Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Nov. 14, 2013 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'MINES MANAGEMENT INC | ' |
Entity Central Index Key | '0000066649 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 28,999,752 |
Document Fiscal Year Focus | '2013 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
CURRENT ASSETS: | ' | ' |
Cash and cash equivalents | $5,438,013 | $10,246,073 |
Interest receivable | 4,310 | 7,815 |
Prepaid expenses and deposits | 281,064 | 250,892 |
Certificates of deposit | 1,559,361 | 1,559,361 |
Total current assets | 7,282,748 | 12,064,141 |
PROPERTY AND EQUIPMENT: | ' | ' |
Buildings and leasehold improvements | 836,454 | 836,454 |
Equipment | 6,450,089 | 6,450,089 |
Office equipment | 344,939 | 344,939 |
Total property and equipment, gross | 7,631,482 | 7,631,482 |
Less accumulated depreciation | 6,093,078 | 5,392,684 |
Total property and equipment, net | 1,538,404 | 2,238,798 |
OTHER ASSETS: | ' | ' |
Available-for-sale securities | 17,715 | 19,633 |
Reclamation deposits | 1,191,182 | 1,184,966 |
Total other assets | 1,208,897 | 1,204,599 |
Total assets | 10,030,049 | 15,507,538 |
CURRENT LIABILITIES: | ' | ' |
Accounts payable | 438,122 | 495,326 |
Payroll and payroll taxes payable | 22,605 | 17,874 |
Total current liabilities | 460,727 | 513,200 |
LONG-TERM LIABILITIES: | ' | ' |
Asset retirement obligation | 473,672 | 456,823 |
Total liabilities | 934,399 | 970,023 |
COMMITMENTS AND CONTINGENCIES | ' | ' |
STOCKHOLDERS' EQUITY: | ' | ' |
Preferred shares - no par value, 10,000,000 shares authorized; -0- shares issued and outstanding | ' | ' |
Common shares - $0.001 par value, 100,000,000 shares authorized; 28,999,752 shares issued and outstanding | 29,000 | 29,000 |
Additional paid-in capital | 87,132,799 | 86,805,769 |
Accumulated deficit | -1,117,306 | -1,117,306 |
Deficit accumulated during the exploration stage | -76,955,393 | -71,188,416 |
Accumulated other comprehensive income | 6,550 | 8,468 |
Total stockholders' equity | 9,095,650 | 14,537,515 |
Total liabilities and stockholders' equity | $10,030,049 | $15,507,538 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ' | ' |
Preferred stock, par value (in dollars per share) | $0 | $0 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 28,999,752 | 28,999,752 |
Common stock, shares outstanding | 28,999,752 | 28,999,752 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | 134 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | |
REVENUE: | ' | ' | ' | ' | ' |
Royalties | $9,049 | $6,527 | $24,294 | $27,108 | $175,598 |
OPERATING EXPENSES: | ' | ' | ' | ' | ' |
General and administrative | 561,647 | 839,656 | 2,295,501 | 2,577,430 | 35,236,758 |
Technical services and exploration | 616,415 | 1,384,087 | 2,037,329 | 3,005,134 | 32,841,814 |
Depreciation | 232,746 | 242,469 | 700,394 | 733,857 | 6,125,131 |
Legal, accounting, and consulting | 259,540 | 130,507 | 565,425 | 352,908 | 5,229,964 |
Fees, filing, and licenses | 128,552 | 122,390 | 211,794 | 176,306 | 2,957,123 |
Impairment of mineral properties | ' | ' | ' | ' | 504,492 |
Total operating expenses | 1,798,900 | 2,719,109 | 5,810,443 | 6,845,635 | 82,895,282 |
LOSS FROM OPERATIONS | -1,789,851 | -2,712,582 | -5,786,149 | -6,818,527 | -82,719,684 |
OTHER INCOME: | ' | ' | ' | ' | ' |
Gain from warrant derivatives | 0 | 0 | ' | 357,977 | 476,381 |
Gain on sale of available-for-sale securities | ' | ' | ' | ' | 2,005,904 |
Interest income, net | 5,495 | 13,127 | 19,172 | 47,741 | 3,282,006 |
Total other income | 5,495 | 13,127 | 19,172 | 405,718 | 5,764,291 |
NET LOSS | ($1,784,356) | ($2,699,455) | ($5,766,977) | ($6,412,809) | ($76,955,393) |
NET LOSS PER SHARE (basic and diluted) (in dollars per share) | ($0.06) | ($0.09) | ($0.20) | ($0.22) | ' |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (basic and diluted) | 28,999,752 | 28,995,839 | 28,999,752 | 28,928,315 | ' |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $) | 3 Months Ended | 9 Months Ended | 134 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ' | ' | ' | ' | ' |
Net Loss | ($1,784,356) | ($2,699,455) | ($5,766,977) | ($6,412,809) | ($76,955,393) |
Unrealized holding gains (losses) arising during the period | -3,703 | 8,081 | -1,918 | 9,986 | 2,012,454 |
Less reclassification adjustment for realized gains included in net income, net of income tax of $0 | ' | ' | ' | ' | -2,005,904 |
COMPREHENSIVE LOSS | ($1,788,059) | ($2,691,374) | ($5,768,895) | ($6,402,823) | ($76,948,843) |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) (USD $) | 134 Months Ended |
Sep. 30, 2013 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ' |
Reclassification adjustment for realized gains included in net income, tax | $0 |
CONDENSED_CONSOLIDATED_STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | 134 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' | ' |
Net loss | ($5,766,977) | ($6,412,809) | ($76,955,393) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' | ' |
Stock-based compensation | 327,030 | 306,230 | 11,232,929 |
Stock received for services | ' | ' | -11,165 |
Depreciation | 700,394 | 733,857 | 6,125,131 |
