Note 6. Business Segments

9 Months Ended

Sep. 30, 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 and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net sales to unaffiliated customers:
Greens Creek	$	81,871		$	77,031		$	239,794		$	260,650
Lucky Friday		—			43,512			249			114,117
	$	81,871		$	120,543		$	240,043		$	374,767
Income from operations:
Greens Creek	$	34,834		$	37,098		$	105,529		$	140,661
Lucky Friday		(6,147	)		27,662			(18,588	)		68,170
Other		(19,961	)		(21,271	)		(55,260	)		(42,816	)
	$	8,726		$	43,489		$	31,681		$	166,015

The reductions in sales and income (loss) from operations at the Lucky Friday segment for the third quarter and first nine months of 2012 compared to the same periods in 2011 are due to the temporary 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, and that production at the Lucky Friday will recommence in 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 was completed down to the 4900 foot level, we commenced 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, including restart of the #4 Shaft sinking sometime in early 2013 and surface infrastructure and mill upgrades.  However, the timing of completion of the Silver Shaft work, resumption of production, and work on the #4 Shaft project at the Lucky Friday mine may ultimately vary from our current estimates.  We expect to spend up to $62 million on all of these projects, including approximately $29 million to remove the loose cementitious material and for shaft improvements and $33 million on other capital projects. We expect to incur non-capitalized expenses of $25 million, based on the assumption that the mine will be on standby for the remainder of 2012 as this work is completed.  As of the third quarter and first nine months of 2012, we have incurred $6.1 million and $18.7 million, respectively, in non-capitalized expenses, including $1.5 million and $4.6 million, respectively, 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 September 30, 2012 and December 31, 2011 (in thousands):

	September 30, 2012		December 31, 2011
Identifiable assets:
Greens Creek	$	743,318	$	729,289
Lucky Friday		240,351		213,285
Other		419,934		453,516
	$	1,403,603	$	1,396,090