Asset Retirement and Reclamation Liabilities

12 Months Ended

Dec. 31, 2020

Asset Retirement and Reclamation Liabilities

Asset Retirement and Reclamation Liabilities

12.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 years ended December 31, 2020 and 2019 the Company recognized approximately $0.2 million of accretion expense each year.

The following table summarizes activity in the Velardeña Properties ARO:

	Year Ended
	December 31,
	2020		2019
	(in thousands)
Beginning balance	$	2,825	$	2,660
Changes in estimates, and other		82		(60)
Accretion expense		249		225
Ending balance	$	3,156	$	2,825

The change in estimate of the ARO recorded during both periods are 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 Consolidated Balance Sheets at December 31, 2020 and December 31, 2019 includes a nominal amount of reclamation liability related to activities at the El Quevar project in Argentina.