Property, Plant and Equipment

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment

Property, Plant and Equipment

9. Property, Plant and Equipment

Property, Plant and Equipment, Net

The components of property, plant, and equipment, net were as follows:

	December 31,		December 31,
	2022		2021
	(in thousands)
Mineral properties	$	9,353	$	9,353
Exploration properties		2,418		2,418
Royalty properties		200		200
Buildings		3,808		3,806
Mining equipment and machinery		17,127		17,477
Other furniture and equipment		1,355		1,328
Asset retirement cost		1,157		1,057
		35,418		35,639
Less: Accumulated depreciation and amortization		(29,002)		(29,012)
	$	6,416	$	6,627

El Quevar Earn-In Agreement

On April 9, 2020, the Company and several of its directly and indirectly wholly-owned subsidiaries entered into the Earn-in Agreement with Barrick, pursuant to which Barrick has acquired an option (the “Option”) to earn a 70% interest in the Company’s El Quevar project located in the Salta Province of Argentina. Pursuant to the terms of the Earn-in Agreement, in order to earn an undivided 70% interest in the El Quevar project, Barrick must: (A) incur a total of $10 million in work expenditures over a total of eight years ($0.5 million per year in years one and two, $1 million per year in years three, four and five, and $2 million per year in years six, seven and eight); (B) deliver to the Company a National Instrument 43-101 compliant pre-feasibility study pursuant to the parameters set forth in the Earn-in Agreement; and (C) deliver a written notice to exercise the Option to the Company within the term of the Earn-in Agreement. Barrick may withdraw from the Earn-in Agreement at any time after spending a minimum of $1 million in work expenditures and upon providing 30 days’ notice to the Company. The Company will form a new entity (“NewCo”) that will hold the El Quevar properties. Upon satisfaction of the Earn-in conditions and exercise of the Option, NewCo will be 70% owned by Barrick and 30% owned by the Company. Funding of NewCo will be based on Barrick’s and the Company’s respective ownership and industry standard dilution mechanisms will apply in the case of funding shortfalls by either shareholder. As of December 31, 2021, Barrick had met the $1 million in work expenditures that would allow them to withdraw from the Earn-in Agreement. The carrying value of El Quevar as of December 31, 2022 and 2021 is $2.3 million.

Sale of Santa Maria Property

On July 14, 2020, the Company entered into a binding letter of intent (“Letter of Intent”) with Fabled for a potential transaction pursuant to which Fabled would acquire the Company’s option to earn a 100% interest in the Santa Maria mining claims located in Chihuahua, Mexico (the “Option”). On December 4, 2020, the Company entered into a definitive option agreement (“Option Agreement”) to sell its option to Fabled. As consideration for the Option, Fabled (i) paid $500,000 in cash to the Company and issued to the Company 1,000,000 shares of Fabled’s common stock (the “Closing Consideration”); (ii) paid $1,500,000 in cash to the Company on the one year anniversary date following the closing of the Option Agreement.

The Company recorded the $1.5 million received from Fabled in December 2021 to “Deferred revenue” on the accompanying Consolidated Balance Sheets and recognized the amount to “Other operating income” over a one-year period through December 2022. Upon receipt of each cash payment, the Option Agreement imposes a performance obligation on the Company to provide Fabled an exclusive right to the Santa Maria Properties to conduct exploration and mining activities during the period from receipt of the payment until the due date of the next required payment. Accordingly, the Company has determined that its performance obligation for each option payment received is satisfied over time. The remaining unamortized balance of deferred revenue at December 31, 2022, is zero. At December 31, 2021, there was an unamortized balance of $1.5 million.

On December 19, 2022, the Option Agreement was amended to reschedule the remaining $2.0 million payment into eight quarterly payments of $250,000 beginning January 31, 2023 through September 30, 2024. Fabled failed to make the payment due on January 31, 2023. The Company issued a notice of default under the Option Agreement to Fabled and the property has reverted to the Company (see Note 24). The carrying value of Santa Maria as of December 31, 2022 and 2021, is zero.