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INCOME TAXES
 12 Months Ended
Jun. 30, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES

15.INCOME TAXES

 

Domestic and foreign components of loss before income taxes for the years ended June 30, 2024 and 2023 are as follows: 

 

   For the year ended June 30, 
   2024   2023 
Canada  $8,319   $34,606 
United States   3,679    6,006 
United Kingdom   39    - 
Total  $12,037   $40,612 

 

 

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

               
   For the year ended June 30, 
   2024   2023 
Loss before income taxes  $12,037   $40,612 
Combined Canadian federal and provincial statutory income tax rate   27%   27%
Income tax benefit at statutory tax rates   3,250    10,965 
Foreign rate differential   (62)   (131)
Earnout shares liability   1,810    (2,841)
Warrant liability   506    (1,518)
GXII transaction costs   -    (925)
Share based compensation   (747)   (412)
Accretion expense   (1,138)   (496)
Convertible note valuation   (607)   - 
Loss on debt extinguishment   -    (54)
Capital loss rate differential   -    (2)
Change in estimates related to prior years   (160)   14 
Other   5    45 
Change in valuation allowance   (2,718)   (4,341)
Income tax benefit  $139   $304 

 

Income tax benefit for the year ends June 30, 2024 and 2023 were derived solely from our U.S. operations.

 

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, 
   2024   2023 
Deferred tax assets          
Net operating losses available for future periods  $14,177   $11,893 
Mineral interests   9,438    9,477 
Startup and organizational costs   1,987    2,132 
Research and development costs   1,419    1,060 
Share issuance/financing costs   635    446 
Capital losses available for future periods   456    419 
Other   69    36 
Total deferred tax assets   28,181    25,463 
 Valuation allowance   (28,181)   (25,463)
Net deferred tax assets  $-   $- 

 

Changes in the valuation allowance are as follows:

 

   For the year ended June 30, 
   2024   2023 
Valuation allowance, beginning of year  $(25,463)  $(18,948)
Current year additions   (2,718)   (4,341)
Startup and organizational costs acquired   -    (2,174)
Valuation allowance, end of year  $(28,181)  $(25,463)

 

The Company acquired a federal income tax payable of $443 in connection with the GXII Transaction. As a result of a post-transaction loss at ECRC, partial releases of the valuation allowance attributed to the reduction of the acquired federal income tax payable of $139 and $304 were recorded as an income tax benefit in the consolidated statement of operations and comprehensive loss for the year ended June 30, 2024 and 2023, respectively. 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 $28,181 at June 30, 2024, 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 2028 and 2044. As a result of the Tax Cuts and Jobs Act of 2017, U.S. tax losses incurred for our tax years ending on and after June 30, 2019, totaling $3,924, have no expiration.

 

   As of June 30, 
Jurisdiction  2024   2023 
Canada  $47,623   $40,267 
United States   4,905    3,491 
United Kingdom   39    - 
Total  $52,567   $43,758 

 

In addition, the Company has a Canadian capital loss carryforward of $3,388 as of June 30, 2024, which has no expiration date and can be used to offset future capital gains, and U.S. state net operating loss carryforwards of $7,018 as of June 30, 2024 which generally expire between 2031 and 2044.

 

At June 30, 2024 and 2023, we had no undistributed earnings of foreign subsidiaries that would be subject to income tax upon distribution to Canada from a foreign subsidiary. As such, as of June 30, 2024 and 2023, we did not provide for deferred taxes on any such earnings of our foreign subsidiaries.

 

The Company had no unrecognized tax benefits as of June 30, 2024 or 2023. 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, the United Kingdom, and Canada. Certain years remain subject to examination but there are currently no ongoing exams in any taxing jurisdictions.