Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Feb. 24, 2016 | Jun. 30, 2015 | |
Document and Entity Information | |||
Entity Registrant Name | Golden Minerals Co | ||
Entity Central Index Key | 1,011,509 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 13,188,091 | ||
Entity Common Stock, Shares Outstanding | 76,690,333 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash and cash equivalents (Note 5) | $ 4,077 | $ 8,579 |
Short-term investments (Note 5) | 72 | |
Trade receivables | 546 | |
Inventories (Note 7) | 330 | 1,497 |
Value added tax receivable (Note 8) | 400 | 1,316 |
Prepaid expenses and other assets (Note 6) | 451 | 835 |
Total current assets | 5,876 | 12,227 |
Property, plant and equipment, net (Note 9) | 11,125 | 29,031 |
Total assets | 17,001 | 41,258 |
Current liabilities | ||
Accounts payable and other accrued liabilities (Note 10) | 1,144 | 1,639 |
Convertible note payable (Note 11) | 3,702 | |
Derivative liability (Note 11) | 488 | |
Deferred revenue (Note 17) | 500 | |
Other current liabilities (Note 13) | 556 | 2,551 |
Total current liabilities | 6,390 | 4,190 |
Asset retirement and reclamation liabilities (Note 12) | 2,546 | 2,685 |
Warrant liability (Note 14) | 210 | 1,554 |
Other long-term liabilities (Note 13) | 84 | 95 |
Total liabilities | $ 9,230 | $ 8,524 |
Commitments and contingencies (Note 21) | ||
Equity (Note 16) | ||
Common stock, $.01 par value, 100,000,000 shares authorized, 100,000,000 shares authorized; 53,335,333 and 53,162,833 shares issued and outstanding, respectively | $ 534 | $ 532 |
Additional paid in capital | 484,742 | 484,197 |
Accumulated deficit | (477,378) | (451,995) |
Accumulated other comprehensive income loss | (127) | |
Shareholders' equity | 7,771 | 32,734 |
Total liabilities and equity | $ 17,001 | $ 41,258 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 53,335,333 | 53,162,833 |
Common stock, shares outstanding | 53,335,333 | 53,162,833 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue: | ||
Sale of metals (Note 17) | $ 7,418 | $ 235 |
Oxide plant lease (Note 17) | 653 | |
Total revenues | 8,071 | 235 |
Costs and expenses: | ||
Costs of metal sold (exclusive of depreciation shown below) (Note 17) | (9,866) | (1,655) |
Oxide plant lease costs (Note 17) | (199) | |
Exploration expense | (3,634) | (5,528) |
El Quevar project expense | (1,042) | (1,597) |
Velardena project expense | (119) | (3,126) |
Velardena shutdown and care & maintenance costs | (1,228) | (2,457) |
Administrative expense | (4,242) | (4,642) |
Stock based compensation | (453) | (926) |
Reclamation expense | (256) | (199) |
Impairment of long lived assets (Note 3) | (13,181) | |
Other Operating Income Net | 471 | 691 |
Depreciation, depletion and amortization | (4,480) | (3,128) |
Total costs and expenses | (38,229) | (22,567) |
Loss from operations | (30,158) | (22,332) |
Other income and (expenses): | ||
Interest expense (Note 11) | (126) | |
Interest and other income (Note 18) | 3,083 | 1,708 |
Warrant derivative income (Note 19) | 1,344 | 1,693 |
Derivative income (Note 19) | 553 | |
Gain (loss) on foreign currency | (79) | 108 |
Other total income, net | 4,775 | 3,509 |
Loss before income taxes | (25,383) | (18,823) |
Net loss | (25,383) | (18,823) |
Other comprehensive loss: | ||
Unrealized loss on securities, net of tax | (127) | |
Comprehensive loss | $ (25,510) | $ (18,823) |
Net loss per common share - basic (1) | ||
Loss (in dollars per share) | $ (0.48) | $ (0.41) |
Weighted average Common Stock outstanding - basic (1) (in shares) | 52,972,352 | 45,862,419 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive income (loss) | Total |
Balance at Dec. 31, 2013 | $ 435 | $ 494,647 | $ (448,626) | $ 46,456 | |
Balance (in shares) at Dec. 31, 2013 | 43,530,833 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Stock compensation accrued | $ 2 | 924 | 926 | ||
Stock compensation accrued (in shares) | 140,000 | ||||
KELTIP mark-to-market | 12 | 12 | |||
Registered offering stock units, net (Note 16) | $ 37 | 1,502 | 1,539 | ||
Registered offering stock units, net (Note 16) (shares) | 3,692,000 | ||||
Private placements stock units, net (Note 16) | $ 58 | 2,729 | 2,787 | ||
Private placement stock units, net (Note 16) (shares) | 5,800,000 | ||||
Reclassification to reflect warrant liability (Note 16) | (15,617) | 15,454 | (163) | ||
Net loss | (18,823) | (18,823) | |||
Balance at Dec. 31, 2014 | $ 532 | 484,197 | (451,995) | 32,734 | |
Balance (in shares) at Dec. 31, 2014 | 53,162,833 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Stock compensation accrued | 453 | 453 | |||
KELTIP mark-to-market | 40 | 40 | |||
KELTIP shares issued | $ 2 | 52 | 54 | ||
KELTIP shares issued ( in shares) | 172,500 | ||||
Unrealized loss on marketable equity securities, net of tax | $ (127) | (127) | |||
Net loss | (25,383) | (25,383) | |||
Balance at Dec. 31, 2015 | $ 534 | $ 484,742 | $ (477,378) | $ (127) | $ 7,771 |
Balance (in shares) at Dec. 31, 2015 | 53,335,333 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | ||
Net cash used in operating activities (Note 20) | $ (9,935) | $ (18,459) |
Cash flows from (used in) investing activities: | ||
Proceeds from sale of assets | 789 | 982 |
Additions to property, plant and equipment | (44) | (500) |
Net cash from investing activities | 745 | 482 |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock, net of issue costs | 7,410 | |
Proceeds from the issuance of convertible note | 5,000 | |
Convertible note costs | (312) | |
Net cash from financing activities | 4,688 | 7,410 |
Net decrease in cash and cash equivalents | (4,502) | (10,567) |
Cash and cash equivalents, beginning of period | 8,579 | 19,146 |
Cash and cash equivalents, end of period | $ 4,077 | $ 8,579 |
Nature of Operations
Nature of Operations | 12 Months Ended |
Dec. 31, 2015 | |
Nature of Operations | |
Nature of Operations | 1. Nature of Operations The Company is a mining company, holding a 100% interest in the Velardeña and Chicago precious metals mining properties and associated oxide and sulfide processing plants in Mexico (the “Velardeña Properties”). During November 2015 the Company suspended mining and sulfide processing activities at its Velardeña Properties in order to conserve the asset until the Company is able to develop mining and processing plans that at then current prices for silver and gold indicate a sustainable positive operating margin (defined as revenue less costs of sales) or the Company is able to locate, acquire and develop alternative mineral sources that could be economically mined and transported to the Velardeña Properties for processing. The Company has placed the mine and sulfide processing plant on care and maintenance to enable a re-start of either the mine or mill when mining and processing plans and metals prices support a cash positive outlook . The Company has incurred approximately $1.2 million in related costs for employee severance and other shutdown expenditures to place the property on care and maintenance in the fourth quarter 2015 and expects to incur approximately $0.3 million in quarterly holding costs while mining and processing remain suspended. The Company has retained a core group of employees, most of whom have been assigned to operate the oxide plant, which is leased to a third party and not affected by the shutdown. The oxide plant began processing material under the lease agreement in December 2015, and the Company expects to receive net cash folw under the lease of between $4.0 and $5.0 million in 2016. The retained employees also include an exploration group and an operations and administrative group to continue to advance the Company’s plans in Mexico, oversee corporate compliance activities, and to maintain and safeguard the longer term value of the Velardeña assets. The Company remains focused on evaluating and searching for mining opportunities in North America (including Mexico) with near term prospects of mining, and particularly for properties within reasonable haulage distances of our Velardeña Properties in order to generate sufficient revenue to fund continuing business activities. These assets may include the Santa Maria Mine located in the Parral District in Chihuahua State, the Santa Rosa vein, located in the San Luis de Cordero District in Durango, or the Rodeo property located west of the Velardeña Properties in Durango . The Company is continuing its exploration efforts on selected properties in its portfolio of approximately 10 exploration properties located primarily in Mexico. It continues to hold its El Quevar advanced exploration property in Argentina on care and maintenance until it can find a partner to further advance the project. The Company also reviews strategic opportunities from time to time. The Company is considered an exploration stage company under the criteria set forth by the SEC as the Company has not yet demonstrated the existence of proven or probable mineral reserves, as defined by SEC Industry Guide 7, at the Velardeña Properties, or any of the Company’s other properties. As a result, and in accordance with GAAP for exploration stage companies, all expenditures for exploration and evaluation of the Company’s properties are expensed as incurred. As such the Company’s financial statements may not be comparable to the financial statements of mining companies that do have proven and probable mineral reserves. Such companies would typically capitalize certain development costs including infrastructure development and mining activities to access the ore. The capitalized costs would be amortized on a units-of-production basis as reserves are mined. The amortized costs are typically allocated to inventory and eventually to cost of sales as the inventories are sold. As the Company does not have proven and probable reserves, substantially all expenditures at the Company’s Velardeña Properties for mine construction activity, as well as costs associated with the mill facilities, and for items that do not have a readily identifiable market value apart from the mineralized material, have been expensed as incurred. Such costs are charged to cost of metals sold or project expense during the period depending on the nature of the costs. Certain of the costs may be reflected in inventories prior to the sale of the product. The term “mineralized material” as used herein, although permissible under SEC Industry Guide 7, does not indicate “reserves” by SEC standards. The Company cannot be certain that any deposits at the Velardeña Properties or any other exploration property will ever be confirmed or converted into SEC Industry Guide 7 compliant “reserves”. |
Liquidity, Capital Resources an
Liquidity, Capital Resources and Going Concern | 12 Months Ended |
Dec. 31, 2015 | |
Liquidity, Capital Resources and Going Concern | |
Liquidity, Capital Resources and Going Concern | 2. Liquidity, Capital Resources and Going Concern At December 31, 2015 the Company’s aggregate cash and cash equivalents totaled $4.1 million. With the cash balance at December 31, 2015 and based on the assumptions described below we expect to have sufficient funds to continue our long term business strategy through December 31, 2016. The Company’s cash and cash equivalents balance at December 31, 2015 of $4.1 million is $4.5 million lower than the $8.6 million in similar assets held at December 31, 2014 due primarily to the negative operating margin (defined as revenue less costs of sales) at the Velardeña Properties of $2.5 million, $1.2 million in shutdown and care and maintenance costs at the Velardeña Properties, $3.6 million in exploration expenditures, $1.1 million in care and maintenance and property holding costs at the El Quevar project and $4.2 million in general and administrative expenses, offset in part by $5.0 million in proceeds received from the issuance of the Sentient Note, $0.5 million of net revenue (defined as revenue less costs of sales) received from the lease of the oxide plant to a third party, $0.5 million of proceeds from sales of non-strategic property and equipment, $0.8 million received as a tax refund, a $1.3 million reduction in working capital and other items primarily due to collections of value added tax (“VAT”) receivables, and a net decrease in working capital consisting of trade receivables, inventories and accounts payable associated with the shutdown of mining and processing activities at the Velardeña Properties. On October 27, 2015, the Company borrowed $5.0 million (the “Sentient Loan”) from Sentient Global Resources Fund IV, L.P. (“Sentient”), the entire amount available pursuant to the terms of a Senior Secured Convertible Note (the “Sentient Note”) and Loan Agreement, with principal and accrued interest due on October 27, 2016. See Note 11 for a full discussion of the Sentient Loan. On February 11, 2016, Sentient converted approximately $3.9 million of principal and $0.1 million of accrued interest (representing the total amount of accrued interest at the conversion date) into 23,335,000 shares of the Company’s common stock at an exercise price of approximately $0.172 per share, equal to 90% of the 15-day volume weighted average price (“VWAP”) immediately preceding the conversion date. (See Note 25). Following the conversion, approximately $1.1 million of principal remained outstanding. If the remaining principal and interest accrued from February 11, 2016 is not converted into the Company’s common stock, the Company would owe approximately $1.2 million to Sentient on the October 27, 2016 maturity date. With the cash balance at December 31, 2015 of $4.1 million and assuming the Company receives $4.8 million in net cash flow from the lease of the oxide plant during 2016 and that the remaining balance of the Sentient Note is fully converted into shares of the Company’s common stock at or prior to the maturity of the loan on October 27, 2016, the Company plans to spend the following amounts totaling approximately $8.4 million during the full year 2016, resulting in a balance of cash and cash equivalents at December 31, 2016 of $0.5 million. · Approximately $1.2 million at the Velardeña Properties for care and maintenance; · Approximately $0.8 million on other exploration activities and property holding costs related to the Company’s portfolio of exploration properties located primarily in Mexico, · Approximately $0.5 million at the El Quevar project to fund ongoing maintenance activities, property holding costs, and continuing project evaluation costs; and · Approximately $1.4 million in exploration, project assessment, and development costs relating to the newly acquired San Luis de Cordero property and other properties; · Approximately $3.4 million on general and administrative costs; · Approximately $1.1 million on an increase in working capital primarily related to a reduction in current liabilities, including an advanced payment of $0.5 million received in 2015 from the oxide plant lease and the payment of $0.4 million in equity taxes owed in a foreign jurisdiction. The actual amount that the Company spends during 2016 and the projected yearend cash balance may vary significantly from the amounts specified above and will depend on a number of factors, including variations from anticipated care and maintenance costs at the Velardeña Properties and costs for continued exploration, project assessment, and development at the Company’s other exploration properties, including San Luis de Cordero. The Company does not currently expect it will generate sufficient funds internally to pay the remaining principal and interest on the Sentient Loan when it becomes due on October 27, 2016. The Company plans, and is required by the Loan Agreement, to seek external funding through the sale of equity or securities convertible into equity. There can be no assurance that the Company will be successful in obtaining sufficient external funding on terms acceptable to the Company or at all. If the remaining balance of the Sentient Loan is converted in full, the Company’s projected cash balance at the end of 2015 and the anticipated net cash flow from the leasing of the oxide plant should provide adequate funds to continue the Company’s business plans through 2016. The financial statements have been prepared on a going concern basis under which an entity is considered to be able to realize its assets and satisfy its liabilities in the normal course of business. However, the continuing operations of the Company are dependent upon its ability to secure sufficient funding and to generate future profitable operations. The underlying value and recoverability of the amounts shown as property, plant and equipment in Note 9 are dependent on the ability of the Company to generate positive cash flows from operations and to continue to fund exploration and development activities that would lead to profitable mining activities or to generate proceeds from the disposition of property, plant and equipment. There can be no assurance that the Company will be successful in generating future profitable operations or securing additional funding in the future on terms acceptable to the Company or at all. These material uncertainties, including repayment of the remaining Sentient Loan, may cast significant doubt on the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or liabilities which might be necessary should the Company not continue as a going concern. |
Impairment of Long Lived Assets
Impairment of Long Lived Assets | 12 Months Ended |
Dec. 31, 2015 | |
Impairment of Long Lived Assets | |
Impairment of Long Lived Assets | 3. Impairment of Long Lived Assets Velardeña Properties Asset Groups The Velardeña Properties consists of two separate asset groups, one involving the oxide plant, which has been leased to a third party, and the other involving the mineral and exploration properties, sulfide plant, and mining and other equipment and working capital related to the mining and processing activities at the Velardeña Properties (the “Mineral Properties Asset Group”). Per the guidance of ASC 360, “Property, Plant and Equipment” (“ASC 360”), the Company assesses the recoverability of its long-lived assets, including property, plant and equipment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Mining and processing activities generated negative operating margin through September 30, 2015. Ongoing efforts during 2015 to improve the grade of mined material delivered to the sulfide plant for processing by limiting dilution in the stopes did not improve grades to a level sufficient to generate positive operating margins at 2015 metals prices. As a result, the Company suspended mining and processing activities at the Velardeña mine and sulfide plant during November 2015 (see Note 1). The continued negative operating margin and the suspension of mining and sulfide processing activities at the Velardeña Properties during November 2015 were events that required an assessment of the recoverability of the Mineral Properties Asset Group at September 30, 2015. Per the guidance of ASC 360, recoverability of an asset group is not achieved if the projected undiscounted, pre-tax cash flows related to the asset group are less than its carrying amount. In its analysis of projected cash flows for the Mineral Properties Asset Group, the Company determined that the Mineral Properties Asset Group was impaired. As a result, at September 30, 2015 the Company recorded impairment charges totaling $13.2 million to arrive at a remaining book value for the Mineral Properties Asset Group of $3.7 million at September 30, 2015, as shown in the table below. To determine whether the Mineral Properties Asset Group was impaired at September 30, 2015 the Company used a cash flow valuation approach, which the Company deemed reasonable under the circumstances, that considered metals price projections using a greater weighting of current prices. Based on the metals price projections and current operating experience for silver and gold grades, recoveries, and mining and processing costs, total projected net cash flow from mining and processing activities was negative, requiring that each of the individual components of the Mineral Properties Asset Group be written down to fair value. The Mineral Properties Asset Group includes the mineral and exploration properties associated with the mining and sulfide processing activities at the Velardeña Properties. The discounted cash flow analysis performed by the Company implies a zero value for the mineral and exploration properties from mining and processing activities in the current economic environment, but the Company believes those properties have a residual value that could be realized from a sale to a third party. With assistance from a third-party mining consulting and engineering firm, in reviewing comparable sales of similar properties in the region and considering the location of the Company’s properties to other active mining operations in close proximity to the Company’s properties, the Company concluded that the mineral and exploration properties included in the Mineral Properties Asset Group had a fair value of $1.4 million at September 30, 2015. The tangible assets included in the Mineral Properties Asset Group, which includes buildings, plant and equipment, were separately analyzed by a third party valuation firm in 2013 using available market data to determine a fair value based on the net realizable value that could be received in a sale to a third party. The market data was derived by researching the secondary equipment market on sales and/or offers for sale of similar assets. The Mineral Properties Asset Group tangible assets were determined to have a fair value of approximately $6.0 million as of June 30, 2013, and have since been further depreciated, reflecting a current net book value of approximately $3.2 million as of September 30, 2015. The Company believes the current net book value of the Mineral Properties Asset Group tangible assets did not exceed fair value at September 30, 2015. The assets continue to be used or held in condition for use to support future profitable operations from the acquisition, exploration and development of other mineral sources located near the Velardeña Properties. The following table details the components of the impairment of the Mineral Properties Asset Group: Net Book Value Net Book Value Prior to Sept. 30, 2015 After Impairment at Impairment Impairment at Sept. 30, 2015 Charges Sept. 30, 2015 (in thousands) Mineral and exploration properties $ $ $ Exploration properties — Buildings, plant and equipment — Asset retirement cost — Other working capital, net ) — ) $ $ $ Prior to assessing the recoverability of the assets comprising the Mineral Properties Asset Group, the Company also assessed the fair value of its material and supplies inventory at September 30, 2015, which is included in the Mineral Properties Asset Group. Because of the suspension of mining and processing activities at the Velardeña Properties, as noted above, a portion of the material and supplies inventory is expected to be sold at a discount to its pre-shutdown book value or to decline in value prior to its use in future mining and processing activities. As a result, the Company increased its reserve for obsolescence of the materials and supplies inventory and recorded a noncash charge to shut down costs of approximately $0.4 million at September 30, 2015. At December 31, 2015, the Company re-evaluated its material and supplies inventory taking into account consumption and purchases during the quarter and reduced the reserve for obsolescence by approximately $0.1 million. Because of the close proximity of the asset group involving the oxide plant (the “Oxide Plant Asset Group”) the Company also assessed the recoverability of the Oxide Plant Asset Group at September 30, 2015. The Oxide Plant Asset Group, which has been leased to a third party, consists primarily of the oxide plant facilities with a carrying value at September 30, 2015 of $1.3 million. The projected net cash flows from the lease are in excess of the carrying value of the Oxide Plant Asset Group and the Company therefore determined that the Oxide Plant Asset Group was not impaired. The market approach used in the determination of fair value falls within Level 3 of the fair value hierarchy per ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”) (see Note 14) and relied upon a review of comparable sales of similar properties in the region and considered the location of the Company’s properties to other active mining operations in close proximity to the Company’s properties. Based on the Company’s assessment of the recoverability of the Velardeña Properties at December 31, 2014 no impairment was deemed to have occurred during 2014. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 4. Summary of Significant Accounting Policies The Company’s consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of the Company’s consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions relate to mineralized material and related future metals prices that are the basis for future cash flow estimates utilized in impairment calculations and units-of-production depreciation, depletion and amortization calculations; environmental reclamation and closure obligations; estimates of recoverable metals in stockpiles; valuation allowances for deferred tax assets and the fair value of financial instruments. The Company based its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ significantly from these estimates under different assumptions or conditions. The policies adopted, considered by management to be significant, are summarized as follows: a. Basis of consolidation All of the Company’s consolidated subsidiaries are 100% owned and as such the Company does not have a noncontrolling interest in any of its subsidiaries. All intercompany transactions and balances have been eliminated at consolidation. b. Translation of foreign currencies Substantially all expenditures and sales are made in U.S. dollars. Accordingly, the Company and its subsidiaries use the U.S. dollar as their functional and reporting currency. c. Cash and cash equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. d. Inventories Metals inventory at the Velardeña Properties consisted of marketable products including concentrates and precipitates. Metals inventory was carried at the lower of average cost or net realizable value. Net realizable value represents the estimated future sales price of the product based on spot and futures metals prices through estimated sale and settlement dates, less the estimated costs to complete processing and bring the product to sale. Costs included in metals inventory included direct and indirect costs of mining and processing, including depreciation. The Company had no metals inventories at December 31, 2015 as the result of the suspension of operations at its Velardeña Properties during November 2015 (see Note 1). At December 31, 2014 the Company had written down its metals inventory to net realizable value with excess costs included in cost of sales and depreciation (see Note 7). Materials and supplies inventories are valued at the lower of average cost or net realizable value. Cost includes applicable taxes and freight. The Company routinely counts and evaluates its material and supplies to determine the existence of any obsolete stock that is subject to impairment (see Note 3). e . Mining properties, exploration and development costs The Company expenses general prospecting costs and the costs of acquiring and exploring unevaluated mineral properties. When a mineral property is determined to have proven and probable reserves, subsequent development costs are capitalized to mineral properties. For acquired mineral properties with proven and probable reserves, the Company capitalizes acquisition costs and subsequent development costs. When mineral properties are developed and operations commence, capitalized costs are charged to operations using the units-of-production method over proven and probable reserves. Upon abandonment or sale of a mineral property, all capitalized costs relating to the specific property are written off in the period abandoned or sold and a gain or loss is recognized in the accompanying Consolidated Statements of Operations and Comprehensive Loss. As discussed in Note 1, the Company is considered an exploration stage company under the criteria set forth by the SEC since it has not yet demonstrated the existence of proven or probable reserves at the Velardeña Properties, or any of the Company’s other properties. As such, the Company expenses costs as incurred related to the extraction of mineralized material at its Velardeña Properties. The Company established a cost basis for the mineralized material at the Velardeña Properties as a result of purchase accounting for the Company’s business combination transaction with ECU Silver Mining Inc. (“ECU”) in September 2011, the transaction pursuant to which the Company acquired the Velardeña Properties. Mineral properties acquired in the ECU merger were recorded at estimated fair market value based on valuations performed with the assistance of an independent appraisal firm and a minerals engineering company. Although the Company has not demonstrated the existence of proven and probable reserves, and the Company has not completed a pre-feasibility economic assessment, the Company had established the existence of mineralized material that was used in assigning value to mineral properties for purchase accounting purposes. The subsequent extraction of this mineralized material has provided a reasonable basis for the calculation of units-of-production depreciation for the cost basis in the mineral properties. On a quarterly basis the Company evaluates its exploration properties to determine if they meet the Company’s minimum requirements for continued evaluation. The rights to the properties that do not meet the minimum requirements are relinquished and the carrying values, if any, are written off and reflected in other operating gains and losses, net on the accompanying Consolidated Statements of Operations and Comprehensive Loss. Costs of exploration subsequent to the application of fresh start accounting have been and will continue to be expensed. f. Property, plant and equipment and long lived asset impairment Buildings are depreciated using the straight—line method over the estimated useful lives of 30 to 40 years or the life of the mine whichever is shorter. Mining equipment and machinery, excluding the plant, are depreciated using the straight-line method over useful lives of three to eight years or the lease period, whichever is shorter. Mineral properties and the plant are depreciated using units of production based on estimated mineralized material. Other furniture and equipment are depreciated using the straight-line method over estimated useful lives of three to five years. Depreciation on plant and equipment used in the construction of an asset is capitalized to the constructed asset. As discussed above, the Company does not have any properties with proven or probable reserves including the the Velardeña Properties. Property, plant and equipment are recorded at cost and per the guidance of ASC 360 the Company assesses the recoverability of its property, plant and equipment, including goodwill, whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. If the sum of estimated future net cash flows on an undiscounted basis is less than the carrying amount of the related asset, impairment is considered to exist. The related impairment loss is measured by comparing estimated future net cash flows on a discounted basis or by comparing other market indicators to the carrying amount of the asset (see Notes 3 and 9). g. Asset Retirement Obligations The Company records asset retirement obligations (“ARO”) in accordance with ASC 410, “Asset Retirement and Environmental Obligations” (“ASC 410”), which establishes a uniform methodology for accounting for estimated reclamation and abandonment costs. According to ASC 410, the fair value of an ARO is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. An offsetting asset retirement cost (“ARC”) is capitalized as part of the carrying value of the assets with which it is associated, and depreciated over the useful life of the asset (see Note 14). The Company prepares estimates of the timing and amount of expected cash flows when an ARO is incurred. The fair value of the ARO is measured by discounting the expected cash flows using a discount rate that reflects the credit adjusted risk-free rate of interest. The Company records the fair value of an ARO when it is incurred and layer adjustments of the ARO are recorded as an adjustment to the corresponding ARC. The ARO is adjusted to reflect the passage of time (accretion cost) calculated by applying the discount rate implicit in the initial fair value measurement to the beginning-of-period carrying amount of the ARO. The Company records accretion costs to expense as incurred. h. Revenue Recognition Following the guidance of ASC 605, “Revenue Recognition” (“ASC 605”), the Company recognizes “Revenue from the sale of metals” at the earliest point that both risk of loss and title transfer to the purchaser pursuant to the terms of the Company’s sales agreements. Prices for concentrate and precipitate sales are fixed according to terms included in the sales agreements, which generally call for final pricing based on average metals prices observed over specific periods that range from 10 days prior to the transfer of title to the month following the month the product is received by the purchaser. Revenue is recorded based on estimated metals contained in the product from assay data and using either actual or projected prices for the pricing period specified in the sales agreement. Upon final settlement revenue may be adjusted for changes in actual contained metals and final metals prices. The Company recognizes oxide plant lease fees and reimbursements for labor, utility and other costs as “Revenue from Oxide plant lease” in the Consolidated Statements of Operations and Comprehensive Loss following the guidance of ASC 605 regarding “income statement characterization of reimbursements received for “out-of-pocket” expenses incurred” and “reporting revenue gross as a principal versus net as an agent”. ASC 605 supports recording as gross revenue fees received for the reimbursement of expenses in situations where the recipient is the primary obligor and has certain discretion in the incurrence of the reimbursable expense. The actual costs incurred for the reimbursed labor, utility and other costs are reported as “Oxide plant lease costs” in the statement of operations. The Company recognizes lease fees during the period the fees are earned per the terms of the lease (see Note 17). i. Stock compensation Stock based compensation costs are recognized per the guidance of ASC 718, “Compensation — Stock Compensation” (“ASC 718”), using a graded vesting attribution method whereby costs are recognized over the requisite service period for each separately vesting portion of the award (see Note 16). Stock grants are valued at their grant date at fair value which in the case of options requires the use of the Black-Scholes option pricing model. Per ASC 718 the grants may be classified as equity grants or liability grants depending on the terms of the grant. j. Net income (loss) per Share of Common Stock Basic income (loss) per share is computed by dividing net income (loss) available to holders of the Company’s Common Stock by the weighted average number of shares of Common Stock outstanding for the period. Diluted income (loss) per share reflects the potential dilution that would occur if securities or other contracts to issue Common Stock were exercised or converted into Common Stock. At December 31, 2015 and 2014, all potentially dilutive shares were excluded from the computation of diluted earnings per share because to include them would have been anti-dilutive. k. Comprehensive Income (Loss) Comprehensive income (loss) is defined as all changes in equity (deficit), exclusive of transactions with stockholders, such as capital investments. Comprehensive income (loss) includes net income (loss) and changes in certain assets and liabilities that are reported directly in equity. For the years ended December 31, 2015 and 2014 Comprehensive Loss included the change in the market value of available for sale securities and is reported on the Consolidated Statements of Operations and Comprehensive Loss. l. Income Taxes The Company accounts for income taxes in accordance with the provisions of ASC 740, “Income Taxes” (“ASC 740”), on a tax jurisdictional basis. The Company files United States and certain other foreign country income tax returns, and pays taxes reasonably determined to be due. The tax rules and regulations in these countries are highly complex and subject to interpretation. The Company’s income tax returns are subject to examination by the relevant taxing authorities and in connection with such examinations, disputes can arise with the taxing authorities over the interpretation or application of certain tax rules within the country involved. In accordance with ASC 740, the Company identifies and evaluates uncertain tax positions, and recognizes the impact of uncertain tax positions for which there is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the balance sheet. The Company classifies income tax related interest and penalties as income tax expense. m. Recently Adopted Standards In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, “Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”). The purpose of the standard update is to simplify presentation of debt issuance costs. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Amortization of the discount or premium shall be reported as interest expense in the case of liabilities or as interest income in the case of assets. Amortization of debt issuance costs also shall be reported as interest expense. ASU No. 2015-03 becomes effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted and the Company adopted ASU 2015-03 in 2015. The adoption of this standard did not have a material impact on the Company’s financial position or results of operations. In April 2014 the FASB issued ASU No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (“ASU 2014-08”). ASU 2014-08 changes the criteria for reporting discontinued operations while enhancing disclosures in this area. Under ASU 2014-08, only disposals representing a strategic shift in operations will be presented as discontinued operations. Additionally, ASU 2014-08 requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. ASU 2014-08 became effective for the Company January 1, 2015. The adoption of ASU 2014-08 did not have a material impact on the Company’s consolidated financial position or results of operations. In July 2013 the FASB issued ASU No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” (“ASU 2013-11”), which requires an unrecognized tax benefit to be presented as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward that the entity intends to use and is available for settlement at the reporting date. ASU 2013-11 became effective for the Company January 1, 2014. The adoption of ASU 2013-11 has not had a material impact on the Company’s consolidated financial position or results of operations. n. Recently Issued Pronouncements In January 2016, the FASB issued ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”) which amended its standards related to the accounting of certain financial instruments. This amendment addresses certain aspects of recognition, measurement, presentation and disclosure. The new rules will become effective for annual and interim periods beginning after December 15, 2017. Early adoption is not permitted. We are in the process of evaluating the impact the amendment will have on our consolidated financial position or results of operations. In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes: Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”). ASU 2015-17 requires that deferred tax assets and liabilities be classified as noncurrent on the balance sheet. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. The adoption of this update is not expected to have a material impact on the Company’s consolidated financial position or results of operations. In July 2015, the FASB issued ASU No. 2015-11, “Inventory, Simplifying the Measurement of Inventory” (“ASU 2015-11”). ASU 2015-11 affects reporting entities that measure inventory using first-in, first-out or average cost. ASU 2015-11 requires that inventory be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for annual periods beginning after December 15, 2016, with early adoption permitted. The adoption of ASU 2015-11 is not expected to have a material impact on the consolidated financial position or results of operations. On August 27, 2014, the FASB issued ASU No. 2014-15, “ Presentation of Financial Statements - Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15 will require management to evaluate whether there are conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the financial statements are issued on both an interim and annual basis. Management will be required to provide certain footnote disclosures if it concludes that substantial doubt exists or when its plans alleviate substantial doubt about the Company’s ability to continue as a going concern. ASU 2014-15 becomes effective for annual periods beginning in 2016 and for interim reporting periods starting in the first quarter of 2017. The Company does not expect the adoption of this amendment to have a material impact on its consolidated financial position or results of operations. In May 2014, FASB and the International Accounting Standards Board issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. In addition, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing and uncertainty of revenue that is recognized and the related cash flows. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017; early adoption is not permitted. ASU 2014-09 was originally effective December 15, 2016 but ASU 2015-14 deferred the effective date by one year. The Company is evaluating the financial statement implications of adopting ASU 2014-09 but does not believe adoption of ASU 2014-09 will have a material impact on its consolidated financial position or results of operations. |
Cash and Cash Equivalents and S
Cash and Cash Equivalents and Short-Term Investments | 12 Months Ended |
Dec. 31, 2015 | |
Cash and Cash Equivalents and Short-Term Investments | |
Cash and Cash Equivalents and Short-Term Investments | 5. Cash and Cash Equivalents and Short-Term Investments The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Short-term investments include investments with maturities greater than three months, but not exceeding 12 months, or highly liquid investments with maturities greater than 12 months that the Company intends to liquidate during the next 12 months for working capital needs. The following tables summarize the Company’s short-term investments at December 31, 2015: December 31, 2015 Cost Estimated Fair Value Carrying Value (in thousands) Investments: Short-term: Available for sale common stock $ $ $ Total available for sale Total short term $ $ $ |
Prepaid Expenses and Other Asse
Prepaid Expenses and Other Assets | 12 Months Ended |
Dec. 31, 2015 | |
Prepaid Expenses and Other Assets | |
Prepaid Expenses and Other Assets | 6. Prepaid Expenses and Other Assets Prepaid expenses and other assets consist of the following: December 31, 2015 2014 (in thousands) Prepaid insurance $ $ Prepaid contractor fees and vendor advances Taxes receivable — Recoupable deposits and other $ $ |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2015 | |
Inventories | |
Inventories | 7. Inventories Inventories at the Velardeña Properties were as follows: December 31, 2015 2014 (in thousands) Metals inventory $ — $ In-process inventory — Material and supplies $ $ The Company had no metals or in process inventories at December 31, 2015 as the result of the suspension of mining and processing at the Velardeña Properties (see Note 1). The material and supplies inventory at December 31, 2015 is reduced by a $0.3 million obsolescence charge reflected in shutdown costs. At December 31, 2014 the Company had written down its metals and in-process inventories to net realizable value including a charge to cost of metals sold of $1.2 million and a charge to depreciation expense of approximately $0.7 million. |
Value added tax receivable
Value added tax receivable | 12 Months Ended |
Dec. 31, 2015 | |
Value added tax receivable | |
Value added tax receivable | 8. Value added tax receivable The Company has recorded value added tax (“VAT”) paid in Mexico and related to the Velardeña Properties as a recoverable asset. Mexico law allows for certain VAT payments to be recovered through ongoing applications for refunds. The Company expects that the current amounts will be recovered within a one year period. The Company has also paid VAT in Mexico as well as other countries, primarily related to exploration projects, which has been charged to expense as incurred because of the uncertainty of recoverability. |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment | |
