Revett Mining Company, Inc. - Form 10-Q - Filed by newsfilecorp.com

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

REVETT MINING COMPANY, INC.
(Exact name of small business issuer in its charter)

11115 East Montgomery, Suite G
Spokane Valley, Washington 99206
(Address of principal executive offices)

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for a shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[X] yes [ ] no

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in rule 12b-2 of the Exchange Act. (Check One)

Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]

Indicate by check whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.
[ ] yes [X] No

At November 10, 2014, 39,273,989 shares of common stock were issued and outstanding.

Revett Mining Company, Inc.
Consolidated Balance Sheets
at September 30, 2014 and December 31, 2013
(expressed in thousands of United States dollars except share and per share amounts)
(Unaudited)

See accompanying notes to unaudited interim consolidated financial statements.

Revett Mining Company, Inc.
Consolidated Statements of Operations and Comprehensive income (loss)
Three and nine months ended September 30, 2014 and 2013
(expressed in thousands of United States dollars except share and per share amounts)
(unaudited)

See accompanying notes to unaudited interim consolidated financial statements.

Revett Mining Company, Inc.
Consolidated Statements of Cash Flows
Nine months ended September 30, 2014 and 2013
(expressed in thousands of United States dollars except share and per share amounts)
(unaudited)

See accompanying notes to unaudited interim consolidated financial statements.

Revett Mining Company, Inc.
Consolidated Statements of Shareholders’ Equity
Nine months ended September 30, 2014 and year ended December 31, 2013
(expressed in thousands of United States dollars except share and per share amounts)
(unaudited)

Revett Mining Company, Inc.
Notes to Consolidated Financial Statements
Three and nine months ended September 30, 2014 and 2013
(expressed in thousands of United States dollars unless otherwise stated)
(unaudited)

In the opinion of management, the accompanying unaudited interim consolidated balance sheets and consolidated statements of operations and comprehensive income (loss), cash flows, and shareholders’ equity contain all adjustments, consisting of normal recurring items, necessary to present fairly, in all material respects, the financial position of Revett Mining Company, Inc. (“Revett Mining Company” or the “Company”) as of September 30, 2014, and the results of its operations and its cash flows for the three and nine month periods ended September 30, 2014 and 2013. The operating and financial results for Revett Mining Company for the three and nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ended December 31, 2014.

These unaudited interim financial statements have been prepared by management in accordance with generally accepted accounting principles used in the United States of America (U.S. GAAP) and are presented in U.S. dollars. These unaudited interim consolidated financial statements do not include all note disclosures required by U.S. GAAP on an annual basis, and therefore should be read in conjunction with the annual audited consolidated financial statements for the year ended December 31, 2013 filed with the appropriate securities regulatory authorities.

Revett Mining Company, Inc. (formerly known as Revett Minerals Inc.) was incorporated in Canada in August 2004 to acquire Revett Silver Company and undertake a public offering of its common shares, transactions that were completed in February 2005. Revett Silver Company, a Montana corporation, was organized in April 1999 to acquire the Troy mine (“Troy”) and the Rock Creek project (“Rock Creek”) from ASARCO Incorporated and Kennecott Montana Company, transactions that were completed in October 1999 and February 2000. Revett Mining Company changed its jurisdiction of incorporation (from Canada to Delaware) and its name (from Revett Minerals, Inc. to Revett Mining Company, Inc.) on February 18, 2014, following approval by shareholders at a special meeting held on January 24, 2014. The Company conducts business through four Montana corporations, all subsidiaries of its wholly-owned Revett Silver Company subsidiary: Troy Mine, Inc., RC Resources, Inc., Revett Exploration, Inc. and Revett Holdings, Inc.

Troy is an underground silver and copper mine located in Lincoln County in northwestern Montana. ASARCO operated the mine from 1981 to 1993, and then placed it on care and maintenance because of low metals prices. We restarted mining operations in late 2004 and commenced commercial production in early 2005. We operated Troy continuously until December 2012, when operations were suspended due to unstable underground conditions in portions of the mine. After an unsuccessful attempt to find an alternative route to our reserve mining areas, a decision was made to construct a new decline from the service adit to the North C Beds, giving access to the A and C Beds, and then continue to the undeveloped I Bed mining areas. In late September of 2014, we reached the North C Bed orebody and have started to stockpile ore for milling in the fourth quarter of 2014.

The Rock Creek project is located in Sanders County in northwestern Montana, approximately sixteen air miles southeast of the Troy Mine. Our proposed development of Rock Creek will occur in two phases. The first phase entails a two year evaluation program to reconfirm geotechnical assumptions and better define the economic and technical viability of the project.

The second phase will encompass underground mine and surface mill and ancillary facilities construction. We cannot begin the evaluation program until we receive final permits and approvals from the various Federal and State agencies that exercise jurisdiction over the project.

2. Changes affecting consolidated financial statements and future accounting changes:

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP.

The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2017.

The major components of the Company’s mineral property, plant, and equipment accounts are as follows:

The net book value of assets under capital leases at September 30, 2014 and December 31, 2013 was $0.0 million and $2.1 million, respectively.

Included in other corporate assets is Revett Holdings Inc., a wholly owned subsidiary of Revett Silver Company, which owns mitigation lands with a carrying value of $3.6 million. This land and other land not essential to our mining operations are designated as grizzly bear habitat mitigation land. The property costs for Rock Creek will be amortized when the property is placed into production, or written off if it is determined that Rock Creek cannot be developed.

Available for sale securities are comprised of publically traded common stocks which have been valued using quoted market prices in active markets. The following table summarizes the Company’s available for sale securities at December 31, 2013:

During the quarter ended March 31, 2014, the Company sold all of its available for sale equity securities for approximately $1.0 million, and recognized a gain of $0.4 million.

At September 30, 2014 and December 31, 2013, the balance of the Company’s note payable and capital lease obligations were as follows:

The Company entered into a new note payable in August 2014. The amount borrowed was $5 million with a 30 month term and a 6.25% interest rate. Monthly principal and interest payments are $0.2 million ($2.2 million annually). The note is collateralized by certain equipment at the Troy Mine. The Company used a portion of the proceeds to pay off the two remaining capital leases which principal balances were approximately $0.4 million.

