NOTE 2 INVESTMENTS

The Company’s investment portfolio consists of marketable equity securities and warrants of certain publicly-traded companies. As at December 31, 2017, the Company classified the marketable equity securities as available-for-sale securities, which are recorded at fair value based upon quoted market prices with changes in fair value recorded in Other Comprehensive Income (Loss) (“OCI”). The gains and losses for available-for-sale securities are not reported in Net (Loss) in the Statement of Operations until the securities are sold or if there is an other-than-temporary decline in fair value below cost. In the three and nine months ending September 30, 2017, the Company recorded an other-than-temporary impairment (“OTTI”) of $0.4 million.

The Company adopted ASU 2016-01 as of January 1, 2018 and as a result has reclassified the accumulated OCI balance of $3.0 million related to marketable equity securities to beginning Accumulated Deficit (see Statement of Changes in Shareholders’ Equity). As a result of adoption of this guidance, the Company now recognizes changes in fair value of these securities in the Statement of Operations. During the three and nine months ended September 30, 2018, the Company sold marketable equity securities for proceeds of $nil and $3.7 million respectively. The Company realized a loss of $0.8 million on the sale, which is included in the Statement of Operations. During the comparable period ended September 30, 2017, the Company sold $2.2 million of marketable equity securities resulting in a gain of $0.8 million. During the three and nine months ended September 30, 2018, the Company had an unrealized loss on equity securities in the amount of $0.2 million and $1.8 million respectively, which is included in the Statement of Operations.

The Company records warrants at fair value using the Black-Scholes option pricing model. As the warrants meet the definition of derivative instruments, unrealized gains or losses arising from their revaluation are recorded in the Statement of Operations. During the three and nine months ended September 30, 2018, the Company recorded an unrealized gain of $0.1 million and as unrealized loss of $0.7 million respectively (September 30, 2017 – $0.9 million loss and $0.1 million gain).

During the three months ended September 30, 2018, the Company participated in a private placement financing of a TSX.V listed company, Great Bear Resources Ltd. (“Great Bear”). The Company purchased 786,186 units at C$1.45 per unit for total investment of C$1.1 million or US$0.9 million. Each unit consists of one common share and one-half of one common share purchase warrant. The investment in Great Bear was classified as an equity investment with changes in fair value measured through operations. The intial cost basis allocated to common shares and warrants was allocated on a pro-rata fair value basis. The fair value of the warrants was derived using the Black-Scholes option pricing model.

The following is a summary of the balances as of September 30, 2018 and December 31, 2017:


							Other		Statement of
	Opening		Additions		Disposals		Comprehensive		Operations		Fair Value
	balance		during		during		Income (Loss)		(Loss)		end of the
As of September 30, 2018	(January 1)		period		period		(pre-tax)		Income		period
Marketable equity securities	$	6,404	$	1,887	$	(3,667)	$	—	$	(1,795)	$	2,829
Warrants		1,567		201		(704)		—		(731)		333
Investments	$	7,971	$	2,088	$	(4,371)	$	—	$	(2,526)	$	3,162


							Other		Statement of
	Opening		Additions		Disposals		Comprehensive		Operations		Fair Value
	balance		during		during		Income (Loss)		(Loss)		end of the
As of December 31, 2017	(January 1)		year		year		(pre-tax)		Income		year
Marketable equity securities	$	6,749	$	—	$	(2,163)	$	1,334	$	484	$	6,404
Warrants		1,794		—		—		—		(227)		1,567
Investments	$	8,543	$	—	$	(2,163)	$	1,334	$	257	$	7,971

As of September 30, 2018, the cost of the marketable equity securities and warrants was approximately $2.9 million (December 31, 2017 - $3.3 million).