NOTE 17 FAIR VALUE ACCOUNTING

Assets and liabilities measured at fair value on a recurring basis

The following tables set forth the fair value of the Company’s assets and liabilities measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy as at December 31, 2015 and 2014. As required by accounting guidance, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.


	Fair Value as at December 31, 2015
	Total		Level 1		Level 2		Level 3
Assets:
Investments	$	1,032	$	1,032	$	—	$	—
	$	1,032	$	1,032	$	—	$	—


	Fair Value as at December 31 2014
	Total		Level 1		Level 2		Level 3
Assets:
Investments	$	1,082	$	1,082	$	—	$	—
	$	1,082	$	1,082	$	—	$	—
Liabilities:
Portion of accounts payable and accrued liabilities recorded at fair value	$	355	$	355	$	—	$	—
	$	355	$	355	$	—	$	—

The Company's investments are marketable equity securities which are exchange traded and are valued using quoted market prices in active markets and as such are classified within Level 1 of the fair value hierarchy. The fair value of the investments is calculated as the quoted market price of the marketable equity security multiplied by the quantity of shares held by the Company.

As at December 31, 2014, accounts payable included an accrual of $0.4 million on for the fair value approximately 319,640 shares of common stock, which were issued in payment during 2015, as discussed in Note 10, Shareholders’ Equity. The fair value of these accounts payable is assumed to approximate the fair value of the underlying shares with which they were settled. As the Company's stock is quoted on an active market, this liability is classified within Level 1 of the fair value hierarchy.

The fair value of other financial assets and liabilities were assumed to approximate their carrying values due to their short-term nature and historically negligible credit losses.

Assets and liabilities measured at fair value on a non‑recurring basis

As discussed in Note 5, Mineral Property Interests and Asset Retirement Obligations, the Company recorded several impairment charges in the year ended December 31, 2015.

During the year ended December 31, 2015, the Company recorded impairment charges of $20.8 million for the Gold Bar project, $14.9 million for the Tonkin project and $1.4 million for the North Battle Mountain Complex. Fair value of these projects was estimated using an observed precedent transaction market value per acre and per ounce of gold equivalent mineralized material, which indicated a potential significant decrease in the market price of the projects, as of December 31, 2015.

During the fourth quarter of 2015, the Company noted that the estimated market value per pound of copper equivalent mineralized material from comparable projects was below the carrying value per pound of copper equivalent mineralized material of the Los Azules project, indicating a potential decrease on its market value, and therefore a requirement to test the Los Azules Project for recoverability. To assist in performing a recoverability test, the Company engaged a third-party valuation firm which determined that the carrying value of the property exceeded its estimated fair value, resulting in an impairment charge of $11.4 million, along with a resulting deferred income tax recovery of $1.3 million, recorded in the Statement of Operations and Comprehensive Loss for the year ended December 31, 2015.

Further, during the fourth quarter of 2015 the Company also performed a fair value analysis on the El Gallo 2 assets, including mineral property interest, land, surface ownership and construction-in-progress. As a result of this analysis, the carrying value of the asset was found to exceed its fair value in the amount of $2.0 million. Therefore, an impairment charge of $2.0 million was recorded in the Statement of Operations and Comprehensive Loss, and allocated to construction-in-progress, based on the impairment results for the year ended December 31, 2015.

During the fourth quarter of 2015, an impairment loss of $11.8 million was also recorded with respect to the Company’s investment in MSC. To estimate the fair value of the Company’s investment in MSC, the Company used a combined approach, which uses a discounted cash flow model for the operating mine and an observed precedent transaction market value per acre for the fair value of exploration properties.