Property, Plant and Equipment | 9. Property, Plant and Equipment Property, plant and equipment, net The components of property, plant, and equipment, net were as follows: December 31, 2015 2014 (in thousands) Mineral properties $ $ Exploration properties Royalty properties Buildings Mining equipment and machinery Other furniture and equipment Asset retirement cost Less: Accumulated depreciation & amortization ) ) At September 30, 2015 the Company determined that the recoverability of certain mineral property and exploration property costs related to theVelardeña Properties Mineral Properties Asset Group was impaired. As such the carrying value of the Mineral Properties Asset Group was written down by approximately $13.2 million and an impairment charge for that amount was recorded. (See Note 3.) During the year ended December 31, 2015 the Company received $0.3 million related to an option agreement on its Otuzco property in Peru. In addition, the Company sold certain non-strategic mining concessions and equipment for net proceeds of approximately $0.5 million and recorded a $0.2 million gain on the transactions. The net gains for the above transactions are reflected in other operating income, net on the accompanying Consolidated Statements of Operations and Comprehensive Loss. During the year ended December 31, 2014 the Company sold 45 mining concessions totaling 770 hectares located in the Zacatecas District, Zacatecas State, Mexico, to Capstone Mining Group for $0.7 million and recorded a $0.5 million gain on the sale. Also in the third quarter 2014, the Company entered into an option agreement with a private party to sell its 1,100 hectare Otuzco property in Peru for approximately $0.5 million. The Company received approximately $0.2 million under the option agreement during 2014, and the remaining $0.3 million was received during 2015, as discussed above. In addition, the Company sold miscellaneous surplus equipment located in Argentina for approximately $0.1 million and recorded a nominal gain. The net gains for the above transactions are reflected in other operating income, net on the accompanying Consolidated Statements of Operations and Comprehensive Loss. The ARC) is all related to the Company’s Velardeña Properties. The decrease in the ARC during the period is related to an adjustment to the ARO (see Note 12) and to the impairment of the ARC, as discussed below. At September 30, 2015 the Company reduced the carrying value of the Velardeña Properties mineral and exploration properties by $12.8 million and the ARC by $0.4 million and recorded a $13.2 million impairment charge on the accompanying Consolidated Statements of Operations and Comprehensive Loss (see Note 3). The table below sets forth the detail of the impairment charges recorded to the Velardeña Properties property, plant and equipment: Impairment Gross Value Charge Gross Value Prior to Minerals After Impairment at Properties Impairment at Sept. 30, 2015 Asset Group Sept. 30, 2015 (in thousands) Mineral properties $ $ $ Exploration properties Royalty properties — Buildings — Mining equipment and machinery — Other furniture and equipment — Asset retirement cost The carrying value after the impairment at September 30, 2015 represents the fair value of the assets as discussed in Note 3. |
Accounts Payable and Other Accr
Accounts Payable and Other Accrued Liabilities | 12 Months Ended |
Dec. 31, 2015 | |
Accounts Payable and Other Accrued Liabilities | |
Accounts Payable and Other Accrued Liabilities | 10. Accounts Payable and Other Accrued Liabilities The Company’s accounts payable and other accrued liabilities consist of the following: December 31, 2015 2014 (in thousands) Accounts payable and accruals $ $ Accrued employee compensation and benefits $ $ December 31, 2015 Accounts payable and accruals at December 31, 2015 consist primarily of $0.3 million due to contractors and suppliers and $0.3 million related to the Company’s Velardeña Properties and corporate administrative activities, respectively. In the case of the Velardeña Properties, amounts due also include VAT payable that is not an offset to the VAT receivable. Accrued employee compensation and benefits at December 31, 2015 consist of $0.1 million of accrued vacation payable and $0.4 million related to withholding taxes and benefits payable, of which $0.2 million is related to activities at the Velardeña Properties. December 31, 2014 Accounts payable and accruals at December 31, 2014 consist primarily of $0.7 million due to contractors and suppliers and $0.2 million related to the Company’s Velardeña Properties and corporate administrative activities, respectively. In the case of the Velardeña Properties, amounts due also include VAT payable that is not an offset to the VAT receivable. Accrued employee compensation and benefits at December 31, 2014 consist of $0.1 million of accrued vacation payable and $0.6 million related to withholding taxes and benefits payable, of which $0.3 million is related to activities at the Velardeña Properties. Key Employee Long-Term Incentive Plan In December 2013, the Board of Directors of the Company approved and the Company adopted the 2013 Key Employee Long-Term Incentive Plan (the “KELTIP”), which became effective immediately. The KELTIP provides for the grant of units (“KELTIP Units”) to certain officers and key employees of the Company, which units will, once vested, entitle such officers and employees to receive an amount, in cash or in Company common stock issued pursuant to the Company’s Amended and Restated 2009 Equity Incentive Plan, measured generally by the price of the Company’s common stock on the settlement date. KELTIP Units are not an actual equity interest in the Company and are solely unfunded and unsecured obligations of the Company that are not transferable and do not provide the holder with any stockholder rights. Payment of the settlement amount of vested KELTIP Units is deferred generally until the earlier of a change of control of the Company or the date the grantee ceases to serve as an officer or employee of the Company. During 2015, with the retirement of an officer of the Company all outstanding KELTIP Units were settled with the issuance of common stock of the Company under the Equity Plan (defined herein). No additional KELTIP Units have been granted and at December 31, 2015 the Company has no KELTIP Units outstanding. At December 31, 2014 after marking the outstanding KELTIP Units to market the Company had recorded a $93,000 liability which is included in accrued employee compensation and benefits in the table above. |
Convertible note payable
Convertible note payable | 12 Months Ended |
Dec. 31, 2015 | |
Convertible note payable | |
Convertible note payable | 11. Convertible note payable On October 27, 2015, the Company borrowed $5.0 million from Sentient, per the terms of the Sentient Note and Loan Agreement (the “Sentient Loan”), with principal and accrued interest due on October 27, 2016. To comply with security regulations and stock exchange rules in the United States and Canada, the Company received stockholder approval on January 19, 2016 to allow the Sentient Note principal and accrued interest to be converted, solely at Sentient’s option, into shares of the Company’s common stock at a price equal to the lowest of: 1) $0.29, 90 percent of the 15-day volume weighted average price (“VWAP”) for the period immediately preceding the Loan closing date, 2) 90 percent of the 15-day VWAP for the period immediately preceding the Loan conversion date, or 3) an anti-dilution adjusted price based on the lowest price for which the Company has sold its stock following the Loan closing date. The Loan bears interest at a rate of 9.0% per annum, compounded monthly. The interest is due on the earlier of the full conversion of the Sentient Note or at maturity. The Sentient Loan contains customary representations, warranties, covenants and default provisions and is secured by the stock of the Company’s principal subsidiaries, including the stock of subsidiaries that own directly or indirectly the Velardeña Properties and the El Quevar project. The Company incurred approximately $0.3 million in legal and other costs associated with the Sentient Loan, including costs related to the special meeting of stockholders to approve the convertibility of the Sentient Note. Per the guidance of ASU 2015-03 the loan costs are presented as a reduction to the note payable on the accompanying Consolidated Balance Sheets and will be amortized to interest expense over the life of the Sentient note using the interest rate method (see Note 4). At December 31, 2015 the balance of the note payable was reduced by approximately $0.3 million related to the loan costs and the Company had recognized $54,000 of interest expense related to the amortization of the loan costs. The beneficial conversion feature of the Sentient Note represents an embedded derivative as defined by ASC 815 “Derivatives and Hedging”(“ASC 815”). ASC 815 provides that a derivative instrument’s fair value must be bifurcated between the note and the embedded derivative and separately recorded on the Company’s Consolidated Balance Sheet. The Company used a third party consultant to value the embedded derivative in the Sentient Note employing a Monte Carlo type probability analysis, which falls within Level 3 of the fair value hierarchy (see Note 14). For purposes of valuing the embedded derivative as of the Sentient Loan closing date and at December 31, 2015 the valuation model takes into account, among other items: 1) the probability of successfully achieving stockholder approval of the Sentient Notes’ conversion feature, 2) future variations in the Company’s stock price, and 3) the probability of entering into an equity transaction prior to the Sentient Loan maturity date that would lower the conversion price. The derivative is recorded at fair value with subsequent mark-to-market changes in the value of the derivative recorded as income or loss in the Consolidated Statements of Operations and Comprehensive Loss. It was determined that the embedded derivative had a fair value of approximately $1.1 million at October 27, 2015, the date the Company entered into the Sentient Loan. At December 31, 2015 the embedded derivative had a fair value of approximately $0.5 million and the Company recorded a gain of approximately $0.6 million. Because the proceeds of the Sentient Loan have been bifurcated between the Sentient Note and the embedded derivative, and because the Sentient Note has been recorded net of loan costs, which will be amortized to interest expense over the life of the Sentient Note, the effective rate of interest on solely the recorded loan obligation is higher than the stated nominal rate of interest on the Sentient Note. The effective interest rate on the Sentient Note during the year ended December 31, 2015 is approximately 21%, compounded monthly, compared to the stated nominal rate of 9.0% per annum, compounded monthly. The Company has also agreed to enter into a registration rights agreement (“RRA”) upon the conversion of any part of the Sentient Note into shares of common stock of the Company. The RRA will require the Company to register, at the Company’s expense, any shares received by Sentient upon conversion of all or a part of the Sentient Note within a reasonable period of time and to maintain the effectiveness of such shares. The RRA will provide for penalties up to a maximum of 3.0 percent of the value of the shares received in the case that the shares are not registered and declared effective within a reasonable timeframe. On February 11, 2016, Sentient converted approximately $3.9 million of principal and $0.1 million of accrued interest (representing the total amount of accrued interest at the conversion date) into 23,335,000 shares of the Company’s common stock at an exercise price of approximately $0.172 per share, equal to 90% of the 15-day VWAP immediately preceding the conversion date (see Note 25). Following the conversion, approximately $1.1 million of principal remained outstanding. |
Asset Retirement and Reclamatio
Asset Retirement and Reclamation Liabilities | 12 Months Ended |
Dec. 31, 2015 | |
Asset Retirement and Reclamation Liabilities | |
Asset Retirement and Reclamation Liabilities | 12. Asset Retirement and Reclamation Liabilities The Company retained the services of a mining engineering firm to prepare a detailed closure plan for the Velardeña Properties. The plan was completed during the second quarter 2012 and indicated that the Company had an ARO and offsetting ARC of approximately $1.9 million. The estimated $3.5 million ARO and ARC that was recorded at the time of the acquisition of the Velardeña Properties was adjusted accordingly. The Company will continue to accrue additional estimated ARO amounts based on an asset retirement plan as activities requiring future reclamation and remediation occur. During the year ended December 31, 2015 the Company recognized approximately $0.2 million of accretion expense and approximately $0.2 million of amortization expense related to the ARC. The following table summarizes activity in the Velardeña Properties ARO: December 31, 2015 2014 (in thousands) Beginning balance $ $ Changes in estimates, and other ) ) Accretion expense Ending balance $ $ The decrease in the ARO recorded during the years ended December 31, 2015 and 2014 is the result of changes in assumptions related to inflation factors and discount rates used in the determination of future cash flows. The ARO set forth on the accompanying Condensed Consolidated Balance Sheets at December 31, 2015 and December 31, 2014 includes approximately $0.1 million of reclamation liabilities related to activities at the El Quevar project in Argentina. |
Other Liabilities
Other Liabilities | 12 Months Ended |
Dec. 31, 2015 | |
Other Liabilities | |
Other Liabilities | 13. Other Liabilities The Company recorded other current liabilities of approximately $0.6 million and $2.6 million at December 31, 2015 and December 31, 2014, respectively. For December 31, 2015 the amount includes $0.4 million related to the Argentina tax on equity due for years 2009 through 2012 stemming from a tax audit of those years. The amount includes $0.2 million in taxes and $0.2 million in estimated interest and penalties. The $0.2 million in net taxes due will be paid ratably over a six month period beginning in January 2016. The Company is awaiting the final assessment of interest and penalties, estimated to be approximately $0.2 million, payable immediately upon final assessment, which is expected in early 2016 (see Note 21.) The December 31, 2015 amount also includes $0.1 million of accrued interest on the Sentient Loan (see Note 11) and $0.1 million as a loss contingency on a disputed contract with a third party contractor in Mexico. For December 31, 2014 the amount includes $2.3 million related to a loss contingency on foreign withholding taxes that the government could assert are owed by the Company, acting as withholding agent, on certain interest payments made to a third party. The amounts include estimated interest, penalties and other adjustments. This loss contingency expired during 2015. The December 31, 2014 amount also includes $0.2 million related to the Argentina tax on equity due for years 2009 through 2012 stemming from a tax audit of those years. The amount includes estimated interest and penalties and is net of certain VAT credits due the Company. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Measurements | |
Fair Value Measurements | 14. Fair Value Measurements Financial assets and liabilities and nonfinancial assets and liabilities are measured at fair value on a recurring (annual) basis under a framework of a fair value hierarchy which prioritizes the inputs into valuation techniques used to measure fair value into three broad levels. This hierarchy gives the highest priority to quoted prices (unadjusted) in active markets and the lowest priority to unobservable inputs. Further, financial assets and liabilities should be classified by level in their entirety based upon the lowest level of input that was significant to the fair value measurement. The three levels of the fair value hierarchy per ASC 820 are as follows: Level 1: Unadjusted quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date. Level 2: Quoted prices in inactive markets for identical assets or liabilities, quoted prices for similar assets or liabilities in active markets, or other observable inputs either directly related to the asset or liability or derived principally from corroborated observable market data. Level 3: Unobservable inputs due to the fact that there is little or no market activity. This entails using assumptions in models which estimate what market participants would use in pricing the asset or liability. The Company has consistently applied the valuation techniques discussed in Notes 3, 11 and 16 in all periods presented. Recurring Fair Value Measurements The following table summarizes the Company’s financial assets and liabilities measured on a recurring basis at fair value at December 31, 2015 and 2014 by respective level of the fair value hierarchy: Level 1 Level 2 Level 3 Total (in thousands) At December 31, 2015 Assets: Cash and cash equivalents $ $ — $ — $ Trade accounts receivable — — Marketable securities — — $ $ — $ — $ Liabilities: Warrant liability $ — $ — $ $ Derivative liability — — $ — $ — $ $ At December 31, 2014 Assets: Cash and cash equivalents $ $ — $ — $ Trade accounts receivable — — — — $ $ — $ — $ Liabilities: Warrant liability $ — $ — $ $ $ — $ — $ $ The Company’s cash equivalents, comprised principally of U.S. treasury securities, are classified within Level 1 of the fair value hierarchy. The Company’s trade accounts receivable are classified within Level 1 of the fair value hierarchy, are related to the sale of metals at our Velardeña Properties and the oxide plant lease and are valued at published metals prices per the terms of the refining and smelting agreements and lease rates per the plant lease agreement. At December 31, 2015 and 2014, the Company recorded a liability for warrants to acquire the Company’s stock as a result of anti-dilution clauses in the warrant agreements that could result in a resetting of the warrant exercise price in the event the Company were to issue additional shares of its common stock in a future transaction at a price lower than the current exercise price of the warrants (see Note 16). The Company assesses the fair value of its warrant liability at the end of each reporting period, with changes in the value recorded as a separate line item on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss. The valuation policies are approved by the Chief Financial Officer who reviews and approves the inputs used in the fair value calculations and the changes in fair value measurements from period to period for reasonableness. Fair value measurements are discussed with the Company’s Chief Executive Officer, as deemed appropriate. The warrant liability has been recorded at fair value as of December 31, 2015 and 2014 based primarily on a valuation performed by a third party expert using a Monte Carlo simulation, which falls within Level 3 of the fair value hierarchy. The valuation model takes into account the probability that the Company could issue additional shares in a future transaction at a lower price than the current exercise price of the warrants. The beneficial conversion feature of the Sentient Note represents an embedded derivative as defined by ASC 815. ASC 815 provides that a derivative instrument’s fair value must be bifurcated from the host contract and separately recorded on the Company’s Consolidated Balance Sheets. At December 31, 2015 the Company had recorded a derivative liability related to the beneficial conversion feature of the Sentient Note (see Note 11.) The Company assesses the fair value of the derivative liability at the end of each reporting period, with changes in the value recorded as a separate line item on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss. The valuation policies are approved by the Chief Financial Officer who reviews and approves the inputs used in the fair value calculations and the changes in fair value measurements from period to period for reasonableness. Fair value measurements are discussed with the Company’s Chief Executive Officer, as deemed appropriate. The derivative liability has been recorded at fair value as of December 31, 2015 based primarily on a valuation performed by a third party expert using a Monte Carlo simulation, which falls within Level 3 of the fair value hierarchy. The valuation model takes into account, among other items: 1) the probability of successfully achieving stockholder approval of the Loan’s conversion feature, 2) future variations in the Company’s stock price, and 3) the probability of entering into an equity transaction prior to the Loan maturity date that would lower the conversion price. In addition to the warrant exercise prices (see Note 16) and Sentient Note conversion price (see Note 11) other significant inputs to the warrant valuation model and derivative valuation model included the following as applicable: December 31, 2015 2014 Company’s ending stock price $ $ Company’s stock volatility % % Applicable risk free interest rate % % An increase or decrease in the Company’s stock price, in isolation, would result in a relatively lower or higher fair value measurement respectively. A decrease in the probability of the issuance of additional common stock at a lower price than the current warrant exercise price would result in a lower value for the warrants. The table below highlights the change in fair value of the warrant liability and the derivative liability. Fair Value Measurements Using Significant Unobservable Inputs (level 3) Warrant Liabilities Derivative Liability (in thousands) Beginning balance at January 1, 2014 $ — $ — Adjustment to record 2012 warrants as a liability (Note 16) — Issuance of warrants — Change in estimated fair value ) — Ending balance at December 31, 2014 $ $ — Sentient Note, October 27, 2015 — Change in estimated fair value ) ) Ending balance at December 31, 2015 $ $ Non-recurring Fair Value Measurements There were no non-recurring fair value measurements at December 31, 2014. The Company did conduct a fair value assessment of its mineral properties related to the Velardeña Properties at September 30, 2015 (see Note 3). The following table summarizes the Company’s non-recurring fair value measurements at September 30, 2015 by respective level of the fair value hierarchy: Level 1 Level 2 Level 3 Total (in thousands) At September 30, 2015 Assets: Mineral properties $ — $ — $ $ $ — $ — $ $ The Company assesses the fair value of its long lived assets if circumstances indicate a change in the fair value has occurred. The valuation policies are approved by the Chief Financial Officer who reviews and approves the inputs used in the fair value calculations and the changes in fair value measurements from period to period for reasonableness. Fair value measurements are discussed with the Company’s Chief Executive Officer, as deemed appropriate. To determine the fair value of mineral properties the Company uses a discounted cash flow evaluation approach and relied on a third party mining consulting and engineering firm to assist with the determination of a residual value for the Velardeña mineral properties, which falls within Level 3 of the fair value hierarchy. The discounted cash flow valuation approach relies upon assumptions for future metals prices and projected silver and gold grades, recoveries, and mining and processing costs related to the Velardeña Properties. In determining the residual value of the mineral properties the third-party mining consulting and engineering firm reviewed comparable sales of similar properties in the region and considered the location of the Company’s properties to other active mining operations in close proximity to the Company’s properties. See Note 3 for further details related to the determination of fair value. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes | |
