INVENTORY

9 Months Ended

Sep. 30, 2013

INVENTORY [Text Block]

4.       INVENTORY

Inventory is as follows:

		September 30,		December 31,
		2013		2012
Current Assets:		(unaudited)
Copper in process	$	964,381	$	2,018,795
Finished goods		6,642		72,815
Material and supplies		426,891		441,582
		1,397,914		2,533,192
Long-Term Assets:
Stockpiles and ore on leach pads		4,003,790		4,412,151
Total Inventory	$	5,401,704	$	6,945,343

The Company’s inventories are carried at the lower of average cost or net realizable value. Copper in process and finished goods inventories are valued using the average cost of production and include all costs of purchase, conversion costs (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 considers only 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. Costs incurred in excess of this standard are expensed as incurred as abnormal costs which are included in costs applicable to sales within the condensed consolidated statements of operations. Accordingly, during the three and nine month periods ended September 30, 2013, the Company expensed $1,510,501 and $4,719,979, respectively, of abnormal production costs due to the underutilization of plant capacity. During the three and nine month periods ended September 30, 2012, the Company expensed $1,800,371 and $6,384,851, respectively, of abnormal production costs due to the underutilization of plant capacity.

The current portion of copper in process inventory is determined based on the expected amounts to be processed within the next 12 months. Inventories not expected to be processed within the next 12 months are classified under long–term assets as stockpiles and ore on leach pads.