Asset Retirement Obligation and Reclamation Liabilities

12 Months Ended

Dec. 31, 2017

Asset Retirement Obligation and Reclamation Liabilities

Asset Retirement Obligation and Reclamation Liabilities

11.Asset Retirement and Reclamation Liabilities

The Company retained the services of a mining engineering firm to prepare a detailed closure plan for the Velardeña Properties. The plan was completed during the second quarter 2012 and indicated that the Company had an ARO and offsetting ARC of approximately $1.9 million.  The estimated $3.5 million ARO and ARC that was recorded at the time of the acquisition of the Velardeña Properties was adjusted accordingly.

The Company will continue to accrue additional estimated ARO amounts based on an asset retirement plan as activities requiring future reclamation and remediation occur.  During the year ended December 31, 2017 the Company recognized approximately $0.2 million of accretion expense and approximately $4,000 of amortization expense related to the ARC.

The following table summarizes activity in the Velardeña Properties ARO:

	Year Ended
	December 31,
	2017		2016
	(in thousands)
Beginning balance	$	2,380	$	2,480
Changes in estimates, and other		(128)		(293)
Accretion expense		196		193
Ending balance	$	2,448	$	2,380

The decrease in the ARO recorded during the years ended December 31, 2017 and 2016 is the result of changes in assumptions related to inflation factors and discount rates used in the determination of future cash flows.

The ARO set forth on the accompanying Condensed Consolidated Balance Sheets at December 31, 2017 and December 31, 2016 include approximately $50,000 of reclamation liabilities related to activities at the El Quevar project in Argentina.