Asset Retirement Obligation and Reclamation Liabilities

9 Months Ended

Sep. 30, 2019

Asset Retirement Obligation and Reclamation Liabilities

Asset Retirement Obligation and Reclamation Liabilities

14.     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 at that time.

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 nine months of 2019, the Company recognized approximately $167,000 of accretion expense.

The following table summarizes activity in the Velardeña Properties ARO:

	Nine Months Ended
	September 30,
	2019		2018
	(in thousands)
Beginning balance	$	2,660	$	2,448
Changes in estimates, and other		(60)		2
Accretion expense		167		156
Ending balance	$	2,767	$	2,606

The change in estimate of the ARO recorded during 2019 is primarily 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 September 30, 2019 and December 31, 2018 includes a nominal amount of reclamation liability related to activities at the El Quevar project in Argentina.