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INVENTORY

12 Months Ended

Dec. 31, 2012

3. INVENTORY

Inventory is as follows:

		At December 31,
		2012		2011
Current Assets:
Copper in process	$	2,018,795	$	3,170,759
Finished goods		72,815		37,361
Material and supplies		441,582		555,772
		2,533,192		3,763,892
Long-Term Assets:
Stockpiles and ore on leach pads		4,412,151		6,347,012
	$	6,945,343	$	10,110,904

The Company’s inventories are carried at the lower of cost or net realizable value. Cost for the product inventory is valued using the average cost of production and includes all costs of purchase, costs of conversion (direct costs and an allocation of fixed and variable production overheads) and other costs incurred in bringing the inventories to their present location and condition. The Company only considers those costs that are consistent with its estimate of costs to be incurred at a normalized production level, currently estimated at 25,000,000 pounds per annum, as inventoriable costs. Accordingly, the Company expensed $8,130,004 and $11,755,375 of abnormal costs incurred above the standard cost to produce a pound of copper, during the years ended December 31, 2012 and 2011, respectively.

- Definition

The entire disclosure for inventory. This may include, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the major classes of inventory, and the nature of the cost elements included in inventory. If inventory is stated above cost, accrued net losses on firm purchase commitments for inventory and losses resulting from valuing inventory at the lower-of-cost-or-market may also be included. For LIFO inventory, may disclose the amount and basis for determining the excess of replacement or current cost over stated LIFO value and the effects of a LIFO quantities liquidation that impacts net income.

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