Note 6. Business Segments

3 Months Ended

Mar. 31, 2012

Segment Reporting Disclosure [Text Block]

Note 6.    Business Segments

We are currently organized and managed by two reporting segments: the Greens Creek unit and the Lucky Friday unit.

General corporate activities not associated with operating units and their various exploration activities, as well as discontinued operations and idle properties, are presented as “other.”  Interest expense, interest income and income taxes are considered general corporate items, and are not allocated to our segments.

The following tables present information about reportable segments for the three months ended March 31, 2012 and 2011 (in thousands):

	Three Months Ended March 31,
	2012			2011
Net sales to unaffiliated customers:
Greens Creek	$	90,900		$	101,802
Lucky Friday	253			34,562
	$	91,153		$	136,364
Income (loss) from operations:
Greens Creek	$	47,382		$	58,509
Lucky Friday	(5,943		)	19,912
Other	(16,003		)	(9,686		)
	$	25,436		$	68,735

The reductions in sales and income (loss) from operations at the Lucky Friday segment for the first quarter of 2012 compared to the first quarter of 2011 is due primarily to the suspension of production at the Lucky Friday mine during the 2012 period.  At the end of 2011, MSHA began a special impact inspection at the Lucky Friday mine which resulted in an order to remove loose cementitious material from the Silver Shaft. In response, we submitted a plan to MSHA and received approval to remove the material, and this work commenced in the first quarter of 2012. In addition, the plan includes removal of unused utilities, construction of a water ring to prevent ice from forming in the winter, the installation of a metal brattice, repair of shaft steel, and installation of a new power cable, all of which should improve the shaft's functionality and possibly improve the shaft's hoisting capacity. We currently anticipate that the Silver Shaft work will be completed in late 2012, with production at the Lucky Friday temporarily suspended until early 2013.  The smelter contracts related to treatment of Lucky Friday concentrates have been suspended during the care-and-maintenance period based on force majeure. Once the Silver Shaft work is completed down to the 4900 foot level, we expect to commence work on a haulage way bypassing an area at the 5900 level impacted by a rock burst in December 2011. In addition to work on the Silver Shaft, other significant surface and underground capital programs are being planned.  Final plans are not yet complete, but we expect to spend up to $50 million on all of these projects, including approximately $10 million to remove the loose cementitious material, $20 million for shaft improvements and $20 million on other capital projects. We expect to incur non-capitalized expenses of $17.5 million, based on the assumption that the mine will be on standby for the remainder of 2012 as this work is completed.  As of March 31, 2012, we have incurred $6.2 million in non-capitalized expenses, including $1.5 million in depreciation, depletion, and amortization, which is reported in Lucky Friday suspension-related costs on the Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited).

The following table presents identifiable assets by reportable segment as of March 31, 2012 and December 31, 2011 (in thousands):

	March 31, 2012		December 31, 2011
Identifiable assets:
Greens Creek	$	735,983	$	729,289
Lucky Friday	217,267		213,285
Other	444,483		453,516
	$	1,397,733	$	1,396,090