Note 10 - Fair Value Measurement

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note 10.    Fair Value Measurement

Accounting guidance has established a hierarchy for inputs used to measure assets and liabilities at fair value on a recurring basis. The three levels included in the hierarchy are:

Level 1: quoted prices in active markets for identical assets or liabilities;

Level 2: significant other observable inputs; and

Level 3: significant unobservable inputs.

The table below sets forth our assets and liabilities that were accounted for at fair value on a recurring basis and the fair value calculation input hierarchy level that we have determined applies to each asset and liability category (in thousands).  

Description	Balance at September 30, 2021		Balance at December 31, 2020		Input Hierarchy Level
Assets:
Cash and cash equivalents:
Money market funds and other bank deposits	$	190,904	$	129,830	Level 1
Current and non-current investments:
Equity securities		8,030		19,389	Level 1
Trade accounts receivable:
Receivables from provisional concentrate sales		32,821		27,864	Level 2
Restricted cash balances:
Certificates of deposit and other deposits		1,053		1,053	Level 1
Derivative contracts - current and non-current derivative assets:
Foreign exchange contracts		4,655		7,647	Level 2
Metal forward and put option contracts		7,313		381	Level 2
Total assets	$	244,776	$	186,164
Liabilities:
Derivative contracts - current derivatives liabilities and other non-current liabilities:
Foreign exchange contracts	$	200	$	19	Level 2
Metal forward and put option contracts		4,731		11,737	Level 2
Total liabilities	$	4,931	$	11,756

Cash and cash equivalents consist primarily of money market funds and are valued at cost, which approximates fair value, and a small portion consists of municipal bonds having maturities of less than 90 days, which are recorded at fair value.

Current and non-current restricted cash balances consist primarily of certificates of deposit, U.S. Treasury securities, and other deposits and are valued at cost, which approximates fair value.

Our non-current available for sale securities consist of marketable equity securities of companies in the mining industry which are valued using quoted market prices for each security.

Trade accounts receivable from provisional concentrate sales are subject to final pricing and valued using quoted prices based on forward curves for the particular metals.  The embedded derivative contained in our concentrate sales is adjusted to fair market value through earnings each period prior to final settlement.

We use financially-settled forward contracts to manage exposure to changes in the exchange rate between USD and CAD, and the impact on CAD-denominated operating costs incurred at our Casa Berardi unit (see Note 9 for more information). The fair value of each contract represents the present value of the difference between the forward exchange rate for the contract settlement period as of the measurement date and the contract settlement exchange rate.

We use financially-settled forward contracts to manage the exposure to changes in prices of silver, gold, zinc and lead contained in our concentrate shipments that have not reached final settlement.  We also use financially-settled forward and put option contracts to manage the exposure to changes in prices of silver, gold, zinc and lead contained in our forecasted future sales (see Note 9 for more information).  The fair value of each forward contract represents the present value of the difference between the forward metal price for the contract settlement period as of the measurement date and the contract settlement metal price. The fair value of each put option contract is measured using the Black-Scholes pricing model, with inputs for the period-end metal price and assumed metal price volatility and discount rate.

At September 30, 2021, our Senior Notes, which had a carrying value of $469.2 million, net of unamortized initial purchaser discount and issuance costs, had a fair value of $513.2 million. Quoted market prices, which we consider to be Level 1 inputs, are utilized to estimate fair values of the Senior Notes. See Note 8 for more information.