11. INCOME TAXES

Income taxes

Pretax loss from continuing operations in 2011, 2010, and 2009 are as follows (in thousands):


	2011		2010		2009
Domestic loss before taxes	$	7,053	$	6,817	$	8,431
Foreign loss before taxes		11,714		18,351		12,536

Total loss before taxes	$	18,767	$	25,168	$	20,967

Our income tax benefits consisted of the following (in thousands):


	2011		2010		2009
Current:
United States Federal and State	$	—	$	—	$	(75	)
Foreign		—		—		—

Total current income tax benefits	$	—	$	—	$	(75	)

Reconciliation of statutory tax rates and income tax benefits at those rates to the effective income tax rates and income tax benefits reported in the statement of earnings is as follows (in thousands):


	2011						2010						2009
Tax at US statutory rate		35	%	$	(6,569	)		35	%	$	(8,809	)		35	%	$	(7,341	)
State taxes net of federal benefit					(279	)					(295	)					(347	)
Non-deductible expenses					154						116						205
Change in valuation allowance					2,854						2,722						3,568
Foreign tax rate differences					1						1						1
Tax holiday					3,499						6,100						4,077
Other					340						165						(238	)

				$	—					$	—					$	(75	)

The Company's 60.5% owned subsidiary, GeoCam, is currently in the exploration phase of mining operations in Cameroon. GeoCam is currently under a tax regime under which certain Cameroon tax benefits are available. While in the exploration phase, it's the Company's understanding that GeoCam is under a tax holiday with a 0% tax rate. Also, once GeoCam enters the operational phase and for 12 years thereafter, they will be subject to income taxes at 50% of the statutory rate. The tax holiday had no impact on earnings per share for the year ended December 31, 2011. If the Cameroon tax authorities determine our understanding of the tax holiday is not correct and GeoCam had generated tax assets, these would be offset by a full valuation allowance.

Deferred income taxes reflect the tax consequences on future years of temporary differences between the tax basis of assets and liabilities and their financial reporting basis and are reflected as current or non-current depending on the classification of the asset or liability generating the deferred tax. The deferred tax provision for the periods shown represents the effect of changes in the amounts of temporary differences during those periods.

Significant components of the Company's deferred tax assets are as follows:


	December 31,
	2011			2010			2009
Deferred income tax assets:
Exploration costs	$	3,649		$	2,880		$	2,372
Net operating loss and tax credit carryforwards		12,145			9,735			7,206
Accrued Expenses		69			71			58
Stock-based compensation		—			215			543
Excess of capital loss over capital gain		3			3			3

Deferred income tax asset		15,866			12,904			10,182

Deferred income tax liabilities:
Unrealized foreign currency exchange		(1	)		—			—
Stock based compensation		(107	)		—			—

Deferred income tax liability		(108	)		—			—
Valuation allowance		(15,758	)		(12,904	)		(10,182	)

Net deferred income tax asset (liability)	$	—		$	—		$	—

The Company has net operating losses in the United States, France, and New Caledonia. As a result, these entities have net deferred tax assets. The Company has provided a valuation allowance to reduce these deferred tax assets based on the uncertainty of generating future taxable income.

The net operating losses available as of December 31, 2011 to offset future taxable income in the United States, France, and New Caledonia are $28.2 million, $166, and $1.5 million, respectively. The income tax rate for France is 33.33%, and the income tax rate for New Caledonia is 35%. The net operating losses generated in the U.S. expire beginning in 2020 if not utilized. The net operating losses generated in France expire beginning in 2013. The net operating losses generated in New Caledonia may be carried forward indefinitely. The net operating losses may be subject to Section 382 limitations.

The consolidated financial statements do not reflect a carry-forward benefit of $201 associated with windfall stock option expense which arose in the period from January 1, 2011 to December 31, 2011 [2010—$77, 2009—$7]. In accordance with the Financial Accounting Standard Board's Standard No. 123(R), the Company is not permitted to benefit from stock option expense until it is a cash taxpayer. The Company is not expected to be a cash taxpayer in the United States in the immediate future.

As of December 31, 2011, we had no unrecognized tax benefits and recognized $0 in interest and penalties in income tax expense in accordance with ASC Topic 740.

We are subject to examination by numerous taxing authorities in jurisdictions such as Cameroon, France and the U.S. We are generally no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by taxing authorities for years before 2008.