Income tax expense was $10.7 million and $6.8 million for the three months ended September 30, 2011 and 2010, respectively, and $35.8 million and $34.7 million for the nine months ended September 30, 2011 and 2010, respectively.  The Company's income tax provision differs from the U.S. statutory federal income tax rate primarily due to U.S. statutory depletion, domestic production activities deduction, state income taxes (net of federal tax benefit), foreign income tax rate differentials, foreign mining taxes, accrued interest on uncertain tax positions, and interest expense recognition differences for book and tax purposes.

At September 30, 2011 and December 31, 2010, the Company had approximately $10.9 million and $11.1 million, respectively, of gross federal net operating losses (“NOLs”) that expire in various years through 2028. The Company records valuation allowances for portions of its deferred tax assets relating to NOLs that it does not believe are more likely than not to be realized.  As of September 30, 2011 and December 31, 2010, the Company's valuation allowance was $2.3 million in each period. In the future, if the Company determines, based on the existence of sufficient evidence, that it should realize more or less of its deferred tax assets, an adjustment to any existing valuation allowance will be made in the period such determination is made.

Canadian tax authorities have issued tax reassessment for years 2002-2006 which are under audit, totaling approximately $58 million, including interest through September 2011, challenging tax positions claimed by one of the Company's Canadian subsidiaries. The Company has disputed these reassessments and plans to continue to work through the appropriate authorities in Canada to resolve the dispute.  However, there is a reasonable possibility that the ultimate resolution of this dispute and any related disputes for other open tax years will be materially higher or lower than the amounts reserved.  In connection with the dispute, customary local regulations have required us to post security in the form of a $27 million performance bond, approximately $21 million of cash ($9.5 million paid in 2010, $3.7 million paid through September 30, 2011 and the remainder to be paid before the end of 2012) and approximately $10 million for which the form of security is yet to be determined.  The Company will be required by the same local regulations to provide security for additional interest on the disputed amounts and for any future reassessments issued by the Canadian tax authorities in the form of cash, letters of credit, performance bonds, asset liens or other arrangements agreeable with the tax authorities until the dispute is settled.