Income Taxes | 15. Income Taxes The Company accounts for income taxes in accordance with the provisions of ASC 740, “Income Taxes” (“ASC 740”) on a tax jurisdictional basis. Income (loss) from operations before income taxes by country consists of the following: For the Year Ended December 31, 2015 2014 (in thousands) United States $ ) $ ) Other Countries ) ) $ ) $ ) In 2014 and 2015 the Company recorded no current or deferred tax expense or benefit, as any tax expense or benefit incurred during the year has been offset against a change in the valuation allowance of various deferred tax assets in each country. A reconciliation of the provision for income taxes computed at the statutory rate to the provision for income taxes as shown in the Consolidated Statements of Operations and Comprehensive Loss is summarized below. For the Year Ended December 31, 2015 2014 (in thousands) Tax expense (benefit) at US rate of 34% $ ) $ ) Other adjustments: Rate differential of other jurisdictions Effects of foreign earnings ) ) Change in valuation allowance Provision to tax return true-ups ) ) Exchange rate changes on deferred tax assets Other ) Income tax provision $ — $ — The components of the deferred tax assets and deferred tax liabilities are as follows: For the years ended December 31, 2015 2014 (in thousands) Deferred tax assets: Net operating loss carryforwards $ $ Stock-based compensation Property, plant and equipment Other Less: Valuation allowance ) ) Total deferred tax assets Deferred tax liabilities: Property, plant and equipment ) ) Other ) ) Total deferred tax liabilities ) ) Net deferred tax asset (liability) $ — $ — In accordance with ASC 740, the Company presents deferred tax assets net of its deferred tax liabilities on a tax jurisdictional basis on its Consolidated Balance Sheets. The net deferred tax liability as of December 31, 2015 and December 31, 2014 was zero. At December 31, 2015 the Company had net operating loss carryforwards in the U.S. and in certain non-U.S. jurisdictions totaling $330.2 million. Of these, $92.4 million is related to the Velardeña Properties in Mexico and expires in future years through 2025. $22.9 million is related to other Mexico exploration activities and also expires in future years through 2025. $38.0 million net operating losses exist in Luxembourg and have no expiration date, while $118.3 million exist in other non-U.S. countries, which will expire in future years through 2035. In the U.S. there are $58.6 million of net operating loss carryforwards which will expire in future years through 2035. The valuation allowance offsetting the net deferred tax assets of the Company of $111.4 million and $106.8 million at December 31, 2015 and 2014, respectively, relates primarily to the uncertain utilization of certain deferred tax assets, primarily net operating loss carryforwards, in various tax jurisdictions. The Company continually assesses both positive and negative evidence to determine whether it is more likely than not that deferred tax assets can be realized prior to their expiration. The Company, a Delaware corporation, and its subsidiaries file tax returns in the United States and in various foreign jurisdictions. The tax rules and regulations in these countries are highly complex and subject to interpretation. The Company’s tax returns are subject to examination by the relevant taxing authorities and in connection with such examinations, disputes can arise with the taxing authorities over the interpretation or application of certain tax rules within the country involved. In accordance with ASC 740, the Company identifies and evaluates uncertain tax positions, and recognizes the impact of uncertain tax positions for which there is less than a more-likely-than-not probability of the position being upheld upon review by the relevant taxing authority. Such positions are deemed to be “unrecognized tax benefits” which require additional disclosure and recognition of a liability within the financial statements. If recognized, none of the unrecognized tax benefits would affect the Company’s effective tax rate. Below is a reconciliation of the beginning and ending amount of gross unrecognized tax benefits, which excludes any estimated penalties and interest on all identified unrecognized tax benefits. The Company’s unrecognized tax benefits as of December 31, 2015 and 2014 are completely offset by net deferred tax benefits and therefore do not appear on the Consolidated Balance Sheet. The Year Ended December 31, 2015 2014 (in thousands) Gross unrecognized tax benefits at beginning of period $ $ Increases for tax positions taken during prior years Decreases relating to settlements with taxing authorities Reductions due to lapse of statute of limitations ) ) Gross unrecognized tax benefits at end of period $ $ Tax years as early as 2010 remain open and are subject to examination in the Company’s principal tax jurisdictions. The Company does not expect a significant change to its net unrecognized tax benefits over the next 12 months. No interest and penalties were recognized in the Consolidated Statement of Operations and Comprehensive Loss for the year ended December 31, 2015 or 2014, and there were no interest and penalties recognized in the statement of financial position as of December 31, 2015 and 2014. The Company classifies income tax related interest and penalties as income tax expense. |
Equity
Equity | 12 Months Ended |
Dec. 31, 2015 | |
Equity | |
Equity | 16. Equity Registered offering On September 10, 2014 the Company completed a registered public offering (the “Offering”) of 3,692,000 Units (the “Units”), with each Unit consisting of one share of the Company’s common stock (the “Shares”) and a warrant to purchase .50 of a share of the Company’s common stock (the “Warrants”). Each Unit was priced at $0.86 per Unit, before discount to the underwriters. The Warrants became exercisable on March 11, 2015 at an exercise price of $1.21 per share and will expire on September 10, 2019, five years from the date of issuance. The Shares and the Warrants are immediately separable and were issued separately. The Company received net proceeds from the Offering of approximately $2.7 million after the underwriter commissions and expenses of approximately $0.5 million. In arriving at the value of the Shares and Warrants the Company first valued and recorded the Warrants as a liability on the balance sheet as a result of anti-dilution clauses in the warrant agreements that could result in a resetting of the warrant exercise price in the event the Company were to issue additional shares of its common stock in a future transaction at an offering price lower than the current exercise price of the warrants. A third party expert determined a value for the Warrants at September 4, 2014, the date prior to the announcement of the Offering, using a Monte Carlo simulation, which falls within Level 3 of the fair value hierarchy (see Note 14). The valuation model takes into account the probability that the Company could issue additional shares in a future transaction at a lower price than the current exercise price of the Warrants. Significant inputs to the valuation model included the Company’s closing stock price at September 4, 2014 of $1.01, the exercise price for the Warrants disclosed above, the Company’s stock volatility measured as of September 30, 2014, the applicable risk free interest rate of 1.6%, and the probability of an additional issuance of the Company’s common stock at a lower price than the current warrant exercise price. The fair value of the Warrants was determined to be $1.2 million, with the remaining $1.5 million of net proceeds from the Offering being allocated to additional paid in capital. Private placement On September 10, 2014 the Company also completed a private placement (the “Private Placement”) with The Sentient Group (“Sentient”), the Company’s largest stockholder, pursuant to which Sentient purchased, pursuant to Regulation S under the U.S. Securities Act of 1933, a total of 5,800,000 Units (the “Private Placement Units”), with each Private Placement Unit consisting of one share of the Company’s common stock (the “Sentient Shares’) and a warrant to purchase 0.50 of a share of the Company’s common stock (the “Sentient Warrants”). The Sentient Warrants became exercisable on March 11, 2015 at an exercise price of $1.21 per share and will expire on September 10, 2019, five years from the date of issuance. Each Private Placement Unit was priced at $0.817, the same discounted price paid by the underwriters in the Offering. The Company received net proceeds from the Private Placement of approximately $4.7 million after the discount and expenses of approximately $0.3 million. Following the completion of the Private Placement and the Offering, Sentient held approximately 27.2% of the Company’s outstanding common stock (excluding restricted common stock held by the Company’s employees). In arriving at the value of the Sentient Shares and Sentient Warrants the Company first valued and recorded the SentientWarrants as a liability on the balance sheet as a result of anti-dilution clauses in the warrant agreements that could result in a resetting of the warrant exercise price in the event the Company were to issue additional shares of its common stock in a future transaction at a an offering price lower than the current exercise price of the Sentient Warrants. A third party expert determined a value for the Sentient Warrants at September 4, 2014, the date prior to the announcement of the Offering, using a Monte Carlo simulation, which falls within Level 3 of the fair value hierarchy (see Note 14). The valuation model takes into account the probability that the Company could issue additional shares in a future transaction at a lower price than the current exercise price of the Sentient Warrants. Significant inputs to the valuation model included the Company’s closing stock price at September 4, 2014 of $1.01, the exercise price for the Sentient Warrants disclosed above, the Company’s stock volatility measured as of September 30, 2014, the applicable risk free interest rate of 1.6%, and the probability of an additional issuance of the Company’s common stock at a lower price than the current warrant exercise price. The fair value of the Sentient Warrants was determined to be $1.9M, with the remaining $2.7M of net proceeds from the Private Placement being allocated to additional paid in capital. Equity Incentive Plans In May 2014, the Company’s stockholders approved amendments to the Company’s 2009 Equity Incentive Plan, adopting the Amended and Restated 2009 Equity Incentive Plan (the “Equity Plan”), pursuant to which awards of the Company’s common stock may be made to officers, directors, employees, consultants and agents of the Company and its subsidiaries. The Company recognizes stock-based compensation costs using a graded vesting attribution method whereby costs are recognized over the requisite service period for each separately vesting portion of the award. The following table summarizes the status of the Company’s restricted stock grants issued under the Equity Plan at December 31, 2015 and 2014 and changes during the years then ended: The Year Ended December 31, 2015 2014 Restricted Stock Grants Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Outstanding at beginning of year $ $ Granted during the year — — Restrictions lifted during the year ) ) Forfeited during the year — — — — Outstanding at end of year $ $ No restricted stock grants were made during the year ended December 31, 2015. During the year ended December 31, 2014 restricted stock grants were made to one officer and one new employee at the date of hire. Restrictions were lifted on 336,334 shares during the year ended December 31, 2015 on the anniversaries of grants made to officers and employees in prior years. In addition, during 2015 restrictions were lifted on 163,334 shares related to the retirement of two officers during the year and restrictions were lifted on 12,000 shares during 2015 in connection with the termination of employment of two employees. Restrictions were lifted on 444,633 shares during the year ended December 31, 2014 on the anniversaries of grants made to officers and employees in prior years and restrictions were lifted on an additional 10,500 shares during 2014 in connection with the termination of employment of two employees. For the years ended December 31, 2015 and 2014 the Company recognized approximately $0.2 million and $0.5 million, respectively, of compensation expense related to the restricted stock grants. The Company expects to recognize a nominal amount of compensation expense related to these grants over the next 12 months. The following table summarizes the status of the Company’s stock option grants issued under the Equity Plan at December 31, 2015 and 2014 and changes during the years then ended: The Year Ended December 31, 2015 2014 Equity Plan Options Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Outstanding at beginning of year $ $ Granted during the year — — Restrictions lifted during the year — — — — Forfeited during the year — $ — ) $ Outstanding at end of year $ $ Exercisable at end of period $ $ Granted and vested $ $ The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model using the assumptions noted in the following table. Expected volatilities are based on the historical volatilities of the Company’s shares. The Company uses historical data to estimate option exercises and forfeitures within the Black-Scholes model. The expected term of the options granted represents the period of time that options granted are expected to be outstanding, based on past experience and future estimates and includes data related to both employees and directors. The risk-free rate for periods within the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The Company currently does not foresee the payment of dividends in the near term. Grant Date November 12, 2014 Expected volatility % Weighted average volatility % Expected dividend yield — Expected term (in years) Risk-free rate % The grant made during 2014 was to a manager at our Velardeña Properties. The manager’s employment was terminated in conjunction with the suspension of operations at our Velardeña Properties and has six months from the termination date to exercise the options. The options that expired during 2014 were options issued to former ECU stock option holders to replace options previously issued to them by ECU. During the year ended December 31, 2015, the Company recognized expense of less than $0.1 million related to the outstanding options. The Company does not expect to record any additional expense related to these options. Also, pursuant to the Equity Plan, the Company’s Board of Directors adopted the Non-Employee Director’s Deferred Compensation and Equity Award Plan (the “Deferred Compensation Plan”). Pursuant to the Deferred Compensation Plan the non-employee directors receive a portion of their compensation in the form of Restricted Stock Units (“RSUs”) issued under the Equity Plan. The RSUs vest on the first anniversary of the grant and each vested RSU entitles the director to receive one unrestricted share of common stock upon the termination of the director’s board service. The following table summarizes the status of the RSU grants issued under the Deferred Compensation Plan at December 31, 2015 and 2014 and changes during the years then ended: For the Year Ended December 31, 2015 2014 Restricted Stock Units Number of Underlying Shares Weighted Average Grant Date Fair Value Per Share Number of Underlying Shares Weighted Average Grant Date Fair Value Per Share Outstanding at beginning of year $ $ Granted during the year Restrictions lifted during the year — — — — Forfeited during the year — — — — Outstanding at end of year $ $ For the years ended December 31, 2015 and 2014 the Company recognized approximately $0.2 million and $0.4 million, respectively, of compensation expense related to the RSU grants. The Company expects to recognize additional compensation expense related to the RSU grants of less than $0.1 million over the next six months. Pursuant to the KELTIP (see Note 10), KELTIP Units may be granted to certain officers and key employees of the Company, which units will, once vested, entitle such officers and employees to receive an amount in cash or in Company common stock measured generally by the price of the Company’s common stock on the settlement date. The KELTIP Units are recorded as a liability as discussed in detail in Note 10. All of the outstanding KELTIP Units were settled during 2015 upon the retirement of an officer of the Company. The Company issued 172,500 shares of its common stock under the Equity Plan to settle the outstanding KELTIP Units. Common stock warrants The following table summarizes the status of the Company’s common stock warrants at December 31, 2015 and December 31, 2014 and changes during the years then ended: For the Year Ended December 31, 2015 2014 Common Stock Warrants Number of Underlying Shares Weighted Average Exercise Price Per Share Number of Underlying Shares Weighted Average Exercise Price Per Share Outstanding at beginning of year $ $ Granted during period — — Dilution adjustment — — Expired during period — — ) Exercised during period — — — — Outstanding at end of year $ $ The warrants issued during the period are related to the Offering and Private Placement of the Company’s securities completed on September 10, 2014 as discussed above. In September 2012, the Company closed on a registered offering and concurrent private placement with Sentient in which it sold units, consisting of one share of common stock and a five-year warrant to acquire one half of a share of common stock at an exercise price of $8.42 per share (the “September 2012 Warrants”). Pursuant to certain dilution adjustment provisions in the warrant agreement governing the September 2012 Warrants, the number of shares of common stock issuable upon exercise of the September 2012 Warrants was increased from 3,431,649 shares to 4,031,409 shares (599,760 share increase) and the exercise price was reduced from $8.42 per share to $7.17 per share pursuant to a weighted average dilution calculation based on the pricing of the Offering and the Private Placement. The warrants that expired during 2014 were warrants related to the merger with ECU on September 2, 2011 and were issued to former ECU warrant holders to replace warrants previously issued to them by ECU. The warrants issued in September 2012 and September 2014 are being recorded as a liability on the balance sheet as a result of anti-dilution clauses in the warrant agreements that could result in a resetting of the warrant exercise price in the event the Company were to issue additional shares of its common stock in a future transaction at an offering price lower than the current exercise price of the warrants. At December 31, 2015 the total liability for the warrants was $210,000, consisting of $205,000 for 2014 warrants and $5,000 for the 2012 warrants. The warrant liability has been recorded at fair value as of December 31, 2015 based primarily on a valuation performed by a third party expert using a Monte Carlo simulation, which falls within Level 3 of the fair value hierarchy. The valuation model takes into account the probability that the Company could issue additional shares in a future transaction at a lower price than the current exercise price of the warrants. Significant inputs to the valuation model included the Company’s closing stock price at December 31, 2015 of $0.20, the exercise prices for the warrants disclosed above, the Company’s stock volatility of 85%, the applicable risk free interest rate of 1.5%, and the probability of an additional issuance of the Company’s common stock at a lower price than the current warrant exercise price. The balances for warrant liability, paid-in capital, and accumulated earnings also reflect an adjustment made during 2014 to reflect the impact of recording the 2012 warrants as a liability. Paid in capital and accumulated deficit were reduced by $15.6 million $15.5 million respectively and warrant liability was increased by $0.2 million. The adjustments were determined to be immaterial to the Company’s financial statements filed in prior periods. Subsequent to December 31, 2015, two anti-dilution adjustments have been made to the warrants issued in September 2012 and September 2014, resulting from the January 19, 2016 approval by the Company’s stockholders of the convertibility of the Sentient Note and from the subsequent February 11, 2016 conversion by Sentient of a portion of the Sentient Note and accrued interest. (See Note 25.) |
Revenue and Related Costs
Revenue and Related Costs | 12 Months Ended |
Dec. 31, 2015 | |
Revenue and Related Costs | |
