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Sale of Metals and Related Costs

9 Months Ended

Sep. 30, 2012

16. Sale of Metals and Related Costs

The Company produces marketable products including doré, concentrates and precipitates at its Velardeña Operations. During the quarter ended September 30, 2012 the Company sold marketable products to five customers. Under the terms of the Company’s agreements with one doré and precipitate customer, title does not pass to the purchaser until the product is received by the refinery, at which point revenue is recognized. For the Company’s other customers, title generally passes when a provisional payment is made, which occurs generally after the product is shipped and customary sales documents are completed. Costs related to the sale of metals products includes direct and indirect costs incurred to mine, process and market the products. At September 30, 2012, the Company had written down its metals inventory to net realizable value including a charge to the cost of metals sold of approximately $2.0 million and a charge to depreciation expense of approximately $0.6 million.