Fair Value Measurements

9 Months Ended

Sep. 30, 2020


	Three Months Ended September 30,				Nine Months Ended September 30,
In thousands	2020		2019		2020		2019
Unrealized gain (loss) on equity securities	$	2,276	$	3,877	$	12,307	$	7,515
Realized gain (loss) on equity securities	(33)		485		(8,816)		859

Interest rate swap, net	—		15		—		(173)
Fair value adjustments, net	$	2,243	$	4,377	$	3,491	$	8,201

Accounting standards establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1), secondary priority to quoted prices in inactive markets or observable inputs (Level 2), and the lowest priority to unobservable inputs (Level 3).

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:


	Fair Value at September 30, 2020
In thousands	Total		Level 1		Level 2		Level 3
Assets:
Equity securities	$	19,862	$	19,862	$	—	$	—
Foreign currency forward exchange contracts	7,614		—		7,614		—
Provisional metal sales contracts	3		—		3		—
	$	27,479	$	19,862	$	7,617	$	—
Liabilities:
Gold zero cost collars	$	33,926	$	—	$	33,926	$	—
Provisional metal sales contracts	299		—		299		—
	$	34,225	$	—	$	34,225	$	—


	Fair Value at December 31, 2019
In thousands	Total		Level 1		Level 2		Level 3
Assets:
Equity and debt securities	$	35,646	$	35,646	$	—	$	—
Provisional metal sales contracts	753		—		753		—
	$	36,399	$	35,646	$	753	$	—
Liabilities:
Silvertip contingent consideration	$	25,000	$	—	$	—	$	25,000
Provisional metal sales contracts	275		—		275		—
Gold zero cost collars	136		—		136		—
	$	25,411	$	—	$	411	$	25,000

The Company’s investments in equity securities are recorded at fair market value in the financial statements based primarily on quoted market prices. Such instruments are classified within Level 1 of the fair value hierarchy.

The Company’s foreign currency forward exchange contracts are valued using pricing models with inputs derived from observable market data, including forward market prices and other unobservable inputs. The Company’s gold zero cost collars are valued using pricing models with inputs derived from observable market data, including forward market prices, yield curves, credit spreads, and other unobservable inputs. The Company’s provisional metal sales contracts include concentrate and certain doré sales contracts that are valued using pricing models with inputs derived from observable market data, including forward market prices and other unobservable inputs. The model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy.

In October 2017, the Company acquired the Silvertip mine from shareholders of JDS Silver Holdings Ltd (the “Silvertip Acquisition”). The consideration for the Silvertip Acquisition included two $25.0 million contingent payments, which were payable in cash and common stock upon reaching a future permitting milestone and resource declaration milestone, respectively. The fair value of the Silvertip contingent consideration was estimated based on an estimated discount rate of 2.5% for the contingent permitting payment and 2.9% for the contingent resource declaration payment and was classified within Level 3 of the fair value hierarchy. During 2019, the Company paid the $25.0 million due for the permitting milestone in the form of cash and common stock, and in the first quarter of 2020, the Company paid the remaining $25.0 million due for the resource declaration milestone in the form of cash and common stock.

No assets or liabilities were transferred between fair value levels in the nine months ended September 30, 2020.

The following tables present the changes in the fair value of the Company's Level 3 financial assets and liabilities in the nine months ended September 30, 2020:


	Nine Months Ended September 30,
In thousands	Balance at the beginning of the period		Revaluation		Settlements		Accretion		Balance at the end of the period


Liabilities:
Silvertip contingent consideration	$	25,000	$	—	$	(25,000)	$	—	$	—

The fair value of financial assets and liabilities carried at book value in the financial statements at September 30, 2020 and December 31, 2019 is presented in the following table:


	September 30, 2020
In thousands	Book Value		Fair Value		Level 1		Level 2		Level 3


Liabilities:
2024 Senior Notes(1)	$	227,414	$	228,824	$	—	$	228,824	$	—
Revolving Credit Facility(2)	$	20,000	$	20,000	$	—	$	20,000	$	—

(1) Net of unamortized debt issuance costs of $2.6 million.

(2) Unamortized debt issuance costs of $1.7 million included in Other Non-Current Assets.


	December 31, 2019
In thousands	Book Value		Fair Value		Level 1		Level 2		Level 3


Liabilities:
2024 Senior Notes(1)	$	226,885	$	228,585	$	—	$	228,585	$	—
Revolving Credit Facility(2)	$	—	$	—	$	—	$	—	$	—

(1) Net of unamortized debt issuance costs of $3.1 million.

(2) Unamortized debt issuance costs of $2.3 million included in Other Non-Current Assets.

The fair value of the 2024 Senior Notes was estimated using quoted market prices. The fair value of the RCF approximates book value as the liability is secured, has a variable interest rate, and lacks significant credit concerns.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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