Significant Accounting Policies

9 Months Ended

Sep. 30, 2011

Significant Accounting Policies

Significant Accounting Policies

2. Significant Accounting Policies

In conjunction with the Company’s merger with ECU discussed in Note 3, the Company adopted the following accounting policies:

a) Inventories — In process, concentrate and doré inventories are carried at the lower of average cost or net realizable value. Net realizable value represents the estimated future sales price of the product based on spot and futures metals prices through estimated sale and settlement dates, less the estimated costs to complete production and bring the product to sale. Materials and supplies inventories are valued at the lower of average cost or net realizable value. Cost includes applicable taxes and freight. The Company routinely counts and evaluates its material and supplies to determine the existence of any obsolete stock that is subject to impairment (see Note 6).

b) Asset Retirement Obligations - The Company records asset retirement obligations (“ARO”) in accordance with Accounting Standards Codification (“ASC”) 410, “Asset Retirement and Environmental Obligations” (“ASC 410”), which establishes a uniform methodology for accounting for estimated reclamation and abandonment costs. According to ASC 410, the fair value of an ARO is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. An offsetting asset retirement cost (“ARC”) is capitalized as part of the carrying value of the assets with which it is associated, and depreciated over the useful life of the asset (see Note 11).

c) Revenue Recognition - The Company recognizes a sale at the earliest point that both risk of loss and title transfer to the purchaser which, pursuant to the terms of the Company’s agreement for the sale of doré, occurs when the product is received by the refiner (see Note 16).

The Company did not adopt any new accounting standards during the quarter ended September 30, 2011, nor were there any new accounting pronouncements during that period that would have an impact on the Company’s financial position or results of operations.