Impairment of Goodwill	12 Months Ended
Dec. 31, 2013
Impairment of Goodwill
Impairment of Goodwill	3. Impairment of Goodwill Goodwill is all related to the acquisition of the Velardeña Properties as part of the ECU merger transaction and is primarily the result of the requirement to record a deferred tax liability for the difference between the fair value and the tax basis of both the assets acquired and liabilities assumed. Per the guidance of ASC 350, “Intangible — Goodwill and Other” (“ASC 350”), the Company assesses the recoverability of its goodwill at least annually, or whenever events or changes in circumstances indicate that the carrying value of the goodwill may be impaired. 2013 Impairment The carrying value of goodwill, related to the Mexico ECU reporting unit, has been fully written off at December 31, 2013 compared to $11.7 million at December 31, 2012. As discussed in Note 2, regarding the impairment of long lived assets related to the Velardeña Properties asset group, the significant decrease in metals prices and shutdown of mining and processing at the Velardeña Properties during 2013 were events that also required an assessment of whether goodwill had been impaired. The Company recorded an $11.2 million impairment charge at June 30, 2013 and further reduced the carrying value of goodwill from $0.5 million to zero at December 31, 2013. The Company used an analysis of discounted after-tax cash flows to calculate the implied goodwill of the Velardeña Properties asset group following the guidance of ASC 805. Several mining, processing and shutdown scenarios were combined to arrive at a single projection of cash flows using a weighted average approach, which assigned probabilities to the occurrence of each individual scenario. The cash flow analysis used in the impairment assessment for goodwill related to the Velardeña Properties falls within level 3 of the fair value hierarchy per ASC 820 (see Note 13) and includes various inputs including the weighted average cost of capital of 21%, projected future metals prices, and assumptions from the Company’s Velardeña Properties mining and processing plans. The most significant unobservable factors are certain assumptions used in the Velardeña Properties mining and processing plans and include: 1) ore grades consistent with the Company’s current and previously reported estimates of mineralized material, 2) plant throughput consistent with projected mining and processing plans under the various mining and processing scenarios, 3) the Company’s projections of operating costs, and 4) the weighting of mining and processing scenarios. The weighted average cost of capital and forecast of future metals prices were obtained from a third party valuation consultant that derived the data from corroborated observable market data. Metals prices used in the cash flow analysis for silver ranged from $23.80 to $18.06 per ounce and for gold ranged from $1,440 to $1,198 per ounce. 2012 Impairment The carrying value of goodwill, related to the Mexico ECU reporting unit, was $11.7 million at December 31, 2012 compared to $70.2 million at December 31, 2011. During the third and fourth quarters of 2012, the Company’s forecast of future gold and silver prices had decreased by approximately 20% and certain assumptions related to ore processing throughput rates and other aspects of the long term mining and processing plan for the Velardeña Properties had changed. As a result of these changes, and per the guidance of ASC 350, the Company completed an impairment analysis of the goodwill carrying value. The analysis indicated that goodwill was impaired and the Company recorded impairment charges of $57.2 million during the third quarter 2012 and $1.3 million during the fourth quarter 2012 for a total of $58.5 million for the year. The impairment amounts recorded during 2012 were calculated by applying the income approach to determine the fair value of the net assets of the reporting unit per the guidance of ASC 820. The Company utilized discounted cash flows and an excess earnings model to determine the fair value of the entity and the implied goodwill. This model falls within level 3 of the fair value hierarchy per ASC 820 (see Note 13) and includes various inputs including the weighted average cost of capital, future metals prices, and assumptions from the Company’s Velardeña Properties mining and processing plan extended over a twenty five year period. The most significant unobservable factors are certain assumptions used in the Velardeña Properties mining and processing plan and include: 1) ore grades consistent with the Company’s current and previously reported estimates of mineralized material, 2) plant throughput consistent with a plan to ramp up to 1,150 tonnes per day by 2015, and 3) the Company’s projections of mining and processing costs. The weighted average cost of capital of 21% and forecast of future metals prices were obtained from a third party valuation consultant that derived the data from corroborated observable market data. Metals prices used in the analysis for silver ranged from $34.78 to $23.77 per ounce and for gold from $1,866 to $1,394 per ounce.

3. Impairment of Goodwill

Goodwill is all related to the acquisition of the Velardeña Properties as part of the ECU merger transaction and is primarily the result of the requirement to record a deferred tax liability for the difference between the fair value and the tax basis of both the assets acquired and liabilities assumed. Per the guidance of ASC 350, “Intangible — Goodwill and Other” (“ASC 350”), the Company assesses the recoverability of its goodwill at least annually, or whenever events or changes in circumstances indicate that the carrying value of the goodwill may be impaired.

2013 Impairment

The carrying value of goodwill, related to the Mexico ECU reporting unit, has been fully written off at December 31, 2013 compared to $11.7 million at December 31, 2012. As discussed in Note 2, regarding the impairment of long lived assets related to the Velardeña Properties asset group, the significant decrease in metals prices and shutdown of mining and processing at the Velardeña Properties during 2013 were events that also required an assessment of whether goodwill had been impaired. The Company recorded an $11.2 million impairment charge at June 30, 2013 and further reduced the carrying value of goodwill from $0.5 million to zero at December 31, 2013.

The Company used an analysis of discounted after-tax cash flows to calculate the implied goodwill of the Velardeña Properties asset group following the guidance of ASC 805. Several mining, processing and shutdown scenarios were combined to arrive at a single projection of cash flows using a weighted average approach, which assigned probabilities to the occurrence of each individual scenario. The cash flow analysis used in the impairment assessment for goodwill related to the Velardeña Properties falls within level 3 of the fair value hierarchy per ASC 820 (see Note 13) and includes various inputs including the weighted average cost of capital of 21%, projected future metals prices, and assumptions from the Company’s Velardeña Properties mining and processing plans. The most significant unobservable factors are certain assumptions used in the Velardeña Properties mining and processing plans and include: 1) ore grades consistent with the Company’s current and previously reported estimates of mineralized material, 2) plant throughput consistent with projected mining and processing plans under the various mining and processing scenarios, 3) the Company’s projections of operating costs, and 4) the weighting of mining and processing scenarios. The weighted average cost of capital and forecast of future metals prices were obtained from a third party valuation consultant that derived the data from corroborated observable market data. Metals prices used in the cash flow analysis for silver ranged from $23.80 to $18.06 per ounce and for gold ranged from $1,440 to $1,198 per ounce.

2012 Impairment

The carrying value of goodwill, related to the Mexico ECU reporting unit, was $11.7 million at December 31, 2012 compared to $70.2 million at December 31, 2011. During the third and fourth quarters of 2012, the Company’s forecast of future gold and silver prices had decreased by approximately 20% and certain assumptions related to ore processing throughput rates and other aspects of the long term mining and processing plan for the Velardeña Properties had changed. As a result of these changes, and per the guidance of ASC 350, the Company completed an impairment analysis of the goodwill carrying value. The analysis indicated that goodwill was impaired and the Company recorded impairment charges of $57.2 million during the third quarter 2012 and $1.3 million during the fourth quarter 2012 for a total of $58.5 million for the year.

The impairment amounts recorded during 2012 were calculated by applying the income approach to determine the fair value of the net assets of the reporting unit per the guidance of ASC 820. The Company utilized discounted cash flows and an excess earnings model to determine the fair value of the entity and the implied goodwill. This model falls within level 3 of the fair value hierarchy per ASC 820 (see Note 13) and includes various inputs including the weighted average cost of capital, future metals prices, and assumptions from the Company’s Velardeña Properties mining and processing plan extended over a twenty five year period. The most significant unobservable factors are certain assumptions used in the Velardeña Properties mining and processing plan and include: 1) ore grades consistent with the Company’s current and previously reported estimates of mineralized material, 2) plant throughput consistent with a plan to ramp up to 1,150 tonnes per day by 2015, and 3) the Company’s projections of mining and processing costs. The weighted average cost of capital of 21% and forecast of future metals prices were obtained from a third party valuation consultant that derived the data from corroborated observable market data. Metals prices used in the analysis for silver ranged from $34.78 to $23.77 per ounce and for gold from $1,866 to $1,394 per ounce.