On December 10, 2011, the Company entered into a revolving credit agreement with Societe Generale. No funds were drawn under the facility. In August 2014, the Company and Societe Generale mutually agreed to terminate this credit agreement. During the three months ended March 31, 2013, the Company expensed the remaining unamortized deferred loan fee balance of $0.6 million, which is included in interest expense. No expenses were incurred against this credit facility during the nine months ended September 30, 2014. There is no assurance that this credit facility will be renewed.

During the first quarter 2014, the Company shareholders approved a change of jurisdiction of incorporation from Canada to the United States (the “Domestication”). As a result, the Company became Revett Mining Company, Inc., a Delaware corporation. As a result of this change, a par value of $0.01 was established for shares of common stock which previously had no par value. The Company has one class of $0.01 par value common stock of which 100,000,000 are authorized for issue. The holders of common stock are entitled to receive dividends without restriction when and if declared by the board of directors. Holders of the Company’s common stock are not entitled to preemptive rights to acquire additional shares of common stock and do not have cumulative voting rights.

During the nine months ended September 30, 2014, the Company issued 158,500 common shares on exercise of stock options for cash proceeds of $79 thousand, issued 4,499,100 common shares on sale of common shares through a private placement for cash proceeds of $3.3 million and issued 20,000 common shares for compensation with a fair value of $16 thousand.

During the nine months ended September 30, 2013, the Company issued 49,000 common shares on exercise of stock options and 55,000 common shares on exercise of warrants for cash proceeds of $0.12 million.

The Company is authorized to issue 25,000,000 shares with a $0.01 par value of preferred stock. The Company’s board of directors is authorized to create any series and, in connection with the creation of each series, to fix by resolution the number of shares of each series, and the designations, powers, preferences and rights; including liquidation, dividends, conversion and voting rights, as they may determine. At September 30, 2014, no preferred stock was issued or outstanding.

The Company’s Equity Incentive Plan authorizes the Company to reserve and have available for issue, 6,500,000 shares of common stock. There were 1,060,000 stock options granted to employees during the nine months ended September 30, 2014 with an exercise price of $0.77 to $1.20, expiring in 2019. The Company used the Black-Scholes option pricing model with a risk-free interest rate of 0.58% - 0.68%, volatility of 69.22% -71.87% and an expected life of the options of 30 months to estimate the fair values of the options. The weighted average fair value per share was $0.344 for a total value of $0.4 million. These stock options vest 100% on the date of issue. In addition, there were 75,000 stock options granted to consultants during the nine months ended September 30, 2014 with an exercise price of $0.79 to $1.26, expiring in 2017. The Company used the Black-Scholes option pricing model with a risk-free interest rate of 0.285% to 0.52%, volatility of 78.26% to 87.45% and an expected life of the options of 18 to 24 months to estimate the fair values of the options. The weighted average fair value per share was $0.32 to $0.53 for a total value of $27 thousand. These stock options vest 100% on the date of issue. There were 1,094,500 stock options granted during the nine months ended September 30, 2013 with an exercise price of $2.16, expiring on March 21, 2018 and issued 30,000 stock options with an exercise price of $1.17 which expire on September 6, 2015 and 2016. The Company used the Black-Scholes option pricing model with a risk-free interest rate of 0.33% - 0.52%, volatility of 52.16% - 60.31% and an expected life of the options of 30 – 36 months to estimate the fair values of the options. The weighted average fair value per share was $0.69 for a total value of $0.8 million for the 1,094,500 stock options and $13,400 for the 30,000 stock options. The majority of the stock options vest 25% at the end of each quarter in 2013.

During the nine months ended September 30, 2014, 297,500 options were cancelled or expired and 158,500 options were exercised. As of September 30, 2014 and 2013, the intrinsic value of options outstanding and exercisable was $0.3 million and $0.1 million, respectively.

Total stock-based compensation recognized during the three and nine months ended September 30, 2014 was $0.02 million and $0.4 million, respectively (2013 - $0.1 million and $0.5 million, respectively). During the three and nine months ended September 30, 2014, a total of $0.02 million and $0.2 million, respectively (2013 - $0.1 million and $0.3 million, respectively) stock option compensation was attributable to the Troy Mine employees and is included in the amounts reported in general and administrative expense.

Options	Options	Exercise	Expiration
Granted	Exercisable	Price	Date

10,000	10,000	1.05	October 31, 2014
16,500	16,500	4.98	October 31, 2014
17,000	17,000	4.18	October 31, 2014
6,000	6,000	2.15	October 31, 2014
17,500	17,500	2.16	October 31, 2014
5,000	5,000	1.05	November 2, 2014
30,000	30,000	1.65	December 30, 2014
183,000	183,000	2.15	March 15, 2015
10,000	10,000	1.17	September 6, 2015
7,500	7,500	2.16	September 22, 2015
6,500	6,500	4.98	September 22, 2015
7,000	7,000	4.18	September 22, 2015
25,000	25,000	0.79	September 22, 2015
20,000	20,000	2.50	November 1, 2015
472,500	472,500	4.98	March 21, 2016
2,500	2,500	5.93	April 8, 2016
15,000	15,000	1.26	August 26, 2016
20,000	20,000	1.17	September 6, 2016
60,000	60,000	0.79	March 29, 2017
603,000	603,000	4.18	April 1, 2017
20,000	20,000	3.77	May 3, 2017
616,500	616,500	2.16	March 21, 2018
967,500	967,500	0.79	March 29, 2019
30,000	30,000	0.77	May 29, 2019
15,000	15,000	1.20	August 19, 2019
3,183,000	3,183,000	$2.52

The following stock purchase warrants were outstanding at September 30, 2014 for the purchase of common shares of Revett Mining Company, Inc.:

During the nine months ended September 30, 2014, 2,249,549 new warrants were issued and there were no warrants exercised. During the nine months ended September 30, 2013, 55,000 warrants were exercised and no warrants were issued.

The following table shows the changes in the reclamation liability for the periods indicated.

