Contingent Value Rights

Pursuant to a 2012 restructuring of convertible notes, we issued Contingent Value Rights (“CVRs”) that entitle the holders to an aggregate of 5.466% of proceeds associated with the collection of the Award, sale of mining data or an enterprise sale (the “Proceeds”), less amounts sufficient to pay or reserve for taxes payable, certain associated professional fees and expenses not to exceed $10 million, any accrued operating expenses as of the date of the receipt of proceeds not to exceed $1 million and the balance of any remaining Notes and accrued interest thereon (the “Net Proceeds”). We have been advised by a CVR holder that it believes that the Company’s 45% interest in Siembra Minera represents “Proceeds” for purposes of the CVRs and as such it believes it is entitled to the value of 5.466% of that interest. For a variety of reasons, the Board of Directors does not agree with that position and believes it is inconsistent with the CVRs and the terms and manner upon which we reached settlement as to the Award with the Venezuelan government. We continue to have discussions with the CVR holder on this subject, all of which are preliminary and it is not possible at this time to know the outcome of this matter.

As of June 30, 2018, the total estimated remaining amount due pursuant to the terms of the CVRs (including those amounts remaining in the Trust Account and the receivable associated with the Venezuelan bonds) from the sale of the Mining Data and the arbitration award was approximately $5.6 million. The amount distributed during the six months ended June 30, 2018 based on amounts actually received in our North American bank account was approximately $1.9 million.

Due to U.S. and Canadian Sanctions against Venezuela and the uncertainty of transferring the funds still on deposit in the Trust account outside of Venezuela, the Board of Directors has only considered those funds actually received by the Company in its North American bank account as funds available for purposes of calculating the CVR distributions, however, the full amount due based on total payments received has been accrued as a payable in the Consolidated Balance Sheets.

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