Oxide Plant Lease Revenue and Related Costs

12 Months Ended

Dec. 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 year ended December 31, 2020 the Company recorded revenue of approximately $5.6 million and related costs of approximately $2.0 million associated with the lease of the Velardeña Properties oxide plant to Hecla. The Company recognizes oxide plant lease fees and reimbursements for labor, utility and other costs as “Revenue: Oxide plant lease” in the 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 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 Hecla Lease, effective November 30, 2020. Therefore, during the year ended December 31, 2021, the Company did not record any income or costs associated with the lease of the oxide plant to Hecla.  

For the year ended December 31, 2020, the Company recognized a reduction of $254,000 to “Revenue - plant lease” on the Company’s Condensed Consolidated Statements of Operations related to the change in the fair value of a derivative related to the Hecla Lease on November 30, 2020 (see Note 7).  During the year ended December 31, 2020, the Company also recognized approximately $180,000 “Revenue - plant lease” on the Company’s Condensed Consolidated Statements of Operations related to the amortization of deferred revenue.