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Income taxes

12 Months Ended

Nov. 30, 2021

Income taxes

Income taxes

12)    Income taxes

Income tax expense differs from the amount that would result from applying the Canadian federal and provincial income tax rates to earnings before income taxes. These differences result from the following items:

​

​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	in thousands of dollars	​
​	​	November 30, 2021	​	​	November 30, 2020	​	​	November 30, 2019	​
​		$			$			$
Combined federal and provincial statutory tax rate	​	27.00	%	​	27.00	%	​	27.00	%
Income tax (recovery) at statutory rate	​	(5,848)	​	​	43,677	​	​	(7,534)	​
Difference in foreign tax rates	​	(194)	​	​	2,424	​	​	(281)	​
Impact of change in tax rate	​	—	​	​	—	​	​	—	​
Effect of foreign exchange changes	​	—	​	​	(4)	​	​	—	​
Non-deductible expenditures	​	937	​	​	1,009	​	​	4,061	​
Income from option payments applied as proceeds of sale	​	—	​	​	(8,812)	​	​	—	​
Return to provision adjustments	​	116	​	​	(6)	​	​	193	​
Impact of new lease accounting rules (ASC 842 adoption)	​	—	​	​	(28)	​	​	—	​
Expiry of Losses	​	—	​	​	—	​	​	277	​
Change in valuation allowance	​	4,989	​	​	(38,260)	​	​	3,284	​
Income tax recovery (expense)	​	—	​	​	—	​	​	—	​

​

Deferred income taxes arise from temporary differences in the recognition of income and expenses for financial reporting and tax purposes. The significant components of deferred income tax assets and liabilities at November 30, 2021 and 2020 are as follows:

​

​	​	​	​	​	​	​
​	​	​	​	​	in thousands of dollars
​	​	November 30, 2021	​	​	November 30, 2020
​		$			$
Deferred income tax assets	​			​		​
Non-capital losses	​	54,502		​	51,250	​
Mineral property interest	​	447		​	—	​
Deferred interest	​	6,251		​	6,251	​
Property, plant and equipment	​	82		​	88	​
Lease liability	​	112	​	​	153	​
Share issuance costs	​	103		​	267	​
Capital Loss	​	—		​	—	​
Investments	​	—		​	—	​
Other deductible temporary differences	​	197		​	223	​
Total deferred tax assets	​	61,694		​	58,232	​
Valuation allowance	​	(34,249)		​	(29,259)	​
Net deferred income tax assets	​	27,445		​	28,973	​
Deferred income tax liabilities	​			​		​
Investment in Ambler Metals LLC	​	(27,315)	​	​	(28,844)	​
Right of use asset	​	(130)	​	​	(129)	​
Other taxable temporary differences	​	—		​	—	​
Deferred income tax liabilities	​	(27,445)		​	(28,973)	​
Net deferred income tax assets	​	—		​	—	​

​

The Company has loss carry-forwards of approximately $194 million that may be available for tax purposes. Certain of these losses occurred prior to the incorporation of the Company and are accounted for in the financial statements as if they were incurred by the Company. Prior to the NovaGold Arrangement, the Company undertook a tax reorganization in order to preserve the future deductibility of these losses for the Company, subject to the limitations below. Deferred tax assets have been recognized to the extent of future taxable income and the future taxable amounts related to taxable temporary differences for which a deferred tax liability is recognized can be offset. A valuation allowance has been provided against deferred income tax assets where it is not more likely than not that the Company will realize those benefits.

The losses expire as follows in the following jurisdictions:

​

​	​	​	​	​	​	​
​	​	​	​	​	in thousands of dollars	​
​	​	Non-capital losses	​	​	Operating losses	​
​	​	Canada	​	​	United States	​
​		$			$
2022	​	—	​	​	366	​
2023	​	—	​	​	960	​
2024	​	—	​	​	569	​
2025	​	—	​	​	1,530	​
Thereafter	​	51,808	​	​	139,099	​
​	​	51,808	​	​	142,524	​

​

Future use of U.S. loss carry-forwards is subject to certain limitations under provisions of the Internal Revenue Code including limitations subject to Section 382, which relates to a 50% change in control over a three-year period and are further dependent upon the Company attaining profitable operations. An ownership change under Section 382 occurred on January 22, 2009 regarding losses incurred by AGC, of which the attributes of those losses were transferred to Trilogy Metals US with the purchase of the mineral property in October 2011. Therefore, approximately $39.4 million of the U.S. losses above are subject to limitation under Section 382. Accordingly, the Company’s ability to use these losses may be limited. An additional change in control may have occurred after November 30, 2011 which may further limit the availability of losses prior to the date of change in control.

Furthermore, tax reform provisions under Section 172 allow federal net operating losses arising in tax years subsequent to December 31, 2017 to be carried forward indefinitely. As at November 30, 2021 the Company has approximately $21 million in operating losses that can be carried forward indefinitely.

On June 19, 2015, we completed the Sunward acquisition which resulted in an acquisition of control of Sunward Resources ULC under of the Income Tax Act in Canada. Therefore, the Company’s ability to use approximately $15.2 million of losses in Canada may be limited.

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- References

No definition available.

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- 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://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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-Paragraph 17
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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-Topic 740
-SubTopic 10
-Section 50
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-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
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-URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
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-Section S99
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-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

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