SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2014

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Property and Equipment, Estimated Useful Life

Depreciation and amortization is computed on the straight-line method over the estimated useful lives of the assets, or the life of the lease, whichever is shorter, as follows:

	Estimated Useful Life
Building and Building Improvements	20 – 40 years
Mining equipment	2 – 7 years
Office and shop furniture and equipment	3 – 7 years
Vehicles	5 years

Fair value measured on a recurring basis

Liabilities measured at fair value on a recurring basis are summarized as follows:

	Fair value measurement using inputs				Carrying amount
	Level 1	Level 2		Level 3	March 31, 2014		December 31, 2013
Financial instruments:
Warrant derivative		$	225,000		$	225,000	$	950,000
PIK Note derivative		$	480,375		$	480,375	$	2,250,000

Schedule of derivative liability

For the Company's warrant and PIK note derivative liabilities, fair value was estimated using a Monte Carlo Model using the following assumptions:

Warrant derivative liability	Fair Value Measurements
	Using Inputs
	March 31, 2014			December 31, 2013
Market price and estimated fair value of stock	$	0.72		$	1.10
Exercise price	$	1.93		$	1.93
Term (years)		2.73			3
Dividend yield	$	--		$	--
Expected volatility *		56.00	%		76.90	%
Risk-free interest rate		0.50	%		0.78	%

PIK Note derivative liability	Fair Value Measurements
	Using Inputs
	March 31, 2014			December 31, 2013
Market price and estimated fair value of stock	$	0.72		$	1.10
Exercise price	$	1.40		$	1.40
Term (years)		9.33			9.58
Dividend yield	$	--			--
Expected volatility *		56.00	%		76.90	%
Risk-free interest rate		2.63	%		2.96	%

* During the first quarter of 2014, the Company revised its assumption for expected volatility by switching from a peer-group average volatility to the Company’s three-year historical volatility in measuring the value of the derivative liabilities mentioned above.  Prior to 2011, the occurrence of certain corporate events would not have made the historical volatility calculations meaningful or accurate if included.  This reduction in volatility led to a reduced valuation for both the Warrant and PIK Note derivative liabilities of approximately $118,500 and $126,000, respectively. The remaining decrease in the valuation is attributable to the decline in the Company’s stock price.