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PROPERTY, PLANT AND EQUIPMENT | 12 Months Ended
--- | ---
Dec. 31, 2013
PROPERTY, PLANT AND EQUIPMENT |
PROPERTY, PLANT AND EQUIPMENT | 4. PROPERTY, PLANT AND EQUIPMENT
|  | Property, Plant and Equipment Balances, net At December 31, |
--- | --- | --- | ---
|  | 2013 |  | 2012 |
|  |  |  | (Restated) |
Uranium plant |  | $ | 9,344,000 |  | $ | 9,532,000 |
Permits and licenses |  |  | — |  |  | 174,000 |
Mineral rights and properties |  |  | 19,750,000 |  |  | 20,872,000 |
Evaluation and delineation |  |  | — |  |  | 2,022,000 |
Vehicles/depreciable equipment |  |  | 1,530,000 |  |  | 1,435,000 |
Other property, plant and equipment |  |  | 217,000 |  |  | 705,000 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total |  | $ | 30,841,000 |  | $ | 34,740,000 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Uranium Properties Impairment of Uranium Properties The Company reviews and evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the assets. An impairment loss is measured and recorded based on discounted estimated future cash flows. Future cash flows are estimated based on quantities of recoverable minerals, expected uranium prices, production levels and operating costs of production and capital, based upon the projected remaining future uranium production from each project. The Company's estimates of future cash flows are based on numerous assumptions and it is possible that actual future cash flows will be significantly different than the estimates, as actual future quantities of recoverable minerals, uranium prices, production levels and operating costs of production and capital are each subject to significant risks and uncertainties. Long-term uranium market prices declined 12% during 2013. Due to the significance of the downward change, the Company evaluated long-lived assets for impairment at December 31, 2013. For the South Texas mineral properties asset group, the Company prepared an undiscounted cash flow analysis based on a contract price of $50.00/lb. U3O8 and current operating cost estimates for production of South Texas reserves. As a result of this impairment evaluation, the Company determined that the carrying value of its South Texas mineral properties exceeded the estimated undiscounted cash flows resulting in the impairment of the entire $2,807,166 carrying value of the South Texas mineral properties. For the Company's South Texas plant and equipment asset group, the Company evaluated the Rosita plant and all of the Company's satellite equipment as a component of the undiscounted cash flows from the Churchrock Project, the production from which is not subject to an existing sales contract. For the undiscounted cash flow analysis, the Company used a three-year average historical long-term market price of $60.56 and determined that the undiscounted cash flows exceeded the $8.4 million carrying values of these assets, and accordingly, no impairment charge was recorded. For the Kingsville plant, the Company used a third-party estimate of resale value and determined that the $800,000 net carrying value ($2.8 million book value less a $2.0 million dismantling/decontamination liability), exceeded the net realizable sales value by $80,000. Accordingly, the Company recorded an $80,000 impairment charge for the Kingsville plant. For the impairment analysis of the Company's New Mexico mineral properties, the carrying value of which is $19.7 million, a comparable sales transaction was used to provide an indication of fair value. The comparable transaction value was $0.50 per resource lb., which is higher than the $0.42 per resource lb. carrying value of the Company's New Mexico mineral properties, and accordingly, no impairment expense was recorded. However, impairment expense does include $524,000 related to New Mexico mineral properties that the Company has decided to abandon after completing a geological evaluation in 2013. The Company reviews the estimated cost of restoration and remediation activities on particular shut-in mineral properties at each quarter end. For any change in estimated cost, the Company initially records the change on its balance sheet by increasing or decreasing the mineral property asset and increasing or decreasing the asset retirement obligation. However, because there is no further production expected from these particular shut-in South Texas properties, the increase or decrease in costs recorded to the mineral property asset are then expensed (or credited) as impairment expense on the Statement of Operations. During 2013 and 2012, the Company recognized impairment expense of $584,025 and $1,444,405, respectively, related to change in estimates of the asset retirement obligation. The following table summarizes the impairment expense by project:
|  | Year Ended |
--- | --- | --- | ---
|  | 2013 |  | 2012 |
|  |  |  | (Restated) |
Kingsville Dome Project |  | $ | 473,525 |  | $ | 919,414 |
Rosita Project |  |  | 2,820,836 |  |  | 138,856 |
Vasquez Project |  |  | 276,161 |  |  | 679,089 |
Ambrosia Lake Project |  |  | 511,878 |  |  | — |
