| Discontinued Operations |
21. Discontinued Operations As described in Note 1, on December 31, 2020, the Company completed its spin-off of its wholly-owned subsidiary Fortitude Gold Corporation and its subsidiaries (“FGC” or “Nevada Mining Unit”). FGC is presented as discontinued operations in the Company’s consolidated financial statements. Results of discontinued operations for the years ended December 31, 2021, 2020, and 2019 are as follows (in thousands): | | | | | | | | | | | | For the year ended December 31, | | | 2021 | | 2020 | | 2019 | | | | | Sales, net | | $ | - | | $ | 53,967 | | $ | 15,065 | Mine cost of sales | | | - | | | 37,784 | | | 14,582 | Mine gross profit | | | - | | | 16,183 | | | 483 | Exploration expenses | | | - | | | 2,649 | | | 932 | Other expense, net | | | - | | | 838 | | | 168 | Profit (loss) before income taxes | | | - | | | 12,696 | | | (617) | Income tax expense (benefit) | | | - | | | 2,006 | | | (917) | Net income from discontinued operations | | $ | - | | $ | 10,690 | | $ | 300 |
Selected Statements of Cash Flows presenting depreciation and amortization, capital expenditures, sale proceeds and significant operating noncash items of FGC were as follows: | | | | | | | | | | | | | | For the year ended December 31, | | | | 2021 | | 2020 | | 2019 | | | | | | | | | | | | Cash flows from discontinued operating activities: | | | | | | | | | | | Net income | | | $ | - | | $ | 10,690 | | $ | 300 | Adjustments to reconcile net income to net cash from discontinued operating activities: | | | | | | | | | | | Deferred income benefit | | | | - | | | (224) | | | (917) | Depreciation and amortization | | | | - | | | 10,377 | | | 4,022 | Other operating adjustments | | | | - | | | 48 | | | 17 | Changes in operating assets and liabilities: | | | | | | | | | | | Accounts receivable | | | | - | | | (145) | | | - | Inventories | | | | - | | | (2,300) | | | (6,490) | Prepaid expenses and other current assets | | | | - | | | (1,670) | | | 346 | Other non-current assets | | | | - | | | (2,085) | | | (3,600) | Accounts payable and other accrued liabilities | | | | - | | | (1,707) | | | 3,617 | Mining royalty and income taxes payable, net | | | | - | | | 1,200 | | | - | Net cash provided by (used in) discontinued operating activities | | | | - | | | 14,184 | | | (2,705) | | | | | | | | | | | | Cash flows from discontinued investing activities: | | | | | | | | | | | Capital expenditures | | | | - | | | (6,488) | | | (22,538) | Net cash used in discontinued investing activities | | | | - | | | (6,488) | | | (22,538) | | | | | | | | | | | | Cash flows from discontinued financing activities: | | | | | | | | | | | Other financing activities | | | | - | | | (452) | | | (2,019) | Net cash provided used in discontinued financing activities | | | | - | | | (452) | | | (2,019) | | | | | | | | | | | | | | | | | | | | | | | Supplemental Cash Flow Information Discontinued Operations | | | | | | | | | | | Non-cash investing activities: | | | | | | | | | | | Change in capital expenditures in accounts payable | | | $ | - | | $ | (1,544) | | $ | (1,174) | Change in estimate for asset retirement costs | | | $ | - | | $ | 1,159 | | $ | 1,726 |
Effective December 31, 2020, in connection with the spin-off, the Company entered into an agreement with FGC that governs the relationship of the parties following the spin-off. The Management Services Agreement provided that the Company and its subsidiaries provide services to FGC to assist in the transition of FGC as a separate company. The agreed upon charges for services rendered were based on market rates that align with the rates that an unaffiliated service provider would charge for similar services. Due to the successful development of FGC’s corporate, administrative, and technical capabilities, the Company terminated the Agreement effective on May 21, 2021.
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