Convertible note payable	12 Months Ended
Dec. 31, 2015
Convertible note payable
Convertible note payable	11.Convertible note payable On October 27, 2015, the Company borrowed $5.0 million from Sentient, per the terms of the Sentient Note and Loan Agreement (the “Sentient Loan”), with principal and accrued interest due on October 27, 2016. To comply with security regulations and stock exchange rules in the United States and Canada, the Company received stockholder approval on January 19, 2016 to allow the Sentient Note principal and accrued interest to be converted, solely at Sentient’s option, into shares of the Company’s common stock at a price equal to the lowest of: 1) $0.29, 90 percent of the 15-day volume weighted average price (“VWAP”) for the period immediately preceding the Loan closing date, 2) 90 percent of the 15-day VWAP for the period immediately preceding the Loan conversion date, or 3) an anti-dilution adjusted price based on the lowest price for which the Company has sold its stock following the Loan closing date. The Loan bears interest at a rate of 9.0% per annum, compounded monthly. The interest is due on the earlier of the full conversion of the Sentient Note or at maturity. The Sentient Loan contains customary representations, warranties, covenants and default provisions and is secured by the stock of the Company’s principal subsidiaries, including the stock of subsidiaries that own directly or indirectly the Velardeña Properties and the El Quevar project. The Company incurred approximately $0.3 million in legal and other costs associated with the Sentient Loan, including costs related to the special meeting of stockholders to approve the convertibility of the Sentient Note. Per the guidance of ASU 2015-03 the loan costs are presented as a reduction to the note payable on the accompanying Consolidated Balance Sheets and will be amortized to interest expense over the life of the Sentient note using the interest rate method (see Note 4). At December 31, 2015 the balance of the note payable was reduced by approximately $0.3 million related to the loan costs and the Company had recognized $54,000 of interest expense related to the amortization of the loan costs. The beneficial conversion feature of the Sentient Note represents an embedded derivative as defined by ASC 815 “Derivatives and Hedging”(“ASC 815”). ASC 815 provides that a derivative instrument’s fair value must be bifurcated between the note and the embedded derivative and separately recorded on the Company’s Consolidated Balance Sheet. The Company used a third party consultant to value the embedded derivative in the Sentient Note employing a Monte Carlo type probability analysis, which falls within Level 3 of the fair value hierarchy (see Note 14). For purposes of valuing the embedded derivative as of the Sentient Loan closing date and at December 31, 2015 the valuation model takes into account, among other items: 1) the probability of successfully achieving stockholder approval of the Sentient Notes’ conversion feature, 2) future variations in the Company’s stock price, and 3) the probability of entering into an equity transaction prior to the Sentient Loan maturity date that would lower the conversion price. The derivative is recorded at fair value with subsequent mark-to-market changes in the value of the derivative recorded as income or loss in the Consolidated Statements of Operations and Comprehensive Loss. It was determined that the embedded derivative had a fair value of approximately $1.1 million at October 27, 2015, the date the Company entered into the Sentient Loan. At December 31, 2015 the embedded derivative had a fair value of approximately $0.5 million and the Company recorded a gain of approximately $0.6 million. Because the proceeds of the Sentient Loan have been bifurcated between the Sentient Note and the embedded derivative, and because the Sentient Note has been recorded net of loan costs, which will be amortized to interest expense over the life of the Sentient Note, the effective rate of interest on solely the recorded loan obligation is higher than the stated nominal rate of interest on the Sentient Note. The effective interest rate on the Sentient Note during the year ended December 31, 2015 is approximately 21%, compounded monthly, compared to the stated nominal rate of 9.0% per annum, compounded monthly. The Company has also agreed to enter into a registration rights agreement (“RRA”) upon the conversion of any part of the Sentient Note into shares of common stock of the Company. The RRA will require the Company to register, at the Company’s expense, any shares received by Sentient upon conversion of all or a part of the Sentient Note within a reasonable period of time and to maintain the effectiveness of such shares. The RRA will provide for penalties up to a maximum of 3.0 percent of the value of the shares received in the case that the shares are not registered and declared effective within a reasonable timeframe. On February 11, 2016, Sentient converted approximately $3.9 million of principal and $0.1 million of accrued interest (representing the total amount of accrued interest at the conversion date) into 23,335,000 shares of the Company’s common stock at an exercise price of approximately $0.172 per share, equal to 90% of the 15-day VWAP immediately preceding the conversion date (see Note 25). Following the conversion, approximately $1.1 million of principal remained outstanding.

11.Convertible note payable

On October 27, 2015, the Company borrowed $5.0 million from Sentient, per the terms of the Sentient Note and Loan Agreement (the “Sentient Loan”), with principal and accrued interest due on October 27, 2016. To comply with security regulations and stock exchange rules in the United States and Canada, the Company received stockholder approval on January 19, 2016 to allow the Sentient Note principal and accrued interest to be converted, solely at Sentient’s option, into shares of the Company’s common stock at a price equal to the lowest of: 1) $0.29, 90 percent of the 15-day volume weighted average price (“VWAP”) for the period immediately preceding the Loan closing date, 2) 90 percent of the 15-day VWAP for the period immediately preceding the Loan conversion date, or 3) an anti-dilution adjusted price based on the lowest price for which the Company has sold its stock following the Loan closing date. The Loan bears interest at a rate of 9.0% per annum, compounded monthly. The interest is due on the earlier of the full conversion of the Sentient Note or at maturity. The Sentient Loan contains customary representations, warranties, covenants and default provisions and is secured by the stock of the Company’s principal subsidiaries, including the stock of subsidiaries that own directly or indirectly the Velardeña Properties and the El Quevar project.

The Company incurred approximately $0.3 million in legal and other costs associated with the Sentient Loan, including costs related to the special meeting of stockholders to approve the convertibility of the Sentient Note. Per the guidance of ASU 2015-03 the loan costs are presented as a reduction to the note payable on the accompanying Consolidated Balance Sheets and will be amortized to interest expense over the life of the Sentient note using the interest rate method (see Note 4). At December 31, 2015 the balance of the note payable was reduced by approximately $0.3 million related to the loan costs and the Company had recognized $54,000 of interest expense related to the amortization of the loan costs.

The beneficial conversion feature of the Sentient Note represents an embedded derivative as defined by ASC 815 “Derivatives and Hedging”(“ASC 815”). ASC 815 provides that a derivative instrument’s fair value must be bifurcated between the note and the embedded derivative and separately recorded on the Company’s Consolidated Balance Sheet. The Company used a third party consultant to value the embedded derivative in the Sentient Note employing a Monte Carlo type probability analysis, which falls within Level 3 of the fair value hierarchy (see Note 14). For purposes of valuing the embedded derivative as of the Sentient Loan closing date and at December 31, 2015 the valuation model takes into account, among other items: 1) the probability of successfully achieving stockholder approval of the Sentient Notes’ conversion feature, 2) future variations in the Company’s stock price, and 3) the probability of entering into an equity transaction prior to the Sentient Loan maturity date that would lower the conversion price.

The derivative is recorded at fair value with subsequent mark-to-market changes in the value of the derivative recorded as income or loss in the Consolidated Statements of Operations and Comprehensive Loss. It was determined that the embedded derivative had a fair value of approximately $1.1 million at October 27, 2015, the date the Company entered into the Sentient Loan. At December 31, 2015 the embedded derivative had a fair value of approximately $0.5 million and the Company recorded a gain of approximately $0.6 million.

Because the proceeds of the Sentient Loan have been bifurcated between the Sentient Note and the embedded derivative, and because the Sentient Note has been recorded net of loan costs, which will be amortized to interest expense over the life of the Sentient Note, the effective rate of interest on solely the recorded loan obligation is higher than the stated nominal rate of interest on the Sentient Note. The effective interest rate on the Sentient Note during the year ended December 31, 2015 is approximately 21%, compounded monthly, compared to the stated nominal rate of 9.0% per annum, compounded monthly.

The Company has also agreed to enter into a registration rights agreement (“RRA”) upon the conversion of any part of the Sentient Note into shares of common stock of the Company. The RRA will require the Company to register, at the Company’s expense, any shares received by Sentient upon conversion of all or a part of the Sentient Note within a reasonable period of time and to maintain the effectiveness of such shares. The RRA will provide for penalties up to a maximum of 3.0 percent of the value of the shares received in the case that the shares are not registered and declared effective within a reasonable timeframe.

On February 11, 2016, Sentient converted approximately $3.9 million of principal and $0.1 million of accrued interest (representing the total amount of accrued interest at the conversion date) into 23,335,000 shares of the Company’s common stock at an exercise price of approximately $0.172 per share, equal to 90% of the 15-day VWAP immediately preceding the conversion date (see Note 25). Following the conversion, approximately $1.1 million of principal remained outstanding.