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Fair Value Measurements | 12 Months Ended
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Dec. 31, 2012
Fair Value Measurements [Abstract] |
Fair Value Measurements | 16. Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table presents our liabilities at December 31, 2012, which are measured at fair value on a recurring basis:
|  |  |  |  | Fair Value Measurements at December 31, 2012 |
|  |  |  |  | Quoted |  |  | Significant |  |  |  |
|  |  |  |  | Prices |  |  | Other |  |  | Significant |
|  |  |  |  | in Active |  |  | Observable |  |  | Unobservable |
|  |  |  |  | Markets |  |  | Inputs |  |  | Inputs |
|  | Total |  |  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gold call derivative |  | $ | 16,330 |  |  | $ | - |  |  | $ | 16,330 |  |  | $ | - |
Gold forward derivative |  |  | 297,451 |  |  |  |  |  |  |  | 297,451 |  |  |  |  |
Derivative liability - contingent dividend |  |  | 230,900 |  |  |  | - |  |  |  | - |  |  |  | 230,900 |
Total Liabilities |  | $ | 544,681 |  |  | $ | - |  |  | $ | 313,781 |  |  | $ | 230,900 |
The following table presents our assets and liabilities at December 31, 2011, which are measured at fair value on a recurring basis:
|  |  |  |  | Fair Value Measurements at December 31, 2011 |
|  |  |  |  | Quoted |  |  | Significant |  |  |  |
|  |  |  |  | Prices |  |  | Other |  |  | Significant |
|  |  |  |  | in Active |  |  | Observable |  |  | Unobservable |
|  |  |  |  | Markets |  |  | Inputs |  |  | Inputs |
|  | Total |  |  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Certificates of deposit |  | $ | 2,211,287 |  |  | $ | - |  |  | $ | 2,211,287 |  |  | $ | - |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative liability - contingent dividend |  |  | 1,025,000 |  |  |  | - |  |  |  | - |  |  |  | 1,025,000 |
Total Liabilities |  | $ | 3,236,287 |  |  | $ | - |  |  | $ | 2,211,287 |  |  | $ | 1,025,000 |
During the years ended December 31, 2012 and 2011, there were no transfers of assets and liabilities between Level 1, Level 2, or Level 3. Following is a description of the valuation methodologies used for the Company's financial instruments measured at fair value on a recurring basis as well as the general classification of such instruments pursuant to the valuation hierarchy. Derivative liability - contingent dividend - The Company's contingent dividend derivative liability is valued using The Monte-Carlo model with various observed and unobservable market inputs and classified as Level 3 in the valuation hierarchy. These market inputs include volatility, stock price, maturity date, and discount rate. Gold Call and Put Derivatives - The Company's gold call and put are valued based on Black-Scholes model with various observable inputs. These market inputs include volatility of gold prices, gold strike prices, maturity dates of the options, exercise prices of the options, and risk free interest rates. Certificates of Deposit - To estimate the fair value of certificates of deposit, cash flows are evaluated and then discounted using the appropriate market rates for the applicable maturities. The certificates of deposit are classified within level 2 of the valuation hierarchy as valuation inputs are primarily based on readily observable pricing information for similar instruments. Gold Forward Derivative - The Company's gold forward is valued based on observable market changes in the forward prices for gold. The following table indicates the changes in the level 3 financial instruments for the years ended December 31, 2012 and 2011.
|  | Contingent Dividend |
|  | Payment on Convertible |
|  | Preferred Stock |
Balances at January 1, 2011 |  | $ | 4,873,192 |
Issuance of convertible preferred stock |  |  | 15,954 |
Change in fair value |  |  | (3,864,146 | )
Balances at December 31, 2011 |  |  | 1,025,000 |
Issuance of convertible preferred stock |  |  | 6,009 |
Change in fair value |  |  | (800,109 | )
Balances at December 31, 2012 |  | $ | 230,900 |
For Level 3 financial instruments that were measured at fair value on a recurring basis during the year ended December 31, 2012, the following table presents the fair value of those liabilities as of the measurement date, valuation techniques and related unobservable inputs of those liabilities:
Year |  |  |  |  |  |  |  |  | Quantitave |
Ended |  | Fair Value |  |  | Valuation Techniques |  | Unobservable Input |  | Inputs Used |
2012 Derivative liability - contingent dividend |  | $ | 230,900 |  |  | Monte-Carlo Simulation |  | Discount Rate |  |  | 12 | %
Significant changes to the unobservable input would result in a significantly different fair value measurement of the contingent dividend derivative liability. The carrying amount of cash and cash equivalents and trade payables approximates fair value because of the short-term maturity of these financial instruments. At December 31, 2012, the fair value of long-term debt obligations was $14,045,000. The carrying value of long-term debt obligations approximates fair value at December 31, 2011. The fair value of assets and liabilities whose carrying value approximates fair value is determined using Level 2 inputs, with the exception of cash and cash equivalents (Level 1). The fair values of long-term debt obligations with the exception of the Auramet Facility debt obligation are based on current market rates for bonds of the same risk and maturities. The fair value of the Auramet Facility debt obligation was determined based on the current market futures for gold at the various repayment dates.

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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 16 -URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13504-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 107 -Paragraph 15C, 15D -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. 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