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Impairment Reversal
 12 Months Ended
Dec. 31, 2017
Impairment Reversal [abstract]  
Impairment Reversal

14. Impairment Reversal



For the year ended December 31, 2017, the Company recognized an impairment reversal of $31,119 with respect to the Caylloma Mine.  The impairment reversal was due to the significant increase in resources from the successful exploration drill program at the Animas NE vein and increases in the estimated zinc and lead prices.  With the increase in resources, as well as increases in estimated prices, management updated its mine plan for the Caylloma mine. The new mine plan significantly improved the production profile and the associated cash flows compared with the Company’s previous estimates and accordingly, was considered to be an indicator of impairment reversal.



The impairment charges recorded during the years ended December 31, 2015 and 2013 were $55,000 before tax. The amount of impairment reversal is limited to the carrying amount had no impairment been recognized in prior periods, net of depletion and amortization which would have been recognized.



The recoverable amount of the Caylloma Mine was determined based on its fair value less costs of disposal estimated utilizing a discounted cash flow model. The projected cash flows used are significantly affected by changes in assumptions for metal prices, changes in the amount of recoverable reserves and resources, production cost estimates, future capital expenditures and discount rates. The discounted cash flow model is a Level 3 measurement in the fair value hierarchy.



For the year ended December 31, 2017, the Company's impairment testing incorporated the following key assumptions in addition to the increase in the estimated life of the mine:



a)

Weighted average cost of capital



As at December 31, 2017, projected cash flows were discounted using a real after-tax discount rate of 4.1% which represented the estimated weighted average cost of capital.



b)

Metal Price assumptions





 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Metal Price Assumptions

 

 2018 

 

 

 2019 

 

 

 2020 

 

 

 2021 

 

 

2022 -2025

Silver price ($ per ounce)

$

 17.56 

 

$

 18.44 

 

$

 19.00 

 

$

 19.00 

 

$

 18.40 

Gold price ($ per ounce)

$

 1,300 

 

$

 1,300 

 

$

 1,342 

 

$

 1,325 

 

$

 1,325 

Lead price ($ per tonne)

$

 2,469 

 

$

 2,403 

 

$

 2,315 

 

$

 2,205 

 

$

 2,205 

Zinc price ($ per tonne)

$

 3,175 

 

$

 3,031 

 

$

 2,756 

 

$

 2,756 

 

$

 2,425