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Commitments and Contingencies
3 Months Ended
Mar. 31, 2021
Commitments and Contingencies  
Commitments and Contingencies

20.     Commitments and Contingencies

 

During April 2021, the Company became aware of a potential lawsuit in Mexico against one of the Company’s Mexico subsidiaries, Minera William S.A. de C.V. (“Minera William”).  The plaintiff in the matter is Unifin Financiera, S.A.B de C.V. or one of its affiliates (“Unifin”).  Although there is evidence that the lawsuit was filed in the Fifth Specialized Commercial District Court by Unifin and subsequently dismissed by the court for procedural reasons, the Company has not been served with the complaint and therefore has limited knowledge of the basis for the alleged claim.  The Company understands that Unifin has challenged through a federal appeal the dismissal of the proceedings, and there is a possibility that Unifin may seek to refile the complaint in another venue or overturn the dismissal on appeal.  Based on the information that the Company has obtained through informal channels; the Company understands that Unifin is alleging that a representative of Minera William signed certain documents in July 2011 purporting to bind Minera William as a guarantor of payment obligations owed by a third party to Unifin in connection with that third party’s acquisition of certain drilling equipment.  At the time the documentation was allegedly signed, Minera Williams was a subsidiary of ECU Silver Mining prior to the Company’s acquisition of ECU in September 2011.  In connection with this dispute, Unifin has obtained a preliminary court order freezing Minera William’s bank accounts in Mexico, which has limited the Company’s ability to access approximately US$153,000.  Notwithstanding this action, the restrictions imposed on Minera Williams’ bank accounts do not impact the Company’s ability to operate the Rodeo mine, which is held through a different Mexico subsidiary, or continue with the Company’s evaluation plans for a potential Velardena mine restart or move forward with any of the Company’s other exploration programs in Mexico.  Since the Company has not been served in this action, the Company is not able to determine the amount of relief sought by Unifin.  However, informal indications suggest that Unifin is seeking recovery for as much as US$12.5 million.  The Company believes there is no basis for this claim and will defend itself if and when the Company is formally served with notice of the proceedings.  As such, the Company has not accrued an amount for this matter in its Condensed Consolidated Balance Sheets or Statements of Operations as of March 31, 2021.

 

At December 31, 2020, the Company had no gain or loss contingencies.  The Company has certain purchase and lease commitments as set forth in the Company’s Form 10-K for the year ended December 31, 2020.