Investments

6 Months Ended

Jun. 30, 2011

Investments

Investments

3. Investments

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Short-term investments include investments with maturities greater than three months, but not exceeding 12 months, or highly liquid investments with maturities greater than 12 months that the Company intends to liquidate during the next 12 months for working capital needs.

The Company determines the appropriate classification of its investments in equity securities at the time of purchase and re-evaluates those classifications at each balance sheet date.  Available for sale investments are marked to market at each reporting period with changes in fair value recorded as a component of other comprehensive income (loss). If declines in fair value are deemed other than temporary, a charge is made to net income (loss) for the period.

The following tables summarize the Company’s investments at June 30, 2011 and December 31, 2010:

June 30, 2011	Cost		Estimated Fair Value		Carrying Value
	(in thousands)
Investments:
Short-term:
Available for sale
Common stock	$	1,414	$	1,157	$	1,157
Warrant to purchase common stock	124		6		6
Total available for sale	1,538		1,163		1,163
Total short term	$	1,538	$	1,163	$	1,163

December 31, 2010	Cost		Estimated Fair Value		Carrying Value
	(in thousands)
Investments:
Short-term:
Available for sale
Common stock	$	217	$	527	$	527
Warrant to purchase common stock	124		74		74
Total available for sale	341		601		601
Total short term	$	341	$	601	$	601

See Note 8 for a discussion of the methodologies used to determine the fair value of the common stock and warrants presented in the tables above.  The June 30, 2011 carrying value of the available for sale common stock in the table above, includes the approximately $1.1 million fair market value of the 5 million shares of Apogee Minerals Limited (“Apogee”) received from the sale of the Company’s Paca Pulacayo property in Bolivia as discussed in Note 5.  In July 2011 the Company sold approximately 1.6 million of the Apogee shares for net proceeds of approximately $0.4 million.

Credit Risk

Credit risk is the risk that a third party might fail to fulfill its performance obligations under the terms of a financial instrument. For cash and cash equivalents and investments, the Company’s maximum exposure to credit risk represents the carrying amount on the balance sheet. The Company attempts to mitigate credit risk for cash and cash equivalents by placing its funds with high credit-quality financial institutions, limiting the amount of exposure to each financial institution, monitoring the financial condition of the financial institutions and investing only in government and corporate securities rated “investment grade” or better. The Company invests with financial institutions that maintain a net worth of not less than $1.0 billion and are members in good standing of the Securities Investor Protection Corporation.