| INCOME TAXES |
A reconciliation of income taxes at statutory rates with the reported income tax recovery for the years ended December 31 is as follows: | | | | | | | | | | 2025 | | 2024 | | Loss from operations | | $ | (4,895,652) | | $ | (44,139,532) | | Statutory rate | | | 27 | % | | 27 | % | Expected tax recovery | | | (1,321,826) | | | (11,917,674) | | Permanent differences: | | | | | | | | Share-based compensation | | | 1,714,207 | | | 1,426,989 | | Convertible debt | | | (146,264) | | | (1,917,987) | | Other | | | (768) | | | (43,931) | | Tax exempt income from disposal of Argentina assets | | | — | | | (926,659) | | Settlement of flow-through share liability on expenditures (Note 12) | | | (4,662,848) | | | (2,324,790) | | Flow-through share renunciation | | | 4,515,919 | | | 3,918,082 | | Unrecognized deferred tax assets | | | (3,926,750) | | | 9,973,232 | | Recognized deferred tax assets | | | 59,077 | | | (320,061) | | Income tax recovery | | $ | (3,769,253) | | $ | (2,132,799) | |
The tax effects of temporary differences between amounts recorded in the Company’s accounts and the corresponding amounts as calculated for income tax purposes gives rise to the following deferred tax assets and liabilities as at December 31: | | | | | | | | | 2025 | | 2024 | Tax loss carry forwards | | $ | 9,132,055 | | $ | 588,797 | Financing costs | | | — | | | 70,806 | Exploration and evaluation assets | | | (9,194,975) | | | (786,151) | Marketable securities | | | (536,820) | | | (174,328) | Property and equipment | | | (14,394) | | | (68,556) | Capital lease obligations | | | 74,656 | | | 106,765 | Asset retirement obligations | | | 100,502 | | | 3,476 | Deferred tax liabilities | | $ | (438,976) | | $ | (259,191) |
13. | INCOME TAXES (continued) |
As at December 31, 2025, no deferred tax assets are recognized on the following temporary differences as it is not probable that sufficient future taxable profit will be available to realize such assets: | | | | | | December 31, 2025 | Canadian tax loss carry forwards | | $ | 17,600,041 | Australian tax loss carry forwards | | | 2,614,830 | US tax loss carry forwards | | | 38,999,796 | Property and equipment | | | 944,413 | Capital lease obligations | | | 163,473 | Financing costs | | | 4,696,095 | Asset retirement obligations | | | 39,263 |
Movement in the Company’s deferred tax assets (liabilities) in the year is as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | Recognized in | | | | | | | | | Recognized | | Recognized | | other | | | | | | Opening | | in income tax | | in | | comprehensive | | Closing | December 31, 2025 | | balance | | recovery | | shareholders equity | | income | | balance | Deferred tax assets: | | | | | | | | | | | | | | | | Tax loss carry forwards | | $ | 588,797 | | $ | 8,543,258 | | $ | — | | $ | — | | $ | 9,132,055 | Financing costs | | | 70,806 | | | (1,278,564) | | | 1,207,758 | | | — | | | — | Capital lease obligations | | | 106,765 | | | (32,109) | | | — | | | — | | | 74,656 | Deferred tax liabilities: | | | | | | | | | | | | | | | | Exploration and evaluation assets | | | (786,151) | | | (8,408,824) | | | — | | | — | | | (9,194,975) | Marketable securities | | | (174,328) | | | 131,456 | | | — | | | (493,948) | | | (536,820) | Property and equipment | | | (68,556) | | | 54,162 | | | — | | | — | | | (14,394) | Asset retirement obligations | | | 3,476 | | | 97,026 | | | — | | | — | | | 100,502 | | | $ | (259,191) | | $ | (893,595) | | $ | 1,207,758 | | $ | (493,948) | | $ | (438,976) |
13. | INCOME TAXES (continued) |
| | | | | | | | | | | | | | | | | | | | | | | | Recognized | | Recognized in | | | | | | | | | Recognized | | in | | other | | | | | | Opening | | in income tax | | shareholders | | comprehensive | | Closing | December 31, 2024 | | balance | | recovery | | equity | | income | | balance | Deferred tax assets: | | | | | | | | | | | | | | | | Tax loss carry forwards | | $ | 6,241,436 | | $ | (5,652,639) | | $ | — | | $ | — | | $ | 588,797 | Financing costs | | | 303,471 | | | (692,325) | | | 459,660 | | | — | | | 70,806 | Capital lease obligation | | | — | | | 106,765 | | | — | | | — | | | 106,765 | Deferred tax liabilities: | | | | | | | | | | | | | | | | Exploration and evaluation assets | | | (7,142,964) | | | 6,356,813 | | | — | | | — | | | (786,151) | Marketable securities | | | (302,767) | | | (158,888) | | | — | | | 287,327 | | | (174,328) | Property and equipment | | | 86,637 | | | (155,193) | | | — | | | — | | | (68,556) | Asset retirement obligations | | | — | | | 3,476 | | | — | | | — | | | 3,476 | | | $ | (814,187) | | $ | (191,991) | | $ | 459,660 | | $ | 287,327 | | $ | (259,191) |
Deferred income tax recovery for the years ended December 31 comprises: | | | | | | | | | 2025 | | 2024 | Deferred income tax expense related to operations | | $ | (893,595) | | $ | (191,991) | Settlement of flow-through share liability on expenditures | | | 4,662,848 | | | 2,324,790 | Deferred income tax recovery | | $ | 3,769,253 | | $ | 2,132,799 |
The Company has the following tax attributes, which are subject to review, and potential adjustment, by tax authorities: | ● | Canadian non-capital and other losses of $48,030,366 (2024: $35,574,798) which expire in 2035-2045. |
| ● | Australian losses of $4,576,810 (2024: $3,177,586) which do not expire. |
| ● | US losses of $40,100,572 (2024: $49,747,423) which do not expire. |
In 2016, IsoEnergy acquired exploration and evaluation assets from NexGen. At the time of acquisition from NexGen the net book value was $22,773,810, as recorded in NexGen’s financial statements immediately prior to the transfer, compared to the consideration paid by the Company of $29,000,000. The difference has not been recognized as a deferred tax liability pursuant to the “initial recognition exemption” under IFRS 12 - Income Taxes.
|