The Rock Creek project is located in Sanders County, Montana, approximately five miles northeast of Noxon, Montana and sixteen air miles southeast of Troy Mine. The project comprises 99 patented lode-mining claims, 370 unpatented lode-mining claims, five tunnel site claims, 85 mill site claims and 754 acres of fee land. The patented claims lying within the Cabinet Mountain Wilderness Area convey mineral rights only; the patented claims lying outside the wilderness area convey both mineral and surface rights and title. The patented claims were legally surveyed in 1983, patented in 1989, and occupy an area of approximately 1,809 acres. We conduct our development activities at Rock Creek through RC Resources Inc., another of our second-tier operating subsidiaries. RC Resources Inc. is also the record holder of the various claims and fee lands comprising the project.

Our proposed development of Rock Creek will occur in two phases. The first phase, a two year evaluation program, will confirm and better define the economic and technical viability of the project and reconfirm geotechnical assumptions. This initial phase will include the construction of a 7,000 foot evaluation adit to collect additional technical information; underground infill drilling to establish and confirm mineral resource estimates; geotechnical design studies; bulk sampling of the mineralization for use in metallurgical testing; and, to collect and evaluate hydrologic information. We estimate the evaluation program will cost $25 million to $30 million. Once the program is completed, we will commission a feasibility study and, if it is positive, seek financing to construct a 10,000 tons per day mine and process facility. More specific information concerning our proposed development of Rock Creek is set forth in Item 2 of this report.

We cannot begin the evaluation program until we receive final permits and approvals from the various Federal and State agencies that exercise jurisdiction over the project. Rock Creek is partially located on United States Forest Service (the “Forest Service”) land within the Kootenai National Forest and under the Cabinet Mountains Wilderness Area, and federal and state approval is required before development can commence. In 2001, the Forest Service issued a Final Environmental Impact Statement (“Final EIS”) under the National Environmental Policy Act (“NEPA”). In 2003, the Forest Service and the Montana Department of Environmental Quality (the “DEQ”) issued a joint administrative decision approving our proposed plan of operations at Rock Creek (the “Record of Decision”). The Record of Decision was based primarily on the findings in the Final EIS and a companion biological opinion (the “Biological Opinion”) issued by the U.S. Fish and Wildlife Service (“USFWS”) in 2003, pursuant to the requirements of the Endangered Species Act (“ESA”). The project was challenged by several regional and national environmental advocacy groups, culminating in a May 2010 Montana Federal District Court decision that upheld the Biological Opinion but remanded the Record of Decision to the Forest Service to address several NEPA procedural deficiencies. The Federal District Court decision upholding the Biological Opinion was affirmed by the Ninth Circuit Court of Appeals in November 2012. The Forest Service is currently working to develop a Supplemental EIS that will comply with the Federal District Court’s decision.

We are also working to satisfy other federal and state permitting requirements that are required for phase 1 development. These include reclamation bonding, designing and constructing a water treatment facility, and improving the road leading to the proposed evaluation adit site.

We currently own approximately 673 acres of fee land, located in Lincoln and Sanders Counties, that has been designated for Grizzly bear habitat mitigation lands as the Rock Creek project is developed. This land and other current and future real estate holdings that are not essential to our day to day mining operations are; or will be, held by Revett Holdings, Inc., a wholly-owned Montana subsidiary of Revett Silver. Certain of these lands may later be selected for management under the Revett Foundation according to a best-use philosophy.

Although the Company believes that it will ultimately receive all environmental and operating permits, it is possible that successful challenges to the project could delay or prevent the Company from developing Rock Creek which could result in the impairment and write-down of the carrying value related to the Rock Creek property.

The Company enters into concentrate sales contracts with buyers which provides for a provisional payment based upon provisional assays and quoted metal prices. The provisionally priced sales contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of concentrates at the forward price at the time of sale. The embedded derivative, which is the final settlement based on a future price, does not qualify for hedge accounting. These embedded derivatives are recorded in Concentrate settlement and other receivables on the consolidated balance sheet and are adjusted to fair value through earnings each period until the date of final settlement.

At September 30, 2014, the Company did not have any fixed forward contracts to sell silver or copper.

The carrying values of cash and cash equivalents, accounts receivable, restricted cash, and accounts payable and accrued liabilities approximate fair value due to their short time to maturity or ability to immediately convert them to cash in the normal course. The carrying value of concentrate settlement payable or receivable are marked to market each month using quoted forward prices as at the last trading day of each month, and accordingly are recognized at fair value. The carrying values of capital lease obligations approximate fair market values as they are based on market rates of interest.

The Company classifies financial instruments recognized at fair value in accordance with a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are described below:

The following table sets forth the Company’s financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The Company’s cash and cash equivalent instruments are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices.

The Company’s available for sale securities are valued using quoted market prices, and accordingly, are included in Level 1.

The Company’s concentrate receivable embedded derivative, which includes provisionally priced sales, are valued using pricing models and the Company generally uses similar models to value similar instruments. Where possible, the Company verifies the values produced by its pricing models to market prices. Valuation models require a variety of inputs, including contractual terms, market prices, and correlations of such inputs. Such instruments are typically classified within Level 2 of the fair value hierarchy. There were no such amounts existing at June 30, 2014 or December 31, 2013.

For the three and nine month periods ended September 30, 2014, the Company did not report an income tax provision or benefit compared to an income tax benefit of approximately $3.0 million and $8.0 million for the three and nine month periods ended September 30, 2013, respectively. The following table summarizes the components of the Company’s income tax provision (benefit) for the three and nine months ended September 30, 2014 and 2013:

As of September 30, 2014 management of the Company used the guidelines contained in ASC 740 and evaluated the positive and negative evidence available to determine whether a valuation allowance against the deferred tax assets should be established. Management has determined that the Company’s negative evidence of a cumulative loss position after significant permanent differences and the lack of future taxable income based on current conditions regarding the Troy Mine outweighed the positive evidence. Management believes that it is more likely than not the deferred tax assets will not be recovered. Therefore a valuation allowance equal to 100% of the deferred tax assets has been recorded.

The income tax provision (benefit) for the three and nine months ended September 30, 2014 and 2013 varies from the statutory rate primarily because of the change in valuation allowance for net deferred tax assets and depletion. The Company has estimated an effective tax rate of zero for 2014.

The Company has U.S. net operating loss carry forward of $44.0 million that expires at various dates between 2019 and 2034. Montana state net operating losses of $34.0 million expire at various dates between 2014 and 2021. The Company has a net capital loss carry forward of approximately $1.5 million that expires in 2017 and 2018.

