Note 3 - Income Taxes

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note 3.   Income Taxes

Major components of our income tax benefit (provision) for the three and six months ended June 30, 2019 and 2018 are as follows (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Current:
Domestic	$	(2	)	$	(1	)	$	(2	)	$	(1	)
Foreign		(1,716	)		(2,965	)		(2,793	)		(4,171	)
Total current income tax benefit (provision)		(1,718	)		(2,966	)		(2,795	)		(4,172	)
Deferred:
Domestic		5,456			—			7,933			—
Foreign		7,441			2,539			13,257			2,977
Total deferred income tax benefit (provision)		12,897			2,539			21,190			2,977
Total income tax benefit (provision)	$	11,179		$	(427	)	$	18,395		$	(1,195	)

The current income tax benefits (provisions) for the three and six months ended June 30, 2019 and 2018 vary from the amounts that would have resulted from applying the statutory income tax rate to pre-tax income due primarily to the impact of taxation in foreign jurisdictions and a valuation allowance on the majority of U.S. deferred tax assets.

As of June 30, 2019, we have a net deferred tax liability in the U.S. of $45.4 million, a net deferred tax liability in Canada of $102.9 million, and a net deferred tax asset in Mexico of $3.4 million, for a consolidated worldwide net deferred tax liability of $144.9 million.

With the acquisition of Klondex Mines Ltd. ("Klondex") on July 20, 2018 (see Note 13), we acquired a U.S. consolidated tax group (the "Nevada U.S. Group") that did not join the existing consolidated U.S. tax group of Hecla Mining Company and subsidiaries (“Hecla U.S.”). Under acquisition accounting, we recorded a net deferred tax liability of $59.5 million. For the six months ended June 30, 2019, we recorded a tax benefit of $7.9 million in the Nevada U.S. Group. Net operating losses acquired as of the acquisition date are subject to limitation under Internal Revenue Code Section 382. However, the annual limitation is not expected to have a material impact on our ability to utilize the losses.

For Hecla U.S., we recorded a full valuation allowance in the U.S. in December 2017 as a result of U.S. tax reform. Our circumstances at June 30, 2019 continued to support a full valuation allowance in the U.S. for Hecla U.S.