Revenue and Related Costs. | 17. Revenue and Related Costs Sale of Metals and Cost of Metals Sold During the years ended December 31, 2015 and 2014, the Company sold marketable concentrate products from its Velardeña Propertiesto three customers. Under the terms of the Company’s agreements with customers, title generally passes when a provisional payment is made, which occurs generally after the product is shipped and customary sales documents are completed. Costs related to the sale of metals products include direct and indirect costs incurred to mine, process and market the products. At December 31, 2014 the Company had written down its metals and in-process inventories to net realizable value including a charge to the cost of metals sold of approximately $1.2 million and a charge to depreciation expense of approximately $0.7 million. The Company had no metals or in-process inventories at December 31, 2015 as a result of the suspension of mining and processing at its Velardeña Properties (see Note 1). Oxide Plant Lease and Oxide Plant Lease Costs On July 15, 2015 the Company entered into a leasing agreement with a third party, which for a monthly fixed fee and a variable tonnage fee will allow the third party to control and process its own material through the oxide plant at the Velardeña Properties for a period of up to 30 months and a minimum period of 18 months. In addition, under the terms of the lease the Company is entitled to reimbursement for certain costs it incurs related to the lease. For the year ended December 31, 2015 the Company recorded revenue of approximately $0.7 million and related costs of approximately $0.2 million associated with the lease of the oxide plant. In addition, the Company received an advance payment of $0.5 million that will be applied to the lease amounts due during the first four months of 2016. At December 31, 2015 the advance payment was recorded as deferred revenue on the accompanying Consolidated Balance Sheets. The Company recognizes oxide plant lease fees and reimbursements for labor, utility and other costs as “Revenue from Oxide plant lease” in the Consolidated Statements of Operations and Comprehensive Loss following the guidance of ASC 605 regarding “income statement characterization of reimbursements received for “out-of-pocket” expenses incurred” and “reporting revenue gross as a principal versus net as an agent”. ASC 605 supports recording as gross revenue fees received for the reimbursement of expenses in situations where the recipient is the primary obligor and has certain discretion in the incurrence of the reimbursable expense. The actual costs incurred for reimbursed direct labor and utility costs are reported as “Oxide plant lease costs” in the statement of operations. The Company recognizes lease fees during the period the fees are earned per the terms of the lease. |
Interest and Other Income
Interest and Other Income | 12 Months Ended |
Dec. 31, 2015 | |
Interest and Other Income. | |
Interest and Other Income | 18. Interest and Other Income For the year ended December 31, 2015 the Company reported interest and other income of $3.1 million which includes a $2.3 million reduction and elimination of a loss contingency liability related to foreign withholding taxes that the government could have asserted were owed by the Company, acting as withholding agent, on certain interest payments made to a third party (see Note 13). Also included in interest and other income is approximately $0.8 million related to a tax refund received in Mexico. For the year ended December 31, 2014 the Company reported other income of $1.6 million related primarily to the reduction of a loss contingency liability related to foreign withholding taxes that the government could assert are owed by the Company, acting as withholding agent, on certain interest payments made to a third party (see Note 13). |
Derivative Income
Derivative Income | 12 Months Ended |
Dec. 31, 2015 | |
Derivative Income | |
Derivative Income | 19. Derivative Income During the years ended December 31, 2015 and 2014 the Company recorded approximately $1.3 million and $1.7 million respectively, of warrant derivative income related to a decrease in the fair value of the liability recorded for warrants to acquire the Company’s common stock (see Note 14). The warrant liability has been recorded at fair value as of December 31, 2015 and 2014 based primarily on a valuation performed by a third party expert using a Monte Carlo simulation, which falls within Level 3 of the fair value hierarchy. The valuation model takes into account the probability that the Company could issue additional shares in a future transaction at a lower price than the current exercise price of the warrants. Significant inputs to the valuation model included prices for the warrants disclosed above, the probability of an additional issuance of the Company’s common stock at a lower price than the current warrant exercise price and the inputs in the table below for the respective periods. During the year ended December 31, 2015 the Company recorded approximately $0.6 million of derivative income related to a decrease in the fair value of the derivative liability related to the Sentient Loan (see Note 11.) The derivative liability has been recorded at fair value as of December 31, 2015 based primarily on a valuation performed by a third party expert using a Monte Carlo simulation, which falls within Level 3 of the fair value hierarchy. Significant inputs to the valuation model included: 1) the probability of successfully achieving stockholder approval of the Loan’s conversion feature, 2) future variations in the Company’s stock price, and 3) the probability of entering into an equity transaction prior to the Loan maturity date that would lower the conversion price as well as the inputs in the table below for 2015. At December 31, The Company’s 2015 2014 Closing stock price $ $ Volatility % % Risk-free rate % % |
Cash flow information
Cash flow information | 12 Months Ended |
Dec. 31, 2015 | |
Cash flow information | |
Cash flow information | 20. Cash flow information The following table reconciles net income (loss) for the period to cash used in operations: The Year Ended December 31, 2015 2014 (in thousands) Cash flows from operating activities: Net loss $ ) $ ) Adjustments to reconcile net loss to net cash used in operating activities: Amortization and depreciation Gain on sale of assets, net ) ) Accretion of asset retirement obligation Asset write off Write off of loss contingency, net ) ) Decrease in warrant liability ) ) Decrease in derivative liability ) Amortization of deferred loan costs — Impairment of long lived assets — Foreign exchange gain on loss contingency ) ) Stock compensation Changes in operating assets and liabilities: (Increase) decrease in trade accounts receivable ) Decrease in prepaid expenses and other assets Decrease (increase) in inventories ) Decrease in value added tax receivable (net) Increase in accrued interest payable net of amounts capitalized — (Decrease) increase in accounts payable and accrued liabilities ) Increase in deferred revenue — (Decrease) increase in deferred leasehold payments ) Decrease in reclamation liability ) ) Net cash used in operating activities $ ) $ ) The Company did not make any cash payments for interest or income taxes during the years ended December 31, 2015 and 2014. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies | |
Commitments and Contingencies | 21. Commitments and Contingencies Leases and Purchase Commitments The Company has non-cancelable operating lease commitments as follows: 2016 2017 2018 2019 2020 Thereafter El Quevar mining concessions (estimated) $ $ $ $ $ $ — Velardeña mining consessions (estimated) $ $ $ $ $ $ — Office space $ $ $ $ $ — $ — The Company is required to make payments to the Argentinean government to maintain its rights to the El Quevar mining concessions. The Company has made such payments totaling approximately $74,000 and $35,000 for the years ended December 31, 2015 and 2014, respectively. The Company is required to pay concession holding fees to the Mexican government to maintain its rights to the Velardeña Properties mining concessions. During the years ended December 31, 2015 and 2014 the Company made such payments totaling approximately $12,000 each year, and annual payments under its surface right agreement with the local ejido of appromately $25,000. The Company has office leases for its corporate headquarters in Golden, Colorado, as well as for its Velardeña Properties offices in Mexico, and exploration offices in Mexico and Argentina. The lease for the corporate headquarters office space was renegotiated and extended during the first quarter 2014. The new lease reflects an approximately 46% reduction in space and an approximately 44% reduction in cost beginning March 1, 2014. The new lease expires November 30, 2019. Payments associated with the corporate headquarters lease were recorded to rent expense by the Company in the amounts of $227,000 and $259,000 for the years ended December 31, 2015 and 2014, respectively. The Company cannot currently estimate the life of the Velardeña Properties or El Quevar project. The table above assumes that no annual maintenance payments will be made more than five years after December 31, 2015. If the Company continues mining and processing or evaluations of restart at the Velardeña Properties beyond five years, the Company expects that it would make annual maintenance payments of approximately $15,000 per year for the life of the Velardeña mine. If the Company continues to evaluate development opportunities at the El Quevar project, the Company expects that it would make annual maintenance payments of approximately $114,000 per year for the life of the El Quevar mine. Payments associated with other exploration concessions the Company owns are not included because the Company has not completed exploration work on these concessions. Exploration success is historically low and the Company has the right to terminate the payments and release the concessions at any time. Contingencies The Company has recorded loss contingencies of approximately $0.4 million and $2.6 million at December 31, 2015 and December 31, 2014, respectively as discussed in Note 13. |
Foreign Currency
Foreign Currency | 12 Months Ended |
Dec. 31, 2015 | |
Foreign Currency | |
Foreign Currency | 22. Foreign Currency The Company conducts exploration and mining activities primarily in Mexico and Argentina, and gains and losses on foreign currency transactions are related to those activities. The Company’s functional currency is the U.S. dollar but certain transactions are conducted in the local currencies resulting in foreign currency transaction gains or losses. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2015 | |
Segment Information | |
Segment Information | 23. Segment Information The Company’s sole activity is the mining, construction and exploration of mineral properties containing precious metals. The Company’s reportable segments are based upon the Company’s revenue producing activities and cash consuming activities. The Company reports two segments, one for its Velardeña Properties in Mexico and the other comprised of non-revenue producing activities including exploration, construction and general and administrative activities. Intercompany revenue and expense amounts have been eliminated within each segment in order to report on the basis that management uses internally for evaluating segment performance. The financial information relating to the Company’s segments is as follows: Revenue Costs Applicable to Sales Depreciation, Depletion and Amortization Exploration, El Quevar, Velardeña and Administrative Expense Pre-Tax loss Total Assets Capital Expenditures (in thousands ) The Year ended December 31, 2015 Velardeña Properties $ $ $ $ $ $ $ Corporate, Exploration & Other — — $ $ $ $ $ $ $ The Year ended December 31, 2014 Velardeña Properties $ $ $ $ $ $ $ Corporate, Exploration & Other — — $ $ $ $ $ $ $ All of the revenue for the two years presented was from the Company’s Velardeña Properties in Mexico (see Note 17). The revenue for 2015 was attributable to sales of precipitates and concentrates to three customers under varying agreements. The revenue for 2014 was attributable to sale of concentrates to one customer. During 2014 the Velardeña Properties were on care and maintenance until processing of mined material resumed in early November 2014, resulting in lower revenue and costs applicable to sales. The Company suspended operations at its Velardeña properties in November 2015 (see Note 1). The 2015 Velardeña Properties pre-tax loss includes a $13.2 million impairment charge recorded at September 30, 2015 (see Note 3). The impairment charge is also reflected in the reduction of the Velardeña Properties total assets for 2015. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions | |
Related Party Transactions Disclosure | 24. Related Party Transactions Since May, 2009 until her resignation on December 30, 2015, Deborah Friedman devoted approximately half of her time to serve as the Company’s Senior Vice President, General Counsel and Corporate Secretary and approximately half of her time to her legal practice at Davis Graham & Stubbs LLP (“DGS”) where she is a partner. During 2014 and 2015 the Company paid a monthly flat fee retainer of approximately $15,000 to DGS for approximately one half of Ms. Friedman’s time spent serving as the Company’s Senior Vice President, General Counsel and Corporate Secretary, which DGS subsequently remitted to Ms. Friedman, and the Company paid her customary hourly rate to DGS for any time spent by Ms. Friedman in excess of that threshold. Although she was an executive officer of the Company for Section 16(a) reporting purposes under the Securities Exchange Act of 1934, Ms. Friedman was not employed by the Company. For the years ended December 31, 2015 and 2014 the Company paid approximately $490,000 and $460,000 respectively to DGS for legal services, including the amounts relating to Ms. Friedman described above. The Company has been advised by DGS that these amounts represented a de minimis amount of DGS’s total revenue in each of the two years. At December 31, 2015 and 2014 the Company’s Consolidated Balance Sheets included in accounts payable and other accrued liabilities amounts owed to DGS of approximately $25,000 and $21,000 respectively. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events. | |
Subsequent Events | 25. Subsequent Events Stockholder approval of Sentient Note Conversion and Warrant Exercise Price Adjustment Subsequent to December 31, 2015 the Company’s stockholders approved, at a special meeting of the stockholders held on January 19, 2016, the issuance of shares of the Company’s common stock upon conversion of the Sentient Note (see Note 11). Pursuant to certain dilution adjustment provisions in the warrant agreements governing the September 2012 and 2014 Warrants, the exercise price of the warrants was adjusted downward as a result of stockholder approval of the conve rtibility of the Sentient Note. At January 19, 2016, the date of the stockholders’ approval, the lowest conversion price determinable for the Sentient Note, pursuant to the terms of the Sentient Note, was $0.29, a price equal to 90 percent of the 15-day VWAP for the period immediately preceding the Loan closing date of October 27, 2015. As a result, effective January 19, 2016, the number of shares of common stock issuable upon exercise of the September 2012 Warrants was increased from 4,031,409 shares to 5,084,193 shares (1,052,784 share increase) and the exercise price was reduced from $7.17 per share to $5.68 per share. The number of shares of common stock issuable upon exercise of the September 2014 Warrants was increased from 4,746,000 shares to 5,108,347 shares (362,347 share increase) and the exercise price was reduced from $1.21 per share to $1.01 per share. Conversion of Sentient Note and Warrant Exercise Price Adjustment Also subsequent to December 31, 2015, on February 11, 2016, Sentient converted approximately $3.9 million of principal and $0.1 million of accrued interest (representing the total amount of accrued interest at the conversion date) pursuant to the Sentient Note into 23,335,000 shares of the Company’s common stock at an exercise price of approximately $0.172 per share, reflecting 90% of the 15-day VWAP immediately preceding the conversion date. Following the conversion, approximately $1.1 million of principal remained outstanding. If the remaining principal and additional accrued interest from February 11, 2016 is not converted into the Company’s common stock, the Company would owe approximately $1.2 million to Sentient on the October 27, 2016 maturity date. As a result ofthe Sentient Note conversion on February 11, 2016, the number of shares of common stock issuable upon exercise of the September 2012 Warrants was increased pursuant to applicable anti-dilution provisions from 5,084,193 shares to 5,677,757 shares (593,564 share increase) and the exercise price was reduced from $5.68 per share to $5.09 per share. The number of shares of common stock issuable upon exercise of the September 2014 Warrants was increased from 5,108,347 shares to 5,365,983 shares (257,636 share increase) and the exercise price was reduced from $1.01 per share to $0.91 per share. If all or a portion of the remaining principal and interest under the Sentient Loan is converted at a lower conversion price than the Febr uary 11 $0.172 conversion price , the number of shares of common stock issuable upon exercise of the warrants would be further increased and the exercise price of the 2012 and 2014 Warrants would be further decreased. |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies | |
Basis of consolidation | a. Basis of consolidation All of the Company’s consolidated subsidiaries are 100% owned and as such the Company does not have a noncontrolling interest in any of its subsidiaries. All intercompany transactions and balances have been eliminated at consolidation. |
Translation of foreign currencies | b. Translation of foreign currencies Substantially all expenditures and sales are made in U.S. dollars. Accordingly, the Company and its subsidiaries use the U.S. dollar as their functional and reporting currency. |
Cash and cash equivalents | c. Cash and cash equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. |
Inventories | d. Inventories Metals inventory at the Velardeña Properties consisted of marketable products including concentrates and precipitates. Metals inventory was carried at the lower of average cost or net realizable value. Net realizable value represents the estimated future sales price of the product based on spot and futures metals prices through estimated sale and settlement dates, less the estimated costs to complete processing and bring the product to sale. Costs included in metals inventory included direct and indirect costs of mining and processing, including depreciation. The Company had no metals inventories at December 31, 2015 as the result of the suspension of operations at its Velardeña Properties during November 2015 (see Note 1). At December 31, 2014 the Company had written down its metals inventory to net realizable value with excess costs included in cost of sales and depreciation (see Note 7). Materials and supplies inventories are valued at the lower of average cost or net realizable value. Cost includes applicable taxes and freight. The Company routinely counts and evaluates its material and supplies to determine the existence of any obsolete stock that is subject to impairment (see Note 3). |
Mining properties, exploration and development costs | e . Mining properties, exploration and development costs The Company expenses general prospecting costs and the costs of acquiring and exploring unevaluated mineral properties. When a mineral property is determined to have proven and probable reserves, subsequent development costs are capitalized to mineral properties. For acquired mineral properties with proven and probable reserves, the Company capitalizes acquisition costs and subsequent development costs. When mineral properties are developed and operations commence, capitalized costs are charged to operations using the units-of-production method over proven and probable reserves. Upon abandonment or sale of a mineral property, all capitalized costs relating to the specific property are written off in the period abandoned or sold and a gain or loss is recognized in the accompanying Consolidated Statements of Operations and Comprehensive Loss. As discussed in Note 1, the Company is considered an exploration stage company under the criteria set forth by the SEC since it has not yet demonstrated the existence of proven or probable reserves at the Velardeña Properties, or any of the Company’s other properties. As such, the Company expenses costs as incurred related to the extraction of mineralized material at its Velardeña Properties. The Company established a cost basis for the mineralized material at the Velardeña Properties as a result of purchase accounting for the Company’s business combination transaction with ECU Silver Mining Inc. (“ECU”) in September 2011, the transaction pursuant to which the Company acquired the Velardeña Properties. Mineral properties acquired in the ECU merger were recorded at estimated fair market value based on valuations performed with the assistance of an independent appraisal firm and a minerals engineering company. Although the Company has not demonstrated the existence of proven and probable reserves, and the Company has not completed a pre-feasibility economic assessment, the Company had established the existence of mineralized material that was used in assigning value to mineral properties for purchase accounting purposes. The subsequent extraction of this mineralized material has provided a reasonable basis for the calculation of units-of-production depreciation for the cost basis in the mineral properties. On a quarterly basis the Company evaluates its exploration properties to determine if they meet the Company’s minimum requirements for continued evaluation. The rights to the properties that do not meet the minimum requirements are relinquished and the carrying values, if any, are written off and reflected in other operating gains and losses, net on the accompanying Consolidated Statements of Operations and Comprehensive Loss. Costs of exploration subsequent to the application of fresh start accounting have been and will continue to be expensed. |
Property, plant and equipment and long lived asset impairment | f. Property, plant and equipment and long lived asset impairment Buildings are depreciated using the straight—line method over the estimated useful lives of 30 to 40 years or the life of the mine whichever is shorter. Mining equipment and machinery, excluding the plant, are depreciated using the straight-line method over useful lives of three to eight years or the lease period, whichever is shorter. Mineral properties and the plant are depreciated using units of production based on estimated mineralized material. Other furniture and equipment are depreciated using the straight-line method over estimated useful lives of three to five years. Depreciation on plant and equipment used in the construction of an asset is capitalized to the constructed asset. As discussed above, the Company does not have any properties with proven or probable reserves including the the Velardeña Properties. Property, plant and equipment are recorded at cost and per the guidance of ASC 360 the Company assesses the recoverability of its property, plant and equipment, including goodwill, whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. If the sum of estimated future net cash flows on an undiscounted basis is less than the carrying amount of the related asset, impairment is considered to exist. The related impairment loss is measured by comparing estimated future net cash flows on a discounted basis or by comparing other market indicators to the carrying amount of the asset (see Notes 3 and 9). |
