13.

INCOME TAXES

A reconciliation of income taxes at statutory rates with the reported taxes is as follows for the years ended May 31:

	2016			2015

Loss before income taxes	$	(7,434,215)		$	(10,577,487)
Statutory Canadian corporate tax rate		26.00	%		26.00	%

Income tax recovery at statutory rates	$	(1,932,896)		$	(2,750,147)
Stock-based compensation		214,739			386,281
Effect of tax rate change		-			775,666
Difference in tax rates in other jurisdictions		(422,602)			(647,273)
Tax benefits not realized		2,140,759			2,235,473

Income tax recovery	$	-		$	-

The significant components of the Company’s deferred income tax assets and liabilities are as follows:

	2016		2015

Deferred income tax assets (liabilities)
Mineral properties	$	15,907,000	$	13,942,000
Property and equipment		30,000		19,000
Share issuance costs		45,000		56,000
Non-capital losses available for future periods		6,451,000		5,316,000

		22,433,000		19,333,000
Valuation allowance		(22,433,000)		(19,333,000)

Net deferred tax assets	$	-	$	-

At May 31, 2016, the Company has available non-capital tax losses for Canadian income tax purposes of approximately $7,804,000 and net operating loss for US tax purposes of approximately $13,004,000 available for carry-forward to reduce future years’ taxable income, if not utilized, expiring as follows:

	Canada		United States

2029	$	-	$	1,253,000
2030		-		2,000
2031		379,000		186,000
2032		1,089,000		1,595,000
2033		1,443,000		2,106,000
2034		1,733,000		4,102,000
2035		1,806,000		1,906,000
2036		1,354,000		1,854,000

	$	7,804,000	$	13,004,000

In addition, the Company has available mineral resource expenses that are related to the Company’s exploration activities in the United States of approximately $50,526,000 and in Canada of approximately $333,000, which may be deductible for tax purposes. Future tax benefits, which may arise as a result of applying these deductions to taxable income, have not been recognized in these accounts due to the uncertainty of future taxable income.