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Asset retirement obligations
Our mining and exploration activities are subject to various laws and regulations, including legal and contractual
obligations to reclaim, remediate, or otherwise restore properties at the time the property is removed from service.
Asset retirement obligations are recognized when incurred and recorded as liabilities at fair value. The reclamation
obligation is based on when spending for an existing disturbance will occur. We reclaim the disturbance from our
exploration programs on an ongoing basis and, therefore, the portion of our asset retirement obligation
corresponding to our exploration programs will be settled in the near term and is classified as a current liability. The
remaining reclamation associated with environmental monitoring programs is classified as a long-term liability;
however, because we have not declared proven and probable reserves as defined by SEC Industry Guide 7, the
timing of these reclamation activities is uncertain. The estimated fair value of the outstanding liability at the end of
the period approximates the cost of the asset retirement obligation. For exploration stage properties that do not
qualify for asset capitalization, the costs associated with the obligation are charged to operations. For development
and production stage properties, the costs will be added to the capitalized costs of the property and amortized using
the units-of-production method. We review, on a quarterly basis, unless otherwise deemed necessary, the asset
retirement obligation in connection with the Bear Lodge Property.
Asset retirement obligations are secured by surety bonds held for the benefit of the state of Wyoming in amounts
determined by applicable federal and state regulatory agencies.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Market risk.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate
because of changes in market prices. Our market risk comprises three types of risk: interest rate risk, foreign
currency risk and other price risk.
Interest rate risk.
Our cash and cash equivalents consist of cash held in bank accounts and, at times, guaranteed
investment certificates that earn interest at variable interest rates. Due to the short-term nature of these financial
instruments, fluctuations in market rates did not have a significant impact on estimated fair values as of December
31, 2014. Future cash flows from interest income on cash and cash equivalents will be affected by interest rate
fluctuations. We manage interest rate risk by maintaining an investment policy that focuses primarily on
preservation of capital and liquidity.
Foreign currency exchange rate risk.
We are exposed to foreign currency exchange rate risk as certain monetary
financial instruments are denominated in Canadian dollars. We have not entered into any foreign currency contracts
to mitigate this risk. We attempt to mitigate this risk by holding six to twelve months of U.S.-based spending in U.S.
dollars as a natural hedge against currency fluctuations. At December 31, 2014, a 1% increase/decrease in the
Canadian dollar to U.S. dollar exchange rate would have decreased/increased our consolidated net loss by $39.
Other price risk.
Other price risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market prices, other than those arising from interest rate risk or foreign currency
exchange rate risk.