Asset Retirement Obligations | g. Asset Retirement Obligations The Company records asset retirement obligations (“ARO”) in accordance with ASC 410, “Asset Retirement and Environmental Obligations” (“ASC 410”), which establishes a uniform methodology for accounting for estimated reclamation and abandonment costs. According to ASC 410, the fair value of an ARO is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. An offsetting asset retirement cost (“ARC”) is capitalized as part of the carrying value of the assets with which it is associated, and depreciated over the useful life of the asset (see Note 14). The Company prepares estimates of the timing and amount of expected cash flows when an ARO is incurred. The fair value of the ARO is measured by discounting the expected cash flows using a discount rate that reflects the credit adjusted risk-free rate of interest. The Company records the fair value of an ARO when it is incurred and layer adjustments of the ARO are recorded as an adjustment to the corresponding ARC. The ARO is adjusted to reflect the passage of time (accretion cost) calculated by applying the discount rate implicit in the initial fair value measurement to the beginning-of-period carrying amount of the ARO. The Company records accretion costs to expense as incurred. |
Revenue Recognition | h. Revenue Recognition Following the guidance of ASC 605, “Revenue Recognition” (“ASC 605”), the Company recognizes “Revenue from the sale of metals” at the earliest point that both risk of loss and title transfer to the purchaser pursuant to the terms of the Company’s sales agreements. Prices for concentrate and precipitate sales are fixed according to terms included in the sales agreements, which generally call for final pricing based on average metals prices observed over specific periods that range from 10 days prior to the transfer of title to the month following the month the product is received by the purchaser. Revenue is recorded based on estimated metals contained in the product from assay data and using either actual or projected prices for the pricing period specified in the sales agreement. Upon final settlement revenue may be adjusted for changes in actual contained metals and final metals prices. The Company recognizes oxide plant lease fees and reimbursements for labor, utility and other costs as “Revenue from Oxide plant lease” in the Consolidated Statements of Operations and Comprehensive Loss following the guidance of ASC 605 regarding “income statement characterization of reimbursements received for “out-of-pocket” expenses incurred” and “reporting revenue gross as a principal versus net as an agent”. ASC 605 supports recording as gross revenue fees received for the reimbursement of expenses in situations where the recipient is the primary obligor and has certain discretion in the incurrence of the reimbursable expense. The actual costs incurred for the reimbursed labor, utility and other costs are reported as “Oxide plant lease costs” in the statement of operations. The Company recognizes lease fees during the period the fees are earned per the terms of the lease (see Note 17). |
Stock compensation | i. Stock compensation Stock based compensation costs are recognized per the guidance of ASC 718, “Compensation — Stock Compensation” (“ASC 718”), using a graded vesting attribution method whereby costs are recognized over the requisite service period for each separately vesting portion of the award (see Note 16). Stock grants are valued at their grant date at fair value which in the case of options requires the use of the Black-Scholes option pricing model. Per ASC 718 the grants may be classified as equity grants or liability grants depending on the terms of the grant. |
Net income (loss) per Share of Common Stock | j. Net income (loss) per Share of Common Stock Basic income (loss) per share is computed by dividing net income (loss) available to holders of the Company’s Common Stock by the weighted average number of shares of Common Stock outstanding for the period. Diluted income (loss) per share reflects the potential dilution that would occur if securities or other contracts to issue Common Stock were exercised or converted into Common Stock. At December 31, 2015 and 2014, all potentially dilutive shares were excluded from the computation of diluted earnings per share because to include them would have been anti-dilutive. |
Comprehensive Income (Loss) | k. Comprehensive Income (Loss) Comprehensive income (loss) is defined as all changes in equity (deficit), exclusive of transactions with stockholders, such as capital investments. Comprehensive income (loss) includes net income (loss) and changes in certain assets and liabilities that are reported directly in equity. For the years ended December 31, 2015 and 2014 Comprehensive Loss included the change in the market value of available for sale securities and is reported on the Consolidated Statements of Operations and Comprehensive Loss. |
Income Taxes | l. Income Taxes The Company accounts for income taxes in accordance with the provisions of ASC 740, “Income Taxes” (“ASC 740”), on a tax jurisdictional basis. The Company files United States and certain other foreign country income tax returns, and pays taxes reasonably determined to be due. The tax rules and regulations in these countries are highly complex and subject to interpretation. The Company’s income tax returns are subject to examination by the relevant taxing authorities and in connection with such examinations, disputes can arise with the taxing authorities over the interpretation or application of certain tax rules within the country involved. In accordance with ASC 740, the Company identifies and evaluates uncertain tax positions, and recognizes the impact of uncertain tax positions for which there is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the balance sheet. The Company classifies income tax related interest and penalties as income tax expense. |
Recently Adopted Standards | m. Recently Adopted Standards In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, “Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”). The purpose of the standard update is to simplify presentation of debt issuance costs. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Amortization of the discount or premium shall be reported as interest expense in the case of liabilities or as interest income in the case of assets. Amortization of debt issuance costs also shall be reported as interest expense. ASU No. 2015-03 becomes effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted and the Company adopted ASU 2015-03 in 2015. The adoption of this standard did not have a material impact on the Company’s financial position or results of operations. In April 2014 the FASB issued ASU No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (“ASU 2014-08”). ASU 2014-08 changes the criteria for reporting discontinued operations while enhancing disclosures in this area. Under ASU 2014-08, only disposals representing a strategic shift in operations will be presented as discontinued operations. Additionally, ASU 2014-08 requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. ASU 2014-08 became effective for the Company January 1, 2015. The adoption of ASU 2014-08 did not have a material impact on the Company’s consolidated financial position or results of operations. In July 2013 the FASB issued ASU No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” (“ASU 2013-11”), which requires an unrecognized tax benefit to be presented as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward that the entity intends to use and is available for settlement at the reporting date. ASU 2013-11 became effective for the Company January 1, 2014. The adoption of ASU 2013-11 has not had a material impact on the Company’s consolidated financial position or results of operations. |
Recently Issued Pronouncements | n. Recently Issued Pronouncements In January 2016, the FASB issued ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”) which amended its standards related to the accounting of certain financial instruments. This amendment addresses certain aspects of recognition, measurement, presentation and disclosure. The new rules will become effective for annual and interim periods beginning after December 15, 2017. Early adoption is not permitted. We are in the process of evaluating the impact the amendment will have on our consolidated financial position or results of operations. In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes: Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”). ASU 2015-17 requires that deferred tax assets and liabilities be classified as noncurrent on the balance sheet. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. The adoption of this update is not expected to have a material impact on the Company’s consolidated financial position or results of operations. In July 2015, the FASB issued ASU No. 2015-11, “Inventory, Simplifying the Measurement of Inventory” (“ASU 2015-11”). ASU 2015-11 affects reporting entities that measure inventory using first-in, first-out or average cost. ASU 2015-11 requires that inventory be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for annual periods beginning after December 15, 2016, with early adoption permitted. The adoption of ASU 2015-11 is not expected to have a material impact on the consolidated financial position or results of operations. On August 27, 2014, the FASB issued ASU No. 2014-15, “ Presentation of Financial Statements - Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15 will require management to evaluate whether there are conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the financial statements are issued on both an interim and annual basis. Management will be required to provide certain footnote disclosures if it concludes that substantial doubt exists or when its plans alleviate substantial doubt about the Company’s ability to continue as a going concern. ASU 2014-15 becomes effective for annual periods beginning in 2016 and for interim reporting periods starting in the first quarter of 2017. The Company does not expect the adoption of this amendment to have a material impact on its consolidated financial position or results of operations. In May 2014, FASB and the International Accounting Standards Board issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. In addition, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing and uncertainty of revenue that is recognized and the related cash flows. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017; early adoption is not permitted. ASU 2014-09 was originally effective December 15, 2016 but ASU 2015-14 deferred the effective date by one year. The Company is evaluating the financial statement implications of adopting ASU 2014-09 but does not believe adoption of ASU 2014-09 will have a material impact on its consolidated financial position or results of operations. |
Impairment of Long Lived Asse33
Impairment of Long Lived Assets (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Impairment of Long Lived Assets | |
Schedule of details of components of the impairment of long lived assets | Net Book Value Net Book Value Prior to Sept. 30, 2015 After Impairment at Impairment Impairment at Sept. 30, 2015 Charges Sept. 30, 2015 (in thousands) Mineral and exploration properties $ $ $ Exploration properties — Buildings, plant and equipment — Asset retirement cost — Other working capital, net ) — ) $ $ $ |
Cash and Cash Equivalents and34
Cash and Cash Equivalents and Short-Term Investments (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Cash and Cash Equivalents and Short-Term Investments | |
Schedule of short term-investments | December 31, 2015 Cost Estimated Fair Value Carrying Value (in thousands) Investments: Short-term: Available for sale common stock $ $ $ Total available for sale Total short term $ $ $ |
Prepaid Expenses and Other As35
Prepaid Expenses and Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Prepaid Expenses and Other Assets | |
Schedule of prepaid expenses and other current assets | December 31, 2015 2014 (in thousands) Prepaid insurance $ $ Prepaid contractor fees and vendor advances Taxes receivable — Recoupable deposits and other $ $ |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Inventories | |
Schedule of inventories at the Velardena Properties | December 31, 2015 2014 (in thousands) Metals inventory $ — $ In-process inventory — Material and supplies $ $ |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Schedule of components of property, plant and equipment | December 31, 2015 2014 (in thousands) Mineral properties $ $ Exploration properties Royalty properties Buildings Mining equipment and machinery Other furniture and equipment Asset retirement cost Less: Accumulated depreciation & amortization ) ) |
Schedule of details of components of the impairment of long lived assets | Net Book Value Net Book Value Prior to Sept. 30, 2015 After Impairment at Impairment Impairment at Sept. 30, 2015 Charges Sept. 30, 2015 (in thousands) Mineral and exploration properties $ $ $ Exploration properties — Buildings, plant and equipment — Asset retirement cost — Other working capital, net ) — ) $ $ $ |
Velardena properties | Mineral Properties Asset Group | |
Schedule of details of components of the impairment of long lived assets | Impairment Gross Value Charge Gross Value Prior to Minerals After Impairment at Properties Impairment at Sept. 30, 2015 Asset Group Sept. 30, 2015 (in thousands) Mineral properties $ $ $ Exploration properties Royalty properties — Buildings — Mining equipment and machinery — Other furniture and equipment — Asset retirement cost |
Accounts Payable and Other Ac38
Accounts Payable and Other Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accounts Payable and Other Accrued Liabilities | |
Schedule of accounts payable and other accrued liabilities | December 31, 2015 2014 (in thousands) Accounts payable and accruals $ $ Accrued employee compensation and benefits $ $ |
Asset Retirement and Reclamat39
Asset Retirement and Reclamation Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Asset Retirement and Reclamation Liabilities | |
Summary of activity in the Velardena Properties ARO | December 31, 2015 2014 (in thousands) Beginning balance $ $ Changes in estimates, and other ) ) Accretion expense Ending balance $ $ |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Measurements | |
Schedule of financial assets and liabilities at fair value by respective level of the fair value hierarchy | Level 1 Level 2 Level 3 Total (in thousands) At December 31, 2015 Assets: Cash and cash equivalents $ $ — $ — $ Trade accounts receivable — — Marketable securities — — $ $ — $ — $ Liabilities: Warrant liability $ — $ — $ $ Derivative liability — — $ — $ — $ $ At December 31, 2014 Assets: Cash and cash equivalents $ $ — $ — $ Trade accounts receivable — — — — $ $ — $ — $ Liabilities: Warrant liability $ — $ — $ $ $ — $ — $ $ |
Schedule of significant inputs to the valuation model | December 31, 2015 2014 Company’s ending stock price $ $ Company’s stock volatility % % Applicable risk free interest rate % % |
Summary of change in fair value of the warrant liability | Fair Value Measurements Using Significant Unobservable Inputs (level 3) Warrant Liabilities Derivative Liability (in thousands) Beginning balance at January 1, 2014 $ — $ — Adjustment to record 2012 warrants as a liability (Note 16) — Issuance of warrants — Change in estimated fair value ) — Ending balance at December 31, 2014 $ $ — Sentient Note, October 27, 2015 — Change in estimated fair value ) ) Ending balance at December 31, 2015 $ $ |
Summary of the Company's non-recurring fair value measurements | Level 1 Level 2 Level 3 Total (in thousands) At September 30, 2015 Assets: Mineral properties $ — $ — $ $ $ — $ — $ $ |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes | |
Schedule of income (loss) from operations before income taxes by country | For the Year Ended December 31, 2015 2014 (in thousands) United States $ ) $ ) Other Countries ) ) $ ) $ ) |
Summary of reconciliation of the provision for income taxes computed at the statutory rate to the provision for income taxes | For the Year Ended December 31, 2015 2014 (in thousands) Tax expense (benefit) at US rate of 34% $ ) $ ) Other adjustments: Rate differential of other jurisdictions Effects of foreign earnings ) ) Change in valuation allowance Provision to tax return true-ups ) ) Exchange rate changes on deferred tax assets Other ) Income tax provision $ — $ — |
Schedule of components of the deferred tax assets and deferred tax liabilities | For the years ended December 31, 2015 2014 (in thousands) Deferred tax assets: Net operating loss carryforwards $ $ Stock-based compensation Property, plant and equipment Other Less: Valuation allowance ) ) Total deferred tax assets Deferred tax liabilities: Property, plant and equipment ) ) Other ) ) Total deferred tax liabilities ) ) Net deferred tax asset (liability) $ — $ — |
Schedule of reconciliation of the beginning and ending amount of gross unrecognized tax benefits | The Year Ended December 31, 2015 2014 (in thousands) Gross unrecognized tax benefits at beginning of period $ $ Increases for tax positions taken during prior years Decreases relating to settlements with taxing authorities Reductions due to lapse of statute of limitations ) ) Gross unrecognized tax benefits at end of period $ $ |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Schedule of assumptions used for determining fair value of option | Grant Date November 12, 2014 Expected volatility % Weighted average volatility % Expected dividend yield — Expected term (in years) Risk-free rate % |
Summary of the status of the Company's common stock warrants | For the Year Ended December 31, 2015 2014 Common Stock Warrants Number of Underlying Shares Weighted Average Exercise Price Per Share Number of Underlying Shares Weighted Average Exercise Price Per Share Outstanding at beginning of year $ $ Granted during period — — Dilution adjustment — — Expired during period — — ) Exercised during period — — — — Outstanding at end of year $ $ |
Equity Plan | |
Schedule of status of the restricted stock grants issued under the Equity Plan | The Year Ended December 31, 2015 2014 Restricted Stock Grants Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Outstanding at beginning of year $ $ Granted during the year — — Restrictions lifted during the year ) ) Forfeited during the year — — — — Outstanding at end of year $ $ |
Schedule of status of the stock option grants issued under the Equity Plan | The Year Ended December 31, 2015 2014 Equity Plan Options Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Outstanding at beginning of year $ $ Granted during the year — — Restrictions lifted during the year — — — — Forfeited during the year — $ — ) $ Outstanding at end of year $ $ Exercisable at end of period $ $ Granted and vested $ $ |
Deferred Compensation Plan | |
Schedule of status of the RSU grants issued under the Deferred Compensation Plan | For the Year Ended December 31, 2015 2014 Restricted Stock Units Number of Underlying Shares Weighted Average Grant Date Fair Value Per Share Number of Underlying Shares Weighted Average Grant Date Fair Value Per Share Outstanding at beginning of year $ $ Granted during the year Restrictions lifted during the year — — — — Forfeited during the year — — — — Outstanding at end of year $ $ |
Derivative Income (Tables)
Derivative Income (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Level 3 | |
Derivative Income. | |
Fair value hierarchy | At December 31, The Company’s 2015 2014 Closing stock price $ $ Volatility % % Risk-free rate % % |
Cash flow information (Tables)
Cash flow information (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Cash flow information | |
Schedule of reconciliation of net loss for the period to cash used in operations | The Year Ended December 31, 2015 2014 (in thousands) Cash flows from operating activities: Net loss $ ) $ ) Adjustments to reconcile net loss to net cash used in operating activities: Amortization and depreciation Gain on sale of assets, net ) ) Accretion of asset retirement obligation Asset write off Write off of loss contingency, net ) ) Decrease in warrant liability ) ) Decrease in derivative liability ) Amortization of deferred loan costs — Impairment of long lived assets — Foreign exchange gain on loss contingency ) ) Stock compensation Changes in operating assets and liabilities: (Increase) decrease in trade accounts receivable ) Decrease in prepaid expenses and other assets Decrease (increase) in inventories ) Decrease in value added tax receivable (net) Increase in accrued interest payable net of amounts capitalized — (Decrease) increase in accounts payable and accrued liabilities ) Increase in deferred revenue — (Decrease) increase in deferred leasehold payments ) Decrease in reclamation liability ) ) Net cash used in operating activities $ ) $ ) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies | |
Schedule of non-cancellable operating lease commitments | 2016 2017 2018 2019 2020 Thereafter El Quevar mining concessions (estimated) $ $ $ $ $ $ — Velardeña mining consessions (estimated) $ $ $ $ $ $ — Office space $ $ $ $ $ — $ — |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Segment Information | |
Schedule of financial information relating to segments | Revenue Costs Applicable to Sales Depreciation, Depletion and Amortization Exploration, El Quevar, Velardeña and Administrative Expense Pre-Tax loss Total Assets Capital Expenditures (in thousands ) The Year ended December 31, 2015 Velardeña Properties $ $ $ $ $ $ $ Corporate, Exploration & Other — — $ $ $ $ $ $ $ The Year ended December 31, 2014 Velardeña Properties $ $ $ $ $ $ $ Corporate, Exploration & Other — — $ $ $ $ $ $ $ |
Nature of Operations (Details)
Nature of Operations (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2015USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($)property | Dec. 31, 2014USD ($) | |
Basis of Preparation of Financial Statements | ||||
Velardena shutdown and care & maintenance costs | $ 1,228 | $ 2,457 | ||
Velardena properties | ||||
Basis of Preparation of Financial Statements | ||||
Interest acquired (as a percent) | 100.00% | 100.00% | ||
Velardena shutdown and care & maintenance costs | $ 1,200 | |||
Forecast | Velardena properties | ||||
Basis of Preparation of Financial Statements | ||||
Velardena shutdown and care & maintenance costs | $ 1,200 | |||
Oxide Plant Asset Group | ||||
Basis of Preparation of Financial Statements | ||||
Number of exploration properties | property | 10 | |||
