Segment Reporting

12 Months Ended

Dec. 31, 2019

The Company’s operating segments include the Palmarejo complex, and the Rochester, Kensington, Wharf and Silvertip mines. Except for the Silvertip mine, all operating segments are engaged in the discovery, mining, and production of gold and/or silver. The Silvertip mine is engaged in the discovery, mining, and production of silver, zinc and lead. Silvertip commenced commercial production in September 2018. Other includes the Sterling/Crown project and La Preciosa project, other mineral interests, strategic equity investments, corporate office, elimination of intersegment transactions, and other items necessary to reconcile to consolidated amounts.

The Company determined that the disposition in the first quarter of 2018 of Empresa Minera Manquiri S.A., a Bolivian Sociedad anonima (“Manquiri”), which operates the San Bartolomé mine, represented a strategic shift to a North America-focused mining portfolio and had significant effect on the entity's results and operations; therefore, the results of operations are presented as discontinued operations in Other for all periods presented.

Financial information relating to the Company’s segments is as follows (in thousands):



Year ended December 31, 2019	Palmarejo			Rochester			Kensington			Wharf			Silvertip ⁽³⁾			Other			Total
Revenue
Gold sales	$	141,669		$	50,225		$	181,111		$	120,342		$	—		$	—		$	493,347
Silver sales	111,032			61,799			—			1,072			17,575			—			191,478
Zinc sales	—			—			—			—			12,806			—			12,806
Lead sales	—			—			—			—			13,871			—			13,871
Metal sales	252,701			112,024			181,111			121,414			44,252			—			711,502
Costs and Expenses
Costs applicable to sales⁽¹⁾	141,927			100,205			119,602			80,689			108,758			—			551,181
Amortization	59,379			18,041			50,592			12,280			36,738			1,846			178,876
Exploration	5,658			657			5,588			272			2,469			7,883			22,527
Write-downs	—			—			—			—			250,814			—			250,814
Other operating expenses	4,591			4,572			1,248			2,832			1,216			38,455			52,914
Other income (expense)
Loss on debt extinguishment	—			—			—			—			—			(1,281		)	(1,281		)
Fair value adjustments, net	—			—			—			—			—			16,030			16,030
Interest expense, net	(444		)	(1,015		)	(1,333		)	(100		)	(1,137		)	(20,742		)	(24,771		)
Other, net	(4,798		)	(378		)	(704		)	89			(557		)	3,155			(3,193		)
Income and mining tax (expense) benefit	(14,257		)	(709		)	—			(3,041		)	32,084			(2,948		)	11,129
Income (loss) from continuing operations	$	21,647		$	(13,553	)	$	2,044		$	22,289		$	(325,353	)	$	(53,970	)	$	(346,896	)
Income (loss) from discontinued operations	$	—		$	—		$	—		$	—		$	—		$	5,693		$	5,693
Segment assets⁽²⁾	$	319,292		$	284,878		$	194,076		$	84,765		$	164,125		$	168,647		$	1,215,783
Capital expenditures	$	32,658		$	22,592		$	23,513		$	2,220		$	17,504		$	1,285		$	99,772

(1) Excludes amortization

(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests

(3) Subsequent to the end of the period covered by this Report, the Company made the decision to temporarily suspend mining and processing activities at Silvertip as a result of further deterioration in zinc and lead market conditions as well as processing facility-related challenges. The Company plans to (i) double its exploration investment in 2020 to potentially further expand the mineralized material and extend the mine life, and (ii) pursue a mill expansion to improve the asset’s cost structure and its ability to deliver sustainable cash flow



Year ended December 31, 2018	Palmarejo			Rochester			Kensington			Wharf			Silvertip			Other			Total
Revenue
Gold sales	$	131,758		$	66,556		$	132,924		$	95,770		—			$	—		$	427,008
Silver sales	113,998			75,252			—			746			3,157			—			193,153
Zinc sales	—			—			—			—			3,612			—			3,612
Lead sales	—			—			—			—			2,131			—			2,131
Metal sales	245,756			141,808			132,924			96,516			8,900			—			625,904
Costs and Expenses
Costs applicable to sales⁽¹⁾	120,088			105,677			112,364			67,201			35,620			—			440,950
Amortization	60,744			20,909			29,508			11,072			5,235			1,005			128,473
Exploration	10,516			332			5,871			104			2,748			5,826			25,397
Other operating expenses	3,043			7,071			1,721			2,686			303			36,564			51,388
Other income (expense)
Fair value adjustments, net	—			—			—			—			—			3,638			3,638
Interest expense, net	(2,137		)	(466		)	(973		)	(40		)	(766		)	(19,982		)	(24,364		)
Other, net	(8,308		)	(1,211		)	2,795			(834		)	(370		)	(16,777		)	(24,705		)
Income and mining tax (expense) benefit	(15,724		)	(874		)	—			(1,063		)	16,057			18,384			16,780
Income (loss) from continuing operations	$	25,196		$	5,268		$	(14,718	)	$	13,516		$	(20,085	)	$	(58,132	)	$	(48,955	)
Income (loss) from discontinued operations	$	—		$	—		$	—		$	—		—			$	550		$	550
Segment assets⁽²⁾	$	363,024		$	269,903		$	224,460		$	102,246		415,998			$	175,040		$	1,550,671
Capital expenditures	$	29,425		$	9,919		$	44,738		$	3,382		52,932			$	391		$	140,787

