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MINERAL PROPERTY INTERESTS AND ASSET RETIREMENT OBLIGATIONS

3 Months Ended

Mar. 31, 2012

MINERAL PROPERTY INTERESTS AND ASSET RETIREMENT OBLIGATIONS

MINERAL PROPERTY INTERESTS AND ASSET RETIREMENT OBLIGATIONS

NOTE 5 MINERAL PROPERTY INTERESTS AND ASSET RETIREMENT OBLIGATIONS

At March 31, 2012, the Company holds mineral interests in Nevada, mineral rights in Argentina and mineral concession rights in Mexico, including the El Gallo complex. The Magistral Mine is a former producing gold mine located within the El Gallo complex which has been held on a care and maintenance basis since 2005. In August 2011, the Company announced that it would put the Magistral Mine back into production as Phase 1 of mining operations at the El Gallo complex, with mining expected to commence at the end of the second quarter of 2012.

As a result of the acquisition of Minera Andes, as discussed in Note 2 above, the Company increased its mineral property interests by $597.3 million to $842.7 million as at March 31, 2012 from $245.5 million at the end of 2011. The values for the mineral properties from Argentina noted below are on a preliminary basis.

The following table summarizes all of the Company’s mineral property interests in Nevada, Argentina and Mexico (in thousands):

Name of Property/Complex		State/Province		Country		Carrying Value ($)
Tonkin Complex		Nevada		United States		$	52,415
Gold Bar Complex		Nevada		United States		$	77,012
Limo Complex		Nevada		United States		$	50,098
Battle Mountain Complex		Nevada		United States		$	31,106
Other United States Properties		Nevada		United States		$	22,009
Los Azules Copper Project		San Juan		Argentina		$	486,114
Other Argentina Exploration Properties		San Juan		Argentina		$	7,819
Cerro Negro Region		Santa Cruz		Argentina		$	80,889
Other Argentina Exploration Properties		Santa Cruz		Argentina		$	19,194
Other Argentina Exploration Properties		Catamarca		Argentina		$	2,362
Other Argentina Exploration Properties		Chubut		Argentina		$	248
El Gallo Complex		Sinaloa		Mexico		$	9,371
Other Mexico Exploration Properties		Sinaloa		Mexico		$	4,095
Other Mexico Exploration Properties		Nayarit		Mexico		$	—
Total						$	842,732

The Company is responsible for reclamation of certain past and future disturbances at its properties. The two most significant properties subject to these obligations are the historic Tonkin property in Nevada and the Magistral Mine in Mexico. The current undiscounted estimate of the reclamation costs for existing disturbances on the Tonkin property to the degree required by the U.S. Bureau of Land Management (“BLM”) and the Nevada Department of Environmental Protection (“NDEP”) is $3.8 million. The Company submitted a mine closure plan to the NDEP and BLM for the Tonkin property during the fourth quarter of 2010. Based on the Company’s estimate, the change in its bonding requirements was insignificant. As at March 31, 2012, the closure plan has already been approved by the NDEP but is still currently under review by the BLM. It is possible that this reclamation plan cost estimate and bonding requirement may increase as a result of its review. The Company, however, is unable to estimate possible increases at this time. The costs of undiscounted projected reclamation of the Magistral Mine are currently estimated at $4.6 million.

For mineral properties in the United States, the Company maintains required reclamation bonding with various governmental agencies, and at March 31, 2012 and December 31, 2011, had cash bonding in place of $5.2 million. Under Mexican regulations, surety bonding of projected reclamation costs is not required.

Changes in the Company’s asset retirement obligations for the three months ended March 31, 2012 and year ended December 31, 2011 are as follows (in thousands):

		Three Months Ended			Year Ended
		March 31,			December 31,
		2012			2011
Asset retirement obligation liability- opening balance		$	6,253		$	6,153
Settlements		—			(82		)
Accretion of liability		112			524
Adjustment reflecting updated estimates		34			(342		)
Asset retirement obligation liability - ending balance		$	6,399		$	6,253

It is anticipated that the capitalized asset retirement costs will be charged to expense based on the units of production method commencing with gold and silver production at the Company’s properties, if any. There was no amortization adjustment recorded during the three months ended March 31, 2012 or the year ended December 31, 2011 related to the capitalized asset retirement cost since the properties were not in operation. Reclamation expenditures are expected to be incurred between 2012 and 2040. As at March 31, 2012 and December 31, 2011, the current portion of the asset retirement obligation was $0.5 million.