Initial measurement of asset retirement obligation | ' | ' | 344,187 |
Accretion of asset retirement obligation | 16,849 | 16,110 | 129,485 |
Gain on sale of available-for-sale securities | ' | ' | -2,005,904 |
Gain from warrant derivatives | ' | -357,977 | -476,381 |
Impairment of mineral properties | ' | ' | 504,492 |
Changes in assets and liabilities: | ' | ' | ' |
Interest receivable | 3,505 | 8,625 | -4,310 |
Prepaid expenses and deposits | -30,172 | -68,188 | -341,475 |
Accounts payable | -57,204 | 127,721 | 437,958 |
Payroll and payroll taxes payable | 4,731 | 22,426 | 19,425 |
Net cash used in operating activities | -4,801,844 | -5,624,005 | -61,001,021 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' | ' |
Purchase of property and equipment | ' | -32,853 | -7,697,121 |
Proceeds from disposition of property and equipment | ' | ' | 35,423 |
Proceeds (purchase) of certificates of deposit | -6,216 | 51,880 | -2,689,631 |
Net proceeds from sale of available-for-sale securities | ' | ' | 2,005,904 |
Increase in mineral properties | ' | ' | -144,312 |
Net cash provided by (used in) investing activities | -6,216 | 19,027 | -8,489,737 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' | ' |
Net proceeds from sale of common stock | ' | 275,400 | 74,881,436 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | -4,808,060 | -5,329,578 | 5,390,678 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 10,246,073 | 17,121,800 | 47,335 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 5,438,013 | 11,792,222 | 5,438,013 |
SUPPLEMENTAL INFORMATION: | ' | ' | ' |
Interest paid | ' | ' | 65,768 |
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES: | ' | ' | ' |
Unrealized gains on available-for-sale securities | $1,918 | $9,986 | $6,550 |
ORGANIZATION_AND_SUMMARY_OF_SI
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | 9 Months Ended |
Sep. 30, 2013 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | ' |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | ' |
NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | |
Organization: | |
Mines Management, Inc. (the Company) is an Idaho corporation incorporated in 1947. The Company acquires, explores, and develops mineral properties in North and South America. | |
Summary of Significant Accounting Policies: | |
These unaudited interim financial statements have been prepared by the Company in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information, as well as the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting solely of normal recurring adjustments) considered necessary for a fair presentation of the interim financial statements have been included. | |
The preparation of financial statements in accordance with U.S. GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company’s condensed consolidated financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions, which could have a material effect on the reported amounts of the Company’s consolidated financial position and results of operations. Operating results for the three and nine month periods ended September 30, 2013 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2013. | |
For further information, refer to the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. | |
(a) Exploration Stage Enterprise | |
Since the Company is in the exploration stage of operation, the Company’s financial statements are prepared in accordance with the provisions of Accounting Standards Codification (“ASC”) 915, Development Stage Enterprises, as it devotes substantially all of its efforts to acquiring and exploring mining interests that management believes should eventually provide sufficient net profits to sustain the Company’s existence. Until such interests are engaged in commercial production, the Company will continue to prepare its consolidated financial statements and related disclosures in accordance with this standard. | |
(b) Mining properties, exploration and development costs | |
All exploration expenditures are expensed as incurred. Significant property acquisition payments for active exploration properties are capitalized, including payments to acquire mineral rights. Once a feasibility study has been completed, approved by management, and a decision is made to put the ore body into production, expenditures to develop new mines, to define further mineralization in existing ore bodies, and to expand the capacity of operating mines are capitalized and amortized on the units of production basis over proven and probable reserves. The Company charges to operations the allocable portion of capitalized costs attributable to properties sold. Capitalized costs are allocated to properties sold based on the proportion of claims sold to the claims remaining within the project area. | |
(c) Fair value measurements | |
The Company discloses the inputs used to develop the fair value measurements for the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as well as the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The three levels of the fair value hierarchy are as follows: | |
Level 1: Unadjusted quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date. | |
