Income taxes

12 Months Ended

Nov. 30, 2023

Income taxes

Income taxes

9)    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, 2023		November 30, 2022		November 30, 2021
	$		$		$
Combined federal and provincial statutory tax rate	27.00	%	27.00	%	27.00	%
Income tax (recovery) at statutory rate	(4,037)		(6,549)		(5,848)
Difference in foreign tax rates	(118)		(252)		(194)
Non-deductible expenditures	239		374		937
Change in estimates in respect of prior years	15		39		116
Change in valuation allowance	3,901		6,388		4,989
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, 2023 and 2022 are as follows:

		in thousands of dollars
	November 30, 2023	November 30, 2022
	$	$
Deferred income tax assets
Non-capital losses	60,255	57,236
Mineral property interest	4,926	3,061
Mineral property impairment	26	17
Deferred interest	6,251	6,251
Property, plant and equipment	88	86
Lease liability	9	60
Share issuance costs	(5)	6
Other deductible temporary differences	166	181
Total deferred tax assets	71,716	66,898
Valuation allowance	(44,456)	(40,555)
Net deferred income tax assets	27,260	26,343
Deferred income tax liabilities
Investment in Ambler Metals LLC	(27,229)	(26,257)
Right of use asset	(31)	(86)
Deferred income tax liabilities	(27,260)	(26,343)
Net deferred income tax assets	—	—

The Company has loss carry-forwards of approximately $214 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
	$	$
2024	—	569
2025	—	1,530
2026	—	7,871
Thereafter	63,192	140,858
	63,192	150,828

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, 2023 the Company has approximately $30.8 million in operating losses that can be carried forward indefinitely.