Income and Mining Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

INCOME AND MINING TAXES

INCOME AND MINING TAXES

The components of Income (loss) before income taxes are below:

	Year Ended December 31,
In thousands	2024		2023		2022
United States	$	50,194	$	(107,021)	$	(107,477)
Foreign	76,156		38,565		44,028
Total	$	126,350	$	(68,456)	$	(63,449)

The components of the consolidated Income and mining tax (expense) benefit from continuing operations are below:

	Year Ended December 31,
In thousands	2024		2023		2022
Current:
United States	$	(145)	$	981	$	(21)
United States — State mining taxes	(11,256)		(7,047)		(2,936)
United States — Foreign withholding tax	(33)		(119)		(300)
Canada	(1,147)		(848)		(305)
Mexico	(63,604)		(30,222)		(29,546)
Other	—		—		—
Deferred:
United States	149		305		215
United States — State mining taxes	(1,778)		(1,076)		5,558
Canada	(376)		—		254
Mexico	10,740		2,870		12,423
Other	—		—		—
Income tax (expense) benefit	$	(67,450)	$	(35,156)	$	(14,658)

The Company’s Income and mining tax benefit (expense) differed from the amounts computed by applying the United States statutory corporate income tax rate for the following reasons:

	Year Ended December 31,
In thousands	2024		2023		2022
Income and mining tax (expense) benefit at statutory rate	$	(28,465)	$	14,376	$	13,249
State tax provision from continuing operations	(149)		4,859		2,871
Change in valuation allowance	727		(36,778)		(36,670)
Percentage depletion	6,974		5,649		3,538
Uncertain tax positions	2		6		655
U.S. and foreign permanent differences	(7,765)		(3,056)		365
Foreign exchange rates	2,405		1,179		(145)
Foreign inflation and indexing	2,322		3,077		2,897
Foreign tax rate differences	(8,923)		(3,911)		(4,994)
Foreign withholding and other taxes	(8,307)		(1,381)		169
Mining taxes	(26,901)		(16,884)		(11,239)
Sale of non-core assets	—		(1,322)		15,447
Enactment of 1% increase in Mexico special mining duty tax	(1,696)		—		—
Other, net	2,326		(970)		(801)
Income and mining tax (expense) benefit	$	(67,450)	$	(35,156)	$	(14,658)

At December 31, 2024 and 2023, the significant components of the Company’s deferred tax assets and liabilities are below:

	Year Ended December 31,
In thousands	2024		2023
Deferred tax liabilities:
Property, plant, and equipment	$	5,529	$	—
	$	5,529	$	—
Deferred tax assets:
Net operating loss carryforwards	$	304,244	$	302,114
Mineral properties	50,824		44,244
Property, plant, and equipment	—		12,068
Mining royalty tax	8,314		7,345
Capital loss carryforwards	16,910		5,167
Asset retirement obligation	49,306		45,155
Accrued expenses	18,117		25,321
Tax credit carryforwards	13,620		14,506
Other long-term assets	30,612		11,566
	$	491,947	$	467,486
Valuation allowance	(490,044)		(479,846)
	$	1,903	$	(12,360)
Net deferred tax liabilities	$	3,626	$	12,360

A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related tax benefits will not be realized. The Company analyzes its deferred tax assets and, if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance. Conversely, if it is determined that the Company will ultimately be more likely than not able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of factors that impact the Company’s ability to realize its deferred tax assets. Based upon this analysis, the Company has recorded valuation allowances as follows:

	Year Ended December 31,
In thousands	2024		2023
U.S.	$	268,119	$	262,059
Canada	200,319		194,727
Mexico	408		723
New Zealand	21,013		22,229
Other	185		108
	$	490,044	$	479,846

The Company has the following tax attribute carryforwards at December 31, 2024, by jurisdiction:

In thousands	U.S.		Canada		Mexico		New Zealand		Other		Total
Regular net operating losses	$	614,873	$	457,894	$	1,913	$	76,041	$	814	$	1,151,535
Expiration years	2025-2037, Indefinite		2028-2044		2029-2035		Indefinite		2025-2029
Capital losses	53,483		26,363		—		—		—		79,846
Foreign tax credits	10,864		—		—		—		—		10,864

As of December 31, 2024, for U.S. income tax purposes, the Company has federal and state net operating loss carryforwards of $614.9 million and $471.4 million, respectively. U.S. net operating loss carryforwards of $313.8 million arising before December 31, 2017 have a 20-year expiration period, the earliest of which could expire in 2025. U.S. net operating loss carryforwards of $301.1 million arising in 2018 and future periods have an indefinite carryforward period. Foreign tax credits expire if unused beginning in 2026.

