Asset Retirement Obligation and Reclamation Liabilities

3 Months Ended

Mar. 31, 2018

Asset Retirement Obligation and Reclamation Liabilities

Asset Retirement Obligation and Reclamation Liabilities

11.     Asset Retirement Obligation 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 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 first three months of 2018, the Company recognized approximately $51,000 of accretion expense and approximately $4,000 of amortization expense related to the ARC.

The following table summarizes activity in the Velardeña Properties ARO:

	Three Months Ended
	March 31,
	2018		2017
	(in thousands)
Beginning balance	$	2,448	$	2,380
Changes in estimates, and other		1		(128)
Accretion expense		51		49
Ending balance	$	2,500	$	2,301

The change in the ARO recorded during the 2018 and 2017 periods are the result of changes in assumptions related to inflation factors and the timing of future expenditures used in the determination of future cash flows.

The ARO set forth on the accompanying Condensed Consolidated Balance Sheets at March 31, 2018 and December 31, 2017 includes approximately $0.1 million of reclamation liabilities related to activities at the El Quevar project in Argentina.