Other |  |  | 12,212 |  |  | — |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total Impairment |  | $ | 4,094,612 |  | $ | 1,737,359 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Kingsville Dome Project The Kingsville Dome project consists of mineral leases from private landowners on about 2,434 gross and 2,227 net acres located in central Kleberg County, Texas. The leases provide for royalties based upon a percentage of uranium sales of 6.25% to 9.375%. The leases have expiration dates ranging from 2000 to 2007 however, we hold most of these leases by production; and with a few minor exceptions all the leases contain clauses that permit us to extend the leases not held by production by payment of an annual per acre royalty ranging from $10 to $30. We have paid such royalties on all material acreage. Rosita Project and Rosita South Property The Rosita project consists of mineral leases from private landowners on about 3,377 gross and net acres located in north-central Duval County, Texas. The Rosita South property consists of mineral leases from private land owners on about 1,795 gross acres and 1,479 net acres located in Duval County near the Company's Rosita project. The leases provide for sliding scale royalties based on a percentage of uranium sales. Royalty percentages on average increase from 6.25% up to 18.25% when uranium prices reach $80.00 per pound. The leases have expiration dates extending out to 2015. We are holding these leases by payment of rentals ranging from $10 to $30 per acre. Vasquez Project The Vasquez project is comprised of a mineral lease on 872 gross and net acres located in southwestern Duval County, in South Texas. The primary term expired in February 2008; however we hold the lease by production and reclamation activities. The lease provides for royalties based upon 6.25% of uranium sales below $25.00 per pound and royalty rate increases on a sliding scale up to 10.25% for uranium sales occurring at or above $40.00 per pound. Los Finados/Tecolote Project The Los Finados Project consisted of an exploration lease from private land owners on about 53,524 gross acres located in Kenedy County near the Company's Kingsville Dome property. The lease option agreement was later extended by two years and expanded to cover approximately an additional 22,700 net acres north of the Los Finados project, which we referred to as the Tecolote project. The agreement included an option to lease the acreage for future uranium production. In May 2011, the Company entered into an exploration agreement with Cameco Texas, Inc. ("CTI"), a subsidiary of Cameco Corporation (NYSE: CCJ) on the Los Finados project (the "Exploration Agreement") which was later expanded to cover the Tecolote project. On November 29, 2013, CTI notified the Company of CTI's intent to terminate the Exploration Agreement. On February 27, 2014, after exploring its options with respect to the project, the Company provided notice terminating the lease option agreement with the Texas landowner. Churchrock Project The Churchrock project encompasses about 3,458 gross and net acres. The properties that comprise the Churchrock project are located in McKinley County, New Mexico and consist of three parcels, known as Section 8, Section 17 and Mancos. None of these parcels lies within the area generally recognized as constituting the Navajo Reservation. We own the mineral estate in fee for both Section 17 and the Mancos properties. We own patented and unpatented lode mining claims on Section 8. The surface estate on Section 17, Mancos Section 13 and Mancos Section 7 is owned by the U.S. Government and held in trust for the Navajo Nation (the "Nation"). On those sections we have royalty obligations ranging from 5% to 61/4% and a 2% overriding royalty obligation to the Nation for surface use agreements. The total royalties on Section 8 depend on the sales' price of uranium. Aggregate royalties are potentially as much as 33% at the current price of uranium. Permitting activities are currently ongoing on these properties. See further discussion of permitting activities in Note 11—"COMMITMENTS AND CONTINGENCIES". Crownpoint Project The Crownpoint project is located in the San Juan Basin, 22 miles northeast of the Company's Churchrock deposits and 35 miles northeast of Gallup, New Mexico, adjacent to the town of Crownpoint. The Crownpoint project consists of 640 gross and 556 net acres. The Company holds the mineral rights in the northwest 1/4 of Section 9, Township 17 North Range 13 West with 9 unpatented lode mining claims, and the mineral rights in the southwest 1/4 of Section 24, Township 17 North Range 13 West with 10 unpatented lode mining claims. In the southeast 1/4 of Section 24, Township 17 North, Range 13 West, the Company owns in fee a 40% interest in the minerals on approximately 140 acres and hold 100% of the minerals on 20 additional acres with two unpatented lode mining claims. In the northeast 1/4 of Section 25, Township 17 North, Range 13 West, the Company holds the minerals with eight unpatented lode mining claims. The unpatented lode mining claims are held through the payment of an annual maintenance fee of $140.00 per claim to the BLM. While the rights to the minerals on the unpatented lode mining claims are subject to annual renewal through the payment of the annual maintenance fees, the rights to the minerals on the fee-owned lands are not subject to any renewal process as long as the Company maintains its ownership of the subject property. Nose Rock Project The Nose Rock project is located in west-central New Mexico, about 45 miles northeast of Gallup, New Mexico. The Nose Rock Project consists of mineral rights covering approximately 6,400 acres. The Company's mineral rights are directly owned and are situated in sections 10, 11, 15, 17, 18, 19, 20, 29, 30, and 31, Township 19 North, Range 11 West, McKinley County, New Mexico. The surface estate over the Company's deeded mineral rights is owned in fee by the Navajo Nation. There are no royalties or interests held by others relating to the Company's mineral rights. West Largo The West Largo project lands are comprised of 75 unpatented lode mining claims that were staked in Sections 20 and 28, and four sections of fee mineral rights in Sections 17, 19, 21 and 29, all situated in Township 15 North, Range 10 