XML 38 R16.htm IDEA: XBRL DOCUMENT
v3.10.0.1

INCOME AND MINING TAXES | 12 Months Ended
--- | ---
Dec. 31, 2018
INCOME AND MINING TAXES. |
INCOME AND MINING TAXES | NOTE 9 INCOME AND MINING TAXES The US Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. The Act reduced the US federal corporate tax rate from 35% to 21%, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. In 2017, the Company re-measured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. The amount recorded in 2017 relating to the re-measurement of the deferred tax balance was a reduction of $4.2 million to deferred tax liabilities, and a reduction of $23.7 million to the deferred tax assets, which have a valuation allowance provided against them. As at December 31, 2018, the Company completed the accounting for the transition tax corresponding to the 2017 tax year. Proposed regulations under Section 965 of the Internal Revenue Code, issued during the third quarter of 2018, limited the use of certain foreign tax credits which would have redeemed the one-time transition tax. The Company’s foreign tax credits originating from MSC are captured under the proposed regulation changes. As a result of the proposed changes, the Company reported in its 2017 US tax return, $13.6 million of taxable income. The taxable income was offset by the use of net-operating losses. Effective January 1, 2018, the Act also subjects a US shareholder to tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. The Company has elected to account for GILTI as a tax expense in the year the tax is incurred, as a period expense only. On December 29, 2017 the Senate of Argentina passed a significant tax reform to the country’s tax system. The law changes the corporate tax rate from 35% to 25% by 2020. As a result of the tax reform, the Company recorded a $3.9 million reduction to deferred tax liabilities on certain Argentine assets acquired in the 2012 Minera Andes acquisition and a reduction of $12.4 million to our deferred tax assets, which have a full valuation allowance provided against them. The Company’s deferred income and mining tax benefit consisted of:
|  | 2018 |  | 2017 |  | 2016
United States |  | $ | 2,185 |  | $ | 10,349 |  | $ | 515
Foreign |  |  | 585 |  |  | 5,020 |  |  | 3,234
Deferred tax benefit |  | $ | 2,770 |  | $ | 15,369 |  | $ | 3,749
The Company’s net (loss) income before income and mining tax consisted of:
|  | 2018 |  | 2017 |  | 2016
United States |  | $ | (27,001) |  | $ | (19,913) |  | $ | (13,959)
Foreign |  |  | (20,639) |  |  | (6,090) |  |  | 31,265
Net (loss) income before tax |  | $ | (47,640) |  | $ | (26,003) |  | $ | 17,306
A reconciliation of the tax provision for 2018, 2017 and 2016 at statutory U.S. Federal and State income tax rates to the actual tax provision recorded in the financial statements is computed as follows:
Expected tax recovery at |  | 2018 |  | 2017 |  | 2016 |
(Loss) income before income and mining taxes |  | $ | (47,640) |  | $ | (26,003) |  | $ | 17,306 |
Statutory tax rate |  |  | 21% |  |  | 35% |  |  | 34% |
US Federal and State tax (recovery) expense at statutory rate |  |  | (10,004) |  |  | (9,101) |  |  | 5,884 |
Reconciling items: |  |  |  |  |  |  |  |  |  |
Equity pickup in MSC |  |  | 2,966 |  |  | (16) |  |  | (4,533) |
Deferred foreign income inclusion |  |  | 5,963 |  |  | 21,002 |  |  | — |
Realized flow-through expenditures |  |  | 2,100 |  |  | — |  |  | — |
Realized flow-through premium |  |  | (1,675) |  |  | — |  |  | — |
Foreign tax credits |  |  | — |  |  | (16,628) |  |  | — |
Tax rate changes |  |  | — |  |  | 28,048 |  |  | — |
Adjustment for foreign tax rates |  |  | 40 |  |  | 115 |  |  | (501) |
Other permanent differences |  |  | 4,419 |  |  | (1,761) |  |  | 818 |
Unrealized foreign exchange rate (loss)/gain |  |  | (6,935) |  |  | 2,469 |  |  | 5,972 |
NOL expires and revisions |  |  | (120) |  |  | (2,806) |  |  | (242) |
