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FAIR VALUE ACCOUNTING | 9 Months Ended
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Sep. 30, 2013
FAIR VALUE ACCOUNTING |
FAIR VALUE ACCOUNTING | NOTE 12 FAIR VALUE ACCOUNTING Fair value accounting establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below: Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3 Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). The following table identifies the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy. As required by accounting guidance, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
|  | Fair Value as a September 30, 2013 |
|  | Total |  | Level 1 |  | Level 2 |  | Level 3 |
|  | (in thousands) |
Assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 31,062 |  | $ | 31,062 |  | $ | — |  | $ | — |
IVA taxes receivable |  | 10,129 |  | — |  | 10,129 |  | — |
|  | $ | 41,191 |  | $ | 31,062 |  | $ | 10,129 |  | $ | — |
Liabilities: |  |  |  |  |  |  |  |  |
Accounts payable and accrued liabilities |  | $ | 10,041 |  | $ | 38 |  | $ | 10,003 |  | $ | — |
|  | $ | 10,041 |  | $ | 38 |  | $ | 10,003 |  | $ | — |
|  | Fair Value as at December 31, 2012 |
|  | Total |  | Level 1 |  | Level 2 |  | Level 3 |
|  | (in thousands) |
Assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 70,921 |  | $ | 70,921 |  | $ | — |  | $ | — |
IVA taxes receivable |  | 9,150 |  | — |  | 9,150 |  | — |
|  | $ | 80,071 |  | $ | 70,921 |  | $ | 9,150 |  | $ | — |
Liabilities: |  |  |  |  |  |  |  |  |
Accounts payable and accrued liabilities |  | $ | 21,235 |  | $ | — |  | $ | 21,235 |  | $ | — |
Litigation settlement liability |  | 3,830 |  | 3,830 |  | — |  | — |
|  | $ | 25,065 |  | $ | 3,830 |  | $ | 21,235 |  | $ | — |
The Company’s cash and cash equivalents is classified within Level 1 of the fair value hierarchy because it is valued using quoted market prices. The carrying value of this balance approximates its fair value due to its short-term nature and historically negligible credit losses. The cash equivalent instruments that are valued based on quoted market prices in active markets are primarily money market securities. The fair value of the IVA receivable, accounts payable and accrued liabilities approximates their carrying value due to their short-term nature. As at September 30, 2013, accounts payable included an accrual for the fair value of approximately 15,800 shares of common stock that are required to be issued as part of the settlement of certain amounts due by the Company to one of its vendors, as discussed in Note 7, Shareholders’ Equity. As the Company’s stock is quoted on an active market, this liability is classified within Level 1 of the fair value hierarchy. The litigation settlement liability at December 31, 2012 represented the fair value of the 1,000,000 shares of the Company’s common stock that were required to be issued as part of the settlement with TNR Gold Corp. Since the Company’s common stock is quoted on an active market, the liability was classified within Level 1 of the fair value hierarchy. In the second quarter of 2013, the Company recorded impairment charges related to its mineral property interests in the Santa Cruz Province, Argentina and its investment in MSC, as discussed in Notes 5 and 6, respectively. The estimated fair values of the Santa Cruz mineral property interests were determined using observed market value per acre in the region. The estimated fair value of the Company’s investment in MSC was determined using a discounted cash flow approach. The discounted cash flow model used significant unobservable inputs and is, therefore, considered within Level 3 of the fair value hierarchy. The following table sets forth a summary of the quantitative and qualitative information related to the unobservable inputs used in the calculation of the Company’s non-recurring Level 3 fair value measurements.
|  | Valuation |  | Unobservable |  | Range / |
|  | Technique |  | Input |  | Weighted Average |
Investment in MSC |  | Discounted cash flow |  | Discount Rate Long Term Gold Price Long Term Silver Price Argentina Inflation Index United States Inflation Index |  | 10.0% $1,300 per ounce $22.75 per ounce 10.0% 1.7% |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13537-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13433-108611 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=25499696&loc=d3e19207-110258 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13504-108611 + Details
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