As a result of the reorganization of the Canadian company to a U.S. company, the Canadian net operating loss of approximately $10.7 million was forfeited upon the reorganization. Therefore, the Company’s deferred tax asset and valuation allowance has been reduced by approximately $2.8 million.

For the three and nine months ended September 30, 2014 and 2013, options and warrants to purchase 5,432,549 and 3,282,000 shares, respectively, of the Company’s common stock were excluded from the computation of diluted earnings per share because they were anti-dilutive.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis (“MD&A”) of the financial results of Revett Mining Company, Inc. (“Revett Mining” or the “Company”) for the nine month period ended September 30, 2014 should be read in conjunction with the unaudited interim financial statements and notes as at and for the nine months ended September 30, 2014 which form part of this report. In addition, this MD&A and related financial statements should be read in conjunction with the 2013 audited consolidated financial statements, the related Management’s Discussion and Analysis, and the Form 10-K filed in the United States with the Securities and Exchange Commission (“SEC”) or on EDGAR, or on file in Canada on SEDAR. These financial statements are expressed in United States dollars, unless otherwise stated, and they are prepared in accordance with United States generally accepted accounting principles (“GAAP”).

These unaudited interim consolidated financial statements have been prepared by management in accordance with generally accepted accounting principles used in the United States of America (U.S. GAAP) and are presented in U.S. dollars.

Some of the statements in this MD&A are forward looking statements that are subject to risk factors set out in the cautionary note contained in this MD&A.

Overview and Important Factors Influencing Results for the Nine Months Ended September 30, 2014

The Company owns a 100% interest in Revett Silver Company (“Revett Silver”), which in turn owns 100% of Troy Mine, Inc., RC Resources, Inc., Revett Exploration, Inc. and Revett Holdings, Inc. Troy Mine is an operating underground silver and copper mine and Rock Creek is a development stage silver and copper property. Both properties are located in northwest Montana.

We suspended operations at Troy Mine in December 2012 due to unstable underground conditions in portions of the mine. In November 2013, after unsuccessful attempts to find alternative routes to our reserve mining areas and with approval from the Mine Safety and Health Administration (“MSHA”), we commenced construction of a new decline from the main service adit to access the North C Beds and the undeveloped I Beds. In late September, 2014 we completed the initial decline totaling approximately 7,500 feet (including dual drifts, cross-overs, muck bays, etc.) to the North C Beds and expect to resume milling operations and return to limited commercial production in the fourth quarter 2014. Continued development to the deeper I Beds will require us to construct an additional 5,900 feet of decline including an accompanying borehole for secondary egress and ventilation. We anticipate this continued development will take an additional six to nine months to complete;, following which, we expect to ramp-up to full production of around 4,000tpd. The cost of constructing the decline to the North C Beds in order to resume production is estimated to be approximately $5.9 million; the total cost of the decline, including the extension to the undeveloped I Bed area, is currently estimated to be approximately $12 million. Although we took significant steps to improve our liquidity during the first nine months of 2014, we currently do not have enough cash on hand to complete the I-Bed development and are reviewing alternative sources of finance to meet our capital spending requirements.

As at September 30, 2014 the Company has working capital of $7.9 million. Due to the suspension of mining operations since December of 2012, during 2013 and the first nine months of 2014 we were unable to generate production revenues, which resulted in a net loss. For the three and nine month periods ended September 30, 2014, the Company reported a net loss after taxes of $2.1 million and $4.5 million or $0.05 and $0.12 a share, respectively, compared to a net loss after taxes of $0.6 and $8.8 million or $0.02 and $0.25 per share, respectively, for the three and nine months periods ended September 30, 2013.

Results of Operations for the Three and Nine Months Ended September 30, 2014 compared to the same periods in 2013.

	2012	2013	2013	2013	2013	2014	2014	2014
	4Q	1Q	2Q	3Q	4Q	1Q	2Q	3Q
Cu Production (million lbs)	1.0	-	-	-	-	-	-	-
Ag Production (000’s ozs)	161	-	-	-	-	-	-	-
Total Sales (millions)	$7.2	$0.2	$0.0	$(0.1)	$0.0	$0.0	$0.0	$0.0
Cash Flow from Operations before changes in working capital (millions) (1)	$(0.02)	$(4.7)	$(3.9)	$(2.1)	$(1.4)	$(3.0)	$(4.2)	$(4.6)
Net Income (loss) (millions)	$(1.8)	$(4.1)	$(4.1)	$(0.6)	$(2.8)	$(0.8)	$(1.6)	$(2.1)
EPS- Basic	$(0.05)	$(0.12)	$(0.12)	$(0.02)	$(0.05)	$(0.02)	$(0.04)	$(0.05)
EPS- Fully diluted	$(0.05)	$(0.12)	$(0.12)	$(0.02)	$(0.05)	$(0.02)	$(0.04)	$(0.12)
Cash and Cash Equivalents & Short term Investments (millions)	$28.3	$21.0	$15.0	$12.1	$8.0	$9.0	$6.1	$7.2
Total Assets ending (millions)	$108.0	$100.2	$92.7	$91.2	$86.6	$89.8	$86.8	$89.3
Total liabilities (millions)	$19.2	$15.1	$11.1	$10.0	$8.1	$8.4	$7.0	$11.5
Total Equity (millions)	$88.8	$85.1	$81.7	$81.2	$78.5	$81.4	$79.8	$77.8

(1) This is a non-GAAP measurement. These amounts reflect the net cash flow from the Troy Mine before capital spending, equipment payments and changes in working capital.

In August 2014, the Company entered into a note payable for $5.0 million. This note is secured by certain pieces of the Company’s mining equipment. The two existing capital leases were paid off from the proceeds of this new note payable. The payoff amount was approximately $0.4 million. The Company has the following contractual financial obligations (in thousands of USD):

				Current	1 to 3	3 to 5		5 years or
Contractual obligation		Total		portion	years	years		more

Note payable	$	4,846	$	1,917	2,929	-		-
Long term reclamation costs		12,743		-	-	-	$	12,743
Total contractual obligations	$	17,589	$	1,917	2,929	-	$	12,743

Revett Silver has also entered into a number of operating leases relating to the production and transportation of the copper concentrate produced at Troy. All such leases expire in 2014 and many may be renewed annually. The obligations in 2014 under the terms of these leases are $0.4 million.