Oxide Plant Asset Group | Velardena properties | ||||
Basis of Preparation of Financial Statements | ||||
Velardena shutdown and care & maintenance costs | $ 1,200 | |||
Quarterly holding costs to be incurred if operations remain suspended | $ 300 | |||
Oxide Plant Asset Group | Forecast | Velardena properties | ||||
Basis of Preparation of Financial Statements | ||||
Procceds from lease | 5,000 | |||
Minimum | Oxide Plant Asset Group | Forecast | Velardena properties | ||||
Basis of Preparation of Financial Statements | ||||
Procceds from lease | $ 4,000 |
Liquidity, Capital Resources 48
Liquidity, Capital Resources and Going Concern (Details) | Feb. 11, 2016USD ($)item$ / sharesshares | Jan. 19, 2016item | Oct. 27, 2015USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) |
Liquidity and Capital Resources | ||||||||
Cash and cash equivalents | $ 4,077,000 | $ 4,077,000 | $ 8,579,000 | $ 19,146,000 | ||||
Difference of cash and cash equivalents between periods | 4,500,000 | 4,500,000 | ||||||
Shutdown and care and maintenance costs | 1,228,000 | 2,457,000 | ||||||
Exploration expenditures | 3,634,000 | 5,528,000 | ||||||
General and administrative expenses | 4,242,000 | 4,642,000 | ||||||
Proceeds from sales of non strategic property and equipment | 500,000 | |||||||
Proceeds from VAT refunds | 800,000 | |||||||
Reduction in working capital | 1,300,000 | |||||||
Operating Leases, Income Statement, Lease Revenue | 653,000 | |||||||
Costs and expenses forecasted | 38,229,000 | $ 22,567,000 | ||||||
Sentient Loan | Convertible loan | ||||||||
Liquidity and Capital Resources | ||||||||
Principal amount of loan | $ 5,000,000 | |||||||
Consecutive trading days, period | item | 15 | |||||||
Interest rate (as a percent) | 9.00% | |||||||
Subsequent Event | Sentient Loan | Convertible loan | ||||||||
Liquidity and Capital Resources | ||||||||
Amount of debt converted to equity | $ 3,900,000 | |||||||
Amount of accrued interest converted to equity | $ 100,000 | |||||||
Equity shares issued upon conversion of debt | shares | 23,335,000 | |||||||
Exercise price per share of shares converted from debt | $ / shares | $ 0.172 | |||||||
Stock price trigger (as a percent) | 90.00% | 90.00% | ||||||
Consecutive trading days, period | item | 15 | 15 | ||||||
Debt outstanding | $ 1,100,000 | |||||||
Amount payable on failing to convert debt and accrued interest | $ 1,200,000 | |||||||
Forecast | ||||||||
Liquidity and Capital Resources | ||||||||
Cash and cash equivalents | $ 500,000 | |||||||
General and administrative expenses | 3,400,000 | |||||||
Reduction in working capital | (1,100,000) | |||||||
Costs and expenses forecasted | 8,400,000 | |||||||
Other exploration and property holding costs | 800,000 | |||||||
Exploration, project assessment and development costs | 1,400,000 | |||||||
Payments for equity taxes owned in foreign jurisdiction | 400,000 | |||||||
Period Preceding Loan Closure Date | Sentient Loan | Convertible loan | ||||||||
Liquidity and Capital Resources | ||||||||
Stock price trigger (as a percent) | 90.00% | |||||||
Period Preceding Loan Conversion Date | Sentient Loan | Convertible loan | ||||||||
Liquidity and Capital Resources | ||||||||
Stock price trigger (as a percent) | 90.00% | |||||||
Period Preceding Loan Conversion Date | Subsequent Event | Sentient Loan | Convertible loan | ||||||||
Liquidity and Capital Resources | ||||||||
Stock price trigger (as a percent) | 90.00% | |||||||
Consecutive trading days, period | item | 15 | |||||||
Velardena properties | ||||||||
Liquidity and Capital Resources | ||||||||
Negative operating margin | 2,500,000 | |||||||
Shutdown and care and maintenance costs | 1,200,000 | |||||||
Exploration expenditures | 3,600,000 | |||||||
Velardena properties | Forecast | ||||||||
Liquidity and Capital Resources | ||||||||
Shutdown and care and maintenance costs | 1,200,000 | |||||||
El Quevar Project | ||||||||
Liquidity and Capital Resources | ||||||||
Shutdown and care and maintenance costs | 1,100,000 | |||||||
El Quevar Project | Forecast | ||||||||
Liquidity and Capital Resources | ||||||||
Ongoing maintenance activities and property holding costs | 500,000 | |||||||
Oxide Plant Asset Group | Velardena properties | ||||||||
Liquidity and Capital Resources | ||||||||
Shutdown and care and maintenance costs | $ 1,200,000 | |||||||
Net revenue from lease | $ 500,000 | |||||||
Oxide Plant Asset Group | Velardena properties | Forecast | ||||||||
Liquidity and Capital Resources | ||||||||
Operating Leases, Income Statement, Lease Revenue | $ 4,800,000 |
Impairment of Long Lived Asse49
Impairment of Long Lived Assets (Details) $ in Thousands | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) | Jun. 30, 2013USD ($) | |
Impairment of Long Lived Assets | |||||
Net deferred tax asset (liability) | $ 0 | $ 0 | |||
Details of components of the impairment of long lived assets | |||||
Impairment Charges | $ 13,181 | ||||
Mineral and exploration properties | |||||
Details of components of the impairment of long lived assets | |||||
Net Book Value | $ 6,000 | ||||
Buildings, plant and equipment | |||||
Details of components of the impairment of long lived assets | |||||
Net Book Value After Impairment | $ 3,236 | $ 3,236 | |||
Buildings, plant and equipment | Prior to impairment | |||||
Details of components of the impairment of long lived assets | |||||
Net Book Value After Impairment | 3,236 | 3,236 | |||
Asset retirement cost | |||||
Details of components of the impairment of long lived assets | |||||
Impairment Charges | 417 | ||||
Asset retirement cost | Prior to impairment | |||||
Details of components of the impairment of long lived assets | |||||
Net Book Value After Impairment | 417 | 417 | |||
Velardena properties | |||||
Impairment of Long Lived Assets | |||||
Number of asset groups | item | 2 | ||||
Details of components of the impairment of long lived assets | |||||
Impairment Charges | 13,181 | $ 0 | |||
Net Book Value After Impairment | 3,718 | 3,718 | |||
Velardena properties | Prior to impairment | |||||
Details of components of the impairment of long lived assets | |||||
Net Book Value After Impairment | 16,899 | 16,899 | |||
Velardena properties | Impairment adjustment | |||||
Details of components of the impairment of long lived assets | |||||
Impairment Charges | 13,181 | ||||
Velardena properties | Mineral and exploration properties | |||||
Details of components of the impairment of long lived assets | |||||
Impairment Charges | 12,306 | ||||
Net Book Value After Impairment | 1,354 | 1,354 | |||
Velardena properties | Mineral and exploration properties | Prior to impairment | |||||
Details of components of the impairment of long lived assets | |||||
Net Book Value After Impairment | 13,660 | 13,660 | |||
Velardena properties | Exploration properties | |||||
Details of components of the impairment of long lived assets | |||||
Impairment Charges | 458 | ||||
Velardena properties | Exploration properties | Prior to impairment | |||||
Details of components of the impairment of long lived assets | |||||
Net Book Value After Impairment | 458 | 458 | |||
Velardena properties | Exploration properties | Impairment adjustment | |||||
Details of components of the impairment of long lived assets | |||||
Impairment Charges | 458 | ||||
Velardena properties | Asset retirement cost | Impairment adjustment | |||||
Details of components of the impairment of long lived assets | |||||
Impairment Charges | 417 | ||||
Velardena properties | Other working capital, net | |||||
Details of components of the impairment of long lived assets | |||||
Net Book Value After Impairment | (872) | (872) | |||
Velardena properties | Other working capital, net | Prior to impairment | |||||
Details of components of the impairment of long lived assets | |||||
Net Book Value After Impairment | (872) | (872) | |||
Velardena properties | Materials and supplies inventory | |||||
Impairment of Long Lived Assets | |||||
Obsolescence charge reflected in shutdown costs | $ 300 | ||||
Velardena properties | Mineral Properties Asset Group | Sales of similar properties | |||||
Details of components of the impairment of long lived assets | |||||
Net Book Value | 1,400 | 1,400 | |||
Velardena properties | Mineral Properties Asset Group | Materials and supplies inventory | |||||
Impairment of Long Lived Assets | |||||
Obsolescence charge reflected in shutdown costs | 400 | ||||
Reduction in reserve for obsolescence. | $ 100 | ||||
Velardena properties | Oxide Plant Asset Group | |||||
Details of components of the impairment of long lived assets | |||||
Net Book Value | $ 1,300 | $ 1,300 |
Summary of Significant Accoun50
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Nature of Operations | ||
Ownership percentage of subsidiaries | 100.00% | |
Revenue Recognition | ||
Number of days used for observing average prices of metals | 10 days | |
Inventories | ||
Metals inventory | $ 0 | $ 477 |
Buildings | Minimum | ||
Property, plant and equipment and long-lived asset impairment | ||
Useful life | 30 years | |
Buildings | Maximum | ||
Property, plant and equipment and long-lived asset impairment | ||
Useful life | 40 years | |
Mining equipment and machinery | Minimum | ||
Property, plant and equipment and long-lived asset impairment | ||
Useful life | 3 years | |
Mining equipment and machinery | Maximum | ||
Property, plant and equipment and long-lived asset impairment | ||
Useful life | 8 years | |
Other furniture and equipment | Minimum | ||
Property, plant and equipment and long-lived asset impairment | ||
Useful life | 3 years | |
Other furniture and equipment | Maximum | ||
Property, plant and equipment and long-lived asset impairment | ||
Useful life | 5 years |
Cash and Cash Equivalents and51
Cash and Cash Equivalents and Short-term Investments (Details) $ in Thousands | Dec. 31, 2015USD ($) |
Investments: | |
Available for sale common stock | $ 199 |
Total available for sale | 199 |
Total short term | 199 |
Total short term | 72 |
Estimated Fair Value. | |
Investments: | |
Available for sale common stock | 72 |
Total available for sale. | 72 |
Total short term | 72 |
Carrying Value. | |
Investments: | |
Available for sale common stock | 72 |
Total available for sale. | 72 |
Total short term | $ 72 |
Prepaid Expenses and Other As52
Prepaid Expenses and Other Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Prepaid Expenses and Other Assets | ||
Prepaid insurance | $ 302 | $ 542 |
Prepaid contractor fees and vendor advances | 12 | 100 |
Taxes receivable | 90 | |
Recoupable deposits and other | 137 | 103 |
Prepaid expenses and other assets | $ 451 | $ 835 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Metals inventory | $ 0 | $ 477 |
In-process inventory | 307 | |
Material and supplies | 330 | 713 |
Inventories | 330 | 1,497 |
Inventory write down charged to cost of metals sold | 1,200 | |
Inventory write down charged to depreciation expense | $ 700 | |
Velardena properties | Materials and supplies inventory | ||
Obsolescence charge reflected in shutdown costs | $ 300 |
Value added tax receivable (Det
Value added tax receivable (Details) | 12 Months Ended |
Dec. 31, 2015 | |
Value added tax receivable | |
Expected period within which current amount of VAT will be recovered | 1 year |
Property, Plant and Equipment55
Property, Plant and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Property, plant and equipment | ||
Property, plant and equipment, gross | $ 35,849 | $ 50,255 |
Less: Accumulated depreciation & amortization | (24,724) | (21,224) |
Property, plant and equipment, net | 11,125 | 29,031 |
Mineral properties | ||
Property, plant and equipment | ||
Property, plant and equipment, gross | 9,630 | 22,397 |
Exploration properties | ||
Property, plant and equipment | ||
Property, plant and equipment, gross | 2,518 | 2,743 |
Royalty properties | ||
Property, plant and equipment | ||
Property, plant and equipment, gross | 200 | 200 |
Buildings | ||
Property, plant and equipment | ||
Property, plant and equipment, gross | 4,377 | 4,377 |
Mining equipment and machinery | ||
Property, plant and equipment | ||
Property, plant and equipment, gross | 16,998 | 17,695 |
Other furniture and equipment | ||
Property, plant and equipment | ||
Property, plant and equipment, gross | 841 | 841 |
Asset retirement cost | ||
Property, plant and equipment | ||
Property, plant and equipment, gross | $ 1,285 | $ 2,002 |
Property, Plant and Equipment -
Property, Plant and Equipment - Impairments (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($)ha | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($)haitem | |
Property, plant and equipment | |||||
Impairment Charges | $ 13,181 | ||||
Proceeds from sale of assets | 789 | $ 982 | |||
Gain on sale of assets | 719 | 689 | |||
Property, plant and equipment, gross | 35,849 | 50,255 | |||
Zacatecas District | |||||
Property, plant and equipment | |||||
Proceeds from sale of assets | 700 | ||||
Gain on sale of assets | $ 500 | ||||
Number of Mining Concessions Sold | item | 45 | ||||
Area in Hectares | ha | 770 | ||||
Velardena properties | |||||
Property, plant and equipment | |||||
Impairment Charges | $ 13,181 | $ 0 | |||
Property, plant and equipment, gross | 36,057 | $ 36,057 | |||
Peruvian Exploration Properties | |||||
Property, plant and equipment | |||||
Proceeds from sale of assets | 300 | 200 | |||
Area in Hectares | ha | 1,100 | ||||
Amount of Agreement to Sell Property | $ 500 | ||||
Prior to impairment | Velardena properties | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 49,238 | 49,238 | |||
Impairment adjustment | Velardena properties | |||||
Property, plant and equipment | |||||
Impairment Charges | 13,181 | ||||
Mineral properties | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 9,630 | 22,397 | |||
Mineral properties | Velardena properties | |||||
Property, plant and equipment | |||||
Impairment Charges | 13,200 | ||||
Property, plant and equipment, gross | 9,630 | 9,630 | |||
Mineral properties | Prior to impairment | Velardena properties | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 21,936 | 21,936 | |||
Mineral properties | Impairment adjustment | Velardena properties | |||||
Property, plant and equipment | |||||
Impairment Charges | 12,306 | ||||
Exploration properties | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 2,518 | 2,743 | |||
Exploration properties | Velardena properties | |||||
Property, plant and equipment | |||||
Impairment Charges | 458 | ||||
Property, plant and equipment, gross | 2,543 | 2,543 | |||
Exploration properties | Prior to impairment | Velardena properties | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 3,001 | 3,001 | |||
Exploration properties | Impairment adjustment | Velardena properties | |||||
Property, plant and equipment | |||||
Impairment Charges | 458 | ||||
Royalty properties | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 200 | 200 | |||
Royalty properties | Velardena properties | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 200 | 200 | |||
Royalty properties | Prior to impairment | Velardena properties | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 200 | 200 | |||
Buildings | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 4,377 | 4,377 | |||
Buildings | Velardena properties | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 4,377 | 4,377 | |||
Buildings | Prior to impairment | Velardena properties | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 4,377 | 4,377 | |||
Mining equipment and machinery | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 16,998 | 17,695 | |||
Mining equipment and machinery | Argentina | |||||
Property, plant and equipment | |||||
Proceeds from sale of assets | 100 | ||||
Mining equipment and machinery | Velardena properties | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 17,181 | 17,181 | |||
Mining equipment and machinery | Peruvian Exploration Properties | |||||
Property, plant and equipment | |||||
Proceeds from sale of assets | 500 | ||||
Gain on sale of assets | 200 | ||||
Mining equipment and machinery | Prior to impairment | Velardena properties | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 17,181 | 17,181 | |||
Other furniture and equipment | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 841 | 841 | |||
Other furniture and equipment | Velardena properties | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 841 | 841 | |||
Other furniture and equipment | Prior to impairment | Velardena properties | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 841 | 841 | |||
Asset retirement cost | |||||
Property, plant and equipment | |||||
Impairment Charges | 417 | ||||
Property, plant and equipment, gross | $ 1,285 | $ 2,002 | |||
Asset retirement cost | Velardena properties | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 1,285 | 1,285 | |||
Asset retirement cost | Prior to impairment | Velardena properties | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | $ 1,702 | 1,702 | |||
Asset retirement cost | Impairment adjustment | Velardena properties | |||||
Property, plant and equipment | |||||
Impairment Charges | 417 | ||||
Mineral and exploration properties | Velardena properties | |||||
Property, plant and equipment | |||||
Impairment Charges | $ 12,800 |
Accounts Payable and Other Ac57
Accounts Payable and Other Accrued Liabilities (Details) | 12 Months Ended | |
Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) | |
Accounts Payable and Other Accrued Liabilities | ||
Accounts payable and accruals | $ 599,000 | $ 893,000 |
Accrued employee compensation and benefits | 545,000 | 746,000 |
Accounts payable and other accrued liabilities | 1,144,000 | 1,639,000 |
Accrued vacation | 100,000 | 100,000 |
Withholding taxes and benefits payable | 400,000 | 600,000 |
Liabilities Pertaining to Corporate Administrative Activities | ||
Accounts Payable and Other Accrued Liabilities | ||
Accounts payable and accruals | $ 300,000 | 200,000 |
KELTIP Units | KELTIP | ||
Accounts Payable and Other Accrued Liabilities | ||
Accrued employee compensation and benefits | 93,000 | |
KELTIP units granted | item | 0 | |
Velardena properties | ||
Accounts Payable and Other Accrued Liabilities | ||
Accounts payable and accruals | $ 300,000 | 700,000 |
Accrued employee compensation and benefits | $ 200,000 | $ 300,000 |
Convertible notes payable (Deta
Convertible notes payable (Details) | Feb. 11, 2016USD ($)item$ / sharesshares | Jan. 19, 2016item$ / shares | Oct. 27, 2015USD ($)item$ / shares | Dec. 31, 2015USD ($) |
Interest expense associated to amortization of loan costs | $ 54,000 | |||
Convertible note payable (Note 11) | 3,702,000 | |||
Derivative liability | 488,000 | |||
Sentient Loan | ||||
Fair value of imbedded derivative | $ 1,100,000 | 500,000 | ||
Gain (loss) on imbedded derivative | 600,000 | |||
Sentient Loan | Convertible loan | ||||
Principal amount of loan | $ 5,000,000 | |||
Stock price trigger (in dollars per share) | $ / shares | $ 0.29 | |||
Consecutive trading days, period | item | 15 | |||
Interest rate (as a percent) | 9.00% | |||
Legal and other associated costs | $ 300,000 | |||
Interest expense associated to amortization of loan costs | $ 54,000 | |||
Maximum penalty for not registering the issued shares (as a percent) | 3.00% | |||
Effective interest rate (as a percent) | 21.00% | |||
Subsequent Event | Sentient Loan | Convertible loan | ||||
Stock price trigger (in dollars per share) | $ / shares | $ 0.29 | |||
Stock price trigger (as a percent) | 90.00% | 90.00% | ||
Consecutive trading days, period | item | 15 | 15 | ||
Amount of debt converted to equity | $ 3,900,000 | |||
Amount of accrued interest converted to equity | $ 100,000 | |||
Equity shares issued upon conversion of debt | shares | 23,335,000 | |||
Exercise price per share of shares converted from debt | $ / shares | $ 0.172 | |||
Debt outstanding | $ 1,100,000 | |||
Period Preceding Loan Closure Date | Sentient Loan | Convertible loan | ||||
Stock price trigger (as a percent) | 90.00% | |||
Period Preceding Loan Conversion Date | Sentient Loan | Convertible loan | ||||
Stock price trigger (as a percent) | 90.00% | |||
Period Preceding Loan Conversion Date | Subsequent Event | Sentient Loan | Convertible loan | ||||
Stock price trigger (as a percent) | 90.00% | |||
Consecutive trading days, period | item | 15 |
Asset Retirement Obligations (D
Asset Retirement Obligations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2012 | |
Summary of activity in the Velardena Operations ARO | |||
Beginning balance | $ 2,685 | ||
Accretion expense | 198 | $ 200 | |
Ending balance | 2,546 | 2,685 | |
Velardena properties | |||
Asset Retirement and Reclamation Liabilities | |||
Third party estimated closure plan | $ 1,900 | ||
Estimated ARO and ARC recorded at the time of the acquisition | 3,500 | ||
Amortization expense related to the ARC | 200 | ||
Summary of activity in the Velardena Operations ARO | |||
Beginning balance | 2,582 | 2,467 | |
Changes in estimates, and other | (300) | (85) | |
Accretion expense | 198 | 200 | |
Ending balance | 2,480 | 2,582 | |
El Quevar Project | |||
Summary of activity in the Velardena Operations ARO | |||
Beginning balance | 100 | ||
Ending balance | $ 100 | $ 100 |
Other Liabilities (Details)
Other Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Other Liabilities, Current | $ 556 | $ 2,551 |
Estimated interest and penalties | 0 | |
Interest and penalties accrued | 0 | 0 |
Deferred revenue | 500 | |
Loss Contingency Accrual | 2,300 | |
Third party contractor in Mexico | ||
Loss Contingency Accrual | 100 | |
Sentient Loan | ||
Accrued interest | 100 | |
Argentina Equity Tax 2009 Through 2012 | ||
Net income tax due | 400 | |
Accrued income taxes, net | 200 | |
Estimated interest and penalties | 200 | |
Interest and penalties accrued | $ 200 | |
Loss Contingency Accrual | $ 200 |
Fair value measurements (Detail
Fair value measurements (Details) - USD ($) $ / shares in Units, $ in Thousands | Oct. 27, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2015 |
Fair value measurements | ||||
Derivative liability | $ 488 | |||
Company's ending stock price (in dollars per share) | $ 0.20 | $ 0.54 | ||
Company's stock volatility (as a percent) | 85.00% | 90.00% | ||
Applicable risk free interest rate (as a percent) | 1.48% | 1.60% | ||
Level 3 | Warrant Liability | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning Balance | $ 1,554 | |||
Adjustment to record 2012 warrants as a liability (Note 16) | $ 163 | |||
Issuance of warrants | 3,084 | |||
Change in estimated fair value | (1,344) | (1,693) | ||
Ending Balance | 210 | 1,554 | ||
Level 3 | Derivative Liability | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Sentient Note, October 27, 2015 | $ 1,040 | |||
Change in estimated fair value | (552) | |||
Ending Balance | 488 | |||
Recurring | ||||
Fair value measurements | ||||
Cash and cash equivalents | 4,077 | 8,579 | ||