The utilization of U.S. net operating loss carryforwards, tax credit carryforwards, and recognized built-in losses may be subject to limitation under the rules regarding a change in stock ownership as determined by the Internal Revenue Code and state tax laws. Section 382 of the Internal Revenue Code of 1986, as amended, imposes annual limitations on the utilization of net operating loss carryforwards, tax credit carryforwards, and certain built-in losses upon an ownership change as defined under that Section. Generally, an ownership change may result from transactions that increase the aggregate ownership of certain shareholders in the Company’s stock by more than 50 percentage points over a three-year testing period. If the Company experiences an ownership change, an annual limitation would be imposed on certain of the Company’s tax attributes, including net operating losses and certain other losses, credits, deductions or tax basis. Management has determined that the Company experienced ownership changes during 2002, 2003, 2007, and 2015 for purposes of Section 382. Based on management’s calculations, the Company does not expect any of its U.S. tax attributes to expire unused as a result of the Section 382 annual limitations. However, the annual limitations may impact the timeframe over which the net operating loss carryforwards can be used, potentially impacting cash tax liabilities in a future period. The U.S. federal tax credits and state net operating losses may potentially be limited as well. We continue to maintain a full valuation allowance on our U.S. net deferred tax assets since it is more likely than not that the related tax benefits will not be realized.

The Company may also experience ownership changes in the future as a result of subsequent shifts in our stock ownership. As a result, if the Company earns U.S. federal taxable income, it may be limited in the ability to (1) recognize current deductions on built-in loss assets and (2) offset this income with our pre-change net operating loss carryforwards and other tax credit carryforwards, which may be subject to limitations, potentially resulting in increased future tax liability to us. Under the Tax Cuts and Jobs Act of 2017 (“TCJA”), federal net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such federal net operating losses is limited to 80% of future taxable income.

The Company intends to continue repatriating certain earnings from its Mexican operations and has provided deferred income taxes on the planned distributions. Prior to 2023, the Company had asserted that earnings from its Mexican operations were indefinitely reinvested.

A reconciliation of the beginning and ending amount related to unrecognized tax benefits is below (in thousands):

Unrecognized tax benefits at December 31, 2022	$	4
Gross increase to current period tax positions	$	—
Gross increase to prior period tax positions	$	1
Reductions in unrecognized tax benefits resulting from a lapse of the applicable statute of limitations	$	(3)
Unrecognized tax benefits at December 31, 2023	$	2
Gross increase to current period tax positions	$	—
Gross increase to prior period tax positions	$	—
Reductions in unrecognized tax benefits resulting from a lapse of the applicable statute of limitations	$	(2)
Unrecognized tax benefits at December 31, 2024	$	—

At December 31, 2024, 2023, and 2022, nil, $2 thousand, and $4 thousand, respectively, of these gross unrecognized benefits would, if recognized, decrease the Company’s effective tax rate.

The Company operates in numerous countries around the world and is subject to, and pays annual income taxes under, the various income tax regimes in the countries in which it operates. The Company has historically filed, and continues to file, all required income tax returns and paid the taxes reasonably determined to be due. The tax rules and regulations in many countries are highly complex and subject to interpretation. From time to time, the Company is subject to a review of its historic income tax filings and, in connection with such reviews, disputes can arise with the taxing authorities over the interpretation or application of certain rules to the Company’s business conducted within the country involved.

The Company files income tax returns in various U.S. federal and state jurisdictions, in all identified foreign jurisdictions, and various others. The statute of limitations remains open from 2021 for the U.S. federal jurisdiction, for 2016 and from 2019 for the Mexico federal jurisdiction, and from 2018 for certain other foreign jurisdictions. Our 2016 federal tax return is currently under audit in Mexico. As a result of statutes of limitations that will begin to expire within the next 12 months in various jurisdictions and possible settlement of audit-related issues with taxing authorities in various jurisdictions with respect to which none of these issues are individually significant, the Company believes that there will be no impact on its unrecognized income tax liability in the next 12 months.

The Company classifies interest and penalties associated with uncertain tax positions as a component of income tax expense and recognized interest and penalties of nil, nil, and nil at December 31, 2024, 2023, and 2022, respectively.

In 2021, the Organization for Economic Co-operation and Development (OECD) published Pillar Two Model Rules defining a global minimum tax, which calls for the taxation of large corporations at a minimum rate of 15%. The OECD has since issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar Two global minimum tax. Effective January 1, 2024, a number of countries have proposed or enacted legislation to implement core elements of the Pillar Two proposal. The Company’s worldwide revenues did not exceed the thresholds necessary to be subject to the Pillar Two rules during its year ended December 31, 2024.

After considering 2025 business expansions, including the planned Q1 2025 closing of acquisition of SilverCrest Metals Inc., the Company may fall within the scope of the Pillar Two rules as of January 1, 2025. The Company will continue to monitor developments and evaluate the potential impact on future periods. At this time, because the Company primarily does business in jurisdictions with a tax rate greater than 15%, the Company does not anticipate a material future impact to its Consolidated Financial Statements.