The Company’s liquidity position is directly related to the level of concentrate production, cost of this production and the provisional and final prices received for the copper and silver in the concentrate that is sold. At September 30, 2014, working capital was $7.9 million, including cash and cash equivalents of $7.2 million. At September 30, 2014, concentrate receivable and other receivables was $0.005 million compared to $1.2 million at December 31, 2013. In early April, 2014, we received the final settlement for an insurance claim for a net cash proceeds of $1.9 million.

Delays in recommencing production at Troy could erode our cash and working capital position. We continue to have discussions with interested parties in possibly obtaining capital, however, no assurance can be given that these efforts will prove successful. Given current market conditions, we may experience difficulties in raising sufficient funds to meet our obligations and complete construction of the development decline to gain access to the deeper ore reserves at Troy. Because of our need to conserve cash, nearly all discretionary capital spending and exploration spending has been placed on hold.

Royal Gold, Inc. holds a 3% gross smelter royalty on a defined area of production from Troy Mine and a 1% net smelter royalty on production from Rock Creek pursuant to the terms of an amended royalty agreement dated October 13, 2009.

Trafigura AG is the sole purchaser of the silver and copper concentrate we produce at Troy. It is also the beneficial owner of more than five percent of our outstanding common shares, and is therefore a related party. During the nine months ended September 30, 2014 and 2013, there were no sales transactions with Trafigura AG. However, during the nine months ended September 30, 2014, Trafigura AG paid us $0.3 million for the purchase of 320,512 shares of common stock (see note 7).

The following risk factors and other information in this report contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. If any of the following events or developments described below actually occur, our business, financial condition or operating results could be materially harmed. This could cause the market price of our common stock to decline.

Production Operations at Troy are currently suspended. We suspended production operations at Troy in December 2012 due to unstable underground conditions in portions of the mine. In November 2013, after unsuccessful attempts to find alternative routes to our reserve mining areas and with approval from the Mine Safety and Health Administration (“MSHA”), we commenced construction of a new decline from the main service adit to access the North C Beds and the undeveloped I Beds. In late September, 2014 we completed the initial decline totaling approximately 7,500 feet (including dual drifts, cross-overs, muck bays, etc.) to the North C Beds and expect to resume milling operations and return to limited commercial production in the fourth quarter 2014. Continued development to the deeper I Beds will require us to construct an additional 5,900 feet of decline including an accompanying borehole for secondary egress and ventilation. We anticipate this continued development will take an additional six to nine months to complete;, following which, we expect to resume full production of around 4,000tpd. The cost of constructing the decline to the North C Beds in order to resume production is estimated to be approximately $5.9 million; the total cost of the decline, including the extension to the undeveloped I Bed area, is currently estimated to be approximately $12 million. Although we took significant steps to improve our liquidity during the first quarter of 2014, we currently do not have enough cash on hand to complete the I-Bed development and are reviewing alternative sources of finance to meet our capital spending requirements. There is no assurance our financing efforts will be successful under current market conditions. Our business has been materially and adversely affected by the suspension of commercial mining operations at Troy.

Copper and silver prices fluctuate markedly. Our operations are significantly influenced by the prices of copper and silver. Copper and silver prices fluctuate widely and are affected by numerous factors that are beyond our control, such as the strength of the United States dollar, global and regional industrial demand, and the political and economic conditions of major producing countries throughout the world. During the last four years, annual average copper prices have fluctuated from a low of $2.34 per pound in 2009 to a high of $4.00 per pound in 2011, and world average annual silver prices have fluctuated from a low of $14.38 per ounce in 2009 to a high of $35.11 per ounce in 2011.

There are other formidable risks to mining. We are subject to all of the risks inherent in the mining industry, including industrial accidents, labor disputes, environmental related issues, unusual or unexpected geologic formations, cave-ins, surface subsidence, flooding, power disruptions and periodic interruptions due to inclement weather. These risks could result in damage to or destruction of our mineral properties and production facilities, personal injury, environmental damage, delays, monetary losses and legal liability. In addition, we are subject to competition for new minerals properties, management and skilled miners from other mining companies, many of which have significantly greater resources than we do. We also have no direct control over changes in governmental regulation of mining activities, the speculative nature of mineral exploration and development, operating hazards, fluctuating metal prices and inflation and other economic conditions.

Legal challenges could prevent us from ever developing Rock Creek. Our proposed development of Rock Creek has been challenged by several regional and national conservation groups at various times since the Forest Service issued its initial Record of Decision in 2003 approving our plan of operation. Some of these challenges have alleged violations of a variety of federal and state laws and regulations pertaining to our permitting activities at Rock Creek, including the Endangered Species Act, the National Environmental Policy Act, the 1872 Mining Law, the Federal Land Policy Management Act, the Wilderness Act, the National Forest Management Act, the Clean Water Act, the Clean Air Act, the Forest Service Organic Act of 1897 and the Administrative Procedural Act. Although we have successfully addressed most all of these challenges, we were directed by the Montana Federal District Court in May 2010 to produce a Supplemental EIS (“SEIS”) to address NEPA procedural deficiencies identified by the court. We cannot predict with any degree of certainty how possible future challenges will be resolved. Rock Creek is potentially the more significant of our two mining assets. New court challenges to the Supplemental EIS and a revised Record of Decision may delay us from proceeding with our planned development at Rock Creek. If we are successful in completing the SEIS and defending any challenges, we still must comply with a number of requirements and conditions as development progresses, failing which we could be denied the ability to continue with our proposed activities.

Our reclamation liability at Troy Mine could be substantial. Our financial obligations to reclaim, restore and close Troy are presently covered by a $12.9 million surety bond, which includes $6.5 million in a restricted cash account. In late 2012, Montana DEQ and the U.S. Forest Service issued a new EIS and Record of Decision pertaining to the Troy reclamation. We do not presently know whether the revised reclamation plan will increase our bonding costs. Laws governing the closure of mining operations in Montana have become more stringent since Troy Mine was first placed into production. These factors could result in the imposition of a higher performance bond. Our reclamation liability for Troy is not limited by the amount of the performance bond itself; the bond serves only as security for the payment of these obligations. We would necessarily have to pay for any substantial increase in actual costs over and above the maximum allowed under the bond.

