Discontinued Operations

9 Months Ended

Sep. 30, 2011

Discontinued Operations [Abstract]

DISCONTINUED OPERATIONS

NOTE 4 – DISCONTINUED OPERATIONS

In August 2010, the Company sold its 100% interest in its subsidiary Compañía Minera Cerro Bayo Ltd. (“Minera Cerro Bayo”), which controls the Cerro Bayo mine in southern Chile, to Mandalay Resources Corporation (“Mandalay”). Under the terms of the agreement, the Company received the following from Mandalay in exchange for all of the outstanding shares of Minera Cerro Bayo: (i) $6.0 million in cash; (ii) 17,857,143 common shares of Mandalay; (iii) 125,000 ounces of silver to be delivered in six equal quarterly installments commencing in the third quarter of 2011, which had an estimated fair value of $2.3 million; (iv) a 2.0% Net Smelter Royalty (NSR) on production from Minera Cerro Bayo in excess of a cumulative 50,000 ounces of gold and 5,000,000 ounces of silver, which had an estimated fair value of $5.4 million; and (v) existing value-added taxes to be collected from the Chilean government in excess of $3.5 million, which were valued at $3.5 million. We received the first quarterly installment of 20,833 ounces of silver valued at $0.7 million on September 30, 2011. As part of the transaction, Mandalay agreed to pay the next $6.0 million of reclamation costs associated with Minera Cerro Bayo’s nearby Furioso property. Any reclamation costs above that amount are to be shared equally by Mandalay and the Company. At the time of the sale, the Company realized a loss on the sale of approximately $2.1 million, net of income taxes.

The following table details selected financial information included in income from discontinued operations for the three and nine months ended September 30, 2010 (in thousands):

	Three months ended September 30, 2010			Nine months ended September 30, 2010
Sales of metals	$	—		$	—
Depreciation and depletion		(112	)		(2,194	)
Care and maintenance expense		(472	)		(2,350	)
Other income and expense		333			(164	)
Income tax expense		—			(1,321	)
Loss on sale of discontinued assets		882			(2,095	)
Income (loss) from discontinued operations	$	631		$	(8,124	)