Trade accounts receivable | 546 | |||
Marketable securities | 72 | |||
Assets | 4,695 | 8,579 | ||
Warrant liability | 210 | 1,554 | ||
Derivative liability | 488 | |||
Liabilities | 698 | 1,554 | ||
Recurring | Level 1 | ||||
Fair value measurements | ||||
Cash and cash equivalents | 4,077 | 8,579 | ||
Trade accounts receivable | 546 | |||
Marketable securities | 72 | |||
Assets | 4,695 | 8,579 | ||
Recurring | Level 3 | ||||
Fair value measurements | ||||
Warrant liability | 210 | 1,554 | ||
Derivative liability | 488 | |||
Liabilities | $ 698 | 1,554 | ||
Non-recurring | ||||
Fair value measurements | ||||
Assets | 0 | |||
Liabilities | $ 0 | |||
Non-recurring | Level 3 | ||||
Fair value measurements | ||||
Assets | $ 1,354 | |||
Mineral Properties, Net | 1,354 | |||
Non-recurring | Estimated Fair Value. | ||||
Fair value measurements | ||||
Assets | 1,354 | |||
Mineral Properties, Net | $ 1,354 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Current taxes: | ||
Current taxes | $ 0 | $ 0 |
Deferred taxes: | ||
Deferred taxes | 0 | 0 |
Income (loss) from continuing operations before income taxes | ||
United States | (6,484) | (8,207) |
Other Countries | (18,899) | (10,616) |
Loss before income taxes | $ (25,383) | $ (18,823) |
Reconciliation of the provision for income taxes computed at the statutory rate to the provision for income taxes | ||
US rate (as a percent) | 34.00% | 34.00% |
Tax expense (benefit) at US rate of 34% | $ (8,630) | $ (6,400) |
Other adjustments: | ||
Rate differential of other jurisdictions | 681 | 301 |
Effects of foreign earnings | (1,475) | (2,238) |
Change in valuation allowance | 3,745 | 14,127 |
Provision to tax return true-ups | (10,533) | (18,826) |
Exchange rate changes on deferred tax assets | 15,772 | 13,605 |
Other | $ 440 | $ (569) |
Income Taxes - Components of De
Income Taxes - Components of Deferred Tax Assets And Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 98,571 | $ 93,364 |
Stock-based compensation | 1,325 | 1,943 |
Property, plant and equipment | 9,816 | 13,990 |
Other | 1,139 | 1,289 |
Deferred tax assets, gross | 110,851 | 110,586 |
Less: Valuation allowance | (110,510) | (106,764) |
Total deferred tax assets | 341 | 3,822 |
Deferred tax liabilities: | ||
Property, plant and equipment | (189) | (3,436) |
Other | (152) | (386) |
Total deferred tax liabilities | (341) | (3,822) |
Net deferred tax asset (liability) | $ 0 | $ 0 |
Income Taxes - Net Operating Lo
Income Taxes - Net Operating Loss Carryforwards (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Operating loss carryforwards | ||
Net operating loss carryforwards | $ 330,200 | |
Valuation allowance offsetting the deferred tax assets | 110,510 | $ 106,764 |
Unrecognized tax benefits would affect effective tax rate | 0 | |
Luxembourg and Chile | ||
Operating loss carryforwards | ||
Net operating loss carryforwards | 38,000 | |
Other non-U.S. Countries | ||
Operating loss carryforwards | ||
Net operating loss carryforwards | 118,300 | |
U.S | ||
Operating loss carryforwards | ||
Net operating loss carryforwards | 58,600 | |
Velardena properties | ||
Operating loss carryforwards | ||
Net operating loss carryforwards | 92,400 | |
Other Mexico Exploration Activities | ||
Operating loss carryforwards | ||
Net operating loss carryforwards | $ 22,900 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of the beginning and ending amount of gross unrecognized tax benefits | ||
Gross unrecognized tax benefits at beginning of period | $ 1,163 | $ 1,668 |
Reductions due to lapse of statute of limitations | (226) | (505) |
Gross unrecognized tax benefits at end of period | 937 | 1,163 |
Interest and penalties recognized in the statement of operations | 0 | |
Interest and penalties accrued recognized in the statement of financial position | $ 0 | $ 0 |
Equity - Registered Offering An
Equity - Registered Offering And Private Placement (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 10, 2014 | Sep. 04, 2014 | Dec. 31, 2015 | Dec. 31, 2014 |
Net proceeds from offering | $ 7,410 | |||
Closing stock price (in dollars per share) | $ 0.20 | $ 0.54 | ||
Applicable risk free interest rate (as a percent) | 1.48% | 1.60% | ||
Value of shares | $ 1,539 | |||
Registered Offering | ||||
Registered offering stock units (in shares) | 3,692,000 | |||
Number of shares of common stock per capital unit (in shares) | 1 | |||
Number of common shares which can be purchased with each warrant | 0.50 | |||
Sale price (in dollars per shares) | $ 0.86 | |||
Exercise price of warrants (in dollars per share) | $ 1.21 | |||
Term of warrants | 5 years | |||
Net proceeds from offering | $ 2,700 | |||
Amount of underwriting commissions and expenses | $ 500 | |||
Closing stock price (in dollars per share) | $ 1.01 | |||
Applicable risk free interest rate (as a percent) | 1.60% | |||
Fair value of warrants | $ 1,200 | |||
Value of shares | $ 1,500 | |||
Private Placement | Sentient | ||||
Units issued (in shares) | 5,800,000 | |||
Number of shares of common stock per capital unit (in shares) | 1 | |||
Number of common shares which can be purchased with each warrant | 0.50 | |||
Sale price (in dollars per shares) | $ 0.817 | $ 1.01 | ||
Exercise price of warrants (in dollars per share) | $ 1.21 | |||
Term of warrants | 5 years | |||
Net proceeds from offering | $ 4,700 | |||
Amount of underwriting commissions and expenses | $ 300 | |||
Applicable risk free interest rate (as a percent) | 1.60% | |||
Fair value of warrants | $ 1,900 | |||
Value of shares | $ 2,700 | |||
Ownership interest in outstanding Common Stock (as a percent) | 27.20% |
Equity - Equity Incentive Plans
Equity - Equity Incentive Plans (Details) $ / shares in Units, $ in Thousands | Nov. 12, 2014 | Dec. 31, 2015USD ($)employeeitem$ / sharesshares | Dec. 31, 2014USD ($)employeeitem$ / sharesshares |
Additional information | |||
Compensation expense | $ | $ 453 | $ 926 | |
Equity Plan | Restricted Stock | |||
Number of Shares | |||
Outstanding at beginning of year (in shares) | 600,838 | 915,971 | |
Granted during the year (in shares) | 0 | 140,000 | |
Restrictions lifted during the year (in shares) | (516,668) | (455,133) | |
Outstanding at end of year (in shares) | 84,170 | 600,838 | |
Weighted Average Grant Date Fair Value Per Share | |||
Outstanding at beginning of year (in dollars per share) | $ / shares | $ 1.48 | $ 2.47 | |
Granted during the year (in dollars per share) | $ / shares | 0.52 | ||
Restrictions lifted during the year (in dollars per share) | $ / shares | 1.64 | 3.18 | |
Outstanding at end of year (in dollars per share) | $ / shares | $ 0.46 | $ 1.48 | |
Additional information | |||
Compensation expense | $ | $ 200 | $ 500 | |
Period for future recognition of additional compensation expense | 12 months | ||
Equity Plan | Restricted Stock | Officers and Employees | |||
Number of Shares | |||
Restrictions lifted during the year (in shares) | (336,334) | (444,633) | |
Equity Plan | Restricted Stock | Terminated Employees | |||
Number of Shares | |||
Restrictions lifted during the year (in shares) | (12,000) | (10,500) | |
Additional information | |||
Number of Employees Terminated | employee | 2 | 2 | |
Equity Plan | Restricted Stock | Retired Employee | |||
Number of Shares | |||
Restrictions lifted during the year (in shares) | (163,334) | ||
Additional information | |||
Number of employees resigned | item | 2 | ||
Equity Plan | Restricted Stock | Officer | |||
Additional information | |||
Number of employees | item | 1 | ||
Equity Plan | Restricted Stock | New Employee | |||
Additional information | |||
Number of employees | item | 1 | ||
Equity Plan | Employee Stock Option | |||
Additional information | |||
Expiration period from termination date that option must be exercised | 6 months | ||
Number of Shares | |||
Outstanding at beginning of period (in shares) | 245,810 | 110,810 | |
Granted during period (in shares) | 150,000 | ||
Forfeited or expired during period (in shares) | (15,000) | ||
Outstanding at end of year (in shares) | 245,810 | 245,810 | |
Exercisable at end of period (in shares) | 245,810 | 95,810 | |
Granted and vested (in shares) | 245,810 | 95,810 | |
Weighted Average Exercise Price Per Share | |||
Outstanding at beginning of year (in dollars per share) | $ / shares | $ 3.47 | $ 8.02 | |
Granted during period (in dollars per share) | $ / shares | 0.56 | ||
Forfeited or expired during year (in dollars per share) | $ / shares | 8 | ||
Outstanding at end of year (in dollars per share) | $ / shares | 3.47 | 3.47 | |
Exercisable at end of period (in dollars per share) | $ / shares | 3.47 | 8.02 | |
Granted and vested (in dollars per share) | $ / shares | $ 3.47 | 8.02 | |
Granted during period (in dollars per share) | $ / shares | $ 0.56 | ||
Assumptions noted by using the Black-Scholes option pricing model for estimating fair value of each option award | |||
Expected volatility (as a percent) | 82.64% | ||
Weighted average volatility (as a percent) | 82.64% | ||
Expected term | 5 years | ||
Risk-free rate (as a percent) | 0.88% | ||
Equity Plan | Employee Stock Option | Maximum | |||
Additional information | |||
Compensation expense | $ | $ 100 | ||
Equity Plan | KELTIP Units | Retired Employee | |||
Additional information | |||
Number of shares issued upon retirement of an officer | 172,500 | ||
Deferred Compensation Plan | Restricted Stock Units (RSUs) | |||
Number of Shares | |||
Outstanding at beginning of year (in shares) | 935,285 | 585,285 | |
Granted during the year (in shares) | 310,000 | 350,000 | |
Outstanding at end of year (in shares) | 1,245,285 | 935,285 | |
Weighted Average Grant Date Fair Value Per Share | |||
Outstanding at beginning of year (in dollars per share) | $ / shares | $ 2.08 | $ 2.97 | |
Granted during the year (in dollars per share) | $ / shares | 0.39 | 0.58 | |
Outstanding at end of year (in dollars per share) | $ / shares | $ 1.66 | $ 2.08 | |
Additional information | |||
Compensation expense | $ | $ 200 | $ 400 | |
Number of unrestricted common shares that the Director is entitled to receive for each vested RSU, upon termination from board service | 1 | ||
Additional compensation expense expected to be recognized | $ | $ 100 | ||
Period for future recognition of additional compensation expense | 6 months |
Equity - Common Stock Warrants
Equity - Common Stock Warrants (Details) | Sep. 10, 2014$ / sharesshares | Sep. 04, 2014 | Feb. 11, 2016item$ / sharesshares | Sep. 30, 2012$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | Feb. 10, 2016shares | Jan. 19, 2016shares | Jan. 18, 2016shares |
Weighted Average Exercise Price Per Share | |||||||||
Warrant Liability | $ | $ 210,000 | $ 1,554,000 | |||||||
Closing stock price (in dollars per share) | $ / shares | $ 0.20 | $ 0.54 | |||||||
Volatility (as a percent) | 85.00% | 90.00% | |||||||
Applicable risk free interest rate (as a percent) | 1.48% | 1.60% | |||||||
Sentient | Private Placement | |||||||||
Number of Underlying Shares | |||||||||
Units Issued During Period New Issues | 5,800,000 | ||||||||
Weighted Average Exercise Price Per Share | |||||||||
Outstanding at end of period (in dollars per share) | $ / shares | $ 1.21 | ||||||||
Number of shares of common stock per capital unit (in shares) | 1 | ||||||||
Term of warrants | 5 years | ||||||||
Number of common shares which can be purchased with each warrant | 0.50 | ||||||||
Applicable risk free interest rate (as a percent) | 1.60% | ||||||||
Warrant | |||||||||
Number of Underlying Shares | |||||||||
Outstanding at the beginning of year (in shares) | 8,777,409 | 5,263,578 | |||||||
Granted during the year | 4,746,000 | ||||||||
Dilution adjustment | 599,760 | ||||||||
Expired during period | (1,831,929) | ||||||||
Outstanding at end of year (in shares) | 8,777,409 | 8,777,409 | |||||||
Weighted Average Exercise Price Per Share | |||||||||
Outstanding at beginning of year (in dollars per share) | $ / shares | $ 3.95 | $ 12.10 | |||||||
Granted during period | $ / shares | 1.21 | ||||||||
Dilution adjustment | $ / shares | 7.17 | ||||||||
Expired during period | $ / shares | 19 | ||||||||
Outstanding at end of period (in dollars per share) | $ / shares | $ 3.95 | $ 3.95 | |||||||
Warrant | Subsequent Event | |||||||||
Weighted Average Exercise Price Per Share | |||||||||
Number of anti-dilution adjustments | item | 2 | ||||||||
2012 Warrants | |||||||||
Weighted Average Exercise Price Per Share | |||||||||
Warrant Liability | $ | $ 5,000 | ||||||||
2012 Warrants | Subsequent Event | |||||||||
Weighted Average Exercise Price Per Share | |||||||||
Outstanding at beginning of year (in dollars per share) | $ / shares | $ 7.17 | ||||||||
Outstanding at end of period (in dollars per share) | $ / shares | $ 5.09 | ||||||||
Number of common shares that can be purchased upon exercise of warrant | 5,677,757 | 5,084,193 | 5,084,193 | 4,031,409 | |||||
Increase (Decrease) In Class Of Warrant Or Right Number Of Securities Called By Warrants Or Rights | 593,564 | 1,052,784 | |||||||
2012 Warrants | Sentient | Private Placement | |||||||||
Number of Underlying Shares | |||||||||
Outstanding at end of year (in shares) | 3,431,649 | ||||||||
Outstanding warrants after dilution adjustment | 4,031,409 | ||||||||
Weighted Average Exercise Price Per Share | |||||||||
Outstanding at end of period (in dollars per share) | $ / shares | $ 8.42 | $ 7.17 | |||||||
Number of shares of common stock per capital unit (in shares) | 1 | ||||||||
Term of warrants | 5 years | ||||||||
Number of common shares which can be purchased with each warrant | 0.50 | ||||||||
2014 Warrants | |||||||||
Weighted Average Exercise Price Per Share | |||||||||
Warrant Liability | $ | $ 205,000 | ||||||||
2014 Warrants | Subsequent Event | |||||||||
Weighted Average Exercise Price Per Share | |||||||||
Outstanding at beginning of year (in dollars per share) | $ / shares | $ 1.21 | ||||||||
Outstanding at end of period (in dollars per share) | $ / shares | $ 0.91 | ||||||||
Number of common shares that can be purchased upon exercise of warrant | 5,365,983 | 5,108,347 | 5,108,347 | 4,746,000 | |||||
Increase (Decrease) In Class Of Warrant Or Right Number Of Securities Called By Warrants Or Rights | 257,636 | 362,347 |
Revenue and Related Costs (Deta
Revenue and Related Costs (Details) $ in Thousands | Jul. 15, 2015 | Dec. 31, 2015USD ($)customer | Dec. 31, 2014USD ($)customer |
Number of customers to whom marketable products were sold | customer | 3 | 3 | |
Inventory write down charged to cost of metals sold | $ 1,200 | ||
Inventory write down charged to depreciation expense | 700 | ||
Metals inventory | $ 0 | $ 477 | |
Oxide plant lease | 653 | ||
Lease related costs | 199 | ||
Oxide Plant Lease Agreement | |||
Advance lease amounts received | 500 | ||
Velardena properties | Oxide Plant Lease Agreement | |||
Oxide plant lease | 700 | ||
Lease related costs | $ 200 | ||
Velardena properties | Maximum | Oxide Plant Lease Agreement | |||
Term of lease (in months) | 30 months | ||
Velardena properties | Minimum | Oxide Plant Lease Agreement | |||
Term of lease (in months) | 18 months |
Interest and Other Income (Deta
Interest and Other Income (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Interest and Other Income. | ||
Interest and Other Income | $ 3.1 | |
Loss on reduction and elimination of contingency liability | 2.3 | $ 1.6 |
Proceeds from value added tax refunds | $ 0.8 |
Derivative Income (Details)
Derivative Income (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Derivative Income. | ||
Closing stock price (in dollars per share) | $ 0.20 | $ 0.54 |
Volatility (as a percent) | 85.00% | 90.00% |
Risk-free rate (as a percent) | 1.48% | 1.60% |
Sentient Loan | ||
Derivative Income. | ||
Derivative income | $ 0.6 | |
Warrant Liability | ||
Derivative Income. | ||
Derivative income | $ 1.7 | |
Level 3 | ||
Derivative Income. | ||
Closing stock price (in dollars per share) | $ 0.20 | $ 0.54 |
Volatility (as a percent) | 85.00% | 90.00% |
Risk-free rate (as a percent) | 1.48% | 1.60% |
Cash flow information (Details)
Cash flow information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | ||
Net loss | $ (25,383) | $ (18,823) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation, depletion and amortization | (4,480) | (3,128) |
Gain on sale of assets, net | (719) | (689) |
Accretion of asset retirement obligation | 198 | 200 |
Asset write off | 27 | 138 |
Write off of loss contingency, net | (1,969) | (1,645) |
Decrease in warrant liability | (1,344) | (1,693) |
Decrease in derivative liability | (553) | |
Amortization of deferred loan costs | 54 | |
Impairment of long lived assets | 13,181 | |
Foreign exchange gain on loss contingency | (106) | (281) |
Stock compensation | 453 | 926 |
Changes in operating assets and liabilities: | ||
(Increase) decrease in trade accounts receivable | (546) | 25 |
Decrease in prepaid expenses and other assets | 384 | 287 |
Decrease (increase) in inventories | 861 | (764) |
Increase in accrued interest payable net of amounts capitalized | 81 | |
Decrease in value added tax receivable (net) | 916 | 449 |
(Decrease) increase in accounts payable and accrued liabilities | (402) | 358 |
Increase in deferred revenue | 500 | |
(Decrease) increase in deferred leasehold payments | (11) | 42 |
Decrease in reclamation liability | (37) | (117) |
Net cash used in operating activities | $ (9,935) | $ (18,459) |
Commitments and Contingencies73
Commitments and Contingencies (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2016 | |
Leases and Purchase Commitments | |||
Loss contingency | $ 400,000 | $ 2,600,000 | |
El Quevar mining concessions (estimated) | |||
Leases and Purchase Commitments | |||
2,016 | 114,000 | ||
2,017 | 114,000 | ||
2,018 | 114,000 | ||
2,019 | 114,000 | ||
2,020 | 114,000 | ||
Lease payments | 74,000 | 35,000 | |
El Quevar mining concessions (estimated) | Forecast | |||
Leases and Purchase Commitments | |||
Thereafter | $ 114,000 | ||
Velardena mining concessions (estimated) | |||
Leases and Purchase Commitments | |||
2,016 | 40,000 | ||
2,017 | 40,000 | ||
2,018 | 40,000 | ||
2,019 | 40,000 | ||
2,020 | 40,000 | ||
Lease payments | 12,000 | 12,000 | |
Velardena mining concessions (estimated) | Forecast | |||
Leases and Purchase Commitments | |||
Thereafter | $ 15,000 | ||
Office space | |||
Leases and Purchase Commitments | |||
2,016 | 283,000 | ||
2,017 | 287,000 | ||
2,018 | 292,000 | ||
2,019 | 268,000 | ||
Lease payments | $ 227,000 | 259,000 | |
Reduction in space (as a percent) | 46.00% | ||
Reduction in cost (as a percent) | 44.00% | ||
Surface right agreement with local ejido | |||
Leases and Purchase Commitments | |||
Lease payments | $ 25,000 | $ 25,000 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($)segmentcustomeritem | Dec. 31, 2014USD ($)customer | |
Segment Information | |||
Number of reportable segments | item | 2 | ||
Revenue | $ 8,071 | $ 235 | |
Costs Applicable to Sales | 10,065 | 1,655 | |
Depreciation, Depletion and Amortization | 4,480 | 3,128 | |
Exploration, El Quevar, Velardena and Administrative Expense | 10,265 | 17,350 | |
Pre-Tax loss | 25,383 | 18,823 | |
Total Assets | 17,001 | 41,258 | |
Capital Expenditures | 44 | 500 | |
Impairment of long lived assets and goodwill | $ 27 | $ 138 | |
Number of customers to whom marketable products were sold | customer | 3 | 3 | |
Velardena properties | |||
Segment Information | |||
Number of reportable segments | segment | 1 | ||
Revenue | $ 8,071 | $ 235 | |
Costs Applicable to Sales | 10,065 | 1,655 | |
Depreciation, Depletion and Amortization | 3,826 | 2,353 | |
Exploration, El Quevar, Velardena and Administrative Expense | 1,347 | 6,607 | |
Pre-Tax loss | 17,346 | 8,144 | |
Total Assets | 8,988 | 27,188 | |
Capital Expenditures | $ 28 | 491 | |
Impairment of long lived assets and goodwill | $ 13,200 | ||
Number of customers to whom marketable products were sold | item | 3 | ||
Corporate, Exploration & Other | |||
Segment Information | |||
Depreciation, Depletion and Amortization | $ 654 | 775 | |
Exploration, El Quevar, Velardena and Administrative Expense | 8,918 | 10,743 | |
Pre-Tax loss | 8,037 | 10,679 | |
Total Assets | 8,013 | 14,070 | |
Capital Expenditures | $ 16 | $ 9 |
Related Party Transactions (Det
Related Party Transactions (Details) - Senior Vice President, Deborah Friedman - Services as Company's Senior Vice President, General Counsel and Corporate Secretary - USD ($) | 12 Months Ended | 24 Months Ended | 80 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 30, 2015 | |
Related Party Transaction | ||||
Percentage of time spent performing executive duties for the Company | 50.00% | |||
Percentage of time spent devoted to external employment | 50.00% | |||
Monthly flat retainer fee paid to DGS | $ 15,000 | |||
Fees paid to DGS for legal services | $ 490,000 | $ 460,000 | ||
Number of most recent years that the Company was advised by DGS that legal fees paid are a deminimus portion of their total revenue | 2 years | |||
Due to Related Parties | ||||
Accounts payable and accrued liabilities | $ 25,000 | $ 21,000 | $ 25,000 |
Subsequent Event (Details)
Subsequent Event (Details) $ / shares in Units, $ in Millions | Feb. 11, 2016USD ($)item$ / sharesshares | Jan. 19, 2016item$ / sharesshares | Oct. 27, 2015item$ / shares | Feb. 10, 2016$ / sharesshares | Jan. 18, 2016$ / sharesshares |
Convertible loan | Sentient Loan | |||||
Subsequent Events | |||||
Stock price trigger (in dollars per share) | $ / shares | $ 0.29 | ||||
Consecutive trading days, period | item | 15 | ||||
Subsequent Event | 2012 Warrants | |||||
Subsequent Events | |||||
Number of common shares that can be purchased upon exercise of warrant | shares | 5,677,757 | 5,084,193 | 5,084,193 | 4,031,409 | |
Increase in number of shares to be issued for exercise of warrants | shares | 593,564 | 1,052,784 | |||
Exercise price of warrants (in dollars per share) | $ / shares | $ 5.09 | $ 5.68 | $ 5.68 | $ 7.17 | |
Subsequent Event | 2014 Warrants | |||||
Subsequent Events | |||||
Number of common shares that can be purchased upon exercise of warrant | shares | 5,365,983 | 5,108,347 | 5,108,347 | 4,746,000 | |
Increase in number of shares to be issued for exercise of warrants | shares | 257,636 | 362,347 | |||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.91 | $ 1.01 | $ 1.01 | $ 1.21 | |
Subsequent Event | Convertible loan | Sentient Loan | |||||
Subsequent Events | |||||
Amount of debt converted to equity | $ | $ 3.9 | ||||
Amount of accrued interest converted to equity | $ | $ 0.1 | ||||
Equity shares issued upon conversion of debt | shares | 23,335,000 | ||||
Exercise price per share of shares converted from debt | $ / shares | $ 0.172 | ||||
Stock price trigger (in dollars per share) | $ / shares | $ 0.29 | ||||
Stock price trigger (as a percent) | 90.00% | 90.00% | |||
Consecutive trading days, period | item | 15 | 15 | |||
Debt outstanding | $ | $ 1.1 | ||||
Amount payable on failing to convert debt and accrued interest | $ | $ 1.2 |