Note 5 - Environmental and Reclamation Activities

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Environmental and Reclamation Activities [Text Block]

Note 5: Environmental and Reclamation Activities

The liabilities accrued for our reclamation and closure costs at December 31, 2020 and 2019 were as follows (in thousands):

	2020			2019
Operating properties:
Greens Creek	$	42,716		$	44,695
Lucky Friday		12,818			10,473
Casa Berardi		11,730			4,510
San Sebastian		6,882			7,399
Nevada Operations		26,062			24,754
Non-operating properties:
Troy mine		5,340			6,069
Johnny M		6,065			6,065
Republic		1,500			1,500
All other sites		2,935			2,909
Total		116,048			108,374
Reclamation and closure costs, current		(5,582	)		(4,581	)
Reclamation and closure costs, long-term	$	110,466		$	103,793

The activity in our accrued reclamation and closure cost liability for the years ended December 31, 2020, 2019 and 2018 was as follows (in thousands):

Balance at January 1, 2018	$	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
Accretion expense		5,912
Revision of estimated cash flows due to changes in reclamation plans		2,543
Payment of reclamation obligations		(781	)
Balance at December 31, 2020	$	116,048

Asset Retirement Obligations

Below is a reconciliation as of December 31, 2020 and 2019 (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 $116.0 million and $108.4 million, respectively, 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. 

	2020			2019
Balance January 1	$	91,831		$	89,417
Changes in obligations due to changes in reclamation plans		2,543			(4,522	)
Accretion expense		5,912			7,122
Payment of reclamation obligations		(78	)		(186	)
Balance at December 31	$	100,208		$	91,831

In the fourth quarter of 2020, we updated the ARO at Casa Berardi to reflect a revised plan for reclamation and closure of the mine at the end of its life having estimated undiscounted costs of approximately CAD$29.1 million, an increase from the CAD$15.7 million in the previous plan, resulting in an increase in the ARO asset and liability of $6.7 million.

In the fourth quarter of 2020, we updated the ARO at Lucky Friday to reflect a revised plan for reclamation and closure of the mine at the end of its life having estimated undiscounted costs of approximately $36.9 million, an increase from the $34.3 million in the previous plan, resulting in an increase in the ARO asset and liability of $1.5 million.

In the fourth quarter of 2020, 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 $0.6 million and decrease in the ARO asset and liability of $0.6 million.

In the second quarter of 2020, we revised the ARO at Greens Creek to reflect a revised plan for reclamation and closure of the mine at the end of its life having estimated undiscounted costs of approximately $107.7 million, a decrease from the $114.9 million in the previous plan, resulting in a decrease in the ARO asset and liability of $5.1 million.

The AROs related to the changes described above were discounted using a credit adjusted, risk-free interest rate of between 2.75% and 7.5% and inflation rates ranging from 2% to 4%.