Liquidity and Capital Resources	12 Months Ended
Dec. 31, 2012
Liquidity and Capital Resources
Liquidity and Capital Resources	2. Liquidity and Capital Resources At December 31, 2012 the Company's aggregate cash and short-term investments totaled $44.6 million and, based on the assumptions described below, we expect to have a cash balance of approximately $24.0 million at December 31, 2013. In February of 2013 the Company completed the sale of certain Peruvian exploration properties to a third party for net proceeds of $3.5 million. The Company anticipates completing approximately $1.0 million in additional exploration property sales during 2013. The Company expects to have sufficient funding to continue its long-term business strategy through 2013. Assuming metals prices of $30.00 per ounce of silver and $1,600 per ounce of gold during 2013 the Company expects to generate a negative $1.0 million gross margin at the Velardeña Operations, which the Company defines as revenue from the sale of metals less costs applicable to the sale of metals (exclusive of depreciation and development costs). With the cash and investment balance at December 31, 2012 of $44.6 million, the negative $1.0 million gross margin at the Velardeña Operations, and the anticipated proceeds of $4.5 million from the sale of certain exploration properties, the Company plans to spend the following amounts during 2013 pursuant to its long-term business strategy: 1. Approximately $7.5 million on capital, project and development costs related to the continued development of the San Mateo ramp and other mine development and capital expenditures intended to increase the capacity and productivity of the Velardeña Operations and plant facilities; 2. Approximately $3.5 million at the El Quevar project to fund limited exploration completed in the first quarter of 2013, maintenance activities, property holding costs, and the continuation of project evaluation costs; 3. Approximately $5.0 million on other exploration activities and property holding costs related to the Company's portfolio of exploration properties located primarily in Mexico and in Peru and Argentina, as the Company continues strategies to monetize portions of the portfolio; 4. Approximately $7.0 million on general and administrative costs and $1.0 million on other working capital. The actual amount that the Company spends through year-end 2013 and the projected year-end cash and investment balance may vary significantly from the amounts specified above and will depend on a number of factors, including metals prices, the results of continuing operations and development work at the Velardeña Operations, the results of continued project assessment work at El Quevar and other exploration properties, and whether the Company is able to monetize additional portions of its exploration portfolio. There can be no assurance that the current expenditures planned for the Velardeña Operations will result in the anticipated amounts of silver and gold production. A $2.50 average change in the price of silver during 2013 would result in a $2.0 million change in expected cash flow during the period while a $250.00 average change in the price of gold during 2013 would result in a $1.2 million change in expected cash flow during the period. If the anticipated production does not occur, or metals prices decline from the levels noted previously, the Company would likely end the year 2013 with a lower cash and investment balance than the approximately $24.0 million currently expected.

2. Liquidity and Capital Resources

At December 31, 2012 the Company's aggregate cash and short-term investments totaled $44.6 million and, based on the assumptions described below, we expect to have a cash balance of approximately $24.0 million at December 31, 2013. In February of 2013 the Company completed the sale of certain Peruvian exploration properties to a third party for net proceeds of $3.5 million. The Company anticipates completing approximately $1.0 million in additional exploration property sales during 2013. The Company expects to have sufficient funding to continue its long-term business strategy through 2013.

Assuming metals prices of $30.00 per ounce of silver and $1,600 per ounce of gold during 2013 the Company expects to generate a negative $1.0 million gross margin at the Velardeña Operations, which the Company defines as revenue from the sale of metals less costs applicable to the sale of metals (exclusive of depreciation and development costs). With the cash and investment balance at December 31, 2012 of $44.6 million, the negative $1.0 million gross margin at the Velardeña Operations, and the anticipated proceeds of $4.5 million from the sale of certain exploration properties, the Company plans to spend the following amounts during 2013 pursuant to its long-term business strategy:

1.

Approximately $7.5 million on capital, project and development costs related to the continued development of the San Mateo ramp and other mine development and capital expenditures intended to increase the capacity and productivity of the Velardeña Operations and plant facilities;

2.

Approximately $3.5 million at the El Quevar project to fund limited exploration completed in the first quarter of 2013, maintenance activities, property holding costs, and the continuation of project evaluation costs;

3.

Approximately $5.0 million on other exploration activities and property holding costs related to the Company's portfolio of exploration properties located primarily in Mexico and in Peru and Argentina, as the Company continues strategies to monetize portions of the portfolio;

4.

Approximately $7.0 million on general and administrative costs and $1.0 million on other working capital.

The actual amount that the Company spends through year-end 2013 and the projected year-end cash and investment balance may vary significantly from the amounts specified above and will depend on a number of factors, including metals prices, the results of continuing operations and development work at the Velardeña Operations, the results of continued project assessment work at El Quevar and other exploration properties, and whether the Company is able to monetize additional portions of its exploration portfolio. There can be no assurance that the current expenditures planned for the Velardeña Operations will result in the anticipated amounts of silver and gold production. A $2.50 average change in the price of silver during 2013 would result in a $2.0 million change in expected cash flow during the period while a $250.00 average change in the price of gold during 2013 would result in a $1.2 million change in expected cash flow during the period. If the anticipated production does not occur, or metals prices decline from the levels noted previously, the Company would likely end the year 2013 with a lower cash and investment balance than the approximately $24.0 million currently expected.