Note 11 - Business Segments and Significant Customers

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Note 11: Business Segments and Significant Customers

We discover, acquire, develop, produce, and market concentrates and doré containing silver, gold, lead and zinc.  Our products consist of both metal concentrates, which we sell to custom smelters, and unrefined bullion bars (doré), which may be sold as doré or further refined before sale to precious metals traders.  We are currently organized and managed by three segments, which represent our operating units: the Greens Creek unit, the Lucky Friday unit and the Casa Berardi unit. As further discussed in Note 16, we completed the acquisition of Aurizon on June 1, 2013, giving us 100% ownership of the Casa Berardi mine in Quebec, Canada. As a result, we added a new reporting segment in 2013 for the Casa Berardi 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.

Sales of metal concentrates and metal products are made principally to custom smelters and metals traders. The percentage of sales contributed by each segment is reflected in the following table:

	Year Ended December 31,
	2013			2012			2011
Greens Creek		68.8	%		100.0	%		71.8	%
Lucky Friday		11.6	%		—	%		28.2	%
Casa Berardi	19.6		%		—	%		—	%
		100	%		100	%		100	%

The tables below present information about reportable segments as of and for the years ended December 31, 2013, 2012 and 2011 (in thousands).

	2013			2012			2011
Net sales to unaffiliated customers:
Greens Creek	$	263,263		$	320,895		$	342,906
Lucky Friday		44,204			248			134,728
Casa Berardi		75,122			—			—
	$	382,589		$	321,143		$	477,634
Income (loss) from operations:
Greens Creek	$	62,178		$	138,245		$	181,116
Lucky Friday		(3,563	)		(25,179	)		75,608
Casa Berardi		(15,708	)		—			—
Other		(75,301	)		(75,200	)		(59,079	)
	$	(32,394	)	$	37,866		$	197,645
Capital additions (including non-cash additions):
Greens Creek	$	57,119		$	62,184		$	41,657
Lucky Friday		55,902			55,998			60,454
Casa Berardi		41,425			—			—
Other		8,162			11,760			35,274
	$	162,608		$	129,942		$	137,385
Depreciation, depletion and amortization:
Greens Creek	$	55,265		$	43,522		$	41,013
Lucky Friday		7,833			—			6,053
Casa Berardi		18,030			—			—
	$	81,128		$	43,522		$	47,066
Other significant non-cash items:
Greens Creek	$	1,961		$	4,037		$	2,326
Lucky Friday		96			92			14
Casa Berardi		474			—			—
Other		1,512			33,922			31,470
	$	4,043		$	38,051		$	33,810
Identifiable assets:
Greens Creek	$	744,027		$	741,666		$	729,289
Lucky Friday		313,793			226,196			213,285
Casa Berardi		821,058			—			—
Other		353,241			410,428			453,516
	$	2,232,119		$	1,378,290		$	1,396,090

The Lucky Friday segment had nominal sales during 2012 due to the halt of production most of the year. At the end of 2011, MSHA began a special impact inspection at the Lucky Friday mine which resulted in an order to remove built-up 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 included 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. The Silver Shaft work was completed in early 2013, and limited production at the Lucky Friday began in February. We experienced a ramp-up in mine output during the year, as additional production areas of the mine came on line, until we reached full production levels in September 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, and the bypass was completed in early 2013.

The following is sales information by geographic area based on the location of smelters (for concentrate shipments) and the location of parent companies (for doré sales to metals traders) for the years ended December 31, 2013, 2012 and 2011 (in thousands):

	2013		2012		2011
United States	$	22,361	$	25,438	$	24,409
Canada		170,632		34,441		240,569
Japan		50,039		70,371		60,963
Korea		86,035		120,106		92,919
China		50,479		72,133		51,635
Total, excluding gains/losses on forward contracts	$	379,546	$	322,489	$	470,495

Sales of products for 2013 also include a net gain of $3.0 million on financially-settled forward contracts for silver, gold, lead and zinc contained in our concentrate sales.  2012 sales included a net loss of $1.3 million and 2011 sales included a net gain of $7.1 million on the contracts for lead and zinc. See Note 10 for more information.

The following are our long-lived assets by geographic area as of December 31, 2013 and 2012 (in thousands):

	2013		2012
United States	$	1,053,374	$	996,405
Canada		738,172		198
Mexico		55		56
	$	1,791,601	$	996,659

Sales from continuing operations to significant metals customers as a percentage of total sales were as follows for the years ended December 31, 2013, 2012 and 2011:

	Year Ended December 31,
	2013			2012			2011
Teck Metals Ltd.		25.0	%		10.7	%		51.1	%
Korea Zinc		22.5	%		37.2	%		18.4	%
Trafigura AG		8.8	%		22.4	%		12.4	%
MS Zinc		7.5	%		12.3	%		6.9	%
CIBC		10.9	%		—	%		—	%