Level 2: Quoted prices in inactive markets for identical assets or liabilities, quoted prices for similar assets or liabilities in active markets, or other observable inputs either directly related to the asset or liability or derived principally from corroborated observable market data. | |
Level 3: Unobservable inputs due to the fact that there is little or no market activity. | |
(d) Stock compensation | |
The Company measures and records the costs of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award, recognized over the period during which an employee is required to provide services in exchange for such award. Compensation cost is recognized for awards granted and for awards modified, repurchased or cancelled. | |
(e) Net loss per share | |
Basic earnings or loss per share is computed on the basis of the weighted average number of shares outstanding during the period. Diluted earnings or loss per share is calculated on the basis of the weighted average number of shares outstanding during the period plus the effect of potential dilutive shares during the period. Potential dilutive shares include outstanding stock options and warrants. For periods in which a net loss is reported, potential dilutive shares are excluded because they are antidilutive. Therefore, basic loss per share is the same as diluted loss per share for the periods ended September 30, 2013 and 2012. | |
(f) Recent Accounting Pronouncements | |
In February 2013, the Financial Accounting Standards Board issued guidance related to items reclassified from accumulated other comprehensive income. The new standard requires either in a single note or parenthetically on the face of the financial statements: (i) the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its sources and (ii) the income statement line items affected by the reclassification. The Company adopted the provisions of this guidance effective January 1, 2013. This guidance did not have a significant impact on the Company’s consolidated financial position, results of operations or cash flows. | |
(g) Subsequent events | |
The Company evaluated events and transactions subsequent to the balance sheet date of September 30, 2013 for potential recognition or disclosure in the condensed consolidated financial statements. | |
CERTIFICATES_OF_DEPOSIT
CERTIFICATES OF DEPOSIT: | 9 Months Ended |
Sep. 30, 2013 | |
CERTIFICATES OF DEPOSIT: | ' |
CERTIFICATES OF DEPOSIT: | ' |
NOTE 2 — CERTIFICATES OF DEPOSIT: | |
The Company owns two certificates of deposit for a total of $1,559,361. These investments mature in February 2014 and bear interest at the rate of 0.35%. | |
The Company also has a certificate of deposit pledged as security for a Letter of Credit to the Montana Department of Environmental Quality as a reclamation guarantee for the Montanore expansion evaluation program. This certificate matures on January 3, 2014, bears interest at the rate of 0.45% and renews automatically each year. This certificate of deposit ($1,130,271 and $1,124,055 as of September 30, 2013 and December 31, 2012, respectively) is included with reclamation deposits on the Condensed Consolidated Balance Sheets. | |
AVAILABLEFORSALE_SECURITIES
AVAILABLE-FOR-SALE SECURITIES: | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
AVAILABLE-FOR-SALE SECURITIES: | ' | |||||||
AVAILABLE-FOR-SALE SECURITIES: | ' | |||||||
NOTE 3 — AVAILABLE-FOR-SALE SECURITIES: | ||||||||
Available-for-sale securities are comprised of common stocks which have been valued using quoted market prices in active markets. The following table summarizes the Company’s available-for-sale securities: | ||||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
Cost | $ | 11,165 | $ | 11,165 | ||||
Unrealized Gains | 6,550 | 8,468 | ||||||
Fair Market Value | $ | 17,715 | $ | 19,633 | ||||
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS: | 9 Months Ended | |||||||||
Sep. 30, 2013 | ||||||||||
FAIR VALUE MEASUREMENTS: | ' | |||||||||
FAIR VALUE MEASUREMENTS: | ' | |||||||||
NOTE 4 — FAIR VALUE MEASUREMENTS: | ||||||||||
The following table summarizes the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2013, and the fair value calculation input hierarchy level determined to apply to each asset and liability category. Quoted market prices were used to determine the fair value of available-for-sale securities. See note 5 for further discussion on the fair value measurement technique used to value the warrant derivatives. The Company has no financial assets or liabilities that are measured at fair value on a nonrecurring basis. | ||||||||||
September 30, | December 31, | Input | ||||||||
2013 | 2012 | Hierarchy | ||||||||
Level | ||||||||||
Assets: | ||||||||||
Available-for-sale securities | $ | 17,715 | $ | 19,633 | Level 1 | |||||
Liabilities: | ||||||||||
Asset retirement obligation | $ | 473,672 | $ | 456,823 | Level 3 | |||||
The following table presents the fair value reconciliation of Level 3 liabilities measured at fair value during the nine months ended September 30, 2013 and 2012: | ||||||||||
Asset Retirement Obligation | ||||||||||
2013 | 2012 | |||||||||
Balance January 1 | $ | 456,823 | $ | 435,171 | ||||||
Accretion expense | 5,488 | 5,286 | ||||||||
