Note 5 - Environmental and Reclamation Activities

12 Months Ended

Dec. 31, 2021

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, 2021 and 2020 were as follows (in thousands):

	2021			2020
Operating properties:
Greens Creek	$	37,474		$	42,716
Lucky Friday		13,543			12,818
Casa Berardi		12,497			11,730
Nevada Operations		27,068			26,062
Non-operating properties:
San Sebastian		4,451			6,882
Troy mine		4,813			5,340
Johnny M		8,947			6,065
Republic		1,500			1,500
All other sites		2,938			2,935
Total		113,231			116,048
Reclamation and closure costs, current		(9,259	)		(5,582	)
Reclamation and closure costs, long-term	$	103,972		$	110,466

The activity in our accrued reclamation and closure cost liability for the years ended December 31, 2021, 2020 and 2019 was as follows (in thousands):

Balance at January 1, 2019	$	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
Accruals for estimated costs		4,952
Accretion expense		6,454
Revision of estimated cash flows due to changes in reclamation plans		(8,781	)
Payment of reclamation obligations		(5,442	)
Balance at December 31, 2021	$	113,231

Asset Retirement Obligations

Below is a reconciliation as of December 31, 2021 and 2020 (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 $113.2 million and $116.0 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. 

	2021			2020
Balance January 1	$	100,208		$	91,831
Changes in obligations due to changes in reclamation plans		(8,781	)		2,543
Accretion expense		6,451			5,912
Payment of reclamation obligations		(2,845	)		(78	)
Balance at December 31	$	95,033		$	100,208

In 2021, we revised the AROs at Greens Creek, Lucky Friday and Casa Berardi to reflect updates to the estimated timing for reclamation and closure of the mines, resulting in a decreases in the ARO asset and liability of $8.6 million and $0.1 million for Greens Creek and Casa Berardi, respectively, and an increase in the ARO for Lucky Friday of $0.3 million.

In 2021, we updated the ARO at Nevada Operations to reflect a revised plan for reclamation and closure of the mines having total estimated undiscounted costs of approximately $35.2 million, an increase from the $34.2 million in the previous plan. However, as a result of discounting, the change resulted in a decrease in the ARO asset and liability of $0.3 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%.