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INCOME TAXES
 12 Months Ended
Jun. 30, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES

 

15.INCOME TAXES

 

Domestic and foreign components of loss before income taxes for the years ended June 30, 2023, 2022, and 2021 are as follows: 

 

                       
   For the year ended June 30, 
   2023   2022   2021 
Canada  $34,606   $6,918   $3,362 
United States   6,006    3,969    1,462 
Total  $40,612   $10,887   $4,824 

 

 

The following table is a reconciliation of income taxes at statutory rates:

 

                       
   For the year ended June 30, 
   2023   2022   2021 
Loss before income taxes  $40,612   $10,887   $4,824 
Combined federal and provincial statutory income tax rate   27%   27%   27%
Income tax benefit at statutory tax rates   10,965    2,940    1,303 
Foreign rate differential   (131)   (72)   (31)
Earnout shares liability   (2,841)   -    - 
Warrant liability   (1,518)   -    - 
GXII transaction costs   (925)   -    - 
Share based compensation   (412)   (462)   (212)
Accretion expense   (496)   (407)   (158)
Loss on debt extinguishment   (54)   -    - 
Capital loss rate differential   (2)   (38)   182 
Change in estimates related to prior years   14    (274)   739 
Other   45    26    18 
Change in valuation allowance   (4,341)   (1,713)   (1,841)
Income tax benefit  $304   $-   $- 

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of deferred taxes are as follows:

 

           
   As of June 30, 
   2023   2022 
Deferred tax assets          
Net operating losses available for future periods  $11,893   $8,977 
Mineral interests   9,477    9,477 
Startup and organizational costs   2,132    - 
Research and development costs   1,060    - 
Share issuance costs   446    - 
Capital losses available for future periods   419    420 
Other   36    74 
Total deferred tax assets   25,463    18,948 
 Valuation allowance   (25,463)   (18,948)
Net deferred tax assets  $-   $- 

 

During the year ended June 30, 2022, we identified errors in the recognition of capital losses related to realized mineral property write downs and foreign exchange gains and losses in Canada which resulted in changes to capital losses available for future periods and other of $(221) and $(3), respectively. These changes primarily related to adjustments to deferred tax assets recorded during fiscal year 2021. In addition, during the year ended June 30, 2022, we identified an error in the recognition of net operating losses related to disallowed interest expense for the prior year which resulted in a decrease to net operating loss carryforwards of $19. After evaluation and consideration of the full valuation allowance historically applied against total deferred tax assets, we determined that the impact of the adjustments was not material to the previously issued consolidated financial statements, nor are the out of period adjustments material to the estimated results for the year ended June 30, 2022.

 

Changes in the valuation allowance are as follows:

 

               
   For the year ended June 30, 
   2023   2022 
Valuation allowance, beginning of year  $(18,948)  $(17,235)
Current year additions   (4,341)   (1,713)
Startup and organizational costs acquired   (2,174)   - 
Valuation allowance, end of year  $(25,463)  $(18,948)

 

 

 

The Company acquired a federal income tax payable of $406 in connection with the GXII Transaction. As a result of a post-transaction loss at ECRC, a partial release of the valuation allowance attributed to the reduction of the acquired federal income tax payable of $304 has been recorded as an income tax benefit in the consolidated statement of operations and comprehensive loss for the year ended June 30, 2023. The Company establishes a valuation allowance against future income tax assets if, based on available information, it is more likely than not that all of the assets will not be realized. The valuation allowance of $25,463 at June 30, 2023, relates mainly to net operating loss carryforwards in Canada and mineral interests due to deferred exploration expenditures in the United States, where the utilization of such attributes is not more likely than not.

 

The Company has the following cumulative net operating losses for Canadian and U.S. income tax purposes and these carryforwards will generally expire between 2026 and 2043. As a result of the Tax Cuts and Jobs Act of 2017, U.S. tax losses incurred for tax years ending on and after June 30, 2019, totaling $2,510, have no expiration.. 

               
   As of June 30, 
Jurisdiction  2023   2022 
Canada  $40,267   $31,551 
United States   3,491    2,460 
Total  $43,758   $34,011 

 

In addition, the Company has a Canadian capital loss carryforward of $3,375 as of June 30, 2023, which has no expiration date and can be used to offset future capital gains, and U.S. state net operating loss carryforwards of $4,943 as of June 30, 2023 which generally expire between 2031 and 2043.

 

The Company had no unrecognized tax benefits as of June 30, 2023 or 2022. The Company recognizes interest accrued related to unrecognized tax benefits and penalties in its income tax provision. The Company has not recognized any interest or penalties in the fiscal years presented in these consolidated financial statements. The Company is subject to income tax in the U.S. federal jurisdiction and Canada. Certain years remain subject to examination but there are currently no ongoing exams in any taxing jurisdictions.