Balance March 31 | 462,311 | 440,457 | ||||||||
Accretion expense | 5,615 | 5,350 | ||||||||
Balance June 30 | 467,926 | 445,807 | ||||||||
Accretion expense | 5,746 | 5,474 | ||||||||
Balance September 30 | $ | 473,672 | $ | 451,281 | ||||||
WARRANT_DERIVATIVES
WARRANT DERIVATIVES: | 9 Months Ended |
Sep. 30, 2013 | |
WARRANT DERIVATIVES: | ' |
WARRANT DERIVATIVES: | ' |
NOTE 5 — WARRANT DERIVATIVES: | |
The Company had common share purchase warrants with exercise price reset features which qualified for treatment as a derivative liability. These warrants expired on April 20, 2012. The warrants did not qualify for hedge accounting and, as such, all changes in the fair value of the warrants were recognized in earnings until they expired. The Company reported no gains or losses from the change in fair value of these warrants in the Condensed Consolidated Statements of Operations for the three months ended September 30, 2013 and 2012. Gains of $-0- and $357,977 were recorded for the nine months ended September 30, 2013 and 2012, respectively. | |
CONCENTRATION_OF_CREDIT_RISK
CONCENTRATION OF CREDIT RISK: | 9 Months Ended |
Sep. 30, 2013 | |
CONCENTRATION OF CREDIT RISK: | ' |
CONCENTRATION OF CREDIT RISK: | ' |
NOTE 6 — CONCENTRATION OF CREDIT RISK: | |
The Company maintains most of its cash and cash equivalents in one financial institution. Balances are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company’s total uninsured bank deposit balance totaled approximately $7,950,000 as of September 30, 2013. To date, the Company has not experienced a material loss or lack of access to its invested cash or cash equivalents; however, no assurance can be provided that access to the Company’s invested cash and cash equivalents will not be impacted by adverse conditions in the financial markets. | |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY: | 9 Months Ended |
Sep. 30, 2013 | |
STOCKHOLDERS' EQUITY: | ' |
STOCKHOLDERS' EQUITY: | ' |
NOTE 7 — STOCKHOLDERS’ EQUITY: | |
Common Shares: | |
For a description of the public offerings that occurred in 2011 and 2007 and the sales of common stock during 2007 and 2005, refer to the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. The warrants associated with the public offering completed in April 2007 expired on April 20, 2012. No warrants related to this offering were exercised before they expired. The warrants associated with the sale of stock in October 2005 also expired on April 20, 2012. Cumulative warrants exercised relating to this issue were 269,620 for each of the periods ended September 30, 2013 and December 31, 2012. No warrants were exercised during the nine months ended September 30, 2013 and 2012. | |
Preferred Shares: | |
The Company has authorized 10,000,000 preferred shares, no par value. Through September 30, 2013, the Company had not issued any preferred shares. | |
STOCK_OPTIONS
STOCK OPTIONS: | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
STOCK OPTIONS: | ' | |||||||||||||
STOCK OPTIONS: | ' | |||||||||||||
NOTE 8 — STOCK OPTIONS: | ||||||||||||||
There has been no change to the Company’s 2003 and 2007 Stock Option Plans during 2013, other than the items summarized below. For a description of these Stock Option Plans, refer to the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. | ||||||||||||||
The Board of Directors authorized the Company to establish the 2012 Equity Incentive Plan (“2012 Plan”) which was approved by the shareholders in June 2012. The Company may grant options to purchase up to 3,000,000 common shares under the 2012 Plan. The common shares subject to the 2012 Plan may be either authorized and unissued shares or reacquired shares, bought on the market or otherwise, at the discretion of the Board. The 2012 Plan provides for the issuance of incentive stock options to employees and nonqualified stock options to directors, employees and consultants of the Company. No participant is eligible to be granted more than 200,000 common shares during any calendar year. The option exercise price may not be less than 100% of fair market value per share on the date of grant and the options are exercisable within ten years from the date of grant of the option. The vesting schedule of the options is at the discretion of the Board of Directors. | ||||||||||||||
A summary of the option activity under the Company’s Stock Option Plans as of September 30, 2013, and changes during the period then ended, is presented below: | ||||||||||||||
Number of | Weighted- | Weighted- | Aggregate | |||||||||||
Options | Average | Average | Intrinsic Value | |||||||||||
Exercise | Remaining | |||||||||||||
Price | Contractual | |||||||||||||
Term | ||||||||||||||
Outstanding at January 1, 2013 | 3,622,000 | $ | 1.81 | |||||||||||
Issued | 520,000 | $ | 1.05 | |||||||||||
Outstanding at March 31, 2013 | 4,142,000 | $ | 1.71 | |||||||||||
Expired | (200,000 | ) | $ | 0.99 | ||||||||||
Outstanding at June 30, 2013 | 3,942,000 | $ | 1.75 | |||||||||||
Issued | 910,000 | $ | 0.57 | |||||||||||
Expired | (110,000 | ) | $ | 1.36 | ||||||||||
Outstanding at September 30, 2013 | 4,742,000 | $ | 1.53 | 3.08 | — | |||||||||
