Commitments and Contingencies

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies

Commitments and Contingencies

20. Commitments and Contingencies

Leases and Purchase Commitments

The Company has non-cancelable operating lease and other commitments as follows:

	Year Ended December 31,
	2023		2024		2025		2026		2027		Thereafter		Total
El Quevar mining concessions1	$	30	$	30	$	30	$	30	$	30	$	—	$	150
Velardeña mining concessions1		27		27		27		27		27		—		135
Velardeña ejido and surface rights1		54		54		54		54		54		—		270
Rodeo mining concessions1		99		99		99		99		99		—		495
Rodeo ejido and surface rights1		264		264		264		264		264		—		1,320
Office space		161		119		9		—		—		—		289
Total Commitments	$	635	$	593	$	483	$	474	$	474	$	—	$	2,659

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¹ Estimated

The Company is required to make payments to the Argentine government to maintain its rights to the El Quevar mining concessions. The Company has made such payments totaling approximately $7,000 and $9,000 for the years ended December 31, 2022 and 2021, respectively.

The Company is required to pay concession holding fees to the Mexican government to maintain its rights to the Velardeña Properties and Rodeo Property mining concessions. During the years ended December 31, 2022 and 2021 the Company made such payments totaling approximately $107,000 and $104,000 respectively. Additionally, during the years ended December 31, 2022 and 2021, the Company made annual payments to local ejidos and property owners under its surface rights agreements for the Velardeña Properties and Rodeo Property of approximately $300,000 and $109,000 respectively.

The Company has office leases for its corporate headquarters in Golden, Colorado, as well as for its Velardeña Properties offices in Mexico, and exploration offices in Mexico and Argentina. The lease for the corporate headquarters expires in January 2025. Payments associated with the corporate headquarters lease were recorded to rent expense by the Company in the amounts of $174,000 and $175,000 for the years ended December 31, 2022 and 2021, respectively. The lease for the Mexican offices expires in October 2023. Payments associated with the Mexican office lease were recorded to rent expense by the Company in the amounts of $59,000 and $54,000 for the years ended December 31, 2022 and 2021, respectively. The lease for the Argentina office was renegotiated and extended during the fourth quarter 2021 and now expires in November 2024. Payments associated with the Argentina office lease were recorded to rent expense by the Company in the amounts of $9,000 and $10,000 for the years ended December 31, 2022 and 2021, respectively.

The table above assumes that no annual maintenance payments will be made more than five years after December 31, 2022. If the Company continues mining and processing at the Rodeo or the Velardeña Properties beyond five years, the Company expects that it would make annual concession and surface rights payments of approximately $82,000 per year for the life of the Velardeña mine and approximately $363,000 per year for the life of the Rodeo mine. If

the Company continues to evaluate development opportunities at the El Quevar project, the Company expects that it would make annual maintenance payments of approximately $30,000 per year for the life of the El Quevar mine.

Payments associated with other exploration concessions the Company owns are not included because the Company has not completed exploration work on these concessions. Exploration success is historically low, and the Company has the right to terminate the payments and release the concessions at any time.

Contingencies

During April 2021, the Company became aware of a lawsuit in Mexico against one of the Company’s Mexican subsidiaries, Minera William, S.A. de C.V. (“Minera William”). The plaintiff in the matter is Unifin Financiera, S.A.B de C.V. (“Unifin”). The lawsuit was assigned to the Fifth Specialized Commercial District Court. Although the Company has knowledge of the existence and content of the lawsuit filed by Unifin, the Court has not officially served Minera William with the complaint as of the date of this report. 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 William was a subsidiary of ECU Silver Mining prior to the Company’s acquisition of ECU in September 2011. As a preemptive measure, Unifin has obtained a preliminary court order freezing Minera William’s bank accounts in Mexico, which has limited the Company’s and Minera William’s ability to access approximately US$153,000 according to current currency exchange rates. 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 Velardeña mine restart or move forward with any of the Company’s other exploration programs in Mexico. Unifin is seeking recovery for as much as US$12.5 million. The Company was formally served with notice of the lawsuit and filed a written response. The trial court has published a writ scheduling the preliminary hearing to take place on April 3, 2023. The Company believes there is no basis for this claim and will defend itself. As such, the Company has not accrued an amount for this matter in its Consolidated Balance Sheets or Statements of Operations as of December 31, 2022.