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Revenue and Related Costs
12 Months Ended
Dec. 31, 2016
Revenue and Related Costs  
Revenue and Related Costs

16.Revenue and Related Costs

 

Oxide Plant Lease and Oxide Plant Lease Costs

 

For the year ended December 31, 2016 the Company recorded revenue of approximately $6.4 million and related costs of approximately $2.0 million associated with the lease of the Velardeña Properties oxide plant. The Company recognizes oxide plant lease fees and reimbursements for labor, utility and other costs as "Revenue: Oxide plant lease" in the Consolidated Statements of Operations and Comprehensive Loss following the guidance of ASC 605 regarding “income statement characterization of reimbursements received for "out-of-pocket" expenses incurred” and “reporting revenue gross as a principal versus net as an agent”.  ASC 605 supports recording as gross revenue fees received for the reimbursement of expenses in situations where the recipient is the primary obligor and has certain discretion in the incurrence of the reimbursable expense.  The actual costs incurred for reimbursed direct labor and utility costs are reported as “Oxide plant lease costs” in the Consolidated Statement of Operations. The Company recognizes lease fees during the period the fees are earned per the terms of the lease.

 

For the year ended December 31, 2015 the company recorded revenue of approximately $0.7 million and related costs of approximately $0.2 million associated with the lease of the oxide plant. In addition, the Company received an advance payment of $0.5 million that was applied to the lease amounts due during the first four months of 2016. At December 31, 2015 the advance payment was recorded as “Deferred revenue” on the accompanying Consolidated Balance Sheets.

 

Sale of Metals and Cost of Metals Sold

 

During the year ended December 31, 2015, the Company sold marketable concentrate products from its Velardeña Properties to three customers. Under the terms of the Company’s agreements with customers, title generally passes when a provisional payment is made, which occurs generally after the product is shipped and customary sales documents are completed.  Costs related to the sale of metals products include direct and indirect costs incurred to mine, process and market the products.  The Company had no metals or in-process inventories at December 31, 2015 as a result of the suspension of mining and processing at its Velardeña Properties (see Note 1).