Valuation allowance |  |  | 476 |  |  | (36,691) |  |  | (11,147) |
Tax benefit |  | $ | (2,770) |  | $ | (15,369) |  | $ | (3,749) |
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as at December 31, 2018 and 2017 respectively are presented below:
|  | 2018 |  | 2017 |
Deferred tax assets: |  |  |  |  |  |  |
Net operating loss carryforward |  | $ | 55,515 |  | $ | 72,078 |
Mineral Properties |  |  | 62,345 |  |  | 59,905 |
Other temporary differences |  |  | 15,198 |  |  | 862 |
Total gross deferred tax assets |  |  | 133,058 |  |  | 132,845 |
Less: valuation allowance |  |  | (124,153) |  |  | (123,648) |
Net deferred tax assets |  | $ | 8,905 |  | $ | 9,197 |
Deferred tax liabilities: |  |  |  |  |  |  |
Acquired mineral property interests |  |  | (15,331) |  |  | (17,627) |
Total deferred tax liabilities |  | $ | (15,331) |  | $ | (17,627) |
Total net deferred tax liability |  | $ | (6,426) |  | $ | (8,430) |
The Company reviews the measurement of its deferred tax assets at each balance sheet date. On the basis of available information at December 31, 2018, the Company has provided a valuation allowance for certain of its deferred assets where the Company believes it is more likely than not that some portion or all of such assets will not be realized. The change in valuation allowance of approximately $0.5 million primarily reflects an increase in valuation allowance on certain mineral properties in Mexico associated with the cessation of mining activities. As at December 31, 2017 the Company recognized a deferred tax asset to the extent of the deferred tax liability recognized on the acquired mineral property interests associated with the Gold Bar project, in the amount of $6.4 million. As a result of Gold Bar being in construction, the Company is now able to reasonably estimate when the temporary difference associated with the deferred tax liability will reverse. The reversal is expected to occur over the same time period as existing tax assets, which have previously been provided for by the valuation allowance. The table below summarizes changes to the valuation allowance:
For the year ended December 31, |  | Balance at beginning of period |  | Additions(a) |  | Deductions(b) |  | Balance at end of period
2018 |  | $ | 123,648 |  | $ | 12,232 |  | $ | (11,727) |  | $ | 124,153
2017 |  |  | 111,621 |  |  | 51,220 |  |  | (39,193) |  |  | 123,648
2016 |  |  | 122,768 |  |  | 1,430 |  |  | (12,577) |  |  | 111,621
| (a) |  | The additions to valuation allowance mainly results from the Company and its subsidiaries incurring losses and exploration expenses for tax purposes which do not meet the more-likely-than-not criterion for recognition of deferred tax assets.
| (b) |  | The reductions to valuation allowance mainly results from release of valuation allowance, expiration of the Company’s tax attributes and foreign exchange reductions of tax attributes in Canada, Mexico and Argentina.
As at December 31, 2018 and 2017, the Company did not have any income-tax related accrued interest and tax penalties. The following table summarizes the Company’s losses that can be applied against future taxable profit:
Country |  | Type of Loss |  | Amount |  | Expiry Period
United States(a) |  | Net-operating losses |  | $ | 135,348 |  | 2019-2038
Mexico |  | Net-operating losses |  |  | 29,749 |  | 2019-2024
Canada(a) |  | Net-operating losses |  |  | 38,728 |  | 2019-2038
Argentina(a) |  | Net-operating losses |  |  | 34,001 |  | 2019-2023
| (a) |  | The losses in the United States, Canada, and Argentina are part of multiple consolidating groups, and therefore, may be restricted in use to specific projects.
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: 2015 to 2018 Canada: 2011 to 2018 Mexico: 2014 to 2018 Argentina: 2014 to 2018

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration