Fair Value Measurements

9 Months Ended

Sep. 30, 2017

Fair Value Measurements

Fair Value Measurements

12.     Fair Value Measurements

Financial assets and liabilities and nonfinancial assets and liabilities are measured at fair value under a framework of a fair value hierarchy which prioritizes the inputs into valuation techniques used to measure fair value into three broad levels.  This hierarchy gives the highest priority to quoted prices (unadjusted) in active markets and the lowest priority to unobservable inputs.  Further, financial assets and liabilities should be classified by level in their entirety based upon the lowest level of input that was significant to the fair value measurement. The three levels of the fair value hierarchy per ASC 820 are as follows:

Level 1:  Unadjusted quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date.

Level 2:  Quoted prices in inactive markets for identical assets or liabilities, quoted prices for similar assets or liabilities in active markets, or other observable inputs either directly related to the asset or liability or derived principally from corroborated observable market data.

Level 3:  Unobservable inputs due to the fact that there is little or no market activity. This entails using assumptions in models which estimate what market participants would use in pricing the asset or liability.

The following table summarizes the Company’s financial assets and liabilities at fair value on a recurring basis at September 30, 2017 and December 31, 2016, by respective level of the fair value hierarchy:

	Level 1		Level 2		Level 3		Total
	(in thousands)
At September 30, 2017
Assets:
Cash and cash equivalents	$	4,966	$	—	$	—	$	4,966
Trade accounts receivable		387		—		—		387
Trade accounts receivable - related party		4		—		—		4
Short-term investments		242		—		—		242
	$	5,599	$	—	$	—	$	5,599
At December 31, 2016
Assets:
Cash and cash equivalents	$	2,588	$	—	$	—	$	2,588
Trade accounts receivable		380		—		—		380
Trade accounts receivable - related party		643		—		—		643
Short-term investments		334		—		—		334
	$	3,945	$	—	$	—	$	3,945
Liabilities:
Warrant liability - related party	$	—	$	—	$	976	$	976
Warrant liability		—		—		922		922
	$	—	$	—	$	1,898	$	1,898

The Company’s cash equivalents, comprised principally of U.S. treasury securities, are classified within Level 1 of the fair value hierarchy.

The Company’s trade accounts receivable are classified within Level 1 of the fair value hierarchy and are related to the lease of the oxide plant, valued per the terms of the lease rates per the plant lease agreement, and to the sale of mining equipment, based on the terms of the sales agreement.

The Company’s short-term investments consist of the available for sale common stock in Golden Tag and are classified within Level 1 of the fair value hierarchy (see Note 4).

At December 31, 2016, the Company recorded a liability for warrants to acquire the Company’s stock as a result of anti-dilution clauses in the warrant agreements that could result in a resetting of the warrant exercise price in the event the Company were to issue additional shares of its common stock in a future transaction at a price lower than the current exercise price of the warrants (see Note 14). The Company assessed the fair value of its warrant liability at the end of each reporting period, with changes in the value recorded as “Warrant derivative (loss) gain” on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss. The valuation policies were approved by the Chief Financial Officer who reviewed and approved the inputs used in the fair value calculations and the changes in fair value measurements from period to period for reasonableness. Fair value measurements are discussed with the Company’s Chief Executive Officer, as deemed appropriate. The warrant liability was recorded at fair value as of December 31, 2016, based primarily on a valuation performed by a third party expert using a Monte Carlo simulation, which falls within Level 3 of the fair value hierarchy.  The valuation model took into account the probability that the Company could issue additional shares in a future transaction at a lower price than the current exercise price of the warrants.  The Company did not have a warrant liability at September 30, 2017 as the result of a change in accounting principal during the period as discussed in Note 3.

In addition to the warrant exercise prices (see Note 14) other significant inputs to the warrant valuation model at December 31, 2016 included the following:

	December 31,
	2016
Company's ending stock price	$	0.58
Company's stock volatility		110%
Applicable risk free interest rate		1.39%

At September 30, 2017, the remaining warrants are recorded as equity as the result of a change in accounting principal fully detailed in Note 3.

Non-recurring Fair Value Measurements

There were no non-recurring fair value measurements at December 31, 2016 or September 30, 2017.