West. Collectively, the properties cover an area of approximately 3,840 acres. The Company has a 100% interest in these properties. The surface estates for Sections 17 and 21 are Navajo allotments. The surface over the unpatented lode mining claims in Sections 20 and 28 is public domain managed by the BLM. The surface for Section 19 is held in trust for the Navajo Nation, and the surface of Section 29 is owned by the Elkins Ranch. We do not hold any surface access rights or agreements for Sections 17, 19 or 21. There are no work or royalty obligations for the unpatented lode mining claims, which we own. The unpatented claims are subject to annual maintenance payments of $140 per claim to the BLM in order to maintain the mineral rights in good standing. A production royalty of 2.5 percent of "ore value" is payable to the Elkins Ranch for any production from Section 29. Roca Honda Projects The Roca Honda project lies about 4 miles northwest of the town of San Mateo in McKinley County, New Mexico. The Company owns 36 unpatented lode mining claims situated in Section 8, Township 13 North, Range 8 West, McKinley County, New Mexico, lease 31 unpatented claims in Section 11, and own fee mineral rights covering Sections 13, 15 and 17, all of which are in Township 13 North, Range 8 West. Collectively, the Company's mineral rights holdings in the Roca Honda project area are approximately 3,085 acres. Cebolleta Property In connection with the merger of Neutron we acquired the Cebolleta Lease with La Merced del Pueblo de Cebolleta (the "Cebolleta Land Grant"), a privately held land grant, to lease the Cebolleta Property, which is composed of approximately 6,717 acres of fee (deeded) surface and mineral rights. The Cebolleta Lease provides for: (i) a term of ten years and so long thereafter as Cibola is conducting operations on the Cebolleta property; (ii) initial payments to the Cebolleta Land Grant of $5,000,000; (iii) a recoverable reserve payment equal to $1.00 multiplied by the number of pounds of recoverable uranium reserves upon completion of a feasibility study to be completed within six years, less (a) the $5,000,000 referred to in (ii) above, and (b) not more than $1,500,000 in annual advance royalties previously paid pursuant to (iv); (iv) annual advanced royalty payments of $500,000; (v) gross proceeds royalties from 4.50% to 8.00% based on the then current price of uranium; (vi) employment opportunities and job-skills training for the members of the Cebolleta Land Grant and (vii) funding of annual higher education scholarships for the members of the Cebolleta Land Grant. The Cebolleta Lease provides Cibola with the right to explore for, mine, and process uranium deposits present on the Cebolleta Property. In February 2012, Cibola entered into an Amendment of its Mining Lease Agreement (the "Cebolleta Lease Amendment") amending the Cebolleta Lease, subject to approval of the Thirteenth Judicial District. Pursuant to the Cebolleta Lease Amendment, the date for the completion of the feasibility study was extended from April 2013 to April 2015. In addition, the date may be further extended subject to a reduction in the $6,500,000 initial payment and annual advance royalty payments deduction to the recoverable reserve payment. Juan Tafoya Property In connection with the merger with Neutron we acquired the fee interest in 4,097 acres in northwestern New Mexico of fee (deeded) surface and mineral rights owned by the Juan Tafoya Land Corporation ("JTLC"). The Juan Tafoya property is located approximately 45 miles west-northwest of the city of Albuquerque, and 25 miles northeast of the town of Laguna. The lease has a term of ten years, and it can be extended on a year-to-year basis thereafter, so long as we are conducting operations on the property. Additionally, the lease required: (i) an initial payment of $1,250,000; (ii) annual rental payments of $225,000 for the first five years of the lease and $337,500 for the second five years; (iii) after the second five years, annual base rent of $75 per acre; (iv) a gross proceeds royalty of 4.65% to 6.5% based on the then current price of uranium; (v) employment opportunities and job-skills training programs for shareholders of the JTLC or its heirs, (vi) periodic contributions to a community projects fund if mineral production commences from the Juan Tafoya property and (vii) funding of a scholarship program for the shareholders of the JTLC or its heirs. The Company is obligated to make the first ten years' annual rental payments notwithstanding the right to terminate the JT Lease at any time, unless (a) the market value of uranium drops below $25 per pound, (b) a government authority bans uranium mining on the Juan Tafoya property, or (c) the deposit is deemed uneconomical by an independent engineering firm.

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- Definition The entire disclosure for long-lived, physical assets used in the normal conduct of business and not intended for resale. Includes, but is not limited to, accounting policies and methodology, roll forwards, depreciation, depletion and amortization expense, including composite depreciation, accumulated depreciation, depletion and amortization expense, useful lives and method used, income statement disclosures, assets held for sale and public utility disclosures. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6391035&loc=d3e2868-110229 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6391110&loc=d3e2921-110230 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1361-107760 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.13-14) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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