The Company recognized revenue of $1.2 million in the fourth quarter of 2012 compared $51.1 million in the fourth quarter of 2011. The significant decrease in revenue for the three months ended December 31, 2012 compared to the three months ended December 31, 2011 can be attributed to decreased sales volume and a reduction in the Company's average realized selling price. In the fourth quarter of 2012, the Company's sales volumes and average realized selling price continued to be negatively impacted by the softening of the inland China coking coal markets closest to SouthGobi's operations. However, subsequent to year-end, the Company signed contracts with a number of customers to sell the majority of its remaining coal stockpiles.
SouthGobi's effective royalty rate in the fourth quarter of 2012 was 6%, a significant reduction from prior quarters in 2012. Effective October 1, 2012 (for a six month trial period) the royalty rate is determined using the contracted sales price per tonne, not the reference price per tonne published by the Government of Mongolia. SouthGobi, together with other Mongolian mining companies, have continued their dialog with the appropriate Government of Mongolia authorities with the goal of extending the trial period until the end of 2013.
Cost of sales was $26.5 million for the three months ended December 31, 2012 compared to $34.4 million for the three months ended December 31, 2011. Cost of sales comprise the direct cash costs of product sold, mine administration cash costs of product sold, idled mine costs, inventory impairments, equipment depreciation, depletion of mineral properties and share-based compensation expense. Of the $26.5 million recorded as cost of sales for the three months ended December 31, 2012, $8.1 million related to mine operations and $18.4 million related to idled mine costs. Cost of sales related to mine operations decreased for the three months ended December 31, 2012 compared to the three months ended December 31, 2011 primarily due to lower sales volumes, partially offset by higher unit cost and coal stockpile impairments totaling $7.0 million. For the three months ended December 31, 2012, the Company recorded a coal stockpile impairment of $7.0 million to reduce the carrying value to its net realizable value.
Other Operating Expenses:
Other operating expenses for the three months ended December 31, 2012 decreased to $18.7 million compared to $24.6 million for the three months ended December 31, 2011. The decrease in other operating expenses compared to the three months ended December 31, 2011 primarily relates to recognizing a smaller impairment of property, plant and equipment.
For the three months ended December 31, 2012, the Company recorded $20.8 million of provisions and impairments in other operating expenses related to the following:
-- Trade and other receivables - the Company recorded a loss provision of $4.7 million related to provisions for certain uncollectible trade receivables of $3.7 million and a reduction in the expected insurance proceeds of $1.0 million. The Company anticipates full recovery of its remaining outstanding trade and other receivables.-- Available-for-sale financial asset - in the third quarter of 2012, the Company determined that objective evidence of impairment in the Company's investment in Aspire existed. Therefore, a further impairment loss of $3.1 million was recognized in other operating expenses.-- Property, plant and equipment - the Company recorded $13.0 million of impairment charges to reduce non-refundable prepayments made on cancelled mobile equipment orders to their recoverable amounts. The mobile equipment orders were cancelled to preserve the Company's financial resources.