Asset Retirement Obligation and Reclamation Liabilities

6 Months Ended

Jun. 30, 2021

Asset Retirement Obligation and Reclamation Liabilities

Asset Retirement and Reclamation Liabilities

12.     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 six months of 2021, the Company recognized approximately $131,000 of accretion expense.

The following table summarizes activity in the Velardeña Properties ARO:

	Six Months Ended
	June 30,
	2021		2020
	(in thousands)
Beginning balance	$	3,156	$	2,825
Changes in estimates, and other		(86)		82
Accretion expense		131		121
Ending balance	$	3,201	$	3,028

The change in estimates of the ARO recorded during 2021 and 2020 are primarily the result of changes in assumptions related to inflation factors used in the determination of future cash flows.

The asset retirement obligation and reclamation liability set forth on the accompanying Condensed Consolidated Balance Sheets at June 30, 2021 and December 31, 2020 also includes a nominal amount of reclamation liability related to activities at the El Quevar project in Argentina.  Environmental costs at the Rodeo Property will be expensed as incurred.  

There were no environmental costs incurred at the Rodeo Property for the six-month periods ended June 30, 2021 or June 30, 2020.