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Amayapampa Interest
 12 Months Ended
Dec. 31, 2012
Amayapampa Interest [Abstract]  
Amayapampa Interest

7. Amayapampa Interest

 

On April 7, 2008, we entered into an agreement to dispose of our interest in the Amayapampa gold project (the “Amayapampa Sale Agreement”) in Bolivia to Republic Gold Limited (“Republic”). Under the terms of the Amayapampa Sale Agreement, Republic agreed to pay to us a total amount of $3,000 in three payments of $1,000. The first of these payments will be due and payable upon the start of commercial production (as defined in the Amayapampa Sale Agreement) at the Amayapampa gold project, followed by $1,000 payments on each of the first and second anniversaries of the start of commercial production.  In addition, Republic agreed to pay to us a net smelter return (“NSR”) royalty on the first 720,000 gold equivalent ounces produced from the Amayapampa gold project in varying percentages depending on the price of gold.  To date, no amount has been paid or is payable to the Company under the Amayapampa Sale Agreement.  

 

During February 2012, Republic announced that it had suspended its operations at the Amayapampa gold project pending regulatory and policy certainty specifically related to the nationalization of mining assets and the implications of the Bolivian Draft Mining Code.  During the fourth quarter of 2012, Republic sold its interest in the Amayapampa gold project (the “Sale Transaction”).  The buyer, LionGold Corp Ltd (“LionGold”), has assumed Republic’s obligations under the Amayapampa Sale Agreement.

 

The Amayapampa interest is considered a financial instrument and as such has been accounted for at its fair value of $4,813 based on probability-weighted cash flow scenarios and assumptions, including future gold prices, estimated gold production and the expected timing of commercial production commencement (Notes 2 and 13).

 

As of December 31, 2012, we evaluated the carrying amount of the Amayapampa interest based upon the probability-weighted cash flows taking into account the probability that the project may never go into production and that the start of production may be delayed.  Based on higher estimated gold production in third party technical reports and our analysis of LionGold’s financial and technical capabilities and corporate strategies, we concluded that there was no change in fair value as of December 31, 2012.