XML 56 R20.htm IDEA: XBRL DOCUMENT v2.4.0.6
Fair Value of Financial Instruments
 6 Months Ended
Jun. 30, 2012
Fair Value of Financial Instruments [Abstract]  
Fair Value of Financial Instruments
14. Fair Value ofFinancial Instruments

U.S. GAAP defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and establishes a fair-value hierarchy that prioritizes the inputs used to measure fair value using the following definitions (from highest to lowest priority):

·
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

·
Level 2 - Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means.

·
Level 3 - Prices or valuation techniques requiring inputs that are both significant to the fair-value measurement and unobservable.

Our financial instruments include cash and cash equivalents, marketable securities, Amayapampa interest, long-term investments, accounts payable and certain other current assets and liabilities.  Due to the short-term nature of our cash and cash equivalents, accounts payable and certain other current assets and liabilities, we believe that their carrying amounts approximate fair value.  Our marketable securities are classified as available-for-sale. Accordingly, these securities are carried at fair value, which is based upon quoted market prices in an active market, with unrealized gains and losses being reported in other comprehensive income until such time that the securities are disposed of or become impaired.  As such, these financial instruments are included in Level 1 in our fair-value hierarchy.  The value of our long-term investment in the Midas Gold Shares is based upon its quoted market price in an active market of $2.44 as of June 30, 2012.  Based on these factors, this financial instrument is included in Level 1 in our fair-value hierarchy.  The value of the Amayapampa interest was estimated at $4,813 based on probability-weighted cash flow scenarios and assumptions, including future gold prices (weighted average gold price per ounce of $1,150), estimated gold production (ranging from 350,000 to 650,000 ounces) and the expected timing of commercial production commencement (periods ranging from 2 to 7 years or never), which are management's best estimates based on currently available information.  Significant changes in any of the unobservable inputs in isolation would result in a significant change in fair value measurement of the Amayapampa Interest.  As such, this financial instrument is included in Level 3 in our fair-value hierarchy.