Note 4 - Environmental and Reclamation Activities

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Environmental and Reclamation Activities [Text Block]

Note 4: Environmental and Reclamation Activities

The liabilities accrued for our reclamation and closure costs at December 31, 2019 and 2018 were as follows (in thousands):

	2019			2018
Operating properties:
Greens Creek	$	44,695		$	41,839
Lucky Friday		10,473			10,698
Casa Berardi		4,510			5,843
San Sebastian		7,399			7,765
Nevada Operations		24,754			23,272
Non-operating properties:
Troy mine		6,069			8,971
Johnny M		6,065			5,813
Republic		1,500			1,500
All other sites		2,909			2,688
Total		108,374			108,389
Reclamation and closure costs, current		(4,581	)		(3,410	)
Reclamation and closure costs, long-term	$	103,793		$	104,979

The activity in our accrued reclamation and closure cost liability for the years ended December 31, 2019, 2018 and 2017 was as follows (in thousands):

Balance at January 1, 2017	$	85,580
Accruals for estimated costs		16
Accretion expense		4,870
Revision of estimated cash flows due to changes in reclamation plans		(578	)
Payment of reclamation obligations		(3,843	)
Balance at December 31, 2017		86,045
Accruals for estimated costs		250
Accretion expense		5,309
Revision of estimated cash flows due to changes in reclamation plans		1,280
Liability addition due to acquisition of the Nevada Operations unit		19,571
Payment of reclamation obligations		(4,066	)
Balance at December 31, 2018		108,389
Accruals for estimated costs		472
Accretion expense		7,122
Revision of estimated cash flows due to changes in reclamation plans		(4,522	)
Payment of reclamation obligations		(3,087	)
Balance at December 31, 2019	$	108,374

Asset Retirement Obligations

Below is a reconciliation as of December 31, 2019 and 2018 (in thousands) of the asset retirement obligations ("ARO") relating to our operating properties, which are included in our total accrued reclamation and closure costs of $108.4 million for each year discussed above. The estimated reclamation and closure costs were discounted using credit adjusted, risk-free interest rates ranging from 5.75% to 14.5% from the time we incurred the obligation to the time we expect to pay the retirement obligation.

	2019			2018
Balance January 1	$	89,417		$	63,384
Changes in obligations due to changes in reclamation plans		(4,522	)		1,280
Addition due to acquisition of the Nevada Operations unit		—			19,571
Accretion expense		7,122			5,295
Payment of reclamation obligations		(186	)		(113	)
Balance at December 31	$	91,831		$	89,417

In the fourth quarter of 2019, we updated the ARO at Lucky Friday to reflect a plan for reclamation and closure of the mine at the end of its life having estimated undiscounted costs of approximately $34.3 million, an increase from the $31.8 million in the previous plan. However, the ARO asset and liability decreased by $1.1 million as a result of a change in the estimated timing of costs and the impact of discounting the costs to present value.

In the fourth quarter of 2019, we updated the ARO at San Sebastian to reflect performance of some reclamation work prior to when it was previously scheduled, resulting in a decrease in undiscounted costs of $0.5 million and decrease in the ARO asset and liability of $1.2 million.

In the fourth quarter of 2019, we revised the AROs for the Nevada Operations unit to reflect updates to the reclamation plans for each mine site, resulting in an increase in undiscounted costs of $0.2 million and increase in the ARO asset and liability of $0.5 million.

In the fourth quarter of 2019, we updated the ARO at Casa Berardi to reflect a change in the anticipated timing of reclamation costs, resulting in a decrease in the ARO asset and liability of $2.2 million.

The AROs related to the changes described above were discounted using a credit adjusted, risk-free interest rate of between 7.0% and 7.5% and inflation rates ranging from 2% to 4%.