INCOME TAXES

12 Months Ended

Jul. 31, 2015

INCOME TAXES [Text Block]

NOTE 12: INCOME TAXES

At July 31, 2015, the Company had U.S. and Canadian net operating loss carry-forwards of approximately $120.5 million and $6.0 million in Canadian dollars, respectively, that may be available to reduce future years’ taxable income. These carry-forwards will begin to expire, if not utilized, commencing in 2023. Future tax benefits which may arise as a result of these losses have not been recognized in these consolidated financial statements, as their realization has been determined not likely to occur and accordingly, the Company has recorded a full valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.

The Company reviews its valuation allowance requirements on an annual basis based on projected future operations. When circumstances change resulting in a change in management’s judgement about the recoverability of future tax assets, the impact of the change on the valuation allowance will generally be reflected in current income.

A reconciliation of income tax computed at the federal and state statutory tax rates including the Company’s effective tax rate is as follows:

	Year Ended July 31,
	2015	2014	2013
Federal income tax provision rate	35.00%	35.00%	35.00%
State income tax provision rate, net of federal income tax effect	0.32%	0.22%	0.10%
Total income tax provision rate	35.32%	35.22%	35.10%

The actual income tax provisions differ from the expected amounts calculated by applying the combined federal and state corporate income tax rates to the Company’s loss before income taxes. The components of these differences are as follows:

					Year Ended July 31,
		2015			2014			2013
Loss before income taxes	$	(23,397,341	)	$	(26,044,816	)	$	(21,873,844	)
Corporate tax rate		35.32%			35.22%			35.10%
Expected tax recovery		(8,263,941	)		(9,172,984	)		(7,677,719	)
Increase (decrease) resulting from
Foreign tax rate differences		223,980			286,071			211,744
Permanent differences		1,473,225			585,482			193,821
Prior year true-up		50,025			(79,672	)		(522,982	)
State tax rate true-up		(205,285	)		(199,795	)		58,729
Foreign exchange rate differences		144,242			97,565			(2,808	)
Other		62,398			(10,431	)		52,097
Change in valuation allowance		6,474,775			8,419,286			7,684,149
Tax adjustment from operations		(40,581	)		(74,478	)		(2,969	)
Unrealized loss (gain), other comprehensive income		5,168			4,769			(7,784	)
Deferred income tax benefit	$	(35,413	)	$	(69,709	)	$	(10,753	)

The Company has incurred taxable losses for all years since inception and accordingly, no provision for current income taxes has been recorded for the current or any prior fiscal year. During Fiscal 2015, the Company recorded a deferred income tax benefit of $35,413 (Fiscal 2014: $69,709; Fiscal 2013: $10,753) on the consolidated statements of operations.

The components of income (loss) from operations before income taxes, by tax jurisdiction, were as follows:

		Year Ended July 31,
		2015			2014			2013
United States	$	(22,612,974	)	$	(25,009,106	)	$	(21,105,334	)
Canada		158,616			155,408			125,652
Paraguay		(942,983	)		(1,191,118	)		(894,162	)
	$	(23,397,341	)	$	(26,044,816	)	$	(21,873,844	)

The Company’s deferred tax assets (liabilities) were as follows:

		July 31, 2015			July 31, 2014
Deferred tax assets (liabilities)
Mineral property acquisitions	$	1,867,777		$	1,644,916
Exploration costs		10,931,265			11,424,636
Stock option expense		5,771,387			4,924,354
Depreciable property		78,651			(430,745	)
Inventories		(2,530,383	)		(1,143,744	)
Asset retirement obligations		(316,136	)		(429,710	)
Other		333,026			201,876
Loss carry forward		43,802,183			37,271,811
		59,937,770			53,463,394
Valuation allowance		(59,942,938	)		(53,468,163	)
Deferred tax assets		(5,168	)		(4,769	)
Deferred tax assets, other comprehensive loss		5,168			4,769
Deferred tax liabilities
Mineral property acquisition		(676,064	)		(711,477	)
Net deferred tax liabilities	$	(676,064	)	$	(711,477	)

As the criteria for recognizing future income tax assets have not been met due to the uncertainty of realization, a valuation allowance of 100% has been recorded for the current and prior years.

The Company’s U.S. net operating loss carry-forwards expire as follows:

July 31, 2023	$	180,892
July 31, 2024		228,757
July 31, 2025		507,833
July 31, 2026		5,895,221
July 31, 2027		3,892,722
July 31, 2028		9,913,533
July 31, 2029		8,469,032
July 31, 2030		7,319,644
July 31, 2031		14,420,187
July 31, 2032		15,014,013
July 31, 2033		16,332,007
July 31, 2034		21,173,540
July 31, 2035		17,144,355
	$	120,491,736

For U.S. federal income tax purposes, a change in ownership under IRC Section 382 may have occurred in a prior year. If an ownership change has occurred, the utilization of these losses against future income would be subject to an annual limitation. The annual limitation would be equal to the value of the Company immediately prior to the change in ownership multiplied by the IRC Section 382 rate in effect during the month of the change.

The Company’s Canadian net operating loss carry-forwards in Canadian dollars expire as follows:

July 31, 2027	$	183,105
July 31, 2028		629,788
July 31, 2029		769,072
July 31, 2030		1,224,374
July 31, 2031		2,210,551
July 31, 2032		761,843
July 31, 2033		69,854
July 31, 2034		61,769
July 31, 2035		41,359
	$	5,951,715