RARE ELEMENT RESOURCES LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars, except share and per share amounts, unless otherwise noted)
81
A reconciliation of expected income tax on net income at statutory rates is as follows:
As of December 31,
As of December 31,
As of December 31,
As of June 30,
2014
2013
2012
2012
Net income (loss)
$ (14,029)
$ (22,246)
$ (15,430)
$ (34,994)
Statutory tax rate
26.00%
25.75%
25.00%
25.00%
Tax expense (recovery) at statutory rate
(3,648)
(5,728)
(3,857)
(8,749)
Foreign tax rates
(928)
(1,372)
(1,695)
(2,911)
Change in tax rates
27
162
(1,067)
(9)
Share issuance costs amortization
(220)
(243)
(91)
300
Stock-based compensation
155
391
(2,617)
2,689
Nondeductible expenses
5
8
10
669
Prior year true-up for loss carryovers
20
851
(231)
(353)
Prior year true-up for property basis adjustments
(63)
(521)
246
(2,876)
Unrecognized benefit of non-capital losses
-
-
-
-
Other
-
-
1
4
Change in valuation allowance
4,652
6,452
9,301
11,236
Income tax expense (recovery)
$ -
$ -
$ -
$ -
We do not have any unrecognized income tax benefits. Should we incur interest and penalties relating to tax
uncertainties, such amounts would be classified as a component of the interest expense and operating expense,
respectively.
Rare Element and its wholly-owned subsidiary, Rare Element Resources Holdings, Ltd., file income tax returns in
the Canadian federal jurisdiction and provincial jurisdictions, and its wholly-owned subsidiary, Rare Element
Resources, Inc., files in the U.S. federal jurisdiction and various state jurisdictions. The years still open for audit are
generally the current year plus the previous three. However, because we have NOLs carrying forward, certain items
attributable to closed tax years are still subject to adjustment by applicable taxing authorities through an adjustment
to tax losses carried forward to open years.
9. COMMITMENTS AND CONTINGENCIES
Restricted cash
On August 28, 2012, the Company received notification from the Wyoming Department of Environmental Quality
(“WDEQ”) that the WDEQ had accepted a surety bond in the amount of $430 for our required reclamation program
for land disturbances that occur during our exploration programs at the Bear Lodge REE Project. Upon acceptance,
the WDEQ released the previously restricted funds back to the Company. The surety bond does not require the
Company to restrict any cash as collateral. As such, the $422 discussed below and previously recorded as restricted
cash was reclassified to cash and cash equivalents during the six-month period ended December 31, 2012.
Potential environmental contingency
Our exploration and development activities are subject to various federal and state laws and regulations governing the
protection of the environment. These laws and regulations are continually changing and generally becoming more
restrictive. The Company conducts its operations so as to protect public health and the environment and believes its
operations are materially in compliance with all applicable laws and regulations. We have made, and expect to make in
the future, expenditures to comply with such laws and regulations. The ultimate amount of reclamation and other
future site-restoration costs to be incurred for existing mining interests is uncertain.
