NOTE 4 GOLD AND SILVER BULLION

The Company invested a portion of its cash in physical gold and silver bullion. Below is the balance of its holdings of gold and silver as at June 30, 2013 and December 31, 2012:

	As at June 30, 2013				As at December 31, 2012
	Gold		Silver		Gold		Silver
	(dollars in thousands, except ounces and per ounce)
Number of ounces	793		24,969		793		24,969
Average cost per ounce	$	1,192.00	$	18.86	$	1,278.63	$	27.08
Total cost	$	945	$	471	$	1,014	$	676
Fair value per ounce	$	1,192.00	$	18.86	$	1,657.50	$	29.95
Total fair value	$	945	$	471	$	1,314	$	748

The fair value of gold and silver was based on the daily London P.M. fix as at June 30, 2013 and December 31, 2012. Since ASC Topic 815, Derivatives and Hedging, does not consider gold and silver to be readily convertible to cash, the Company carries these assets at the lower of cost or market.

As at June 30, 2013, the Company’s average cost was $1,278.63 and $27.08 per ounce of gold and silver, respectively, compared to its fair value of $1,192.00 and $18.86 per ounce, respectively. As a result of the fair value being lower than the carrying value, the Company reduced its average cost per ounce and recorded an unrealized loss of $0.1 million and $0.2 million on its gold and silver bullion, respectively, in its statements of operations and comprehensive loss for the three and six month periods ended June 30, 2013. Changes in the Company’s holdings of gold and silver for the six months ended June 30, 2013 and year ended December 31, 2012 are as follows:

	Six months ended June 30, 2013									Year ended December 31, 2012
	Gold			Silver			Total			Gold			Silver			Total
	(in thousands)
Opening Balance	$	1,014		$	676		$	1,690		$	7,232		$	15,578		$	22,810
Proceeds from sale	—			—			—			(7,982		)	(15,854		)	(23,836		)
Gain on sale	—			—			—			1,764			1,311			3,075
Unrealized loss	(69		)	(205		)	(274		)	—			(359		)	(359		)
Ending Balance	$	945		$	471		$	1,416		$	1,014		$	676		$	1,690

Subsequent to the quarter ended June 30, 2013 the Company disposed of its remaining gold and silver bullion at a market price of $1,245.70 per ounce of gold and $19.18 per ounce of silver for net proceeds of approximately $1.5 million.