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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
For the years ended December 31, 2023 and 2022, the Company recorded no Income tax expense (benefit). The annual effective tax rate was Nil for both 2023 and 2022, which was driven primarily by net operating losses for each period and a full valuation allowance was provided for deferred tax assets.
The Company will be subject to mining taxes in Nevada, which will be classified as income taxes as such taxes are based on a percentage of mining profits. The Company did not incur any mining tax expense in 2023 or 2022 due to continued mining losses. The Company is not subject to foreign income taxes as all of the Company’s operations and properties are located within the United States.
The Company’s loss before income taxes was attributable solely to domestic operations in the United States. The components of the Company’s Income tax expense (benefit) were as follows (in thousands):
Year Ended December 31,
20232022
Current
Federal$— $— 
Deferred
Federal(11,428)(17,719)
Change in Valuation Allowance11,428 17,719 
Income tax expense (benefit)$— $— 
For the years ended December 31, 2023 and 2022, the Company incurred no net Income tax expense (benefit).
The following table provides a reconciliation of income taxes computed at the United States federal statutory tax rate of 21% in 2023 and 2022, to the income tax provision (dollars in thousands):
Year Ended December 31,
20232022
Loss before income taxes$(55,026)$(60,828)
United States statutory income tax rate21%21%
Income tax (benefit) at United States statutory income tax rate(11,555)(12,774)
Change in valuation allowance11,428 17,719 
Warrant fair value adjustment(37)33 
Adjustment of prior year income taxes164 (4,978)
Income tax expense (benefit)$— $— 
For the year ended December 31, 2023, the effective tax rate was a result of an increase in the valuation allowance of $11.4 million.
For the year ended December 31, 2022, the effective tax rate was a result of an increase in the valuation allowance of $17.7 million and adjustment to prior year income taxes.
The components of the Company’s deferred tax assets are as follows (in thousands):
Year Ended December 31,
2023(1)
2022
Net operating loss$74,821 $49,765 
Mineral properties48,677 39,322 
Plant, equipment, and mine development1,373 23,219 
Intangible assets17,192 18,698 
Deferred gain on sale of royalty6,266 6,266 
Asset retirement obligation1,674 2,163 
Accrued compensation593 1,258 
Stock-based compensation1,835 536 
Inventories835 221 
Assets available for sale(398)— 
Other31 23 
Valuation allowance(152,899)(141,471)
Total$— $— 
(1)During 2023, the Company determined that it did not timely elect out of Internal Revenue Code (“IRC”) § 168(k) bonus depreciation for 2020 and 2021, and therefore its reported 2023 deferred tax assets related primarily to Net operating loss, Mineral properties, and Plant, equipment, and mine development included adjustments to reflect the proper IRC § 168(k) bonus depreciation.
Based on the weight of evidence available as of both December 31, 2023 and 2022, which included recent operating results, future projections, and historical inability to generate positive operating cash flow, the Company concluded that it was more likely than not that the benefit of its net deferred tax assets would not be realized and, as such, recorded full valuation allowances of $152.9 million and $141.5 million, respectively, against its net deferred tax assets.
The Company had net operating loss carryovers as of December 31, 2023 and 2022, of $356.3 million and $237.5 million, respectively, for federal income tax purposes. The carryforward amount as of December 31, 2023, can be carried forward indefinitely and can be used to offset taxable income and reduce income taxes payable in future periods, subject to limitations under IRC § 382.
IRC § 382 imposes limitations on the use of U.S. federal net operating losses upon a more than 50% change in ownership in the Company within a three-year period. In connection with its at-the-market equity offering, the Company underwent an IRC § 382 ownership change on March 25, 2022. As a result, utilization of $286.5 million of the Company’s net operating
losses and certain unrealized losses are limited on an annual basis. The Company’s annual limitation under IRC § 382 is approximately $1.3 million. If the IRC § 382 annual limitation amount is not fully utilized in a particular tax year, then the unused portion from that tax year is added to the IRC § 382 annual limitation in subsequent years.
As necessary, the Company provides a reserve against the benefits of uncertain tax positions taken in its tax filings that are more likely than not to not be sustained upon examination. Based on the weight of available evidence, the Company does not believe it has taken any uncertain tax positions that require the establishment of a reserve. The Company has not recorded any income tax reserves or related interest, or penalties related to income tax liabilities as of December 31, 2023. The Company’s policy, if it were to have uncertain tax positions, is to recognize interest and/or penalties related to unrecognized tax benefits as part of its Income tax expense (benefit). With limited exception, the Company is no longer subject to U.S. federal income tax audits by taxing authorities for tax years 2017 and prior; however, net operating loss and credit carryforwards from all years are subject to examinations and adjustments for at least three years following the year in which the attributes are used.