We presently do not have the financial resources to complete the construction of the new decline at Troy or to develop Rock Creek. Although we are continuing efforts to procure financing, we presently do not have sufficient funds to complete the construction of a new decline to the North C Bed and deeper I Bed areas at Troy. We also do not have sufficient cash to develop a mine or begin mining operations at Rock Creek should it prove feasible to do so.

The Rock Creek mineral resources are not equivalent to reserves. This report includes information concerning the estimated size of our mineral resource at Rock Creek and supplemental information concerning the extent of the remaining mineral resource at Troy. Although we believe these mineral resources are significant, it does not mean they can be economically mined. A mineral resource is not equivalent to “proven reserves” or “probable reserves” under standards promulgated by the SEC, principally because of the absence of sufficient quantifiable data. We will not be able to determine whether Rock Creek contains a commercially mineable ore body until our evaluation program has been completed and we have obtained a final, economic and technical feasibility study that will include an analysis of the amount of ore that can be economically produced under then-prevailing market conditions. Similarly, we will not be able to determine whether the supplemental mineral resources at Troy can be commercially mined without further exploration and study. Stockholders are cautioned not to assume that mineral resources will ever be converted into proven reserves or probable reserves.

The largest market risk the Company is exposed to is changes in the prices of copper and silver will have a significant effect on revenue, cash flow and the value of concentrate receivables or payables because a significant portion of the Company’s sales are subject to a future pricing mechanism and changes in metal prices will change both revenue and the value of concentrate receivables or payables. The Company does have a hedging policy which permits the Company to fix the sales price of copper and silver in concentrate to be produced in the future or for which concentrate has been sold and for which final settlement has not occurred.

For financial statement purposes, the Company records at fair value the amount of silver and copper in concentrate sold to its customer for which final prices have not yet been determined. At each month-end, the Company adjusts its revenue to account for expected future prices and the corresponding expected future revenue and cash flow. In order to do this, the Company must make estimates of the future prices expected to prevail when final settlement occurs. The Company uses published forward prices for the period of expected settlement to estimate these expected prices.

As at September 30, 2014, the Company had no contracts outstanding to sell silver or copper

Cautionary “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995. With the exception of historical matters, the matters discussed in this report are forward- looking statements that involve risk and uncertainties that could cause actual results to differ materially from projections or estimates contained herein. The words “believe”, “estimate”, “anticipate’, “expect”, and “project” and similar expressions are included to identify forward-looking statements. Such forward looking-statements include statements regarding future production levels and operating costs at the Troy mine, future levels of capital expenditures at both Troy and Rock Creek, the reserve and resource estimates at both Troy and Rock Creek, the adequacy of the financial resources and funds to cover operating and exploration costs at Troy and the cost of exploration at Rock Creek, the timing of certain litigation activities which have delayed exploration activities at Rock Creek, the adequacy of third party financing to complete certain corporate development activities, and the expectation that the Troy mine will be able to generate positive cash flow in future periods. Factors that could cause actual results to differ materially from these forward looking statements include, among others:

As well as other factors described elsewhere in our annual Form 10-K and the various regulatory filings with United States and Canadian and provincial regulatory bodies which are available in Canada at www.sedar.com or in the United States on EDGAR. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Most of these factors are beyond our ability to predict or control. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward looking statements. We disclaim any obligation to update any forward-looking statement made here-in except as required by law. Readers are cautioned not to put undue reliance on forward looking statements.

Our earnings and cash flow are significantly affected by changes in the market price of copper and silver. The prices of both metals can fluctuate widely and are influenced by numerous factors such as demand, production levels, and world political and economic events and the strength of the US dollar. During the past eighteen years the average annual price of copper has ranged from a low of $0.71 per pound to a high of $4.48 per pound. Average annual silver prices over this same period have ranged from a low of $3.95 per ounce to a high of $41.96. Should the price of copper or silver decline substantially, the value of Troy and Rock Creek could fall dramatically and the future operation of Troy and the future exploration and development at Rock Creek could both be at risk.

A substantial portion of our cash and short term investments are invested in certificates of deposit or high quality government and corporate fixed income securities, all of which are denominated in US dollars. With the uncertainty in the financial markets the value of these fixed income securities could change. Approximately $0.8 million of our short term investments are in a major Canadian chartered bank and are denominated in US dollars.

Management is responsible for adopting internal control that gives it and the board of directors reasonable assurance that the Company’s consolidated financial statements present fairly its financial position and results of operations. Management also is responsible for establishing and maintaining disclosure controls and procedures that provide assurance that material information concerning the Company, including its consolidated subsidiaries, is appropriately disclosed.

Disclosure Controls and Procedures. Our disclosure controls and procedures are designed to ensure that information we are required to disclose in our periodic reports and other information filed under the Securities Exchange Act of 1934 (the Exchange Act) is recorded, processed, summarized and reported within the time periods prescribed by the SEC’s rules. They include, without limitation, controls and procedures designed to ensure that such information is accumulated and promptly communicated to our management, including our chief executive officer and our chief financial officer and other principal accounting officers, so such persons can make timely decisions regarding disclosure.

We evaluated the effectiveness of the design and operation of our disclosure controls and procedures as required by Rules 13(a)-15(e) and 15(d)-15(e) under the Exchange Act. This evaluation was performed under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, both of whom concluded that such controls and procedures were effective as of September 30, 2014. Based upon this evaluation, our chief executive officer and chief financial officer concluded that the design and operation of the Company’s disclosure controls and procedures were effective as at September 30, 2014 to ensure that information required to be disclosed by us in reports that we file under the Exchange Act, is gathered, reported, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosure as specified under U.S. and Canadian securities laws.

Changes in Internal Control over Financial Reporting. There have been no changes in the Company’s internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to affect, its internal control over financial reporting.

There have been no material changes with regard to legal proceedings which are reported in the December 31, 2013 Form 10-K.

Our operations at the Troy Mine are subject to health, safety and other standards imposed under the Federal Mine Safety and Health Act of 1977 (“FMSHA”) and regulations promulgated thereunder. FMSHA is administered by the Mine Safety and Health Administration (“MSHA”).

During the three months ended September 30, 2014 MSHA issued one citation pursuant to Section 104 of FMSHA for violations of mandatory health or safety standards that could, in the agency’s opinion, significantly and substantially contribute to mine safety or health hazard. MSHA proposed penalties of $5,019 for violations.

