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Derivative Financial Instruments
 6 Months Ended
Jun. 30, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS DERIVATIVE FINANCIAL INSTRUMENTS
Provisional Metal Sales
The Company enters into sales contracts with third-party smelters, refiners and off-take customers which, in some cases, provide for a provisional payment based upon preliminary assays and quoted metal prices. The provisionally priced sales contracts contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable recorded at the forward price at the time of sale. The embedded derivatives do not qualify for hedge accounting and are marked to market through earnings each period until final settlement.
Interest Rate Swap
The Company enters into interest rate swap contracts in which it receives variable-rate interest and pays fixed-rate interest. The Company uses these instruments to manage its exposure to changes in interest rates related to its RCF (see Note 8-- Debt) and does not designate the instruments as hedges from an accounting standpoint and does not apply hedge accounting. The notional amount is used to measure interest to be paid or received.
During the second quarter, an interest rate swap derivative instrument, with a notional amount of $50.0 million, expired and was replaced with an instrument with a notional amount of $75.0 million, which became effective in June 2019 and covers a contractual term of six months and net settles monthly.
At June 30, 2019, the Company had the following derivative instruments that settle as follows:
In thousands except average prices and notional ounces
2019
 
Thereafter
Provisional silver sales contracts
$
10,423

 
$
—

Average silver price per ounce
$
15.22

 
$
—

Notional ounces
685,006

 
—

 
 
 
 
Provisional gold sales contracts
$
9,663

 
$
—

Average gold price per ounce
$
1,302

 
$
—

Notional ounces
7,424

 
—

 
 
 
 
Provisional zinc sales contracts
$
16,448

 
$
—

Average zinc price per pound
$
1.14

 
$
—

Notional pounds
14,401,624

 
—

 
 
 
 
Provisional lead sales contracts
$
7,964

 
$
—

Average lead price per pound
$
0.89

 
$
—

Notional pounds
8,996,543

 
—

 
 
 
 
Fixed interest rate swap payable
$
967

 
$
—

Fixed Interest rate
2.51
%
 
—

Notional dollars
$
75,000

 
$
—

 
 
 
 
Variable interest rate swap receivable
$
787

 
$
—

Average variable interest rate
2.49
%
 
$
—

Notional dollars
$
75,000

 
$
—


The following summarizes the classification of the fair value of the derivative instruments:
 
June 30, 2019
In thousands
Prepaid expenses and other
 
Accrued liabilities and other
Provisional metal sales contracts
$
926

 
$
2,480

Interest rate swaps
—

 
180

 
$
926

 
$
2,660

 
December 31, 2018
In thousands
Prepaid expenses and other
 
Accrued liabilities and other
Provisional metal sales contracts
$
784

 
$
644

Zinc options
113

 
—

Interest rate swaps
17

 
—

 
$
914

 
$
644


The following represent mark-to-market gains (losses) on derivative instruments for the three and six months ended June 30, 2019 and 2018, respectively (in thousands):
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
Financial statement line
Derivative
2019
 
2018
 
2019
 
2018
Revenue
Provisional metal sales contracts
$
(1,944
)
 
$
(273
)
 
$
(1,694
)
 
$
(20
)
Fair value adjustments, net
Zinc options
—

 
219

 
—

 
363

Fair value adjustments, net
Interest rate swaps
(132
)
 
(188
)
 
(188
)
 
(188
)
 
 
$
(2,076
)
 
$
(242
)
 
$
(1,882
)
 
$
155


Credit Risk
The credit risk exposure related to any derivative instrument is limited to the unrealized gains, if any, on outstanding contracts based on current market prices. To reduce counter-party credit exposure, the Company enters into contracts with institutions management deems credit-worthy and limits credit exposure to each institution. The Company does not anticipate non-performance by any of its counterparties.