Oxide Plant Lease Revenue and Related Costs

3 Months Ended

Mar. 31, 2021

Oxide Plant Lease Revenue and Related Costs

Oxide Plant Lease Revenue and Related Costs

17.      Oxide Plant Lease Revenue and Related Costs

For the three months ended March 31, 2020, the Company recorded revenue of approximately $1.2 million and related costs of approximately $0.6 million associated with the lease of the Velardeña Properties oxide plant. The Company recognizes oxide plant lease fees and reimbursements for labor, utility and other costs as “Revenue: Oxide plant lease” in the Condensed Consolidated Statements of Operations following the guidance of ASC 842.  ASC 842 supports recording as gross revenue the reimbursement of expenses incurred directly by the Company in performing its obligations under the lease in situations where the entity has control over the specific goods or services transferred to a customer as a principal versus as an agent. The actual costs incurred for reimbursed direct labor and utility costs are reported as “Oxide plant lease costs” in the Condensed Consolidated Statements of Operations. The Company recognizes lease fees during the period the fees are earned per the terms of the lease.

On July 7, 2020, the Company received notification from Hecla terminating the Lease Agreement pursuant to the Third Amendment, effective November 30, 2020. Therefore, during the three months ended March 31, 2021 the Company did not record any income or costs associated with the lease of the oxide plant to Hecla.