NOTE 10 INCOME TAXES

In various transactions entered into on February 21, 1992, as well as transactions during 2005, the Company had ownership changes, as that term is defined under the Internal Revenue Code ("IRC") Section 382 (g). As a result, the tax net operating loss carryforwards and the investment tax credit carryforwards are subject to annual limitations under IRC Section 382, following the date of such ownership change. Except as noted below, the Company may receive delayed future benefits from net operating loss carryforwards or investment tax credit carryforwards existing as of the dates of the ownership change. At December 31, 2012 and 2011, the Company estimates those tax loss carry forwards to be $252.9 million and $140.5 million, respectively expiring starting in 2013 and going through 2032.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2012 and 2011 respectively, are presented below:

	2012			2011

	(in thousands)
Deferred tax assets:
Alternative minimum tax (AMT) credit carryforward	$	41		$	41
Net operating loss carryforward		80,975			46,211
Mineral Property		297			2,528
Other temporary differences		9,521			5,330
Capital loss carryforward		241			241

Total gross deferred tax assets		91,075			54,351
Less: valuation allowance		(90,477	)		(53,578	)

Net deferred tax assets	$	598		$	773

Deferred tax liabilities:
Reclamation obligation		416			282
Mineral Property		—			(41	)
Basis in Tonkin Springs Venture LP		(1,014	)		(1,014	)
Acquisition related deferred tax liability		(229,522	)		(78,786	)

Total deferred tax liabilities	$	(230,120	)	$	(79,559	)

Total net deferred tax liability	$	(229,522	)	$	(78,786	)

The Company believes that it is unlikely that the gross deferred tax asset will be realized. Therefore, a valuation allowance has been provided for most of the gross deferred tax assets. The change in valuation allowance of approximately $36.9 million primarily reflects an increase of net operating loss carryforwards. The acquisition related deferred tax liability for 2012 consists of $229.1 million and $0.4 million for mineral properties and fixed assets, respectively.

A reconciliation of the tax provision for 2012, 2011 and 2010 at statutory US Federal and State income tax rates to the actual tax provision recorded in the financial statement is comprised of the following components:

	2012			2011			2010

	(in thousands)
US Federal and State tax recovery at statutory rate	$	(31,925	)	$	(21,098	)	$	(11,895	)
Reconciling items:
Equity pickup in MSC		(7,292	)		—			—
FIN 48 adjustment due to tax years becoming statute barred		—			(180	)		—
Prior year true ups/acquisitions		781			(8,074	)		56
Adjustment for foreign tax rates		3,245			1,342			853
Tax rate changes		(1,869	)		(24	)		2
Imputed interest		135			119			104
Other permanent differences		(3,259	)		8,869			1,621
Unrealized foreign exchange rate (loss)/gain		(21,263	)		(31	)		139
NOL expired		(2,696	)		2,862			746
Valuation allowance		36,899			16,035			6,376

Tax Recovery	$	(27,244	)	$	(180	)	$	(1,998	)

As at December 31, 2012, there are no unrecognized tax benefits.

The Company or its subsidiaries file income tax returns in Canada, the United States, Mexico, and Argentina. These tax returns are subject to examination by local taxation authorities provided the tax years remain open to audit under the relevant statute of limitations. The following summarizes the open tax years by major jurisdiction:

United States: 2009 to 2012
Canada: 2005 to 2012
Mexico: 2008 to 2012
Argentina: 2008 to 2012