Note 19 - Income Taxes

12 Months Ended

Jul. 31, 2022

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE 19: INCOME TAXES

As at July 31, 2022, we had U.S. net operating loss carry-forwards of approximately $199.0 million and Canadian net operating loss carry-forwards of approximately $4.5 million in Canadian dollars that may be available to reduce future years’ taxable income.  These carry-forwards will begin to expire, if not utilized, commencing in 2023.  In addition, as at July 31, 2022, we had U.S. net operating loss totaling $95.9 million and interest expenses of $5.5 million subject to IRC section 163(j) limitation, which will be carried forward indefinitely as a result of the Tax Cut and Jobs Act enacted on December 22, 2017.  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, we have recorded a full valuation allowance for the deferred tax assets relating to these tax loss carry-forwards.

We review the 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 deferred 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,
	2022			2021			2020
Federal income tax provision rate		21.00	%		21.00	%		21.00	%
State income tax provision rate, net of federal income tax effect		2.95	%		0.83	%		0.72	%
Total income tax provision rate		23.95	%		21.83	%		21.72	%

The actual income tax provisions differ from the expected amounts calculated by applying the combined federal and state corporate income tax rates to our loss before income taxes.

The components of these differences are as follows:

	Year Ended July 31,
	2022			2021			2020
Income (Loss) before income taxes	$	5,247		$	(14,817	)	$	(14,616	)
Corporate tax rate		23.95	%		21.83	%		21.72	%
Expected tax expense (recovery)		1,257			(3,235	)		(3,175	)
Increase (decrease) resulting from
Foreign tax rate differences		158			77			86
Permanent differences		(326	)		(217	)		170
Prior year true-up		6			(270	)		118
Change in state tax rate		(460	)		(406	)		(553	)
Foreign exchange rate differences		(4	)		(56	)		17
Other		188			163			72
Change in valuation allowance		(824	)		3,940			3,233
Tax adjustment from operations		(5	)		(4	)		(32	)
Unrealized loss, other comprehensive loss		-			-			26
Deferred tax benefits	$	(5	)	$	(4	)	$	(6	)

We have 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 years.

As at July 31, 2022, we re-evaluated the realizability of our tax loss carry-forwards and our conclusion that the realization of these tax loss carry-forwards is not likely to occur remains unchanged. As a result, we will continue to record a full valuation allowance for the deferred tax assets relating to the remaining tax loss carry-forwards.

The components of income (loss) from operations before income taxes, by tax jurisdiction, are as follows:

	Year Ended July 31,
	2022			2020			2019
United States	$	6,054		$	(14,297	)	$	(13,962	)
Canada		268			94			54
Paraguay		(1,075	)		(614	)		(708	)
	$	5,247		$	(14,817	)	$	(14,616	)

The Company’s deferred tax assets (liabilities) are as follows:

	July 31, 2022			July 31, 2021
Deferred tax assets (liabilities)
Mineral properties	$	1,401		$	1,277
Exploration costs		1,875			6,547
Stock option expense		4,651			4,623
Depreciable property		1,078			(1,163	)
Inventories		(3,955	)		(3,608	)
Asset retirement obligations		2,924			107
Other		654			81
Section 163(j) interest expense carry forwards		2,040			1,061
Loss carry forwards		70,162			49,988
		80,830			58,913
Valuation allowance		(80,454	)		(58,913	)
Deferred tax assets		-			-
Deferred tax assets, other comprehensive loss		-			-
Deferred tax liabilities
Mineral properties		(536	)		(541	)
Net deferred tax liabilities	$	(536	)	$	(541	)

As the criteria for recognizing deferred 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	$	1,887
July 31, 2024		2,035
July 31, 2025		2,398
July 31, 2026		8,461
July 31, 2027		6,807
Remaining balance		177,442
	$	199,030

For U.S. federal income tax purposes, a change in ownership under IRC Section 382 has occurred as a result of the Company’s acquisitions in prior years. When an ownership change has occurred, the utilization of these losses against future income would be subject to an annual limitation, which would be equal to the value of the acquired 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
July 31, 2028		630
July 31, 2029		769
July 31, 2030		764
July 31, 2031		1,206
Remaining balance		980
	$	4,532