There were no mining fatalities at the Troy Mine during the three months ended September 30, 2014, nor did MSHA issue written notice pursuant to Section 104(e) of FMSHA during the period alleging any pattern of violations of mandatory health or safety standards or the potential for such a pattern. MSHA did not deem the cited violations to be flagrant within the meaning of Section 110(b)(2) of FMSHA.

There is two pending appeals before the Federal Mine Health Safety Review Commission challenging MSHA’s assessment of proposed penalties against us. The following table sets forth relevant information concerning the statutory basis for these violations:

Mine
Name
Mine ID

Section
104 S&S
Citations

Section
104(b)
Orders

Section
104(d)
Citations
and
Orders

Section
110(b)(2)
Violations

Section
107(a)
Orders

Total
Dollar
Value of
MSHA
Assessment
s Proposed

Total
Number
of Mining
Related
Fatalities

Received
Notice of
Pattern of
Violations
Under
Section
104(e)

Received
Notice of
Potential
to Have
Pattern
Under
Section
104(e)

Legal
Actions
Pending
as of
Last Day
of the
Period

Legal
Actions
Initiated
During
Period

Legal
Actions
Resolved
During
Period

Troy Mine, Inc. 24-01467

$5,019

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Delaware	46-4577805
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)

			PAGE

PART I – FINANCIAL INFORMATION			3

	ITEM 1.	FINANCIAL STATEMENTS	4

	ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	20

	ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	27

	ITEM 4.	CONTROLS AND PROCEDURES	28

PART II – OTHER INFORMATION			28

	ITEM 1.	LEGAL PROCEEDINGS	28

	ITEM 4.	MINE SAFETY DISCLOSURE	29

	ITEM 6.	EXHIBITS	29

	Page

FINANCIAL STATEMENTS:

Consolidated balance sheets	4

Consolidated statements of operations and comprehensive income (loss)	5

Consolidated statements of cash flows	6

Consolidated statements of shareholders’ equity	7

Notes to consolidated financial statements	8-19

		September 30, 2014			December 31, 2013

Assets
Current Assets
Cash and cash equivalents	$	7,240		$	7,951
Concentrate settlement and other receivables		5			1,164
Inventories		4,069			4,133
Prepaid expenses and deposits		267			414
Total current assets		11,581			13,662
Property, plant, and equipment (net)		70,478			65,108
Restricted cash		6,549			6,542
Available for sale securities		-			600
Other long term assets		736			736

Total assets	$	89,344		$	86,648

Liabilities and shareholders’ equity
Current liabilities
Trade accounts payable	$	844		$	954
Payroll liabilities		693			604
Income, property and mining taxes		216			588
Other accrued payable		28			19
Current portion of capital lease obligations and note payable		1,917			925
Total current liabilities		3,698			3,090

Long term portion of capital lease obligations and note payable		2,929			364
Reclamation and remediation liability		4,900			4,613
Deferred income taxes		-			25
Total liabilities		11,527			8,092

Commitments and contingencies (note 9)

Shareholders' equity
Preferred stock, $0.01 par value, 25,000,000 authorized, no shares issued and outstanding		-			-
Common stock, $0.01 par value 100,000,000 authorized, 39,273,989 and 34,596,387 shares issued and outstanding at September 30, 2014 and December 31, 2013.		393			88,495

Additional paid in capital		91,928			-

Accumulated other comprehensive gain, net of tax		-			45
Retained earnings (deficit)		(14,504	)		(9,984	)
Total equity		77,817			78,556

Total liabilities and shareholders’ equity	$	89,344		$	86,648

		Three month			Three month			Nine month			Nine month
		period ended			period ended			period ended			period ended
		September 30, 2014			September 30, 2013			September 30, 2014			September 30, 2013


Revenues	$	-		$	(146	)	$	6		$	70
Expenses:
Cost of sales		-			-			-			-
Troy Mine suspension related costs		992			2,108			2,655			10,447
Depreciation and depletion		5			8			16			24
Exploration and development		350			444			782			1,083
General & administrative:
Stock based compensation		16			149			410			482
Other		569			658			2,078			2,459
Accretion of reclamation and remediation liability		95			119			286			357
		2,027			3,486			6,227			14,852
Income (loss) from operations
		(2,027	)		(3,632	)		(6,221	)		(14,782	)
Other income (expenses):
Interest expense		(27	)		-			(41	)		(669	)
Interest and other income		3			6			1,313			14
Gain (loss) on available for sale securities		-			-			429			(1,376	)
Gain on warrant derivative		-			-			-			63
Total other income (expenses)		(24	)		6			1,701			(1,968	)

Income (loss) before income taxes		(2,051	)		(3,626	)		(4,520	)		(16,750	)

Income tax benefit (expense):

Current income tax benefit (expense)		-			(20	)		-			(20	)

Deferred income benefit (expense)		-			3,046			-			7,996

Net income (loss)	$	(2,051	)	$	(600	)	$	(4,520	)	$	(8,774	)

Other comprehensive income (loss)		-			20			45			558

Comprehensive income (loss)		(2,051	)	$	(580	)	$	(4,475	)	$	(8,216	)

Net income (loss) for basic earnings per share		(2,051	)	$	(600	)	$	(4,475	)	$	(8,774	)

Net income (loss) for diluted earnings per share		(2,051	)	$	(600	)	$	(4,475	)	$	(8,774	)

Basic earnings (loss) per share	$	(0.05	)	$	(0.02	)	$	(0.12	)	$	(0.25	)

Diluted earnings (loss) per share	$	( 0.05	)	$	(0.02	)	$	(0.12	)	$	(0.25	)

Weighted average number of shares outstanding		39,180,040			34,596,387			37,698,762			34,590,684

Weighted average number of diluted shares outstanding		39,180,040			34,596,387			37,698,762			34,590,684

	Common Shares
						Additional		Accumulated other			Retained
						Paid-in		Comprehensive			earnings
	Shares		Amount			Capital		Income (loss)			(deficit)			Total
							$
Balance, December 31, 2012	34,492,389	$	87,727					(538	)	$	1,591		$	88,780
Issue of shares for exercise of options	49,000		25					-			-			25
Issue of shares for exercise of warrants	55,000		125					-			-			125
Unrealized gain on marketable securities, net of tax	-		-					583			-			583
Stock-based compensation on options granted	-		618					-			-			618
Net income for the period	-		-					-			(11,575	)		(11,575	)

