LOSS ON IMPAIRMENT OF PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2012

LOSS ON IMPAIRMENT OF PROPERTY AND EQUIPMENT [Text Block]

6. LOSS ON IMPAIRMENT OF PROPERTY AND EQUIPMENT

Upon completion of the refinancing, the outcome of which is not assured, the Company plans to construct and place into service a new leach pad. Consequently, the Company does not plan to place additional crushed ore on the existing pad. Therefore, the overland conveyor which currently transports ore from the agglomerator to a transition conveyor just east of the existing pads is no longer needed. A replacement conveyor belt which can only be used on this conveyor is also considered redundant. The net book value of this equipment prior to impairment was $1,319,526. The Company believes the fair value of this equipment is approximately $468,000 and estimated its fair value based on similar property and equipment in the southwestern United States. Consequently, the Company has recorded an impairment charge of $851,526 in Other Income (Expense) on the Consolidated Statements of Operations.

The following table sets forth the estimated fair value and the impairment of the assets that are measured on a non-recurring basis by level within the fair value hierarchy as of December 31, 2012:

						Impairment
		Level 2		Total		Loss
December 31, 2012
Asset:
Property and equipment	$	468,000	$	468,000	$	(851,526	)