(1) Excludes amortization

(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests



Year ended December 31, 2017	Palmarejo			Rochester			Kensington			Wharf			Silvertip			Other			Total
Revenue
Gold sales	$	146,187		$	68,964		$	154,469		$	124,629		—			$	—		$	494,249
Silver sales	128,622			83,716			—			1,272			—			1,739			215,349
Metal sales	274,809			152,680			154,469			125,901			—			1,739			709,598
Costs and Expenses
Costs applicable to sales⁽¹⁾	146,176			107,921			116,096			69,322			—			745			440,260
Amortization	73,744			22,306			36,022			13,012			—			1,465			146,549
Exploration	11,924			1,352			8,604			320			—			8,111			30,311
Other operating expenses	1,263			3,394			1,412			2,468			153			43,862			52,552
Other income (expense)
Loss on debt extinguishment	—			—			—			—			—			(9,342		)	(9,342		)
Fair value adjustments, net	—			(864		)	—			—			—			—			(864		)
Interest expense, net	(487		)	(496		)	(413		)	(66		)	(2,212		)	(12,766		)	(16,440		)
Other, net	(851		)	2,193			(922		)	172			1,142			24,909			26,643
Income and mining tax (expense) benefit	(24,330		)	(1,028		)	—			(3,936		)	(932		)	1,228			(28,998		)
Income (loss) from continuing operations	$	16,034		$	17,512		$	(9,000	)	$	36,949		$	(2,155	)	$	(48,415	)	$	10,925
Income (loss) from discontinued operations	$	—		$	—		$	—		$	—		—			$	(12,244	)	$	(12,244	)
Segment assets⁽²⁾	$	377,621		$	239,223		$	212,588		$	104,010		339,369			$	71,742		$	1,344,553
Capital expenditures	$	29,902		$	40,874		$	36,248		$	8,844		17,684			$	3,182		$	136,734

(1) Excludes amortization

(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests



Assets	December 31, 2019		December 31, 2018
Total assets for reportable segments	$	1,215,783	$	1,550,671
Cash and cash equivalents	55,645		115,081
Other assets	107,208		46,748
Total consolidated assets	$	1,378,636	$	1,712,500

Geographic Information



Long-Lived Assets	December 31, 2019		December 31, 2018
United States	$	494,286	$	515,649
Mexico	312,168		342,007
Canada	146,804		404,185
Other	7,486		8,177
Total	$	960,744	$	1,270,018



Revenue	Year ended December 31,
Revenue	2019		2018		2017
United States	$	414,548	$	371,248	$	433,050
Mexico	252,701		245,756		274,809
Canada	44,253		8,900		—
Australia	—		—		1,739
Total	$	711,502	$	625,904	$	709,598

The Company's doré, as well as the concentrate product produced by the Wharf mine, is refined into gold and silver

bullion according to benchmark standards set by the LBMA, which regulates the acceptable requirements for bullion traded in the London precious metals markets. The Company then sells its gold and silver bullion to multi-national banks, bullion trading houses, and refiners across the globe. The Company had eight trading counterparties at December 31, 2019. The Company's sales of doré or concentrate product produced by the Palmarejo, Rochester, and Wharf mines amounted to approximately 68%, 77%, and 78% of total metal sales for the years ended December 31, 2019, 2018, and 2017, respectively. In November 2018, one of the refiners of the Company’s doré, RMC, a U.S.-based precious metals refiner, filed for protection under Chapter 11 of the United States Bankruptcy Code. See Note 5 -- Receivables for additional detail.

The Company's gold concentrate product from the Kensington mine and the zinc and lead concentrates from the Silvertip mine are sold under a variety of agreements with smelters and traders, and the smelters and traders pay the Company for the metals recovered from the concentrates. The Company’s sales of concentrate produced by the Kensington and Silvertip mines amounted to approximately 32%, 23%, and 22% of total metal sales for the years ended December 31, 2019, 2018, and 2017, respectively.

The Company believes that the loss of any one smelter, refiner, trader or third-party customer would not materially adversely affect the Company due to the liquidity of the markets and current availability of alternative trading counterparties.

The following table indicates customers that represent 10% or more of total sales of metal for at least one of the years December 31, 2019, 2018, and 2017 (in millions):



	Year ended December 31,
Customer	2019		2018		2017		Segments reporting revenue
Asahi	$	341.0	$	213.0	$	124.1	Palmarejo, Wharf, Rochester
Ocean Partners	149.7		74.8		—		Silvertip, Kensington
Techemet Metal Trading	9.4		83.3		104.8		Rochester, Wharf
RMC	—		71.7		132.4		Palmarejo, Rochester
China National Gold	—		54.1		137.5		Kensington