Balance, December 31, 2013	34,596,389	$	88,495				$	45		$	(9,984	)	$	78,556
Reclassification due to change in par value of common shares			(88,149	)	$	88,149
Issue of shares for exercise of options	158,500		2			77		-			-			79
Issue of shares	4,499,100		45			3,292		-			-			3,337
Issue of shares for compensation	20,000		-			16		-			-			16
Unrealized gain on marketable securities, net of tax	-		-					(45	)		-			(45	)
Stock-based compensation on options granted	-					394		-			-			394
Net loss for the period			-			-		-			(4,520	)		(4,520	)
Balance, September 30, 2014	39,273,989	$	393		$	91,928	$	-		$	(14,504	)	$	77,817

		September 30, 2014		December 31, 2013
Concentrate inventory	$	473	$	530
Material and supplies		3,596		3,603
	$	4,069	$	4,133

		September 30,			December 31,
		2014			2013
Troy:
Property acquisition and development costs	$	18,322		$	18,322
Plant and equipment		14,009			13,931
Construction in progress		6,103			808
Buildings and structures		5,613			5,613
		44,047			38,674
Rock Creek:
Property acquisition costs		34,976			34,976

Other, corporate		4,330			4,330
Other, mineral properties		118			118
		83,471			78,098
Accumulated depreciation and depletion:
Troy Property acquisition and development		(7,332	)		(7,332	)
costs
Troy plant and equipment		(3,861	)		(3,861	)
Troy buildings and structures		(1,630	)		(1,630	)
		(12,823	)		(12,823	)
Other corporate assets		(170	)		(167	)
		(12,993	)		(12,990	)
	$	70,478		$	65,108

Cost	$	1,499
Other than temporary impairment charge		(969	)
Unrealized gain		70
Fair value	$	600

		September 30,			Dec. 31,
		2014			2013
Capital leases and note payable	$	4,846		$	1,289
Less current portion		(1,917	)		(925	)
Long-term portion	$	2,929		$	364

Number	Exercise price	Expiration

1,153,844	USD $ 1.00	March 26, 2016
1,095,705	USD $ 1.00	March 31, 2016
2,249,549

		Nine months ended		Nine months ended
		September 30, 2014		September 30, 2013
Reclamation and remediation liability beginning of period	$	4,613	$	5,598
Accretion expense, year to date		287		357
Ending balance	$	4,900	$	5,955

Level 1	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2	Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

		Fair value at September 30, 2014
		Total		Level 1		Level 2		Level 3

Cash and cash equivalents	$	7,240	$	7,240	$	-	$	-

		Fair value at December 31, 2013
		Total		Level 1		Level 2		Level 3

Cash and cash equivalents	$	7,951	$	7,951	$	-	$	-
Available for sale securities		600		600		-		-

	REVETT MINING COMPANY, INC.


Date: November 10, 2014	By: /s/John Shanahan
	John Shanahan
	President and Chief Executive Officer


Date: November 10, 2014	By: /s/ Ken Eickerman
	Ken Eickerman
	Chief Financial Officer

		Three months		Three month			Nine months		Nine months
		ended		ended			ended		ended
		September 30,		September 30,			September 30,		September 30,
		2014		2013			2014		2013
Federal:
Current	$	-	$	20		$	-	$	20
Deferred		-		(2,726	)		-		(7,157	)
Total		-		(2,706	)		-		(7,137	)
State:
Current		-		-			-		-
Deferred		-		(320	)		-		(839	)
Total	$	-	$	(3,026	)	$	-	$	(7,976	)

		Three		Three			Nine			Nine
		months		months			months			months
		ended		ended			ended			ended
		Sept		Sept			Sept			Sept
		30,		30,			30,			30,
		2014		2013			2014			2013

Unrealized loss on available for sale securities before tax	$	-	$	30		$	-		$	(520	)

Deferred tax effect		-		(10	)		-			184

Unrealized loss on available for sale securities, net of tax		-		20			-			(336	)

Reclassification of loss on securities included in net income (loss)		-		-			70			1,376
Related deferred tax effect		-		-			(25	)		(482	)

	$	-	$	20		$	45		$	558

	a)	Revenue: Revenue for the first nine months of 2013 reflects the settlement of a few outstanding invoices. There was no invoicing for concentrate sales during the first nine months of 2014 and 2013 due to the suspension of mining activities described above.

	b)	Troy Mine suspension related costs: 2013 spending reflects the costs related to attempts to repair access to the mine along with general costs of maintaining the Troy mine. 2014 spending reflects both the cost of I Bed development along with the general cost of maintaining the Troy mine. All of the spending related to the I Bed development was capitalized ($5.3 million for the nine months ended September 30, 2014). The 2013 spending reflects the efforts to design a plan to resume mining operations and to maintain our staffing levels as we did not layoff any employees until May of 2013. In May, and again, in October of 2013, we reduced our staffing levels from over 180 employees to just over 60 employees at the Troy Mine.

	c)	Depreciation and depletion: For the three and nine month periods of 2014 and 2013, the depreciation expense is significantly lower. The majority of the plant and equipment at Troy is depreciated using the units-of-production method and the effect of the suspension of mining operations resulted in no depreciation expense for the Troy Mine.

	d)	Exploration and development: This expense includes $0.8 million in 2014 spending for Rock Creek permitting. The spending in 2014 is lower than 2013 ($1.1 million) due to efforts to conserve cash. We did not have any exploration spending during the first nine months of 2014.

	e)	General and administration costs: The decrease in the corporate administration costs during the first nine months of 2014 and 2013 is a result of efforts to conserve cash due to suspension of mining activities at the Troy Mine.

	f)	Other income: During the first nine months of 2014 we sold our available for sale securities for a gain of $0.4 million and recorded a gain of $1.3 million on the recovery of insurance proceeds related to the damaged mine equipment.

	g)	Net loss: The net loss for the first nine months 2014 and 2013 reflects the suspension of mining activities at the Troy Mine.

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C., 1350 (Section 906 of the Sarbanes-Oxley Act
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C., 1350 (Section 906 of the Sarbanes-Oxley Act