Exercisable at September 30, 2013 | 3,832,000 | $ | 1.76 | 2.62 | — | |||||||||
The fair value for each option award is estimated at the date of grant using the Black-Scholes option-pricing model using the assumptions noted in the following table. Volatility for the periods presented is based on the historical volatility of the Company’s common shares over the expected life of the option. The risk-free rate for periods within the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The Company does not foresee the payment of dividends in the near term. | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Weighted average risk-free interest rate | 0.59 | % | 0.3 | % | 0.54 | % | 0.3 | % | ||||||
Weighted average volatility | 71.52 | % | 72.33 | % | 70.56 | % | 72.33 | % | ||||||
Expected dividend yield | — | — | — | — | ||||||||||
Weighted average expected life (in years) | 3 | 3 | 3 | 3 | ||||||||||
Weighted average grant-date fair value | $ | 0.27 | $ | 0.56 | $ | 0.38 | $ | 0.56 | ||||||
During the nine months ended September 30, 2013 there were no stock options exercised. During the three months ended September 30, 2012, there were 60,000 stock options exercised with a weighted average price of $1.29 and a total intrinsic value of $2,400. During the nine months ended September 30, 2012, there were 265,000 stock options exercised with a weighted average exercise price of $1.06 and a total intrinsic value of $212,522. | ||||||||||||||
A summary of the status of the Company’s nonvested options as of September 30, 2013, and changes during the period then ended, is presented below: | ||||||||||||||
Number of | Weighted- | |||||||||||||
Options | Average | |||||||||||||
Grant-Date | ||||||||||||||
Fair Value | ||||||||||||||
Nonvested at January 1, March 31, and June 30, 2013 | — | — | ||||||||||||
Granted | 910,000 | $ | 0.27 | |||||||||||
Nonvested at September 30, 2013 | 910,000 | $ | 0.27 | |||||||||||
As of September 30, 2013, there was $168,270 of unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plans. The cost is expected to be recognized over a weighted-average period of less than one year. | ||||||||||||||
Total compensation costs recognized for stock-based employee compensation awards was $77,430 and $255,360 for the three months ended September 30, 2013 and 2012. Total compensation costs recognized for stock-based employee compensation awards was $327,030 and $306,230 for the nine months ended September 30, 2013 and 2012, respectively. These costs were included in general and administrative expenses and technical services on the Condensed Consolidated Statements of Operations. Cash received from options exercised under all share-based payment arrangements during the nine months ended September 30, 2013 and 2012 was $-0- and $275,400, respectively. | ||||||||||||||
COMMITMENTS
COMMITMENTS: | 9 Months Ended |
Sep. 30, 2013 | |
COMMITMENTS: | ' |
COMMITMENTS: | ' |
NOTE 9 — COMMITMENTS: | |
The Company entered into an Exploration Earn-In Agreement with Estrella Gold Corp. on April 5, 2012, pursuant to which the Company could acquire 75% of the Estrella gold and silver exploration property located in central Peru by expending $5,000,000 on exploration activities. Under the terms of the agreement, the Company is required to make annual cash payments to Estrella of $100,000 prior to the end of the first agreement year ending on February 28, 2013, and $200,000 prior to the end of each subsequent agreement year until the earn-in has been completed. The Company is also required to expend a minimum of $500,000 in exploration and development expenditures in each of the first and second agreement years. The Company may terminate this agreement at any time during the earn-in period; however, a minimum of $350,000 in exploration and development expenses was required during the first year of the agreement regardless of whether or not the agreement was terminated. The Company met the first year’s exploration and development expenditure requirements during 2012. During February 2013, the Company made the required $100,000 cash payment prior to the end of the first agreement year and continued the Exploration Earn-In Agreement into the second year. | |
ORGANIZATION_AND_SUMMARY_OF_SI1
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Policies) | 9 Months Ended |
Sep. 30, 2013 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | ' |
Exploration Stage Enterprise | ' |
(a) Exploration Stage Enterprise | |
Since the Company is in the exploration stage of operation, the Company’s financial statements are prepared in accordance with the provisions of Accounting Standards Codification (“ASC”) 915, Development Stage Enterprises, as it devotes substantially all of its efforts to acquiring and exploring mining interests that management believes should eventually provide sufficient net profits to sustain the Company’s existence. Until such interests are engaged in commercial production, the Company will continue to prepare its consolidated financial statements and related disclosures in accordance with this standard. | |
Mining properties, exploration and development costs | ' |
