductibility of Goodwill impairment	—			3,500
Rate differential of other jurisdictions	301			11,047
Effects of foreign earnings	(2,238		)	(6,671		)
Change in valuation allowance	14,127			37,894
Provision to return true-ups	(18,826		)	—
Exchange rate changes on net deferred tax assets	13,605			—
Effect of a change in tax rates	—			3,153
Other	(569		)	14

Income tax provision	$	—		$	(49,686	)

The components of the deferred tax assets and deferred tax liabilities are as follows:

	For the years ended
	December 31,
	2014			2013
	(in thousands)

Deferred tax assets:
Net operating loss carryforwards	$	93,364		$	84,735
Stock-based compensation	1,943			1,691
Property, plant and equipment	13,990			7,838
Other	1,289			1,239
	110,586			95,503
Less: Valuation allowance	(106,764		)	(92,637		)
Total deferred tax assets	3,822			2,866

Deferred tax liabilities:
Property, plant and equipment	(3,436		)	(2,388		)
Other	(386		)	(478		)
Total deferred tax liabilities	(3,822		)	(2,866		)
Net deferred tax asset (liability)	$	—		$	—

In accordance with ASC 740, the Company presents deferred tax assets net of its deferred tax liabilities on a tax jurisdictional basis on its Consolidated Balance Sheets. The net deferred tax liability as of December 31, 2014 and December 31, 2013 was zero.

At December 31, 2014 the Company had net operating loss carryforwards in the U.S. and in certain non-U.S. jurisdictions totaling $312.9 million. Of these, $100.6 million is related to the Velardeña Properties in Mexico and expire in future years through 2024. $23.1 million is related to other Mexico exploration activities and also expire in future years through 2024. $42.2 million net operating losses exist in Luxembourg and have no expiration date, while $95.8 million exist in other non-U.S. countries, which will expire in future years through 2034. In the U.S. there are $50.5 million of net operating loss carryforwards which will expire in future years through 2034. A portion of the U.S. net operating loss carryforwards are subject to limitations under Internal Revenue Code Section 382, relating to a change of control event triggered by the Company’s public offering of its common stock in March 2010.

The valuation allowance offsetting the deferred tax assets of the Company of $106.7 million and $92.6 million at December 31, 2014 and 2013, respectively, relates primarily to the uncertain utilization of certain deferred tax assets, primarily net operating loss carryforwards, in various tax jurisdictions. The Company continually assesses both positive and negative evidence to determine whether it is more likely than not that deferred tax assets can be realized prior to their expiration.

The Company, a Delaware corporation, and its subsidiaries file tax returns in the United States and in various foreign jurisdictions. The tax rules and regulations in these countries are highly complex and subject to interpretation. The Company’s tax returns are subject to examination by the relevant taxing authorities and in connection with such examinations, disputes can arise with the taxing authorities over the interpretation or application of certain tax rules within the country involved. In accordance with ASC 740, the Company identifies and evaluates uncertain tax positions, and recognizes the impact of uncertain tax positions for which there is less than a more-likely-than-not probability of the position being upheld upon review by the relevant taxing authority. Such positions are deemed to be “unrecognized tax benefits” which require additional disclosure and recognition of a liability within the financial statements. If recognized, none of the unrecognized tax benefits would affect the Company’s effective tax rate.

The Company had no unrecognized tax benefits as of December 31, 2014 and 2013. During 2013 an unrecognized tax benefit of $2.5 million was effectively settled with taxing authorities. Below is a reconciliation of the beginning and ending amount of gross unrecognized tax benefits, which excludes any estimated penalties and interest.

	The Year Ended December 31,
	2014			2013
	(in thousands)
Gross unrecognized tax benefits at beginning of period	$	1,668		$	2,841
Increases for tax positions taken during prior years				17
Decreases relating to settlements with taxing authorities				(889		)
Reductions due to lapse of statute of limitations	(505		)	(301		)
Gross unrecognized tax benefits at end of period	$	1,163		$	1,668

Tax years as early as 2009 remain open and are subject to examination in the Company’s principal tax jurisdictions. The Company does not expect a significant change to its net unrecognized tax benefits over the next 12 months. No interest and penalties were recognized in the statement of operations for the year 2014. The total amount of interest and penalties recognized in the statement of operations for 2013 is an income tax benefit of $1.3 million, and there are no interest and penalties recognized in the statement of financial position as of December 31, 2014 and 2013. The Company classifies income tax related interest and penalties as income tax expense.