Note 16 - Income Taxes

12 Months Ended

Jul. 31, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

16:

         

INCOME TAXES

As at

July 31, 2021,

we had U.S. net operating loss carry-forwards of approximately

$173.0

million and Canadian net operating loss carry-forwards of approximately

$4.9

million in Canadian dollars that

may

be available to reduce future years' taxable income. These carry-forwards will begin to expire, if

not

utilized, commencing in

2023.

In addition, as at

July 31, 2021,

we had U.S. net operating loss totaling

$51.3

million and interest expenses of

$4.9

million subject to IRC section

163

(j) limitation, which will be carried forward indefinitely as a result of the

Tax Cut and Jobs Act

enacted on

December 22, 2017.

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, we have recorded a full valuation allowance for the deferred tax assets relating to these tax loss carry-forwards.

We review the 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 deferred 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,
	2021			2020
Federal income tax provision rate		21.00	%		21.00	%
State income tax provision rate, net of federal income tax effect		0.83	%		0.72	%
Total income tax provision rate		21.83	%		21.72	%

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

	Year Ended July 31,
	2021			2020
Loss before income taxes	$	(14,817,818	)	$	(14,616,067	)
Corporate tax rate		21.83	%		21.72	%
Expected tax recovery		(3,234,730	)		(3,174,610	)
Increase (decrease) resulting from
Foreign tax rate differences		77,454			85,796
Permanent differences		(217,615	)		170,023
Prior year true-up		(270,078	)		117,800
Change in state tax rate		(405,826	)		(553,365	)
Foreign exchange rate differences		(55,666	)		17,456
Other		162,812			71,805
Change in valuation allowance		3,939,641			3,233,427
Tax adjustment from operations		(4,008	)		(31,668	)
Unrealized loss, other comprehensive loss		-			26,117
Deferred tax benefits	$	(4,008	)	$	(5,551	)

We have incurred taxable losses for all years since inception and, accordingly,

no

provision for current income tax has been recorded for the current or any prior fiscal years. During Fiscal

2021

and Fiscal

2020,

we recorded deferred tax benefits of

$4,008

and

$5,551,

respectively.

As at

July 31, 2021,

we re-evaluated the realizability of our tax loss carry-forwards and our conclusion that the realization of these tax loss carry-forwards is

not

likely to occur remains unchanged. As a result, we will continue to record a full valuation allowance for the deferred tax assets relating to the remaining tax loss carry-forwards.

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

	Year Ended July 31,
	2021			2020
United States	$	(14,297,315	)	$	(13,962,287	)
Canada		93,402			53,960
Paraguay		(613,905	)		(707,740	)
	$	(14,817,818	)	$	(14,616,067	)

The Company's deferred tax assets (liabilities) are as follows:

	July 31, 2021			July 31, 2020
Deferred tax assets (liabilities)
Mineral properties	$	1,277,053		$	1,270,292
Exploration costs		6,546,397			6,384,265
Stock option expense		4,623,357			4,594,159
Depreciable property		(1,163,533	)		(1,157,934	)
Inventories		(3,607,772	)		(3,550,814	)
Asset retirement obligations		107,499			62,626
Other		80,834			58,559
Section 163(j) interest expense carry forwards		1,061,263			733,343
Loss carry forwards		49,987,843			46,552,687
		58,912,941			54,947,183
Valuation allowance		(58,912,941	)		(54,973,300	)
Deferred tax assets		-			(26,117	)
Deferred tax assets, other comprehensive loss		-			26,117
Deferred tax liabilities
Mineral properties		(540,992	)		(545,000	)
Net deferred tax liabilities	$	(540,992	)	$	(545,000	)

As the criteria for recognizing deferred 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
Remaining balance		162,246,385
	$	172,951,810

For U.S. federal income tax purposes, a change in ownership under IRC Section

382

has occurred as a result of the Company's acquisitions in prior years. When an ownership change has occurred, the utilization of these losses against future income would be subject to an annual limitation, which would be equal to the value of the acquired 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		764,230
July 31, 2031		1,570,266
Remaining balance		969,872
	$	4,886,333