Fair Value Measurements

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

Accounting standards establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

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

Level 2 Quoted market 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

Level 3 Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

The following table sets forth the Company’s financial assets and liabilities measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy. As required by accounting guidance, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (in thousands):

	Fair Value at June 30, 2013
	Total		Level 1		Level 2		Level 3
Assets:
Marketable equity securities	$	16,008	$	16,008	$	—	$	—
Gold put and call options	2,358		—		2,358		—
	$	18,366	$	16,008	$	2,358	$	—
Liabilities:
Palmarejo royalty obligation embedded derivative	$	52,359	$	—	$	52,359	$	—
Rochester NSR royalty obligation	22,046		—		22,046		—
Other derivative instruments, net	2,554		—		2,554		—
	$	76,959	$	—	$	76,959	$	—

	Fair Value at December 31, 2012
	Total		Level 1		Level 2		Level 3
Assets:
Short term investments	$	999	$	999	$	—	$	—
Marketable securities	27,065		27,065		—		—
Other derivative instruments, net	943		—		943		—
	$	29,007	$	28,064	$	943	$	—
Liabilities:
Royalty obligation embedded derivative	$	145,098	$	—	$	145,098	$	—
Put and call options	9,299		—		9,299		—
	$	154,397	$	—	$	154,397	$	—

The Company’s short-term investments are readily convertible to cash and, therefore, these investments are classified within Level 1 of the fair value hierarchy.

The Company’s marketable equity securities are recorded at fair market value in the financial statements based on quoted market prices, which are accessible at the measurement date for identical assets. Such instruments are classified within Level 1 of the fair value hierarchy.

The Company’s gold put and call options, Palmarejo royalty obligation embedded derivative, Rochester NSR royalty obligation, and other derivative instruments, net, which relate to the concentrate sales contracts and foreign exchange contracts, are valued using pricing models, which require inputs that are derived from observable market data, including contractual terms, forward market prices, yield curves and credit spreads. The model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy.

The Company had no Level 3 financial assets and liabilities as of June 30, 2013 or December 31, 2012.

Financial assets and liabilities that are not measured at fair value at June 30, 2013 and December 31, 2012 are set forth below (in thousands):

	Fair Value at June 30, 2013
	Total		Level 1		Level 2		Level 3
Liabilities:
3.25% Convertible Senior Notes due 2028	$	5,153	$	5,153	$	—	$	—
7.875% Senior Notes due 2021	$	295,689	$	295,689	$	—	$	—
Palmarejo Gold Production Royalty Obligation	$	75,645	$	—	$	75,645	$	—

	Fair Value at December 31, 2012
	Total		Level 1		Level 2		Level 3
Liabilities:
3.25% Convertible Senior Notes due 2028	$	48,220	$	48,220	$	—	$	—
Palmarejo Gold Production Royalty Obligation	$	90,617	$	—	$	90,617	$	—

The fair value of the Company's 7.875% Senior Notes due 2021 was moved to Level 1 as a result of the availability of active market transactions to establish fair value.