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PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2011

NOTE 6 PROPERTY AND EQUIPMENT

At December 31, 2011 and 2010, property and equipment consisted of the following (in thousands):

	2011			2010

Trucks and trailers	$	1,247		$	1,005
Office furniture and equipment		638			591
Drill rigs		998			460
Building		853			853
Land		8,619			1,596
Mining equipment		956			956
Inactive milling equipment		778			778

Subtotal	$	14,089		$	6,239
Less: accumulated depreciation		(2,317	)		(1,848	)

Total	$	11,772		$	4,391

Depreciation expense for 2011 was $0.6 million (2010—$0.5 million, 2009—$0.6 million).

The underlying fair value of inactive mining equipment in Mexico and inactive milling equipment in Nevada were written-down to the estimated net realizable value calculated by a third party valuator in 2009. As at December 31, 2011, the carrying value of these assets is less than their fair value and as a result, no impairment was recorded.

During the current year, the Company invested approximately $7 million to acquire surface rights (land packages) surrounding its El Gallo Complex in order to commence the Phase 2 development of its mining operations in Mexico.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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