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GOLD AND SILVER BULLION

12 Months Ended

Dec. 31, 2011

NOTE 3 GOLD AND SILVER BULLION

The Company invested a portion of its cash in physical gold and silver bullion. Below is the balance of its holdings of gold and silver as at December 31, 2011 and 2010. The Company did not invest in silver bullion in 2010.

	2011				2010

	Gold		Silver		Gold
	(dollars in thousands, except ounces and per ounce)
# of ounces		5,656		552,812		4,442
Average cost per ounce	$	1,278.63	$	28.18	$	1,019
Total cost	$	7,232	$	15,579	$	4,569
Fair value per ounce	$	1,574.50	$	28.18	$	1,405
Total fair value	$	8,905	$	15,579	$	6,241

The market value of gold and silver was based on the daily London P.M. fix as at December 31, 2011 and 2010. Since ASC Topic 815 does not consider gold to be readily convertible to cash, the Company carries this asset at the lower of cost or market.

During 2011, the Company sold 4,008 ounces of gold and 150,499 ounces of silver with a cost of $4.7 million and $4.9 million, respectively, resulting in an overall gain of $2.1 million. As at December 31, 2011, the Company's average cost per ounce for silver was written down to its market value of $28.18 and as a result, the Company recorded an unrealized loss of $3.4 million in its statements of operations and comprehensive loss for the year ended December 31, 2011.

Changes in the Company's holdings of gold and silver for the years ended December 31, 2011 and 2010 are as follows (in thousands):

	2011									2010

	Gold			Silver			Total			Gold
Opening Balance	$	4,569		$	—		$	4,569		$	2,760
Purchases		7,387			23,913			31,300			1,809
Proceeds from sale		(6,218	)		(5,521	)		(11,739	)		—
Gain on sale		1,494			581			2,075			—
Unrealized loss		—			(3,394	)		(3,394	)		—

Ending Balance	$	7,232		$	15,579		$	22,811		$	4,569