(b) Mining properties, exploration and development costs | |
All exploration expenditures are expensed as incurred. Significant property acquisition payments for active exploration properties are capitalized, including payments to acquire mineral rights. Once a feasibility study has been completed, approved by management, and a decision is made to put the ore body into production, expenditures to develop new mines, to define further mineralization in existing ore bodies, and to expand the capacity of operating mines are capitalized and amortized on the units of production basis over proven and probable reserves. The Company charges to operations the allocable portion of capitalized costs attributable to properties sold. Capitalized costs are allocated to properties sold based on the proportion of claims sold to the claims remaining within the project area. | |
Fair value measurements | ' |
(c) Fair value measurements | |
The Company discloses the inputs used to develop the fair value measurements for the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as well as the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The three levels of the fair value hierarchy are as follows: | |
Level 1: Unadjusted quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date. | |
Level 2: Quoted prices in inactive markets for identical assets or liabilities, quoted prices for similar assets or liabilities in active markets, or other observable inputs either directly related to the asset or liability or derived principally from corroborated observable market data. | |
Level 3: Unobservable inputs due to the fact that there is little or no market activity. | |
Stock compensation | ' |
(d) Stock compensation | |
The Company measures and records the costs of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award, recognized over the period during which an employee is required to provide services in exchange for such award. Compensation cost is recognized for awards granted and for awards modified, repurchased or cancelled. | |
Net loss per share | ' |
(e) Net loss per share | |
Basic earnings or loss per share is computed on the basis of the weighted average number of shares outstanding during the period. Diluted earnings or loss per share is calculated on the basis of the weighted average number of shares outstanding during the period plus the effect of potential dilutive shares during the period. Potential dilutive shares include outstanding stock options and warrants. For periods in which a net loss is reported, potential dilutive shares are excluded because they are antidilutive. Therefore, basic loss per share is the same as diluted loss per share for the periods ended September 30, 2013 and 2012. | |
Recent Accounting Pronouncements | ' |
(f) Recent Accounting Pronouncements | |
In February 2013, the Financial Accounting Standards Board issued guidance related to items reclassified from accumulated other comprehensive income. The new standard requires either in a single note or parenthetically on the face of the financial statements: (i) the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its sources and (ii) the income statement line items affected by the reclassification. The Company adopted the provisions of this guidance effective January 1, 2013. This guidance did not have a significant impact on the Company’s consolidated financial position, results of operations or cash flows. | |
Subsequent events | ' |
(g) Subsequent events | |
The Company evaluated events and transactions subsequent to the balance sheet date of September 30, 2013 for potential recognition or disclosure in the condensed consolidated financial statements. | |
AVAILABLEFORSALE_SECURITIES_Ta
AVAILABLE-FOR-SALE SECURITIES: (Tables) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
AVAILABLE-FOR-SALE SECURITIES: | ' | |||||||
Schedule of the Company's available-for-sale securities | ' | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
Cost | $ | 11,165 | $ | 11,165 | ||||
Unrealized Gains | 6,550 | 8,468 | ||||||
Fair Market Value | $ | 17,715 | $ | 19,633 |
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS: (Tables) | 9 Months Ended | |||||||||
Sep. 30, 2013 | ||||||||||
FAIR VALUE MEASUREMENTS: | ' | |||||||||
Schedule of financial assets and liabilities accounted for at fair value on a recurring basis | ' | |||||||||
September 30, | December 31, | Input | ||||||||
2013 | 2012 | Hierarchy | ||||||||
Level | ||||||||||
Assets: | ||||||||||
Available-for-sale securities | $ | 17,715 | $ | 19,633 | Level 1 | |||||
Liabilities: | ||||||||||
Asset retirement obligation | $ | 473,672 | $ | 456,823 | Level 3 | |||||
Schedule of fair value reconciliation of level 3 liabilities measured at fair value | ' | |||||||||
Asset Retirement Obligation | ||||||||||
2013 | 2012 | |||||||||
Balance January 1 | $ | 456,823 | $ | 435,171 | ||||||
Accretion expense | 5,488 | 5,286 | ||||||||
Balance March 31 | 462,311 | 440,457 | ||||||||
Accretion expense | 5,615 | 5,350 | ||||||||
Balance June 30 | 467,926 | 445,807 | ||||||||
Accretion expense | 5,746 | 5,474 | ||||||||
Balance September 30 | $ | 473,672 | $ | 451,281 |
STOCK_OPTIONS_Tables
