INCOME TAXES

We recognize deferred tax assets and liabilities based on the difference between the financial reporting and tax basis of assets and liabilities using the enacted tax rates expected to be in effect when the taxes are paid or recovered. We provide a valuation allowance against deferred tax assets for which we do not consider realization of such assets to meet the required “more likely than not” standard.

Our deferred tax assets and liabilities at December 31, 2012, and 2011 include the following components:



	As of December 31,
	2012			2011
Deferred tax assets:
Offering costs	$	120		$	595
Non-capital loss carryovers	222,213			191,182
Capital loss carryovers	741			907
Mine property costs	7,118			7,154
Reclamation costs	9,765			6,638
Unrealized loss on available for sale investments	508			(173		)
Other	9,609			5,061
Valuation allowance	(163,890		)	(131,208		)
Future tax assets	86,184			80,156
Deferred tax liabilities:
Mine property costs	114,595			102,948
Derivatives	4			1,094
Other	—			107
Deferred tax liabilities	114,599			104,149
Net deferred tax liabilities	$	28,415		$	23,993

The composition of our valuation allowance by tax jurisdiction is summarized as follows:



	As at December 31,
	2012		2011
Canada	$	42,832	$	46,254
U.S.	15		228
Ghana	121,043		84,067
Burkina Faso	—		659
Total valuation allowance	$	163,890	$	131,208

The income taxes expense includes the following components:



	For the years ended December 31,
	2012		2011		2010
Current expense:
Canada	$	—	$	—	$	—
Foreign	12,393		2,669		1,487
Deferred tax expense:
Canada	—		—		—
Foreign	4,423		8,315		3,990
Total expense	$	16,816	$	10,984	$	5,477

A reconciliation of expected income tax on net income before minority interest at statutory rates with the actual expenses (recovery) for income taxes is as follows:



	For the years ended December 31,
	2012			2011			2010
Net income /(loss) before tax	$	6,601		$	8,482		$	(9,128	)
Statutory tax rate	25.0		%	26.5		%	28.5		%
Tax expense/(benefit) at statutory rate	$	1,650		$	2,248		$	(2,601	)
Foreign tax rates	(6,193		)	(7,340		)	(7,548		)
Change in tax rates	(22,145		)	3,395			659
Expired loss carryovers	6,144			—			—
Ghana investment allowance	300			(513		)	(761		)
Non-deductible stock option compensation	1,303			884			848
Non-deductible expenses	270			376			543
Nondeductible convertible debenture	6,096			—			—
Loss carryover not previously recognized	627			(1,189		)	2,321
Ghana property basis not previously recognized	(3,523		)	(1,385		)	912
Change in future tax assets due to exchange rates	(445		)	738			(1,864		)
Change in valuation allowance	31,932			10,881			10,907
National Tax Levy	—			2,669			1,488
Other	800			220			573
Income tax expense /(recovery)	$	16,816		$	10,984		$	5,477

During 2012, we recognized $2.7 million unrealized loss on investments in other comprehensive income. Other comprehensive income was credited in the amount of $0.7 million for the tax benefit of the loss, with an offsetting $0.7 million valuation allowance recorded in other comprehensive income.

At December 31, 2012, we had tax pool and loss carryovers expiring as follows:



	Canada		Ghana
2013	$	—	$	46,294
2014	—		—
2015	3,831		—
2016	—		31,233
2026	15,800		—
2027	16,096		—
2028	14,468		—
2029	22,248		—
2030	20,421		—
2031	38,314		—
Indefinite	5,930		459,423
Total	$	137,108	$	536,950

The Ghana tax pool is further limited to taxable income generated at Bogoso.