Note 9 - Fair Value Measurement

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note 9.    Fair Value Measurement

Fair value adjustments, net is comprised of the following:

	Three Months Ended March 31,
	2022			2021
(Loss) gain on derivative contracts	$	(201	)	$	473
Unrealized gain (loss) on investments in equity securities		6,100			(3,506	)
Gain on disposition or exchange of investments		66			1,158
Total fair value adjustments, net	$	5,965		$	(1,875	)

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 March 31, 2022		Balance at December 31, 2021		Input Hierarchy Level
Assets:
Cash and cash equivalents:
Money market funds and other bank deposits	$	212,029	$	210,010	Level 1
Current and non-current investments:
Equity securities – mining industry		29,204		14,470	Level 1
Trade accounts receivable:
Receivables from provisional concentrate sales		33,324		36,437	Level 2
Restricted cash balances:
Certificates of deposit and other bank deposits		1,041		1,053	Level 1
Derivative contracts - other current assets and other non-current assets:
Metal forward contracts		74		—	Level 2
Foreign exchange contracts		7,829		5,207	Level 2
Total assets	$	283,501	$	267,177
Liabilities:
Derivative contracts - current and non-current derivatives liabilities:
Metal forward contracts	$	82,394	$	37,873	Level 2
Foreign exchange contracts		—		8	Level 2
Total Liabilities	$	82,394	$	37,881

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.

Non-current investments consist of marketable equity securities of mining companies which are valued using quoted market prices for each security. During the first quarter of 2022, we acquired equity securities of various mining companies for a total cost of $10.9 million, and disposed of mining company equity securities acquired for $2.4 million for proceeds of $2.5 million. No such activity occurred during the first quarter of 2021.

Trade accounts receivable from provisional concentrate sales are subject to final pricing and valued using quoted prices based on forward curves for the particular metal.  

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 and capital costs incurred at Casa Berardi (see Note 8 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 (see Note 8 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.

At March 31, 2022, our Senior Notes and IQ Notes were recorded at their carrying value of $469.7 million and $39.2 million, respectively, net of unamortized initial purchaser discount/premium and issuance costs. The estimated fair values of our Senior Notes and IQ Notes were $498.5 million and $40.5 million, respectively, at March 31, 2022. Quoted market prices, which we consider to be Level 1 inputs, are utilized to estimate fair values of the Senior Notes. Unobservable inputs which we consider to be Level 3, including an assumed current annual yield of 6%, are utilized to estimate the fair value of the IQ Notes. See Note 7 for more information.