During the year ended December 31, 2014, a total of $353.7 million impairment charge was recorded, which included $228.3 million to the Los Azules project, $98.4 million to the Nevada properties, and $27.0 million to our Argentina properties. The impairment of Los Azules was triggered by a contemporaneous acquisition of a copper project located in Argentina, which we believed shared similarities with Los Azules, and the decline in the observed market value of comparable transactions observed in 2014. The impairment of the Nevada and Argentina properties, was primarily as a result of significant declines in the observed market value of comparable transactions noted as part of our year‑end annual impairment analysis, which indicated a decrease in the market value of our properties, as well as the strategic review of our exploration program, pursuant to which we have made the decision to focus primarily on core assets, namely our Los Azules, Gold Bar, Tonkin and North Battle Mountain properties. Further, these events resulted in a total deferred income tax recovery of $76.6 million.

Further, during the year ended December 31, 2014 an impairment loss of $21.2 million was also recorded with respect to the Company’s investment in MSC. To estimate the fair value of the Company’s investment in MSC, the Company used a combined approach, which uses a discounted cash flow model for the operating mine and a market approach for the fair value of exploration properties. Further, a discount of 20% was applied to the observable market value per acre for the Argentina exploration properties to reflect the country risk associated with early-stage exploration lands located in Argentina at the date of assessment.

The following table sets forth a summary of the quantitative and qualitative information related to the unobservable inputs used in the calculation of the Company’s non‑recurring Level 3 fair value measurements for the year ended December 31, 2015 and 2014.


	2015
	Date of Fair Value			Range /
	Measurement	Valuation Technique	Unobservable Input	Weighted Average

			Discount Rate		10	%
		Discounted cash flow	Long Term Gold Price	$	1,245	per ounce
Investment in MSC	December 31, 2015	for operating mine	Long Term Silver Price	$	18	per ounce
			Argentina Inflation Index		21	%
			United States Inflation Index		2.4	%


	2014
	Date of Fair Value			Range /
	Measurement	Valuation Technique	Unobservable Input	Weighted Average

			Discount to reflect decline in
		Market value per	observed market value of comparable		35	%
Los Azules Copper Project	December 31, 2014	pound of copper	transactions from June 2014 (date of
		equivalent mineralized	the last impairment test) to December
		material	31, 2014

			Discount Rate		10	%
		Discounted cash flow	Long Term Gold Price	$	1,300	per ounce
		for operating mine	Long Term Silver Price	$	20.50	per ounce
	December 31, 2014		Argentina Inflation Index		11.9	%
Investment in MSC			United States Inflation Index		2.1	%

		Market value per acre	Discount to observed market value
Investment in MSC	December 31, 2014	for exploration	pre acre to reflect Argentina country		20	%
		properties	risk

The following non financial assets and the company’s investment in MSC were measured at fair value on a non‑recurring basis as part of the Company’s impairment assessments during the year ended December 31, 2015 and 2014.


		2015
	Date of Fair Value									Total
	Measurement	Total		Level 1		Level 2		Level 3		Impairment
Mineral property interests
Los Azules Copper Project	December 31, 2015		191,490		—		—		191,490		11,399
Tonkin Complex	December 31, 2015		4,833		—		—		4,833		14,939
Gold Bar Complex	December 31, 2015		30,730		—		—		30,730		20,847
North Battle Mountain Complex	December 31, 2015		785		—		—		785		1,443
Investment in MSC	December 31, 2015		167,107		—		—		167,107		11,777
		$	394,945	$	—	$	—	$	394,945	$	60,405


		2014
	Date of Fair Value									Total
	Measurement	Total		Level 1		Level 2		Level 3		Impairment
Mineral property interests
Los Azules Copper Project	December 31, 2014	$	202,889	$	—	$	—	$	202,889	$	228,301
Tonkin Complex	December 31, 2014		20,423		—		—		20,423		31,391
Gold Bar Complex	December 31, 2014		51,577		—		—		51,577		25,435
North Battle Mountain Complex	December 31, 2014		2,227		—		—		2,227		1,921
Investment in MSC	December 31, 2014		177,018		—		—		177,018		21,162
		$	454,134	$	—	$	—	$	454,134	$	308,210