STOCK OPTIONS: (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
STOCK OPTIONS: | ' | |||||||||||||
Summary of stock option activity | ' | |||||||||||||
Number of | Weighted- | Weighted- | Aggregate | |||||||||||
Options | Average | Average | Intrinsic Value | |||||||||||
Exercise | Remaining | |||||||||||||
Price | Contractual | |||||||||||||
Term | ||||||||||||||
Outstanding at January 1, 2013 | 3,622,000 | $ | 1.81 | |||||||||||
Issued | 520,000 | $ | 1.05 | |||||||||||
Outstanding at March 31, 2013 | 4,142,000 | $ | 1.71 | |||||||||||
Expired | (200,000 | ) | $ | 0.99 | ||||||||||
Outstanding at June 30, 2013 | 3,942,000 | $ | 1.75 | |||||||||||
Issued | 910,000 | $ | 0.57 | |||||||||||
Expired | (110,000 | ) | $ | 1.36 | ||||||||||
Outstanding at September 30, 2013 | 4,742,000 | $ | 1.53 | 3.08 | — | |||||||||
Exercisable at September 30, 2013 | 3,832,000 | $ | 1.76 | 2.62 | — | |||||||||
Schedule of assumptions used to estimate the fair value of stock options | ' | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Weighted average risk-free interest rate | 0.59 | % | 0.3 | % | 0.54 | % | 0.3 | % | ||||||
Weighted average volatility | 71.52 | % | 72.33 | % | 70.56 | % | 72.33 | % | ||||||
Expected dividend yield | — | — | — | — | ||||||||||
Weighted average expected life (in years) | 3 | 3 | 3 | 3 | ||||||||||
Weighted average grant-date fair value | $ | 0.27 | $ | 0.56 | $ | 0.38 | $ | 0.56 | ||||||
Summary of nonvested options | ' | |||||||||||||
Number of | Weighted- | |||||||||||||
Options | Average | |||||||||||||
Grant-Date | ||||||||||||||
Fair Value | ||||||||||||||
Nonvested at January 1, March 31, and June 30, 2013 | — | — | ||||||||||||
Granted | 910,000 | $ | 0.27 | |||||||||||
Nonvested at September 30, 2013 | 910,000 | $ | 0.27 |
CERTIFICATES_OF_DEPOSIT_Detail
CERTIFICATES OF DEPOSIT: (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2012 | |
CERTIFICATES OF DEPOSIT: | ' | ' |
Number of certificates of deposit owned | 2 | ' |
Certificate of deposit value | $1,559,361 | $1,559,361 |
Reclamation deposits | 1,191,182 | 1,184,966 |
Certificates of deposit maturing in February 2014 | ' | ' |
CERTIFICATES OF DEPOSIT: | ' | ' |
Certificate of deposit value | 1,559,361 | ' |
Interest rate (as a percent) | 0.35% | ' |
Certificates of deposit renewed and maturing on January 3, 2014 | ' | ' |
CERTIFICATES OF DEPOSIT: | ' | ' |
Reclamation deposits | $1,130,271 | $1,124,055 |
Interest rate (as a percent) | 0.45% | ' |
AVAILABLEFORSALE_SECURITIES_De
AVAILABLE-FOR-SALE SECURITIES: (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
AVAILABLE-FOR-SALE SECURITIES: | ' | ' |
Cost | $11,165 | $11,165 |
Unrealized Gains | 6,550 | 8,468 |
Fair Market Value | $17,715 | $19,633 |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS: (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
FAIR VALUE MEASUREMENTS: | ' | ' |
Financial assets that are measured at fair value on a nonrecurring basis | $0 | ' |
Financial liabilities that are measured at fair value on a nonrecurring basis | 0 | ' |
Assets: | ' | ' |
Available-for-sale securities | 17,715 | 19,633 |
Liabilities: | ' | ' |
Asset retirement obligation | 473,672 | 456,823 |
Recurring basis | Level 1 | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 17,715 | 19,633 |
Recurring basis | Level 3 | ' | ' |
Liabilities: | ' | ' |
Asset retirement obligation | $473,672 | $456,823 |
FAIR_VALUE_MEASUREMENTS_Detail1
FAIR VALUE MEASUREMENTS: (Details 2) (Asset Retirement Obligation, USD $) | 3 Months Ended | |||||
Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | |
Asset Retirement Obligation | ' | ' | ' | ' | ' | ' |
Fair value reconciliation of level 3 liabilities measured at fair value | ' | ' | ' | ' | ' | ' |
Balance at the beginning of the period | $467,926 | $462,311 | $456,823 | $445,807 | $440,457 | $435,171 |
Accretion expense | 5,746 | 5,615 | 5,488 | 5,474 | 5,350 | 5,286 |
Balance at the end of the period | $473,672 | $467,926 | $462,311 | $451,281 | $445,807 | $440,457 |
WARRANT_DERIVATIVES_Details
WARRANT DERIVATIVES: (Details) (USD $) | 3 Months Ended | 9 Months Ended | 134 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2013 | |
WARRANT DERIVATIVES: | ' | ' | ' | ' |
Gain (loss) from warrant derivatives | $0 | $0 | $357,977 | $476,381 |
CONCENTRATION_OF_CREDIT_RISK_D
CONCENTRATION OF CREDIT RISK: (Details) (Cash and cash equivalents, Concentration of credit risk, USD $) | 9 Months Ended |
Sep. 30, 2013 | |
item | |
Cash and cash equivalents | Concentration of credit risk | ' |
CONCENTRATION OF CREDIT RISK: | ' |
Number of financial institutions | 1 |
Maximum balances insured by Federal Deposit Insurance Corporation | $250,000 |
Uninsured bank deposit balance | $7,950,000 |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS' EQUITY: (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Apr. 20, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 |
Public offering 2007 transaction | The 2005 transaction | The 2005 transaction | The 2005 transaction | |||
Common Shares: | ' | ' | ' | ' | ' | ' |
Warrants exercised (in shares) | ' | ' | 0 | ' | ' | ' |
Cumulative warrants exercised (in shares) | ' | ' | ' | 269,620 | ' | 269,620 |
Warrants exercised (in shares) | ' | ' | ' | 0 | 0 | ' |
Preferred Shares: | ' | ' | ' | ' | ' | ' |
Authorized preferred shares | 10,000,000 | 10,000,000 | ' | ' | ' | ' |
Preferred stock, par value (in dollars per share) | $0 | $0 | ' | ' | ' | ' |
Preferred stock, shares issued | 0 | 0 | ' | ' | ' | ' |
STOCK_OPTIONS_Details
STOCK OPTIONS: (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Number of Options | ' | ' | ' | ' | ' | ' |
Outstanding at the beginning of the period (in shares) | 3,942,000 | 4,142,000 | 3,622,000 | ' | 3,622,000 | ' |
Issued (in shares) | 910,000 | ' | 520,000 | ' | ' | ' |
Expired (in shares) | -110,000 | -200,000 | ' | ' | ' | ' |
Outstanding at the end of the period (in shares) | 4,742,000 | 3,942,000 | 4,142,000 | ' | 4,742,000 | ' |
Exercisable at the end of the period (in shares) | 3,832,000 | ' | ' | ' | 3,832,000 | ' |
Weighted-Average Exercise Price | ' | ' | ' | ' | ' | ' |
Outstanding at the beginning of the period (in dollars per share) | $1.75 | $1.71 | $1.81 | ' | $1.81 | ' |
Issued (in dollars per share) | $0.57 | ' | $1.05 | ' | ' | ' |
Expired (in dollars per share) | $1.36 | $0.99 | ' | ' | ' | ' |
Outstanding at the end of the period (in dollars per share) | $1.53 | $1.75 | $1.71 | ' | $1.53 | ' |
Exercisable at the end of the period (in dollars per share) | $1.76 | ' | ' | ' | $1.76 | ' |
Weighted-Average Remaining Contractual Term | ' | ' | ' | ' | ' | ' |
Outstanding at the end of the period | '3 years 29 days | ' | ' | ' | ' | ' |
Exercisable at the end of the period | '2 years 7 months 13 days | ' | ' | ' | ' | ' |
Assumptions used to estimate the fair value of stock options | ' | ' | ' | ' | ' | ' |
Weighted average risk-free interest rate (as a percent) | 0.59% | ' | ' | 0.30% | 0.54% | 0.30% |
Weighted average volatility (as a percent) | 71.52% | ' | ' | 72.33% | 70.56% | 72.33% |
Weighted average expected life | '3 years | ' | ' | '3 years | '3 years | '3 years |
Weighted-average grant-date fair value (in dollars per share) | $0.27 | ' | ' | $0.56 | $0.38 | $0.56 |
Exercised (in shares) | ' | ' | ' | 60,000 | 0 | 265,000 |
Exercised (in dollars per share) | ' | ' | ' | $1.29 | ' | $1.06 |
Additional disclosure for stock options | ' | ' | ' | ' | ' | ' |
Intrinsic value of awards exercised | ' | ' | ' | $2,400 | ' | $212,522 |
Number of Options | ' | ' | ' | ' | ' | ' |
Granted (in shares) | ' | ' | ' | ' | 910,000 | ' |
Nonvested at the end of the period (in shares) | 910,000 | ' | ' | ' | 910,000 | ' |
Weighted-Average Grant-Date Fair Value | ' | ' | ' | ' | ' | ' |
Granted (in dollars per share) | ' | ' | ' | ' | $0.27 | ' |
Nonvested at the end of the period (in dollars per share) | $0.27 | ' | ' | ' | $0.27 | ' |
Disclosures for share-based compensation cost | ' | ' | ' | ' | ' | ' |
Unrecognized compensation expense related to nonvested share-based compensation arrangements | 168,270 | ' | ' | ' | 168,270 | ' |
Total compensation costs recognized for stock-based employee compensation awards | 77,430 | ' | ' | 255,360 | 327,030 | 306,230 |
Cash received from options exercised | ' | ' | ' | ' | $0 | $275,400 |
Maximum | ' | ' | ' | ' | ' | ' |
Disclosures for share-based compensation cost | ' | ' | ' | ' | ' | ' |
Expected weighted-average period of recognition of unrecognized compensation cost related to nonvested share-based compensation arrangements | ' | ' | ' | ' | '1 year | ' |
2012 Plan | ' | ' | ' | ' | ' | ' |
Stock options | ' | ' | ' | ' | ' | ' |
Number of participants eligible to be granted more than 200,000 common shares during any calendar year | ' | ' | ' | ' | 0 | ' |
2012 Plan | Maximum | ' | ' | ' | ' | ' | ' |
Stock options | ' | ' | ' | ' | ' | ' |
Shares authorized for grant under the plans | 3,000,000 | ' | ' | ' | 3,000,000 | ' |
Maximum number of shares to grant a participant in a calendar year | ' | ' | ' | ' | 200,000 | ' |
2012 Plan | Minimum | ' | ' | ' | ' | ' | ' |
Stock options | ' | ' | ' | ' | ' | ' |
Contractual term | ' | ' | ' | ' | '10 years | ' |
2003 Stock Option Plan | ' | ' | ' | ' | ' | ' |
Stock options | ' | ' | ' | ' | ' | ' |
Option exercise price as percentage of fair market value per share on the date of grant | ' | ' | ' | ' | 100.00% | ' |
COMMITMENTS_Details
COMMITMENTS: (Details) (Estrella Gold Corp., USD $) | 1 Months Ended | 9 Months Ended | 0 Months Ended | ||||
Feb. 28, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 05, 2012 | |
First agreement year | First agreement year | First agreement year | First agreement year | Second agreement year | Subsequent agreement year | Exploration activities | |
Minimum | Exploration activities | Minimum | |||||
Minimum | |||||||
COMMITMENTS: | ' | ' | ' | ' | ' | ' | ' |
Percentage of Estrella exploration property located in central Peru that could be acquired by the company | ' | ' | ' | ' | ' | ' | 75.00% |
Exploration activities commitment | ' | ' | ' | ' | ' | ' | $5,000,000 |
Annual cash payments required to be made to Estrella | ' | 100,000 | ' | ' | ' | 200,000 | ' |
Annual cash payments made to Estrella | 100,000 | ' | ' | ' | ' | ' | ' |
Exploration and development expenditures | ' | ' | $500,000 | $350,000 | $500,000 | ' | ' |