Fair Value Measurements

12 Months Ended

Dec. 31, 2019



	Year ended December 31,
In thousands	2019			2018			2017
Unrealized gain (loss) on equity securities	$	15,348		$	(5,019	)	$	—
Realized gain (loss) on equity securities	860			7,964			—
Zinc options	—			753			—
Interest rate swap, net	(178		)	(60		)	—
Other	—			—			(864		)
Fair value adjustments, net	$	16,030		$	3,638		$	(864	)

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), secondary priority to quoted prices in inactive markets or observable inputs (Level 2), and the lowest priority to unobservable inputs (Level 3).

The following table presents 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. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:



	Fair Value at December 31, 2019
In thousands	Total		Level 1		Level 2		Level 3
Assets:
Equity securities	$	35,646	$	35,646	$	—	$	—
Other derivative instruments, net	753		—		753		—
	$	36,399	$	35,646	$	753	$	—
Liabilities:
Silvertip contingent consideration	$	25,000	$	—	$	—	$	25,000
Other derivative instruments, net	275		—		275		—
	$	25,275	$	—	$	275	$	25,000



	Fair Value at December 31, 2018
In thousands	Total		Level 1		Level 2		Level 3
Assets:
Equity and debt securities	$	17,806	$	15,589	$	—	$	2,217
Other derivative instruments, net	914		—		914		—
	$	18,720	$	15,589	$	914	$	2,217
Liabilities:
Silvertip contingent consideration	$	49,276	$	—	$	—	$	49,276
Other derivative instruments, net	644		—		644		—
	$	49,920	$	—	$	644	$	49,276

The Company’s investments in equity securities are recorded at fair market value in the financial statements based primarily on quoted market prices. Such instruments are classified within Level 1 of the fair value hierarchy. Quoted market prices are not available for certain debt securities; these securities are valued using pricing models, which require the use of observable and unobservable inputs, and are classified within Level 3 of the fair value hierarchy.

The Company’s other derivative instruments, net, include concentrate and certain doré sales contracts, gold and zinc hedges, and an interest rate swap which are valued using pricing models with inputs derived from observable market data, including contractual terms, forward market prices, yield curves, credit spreads, and other unobservable inputs. 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.

In July 2017, the Company sold the Endeavor Silver Stream and remaining non-core royalties to Metalla Royalty & Streaming Ltd. (“Metalla”) for total consideration of $13.0 million, including a $6.7 million convertible debenture. The convertible debenture bears interest at a rate of 5% payable semi-annually, and is convertible into Metalla shares in connection with future equity financings or asset acquisitions by Metalla at the then-current price to maintain the Company’s approximate 19.9% ownership of Metalla. During 2018, Metalla completed a number of equity-based transactions, triggering the top-up clause in the convertible debenture, resulting in the conversion of $4.4 million of debt into 7.4 million shares of Metalla common stock during 2018. The fair value of the convertible debenture is estimated based on observable and unobservable data including yield curves and credit spreads. Therefore, the Company classifies the convertible debenture in Level 3 of the fair value hierarchy. The convertible debenture was due to mature in June 30, 2027, however, through a combination of principal repayments and conversions into Metalla shares, the convertible debenture was extinguished in February 2019.

In October 2017, the Company acquired the Silvertip mine from shareholders of JDS Silver Holdings Ltd (the “Silvertip Acquisition”). The consideration for the Silvertip Acquisition includes two $25.0 million contingent payments, which were payable in cash and common stock upon reaching a future permitting milestone and resource declaration milestone, respectively. The fair value of the Silvertip contingent consideration is estimated based on an estimated discount rate of 2.5% for the contingent permitting payment and 2.9% for the contingent resource declaration payment and is classified within Level 3 of the fair value hierarchy. During 2019, the Company paid the $25.0 million due for the permitting milestone in the form of cash and common stock and, subsequent to the end of the period covered by this Report, the Company paid the $25.0 million due for the resource declaration milestone in the form of cash and common stock.

No assets or liabilities were transferred between fair value levels in the year ended December 31, 2019.

The following tables present the changes in the fair value of the Company's Level 3 financial assets and liabilities for the year ended December 31, 2019 and 2018:



	Year Ended December 31, 2019
In thousands	Balance at the beginning of the period		Revaluation		Settlements			Accretion		Balance at the end of the period
Liabilities:
Silvertip contingent consideration	$	49,276	$	—	$	(25,000	)	$	724	$	25,000



	Year Ended December 31, 2018
In thousands	Balance at the beginning of the period		Revaluation			Settlements			Accretion		Balance at the end of the period
Assets:
Equity and debt securities	$	6,891	$	(274	)	$	(4,400	)	$	—	$	2,217
Liabilities:
Silvertip contingent consideration	$	47,965	$	—		$	—		$	1,311	$	49,276

During the fourth quarter of 2019, Coeur recorded an impairment of long-lived assets totaling $250.8 million. The fair values of long-lived assets were estimated using a discounted cash flow approach derived from live-of-mine plans which were developed using long-term pricing reflective of the current price environment and management’s projections for operating costs. The discounted cash flow model used significant unobservable inputs and is therefore classified within Level 3 for the fair value hierarchy. See Note 4 -- Impairment of Long-lived Assets for additional detail regarding the impairment.

The following table sets forth the quantitative and qualitative information related to the unobservable inputs used in the calculation of the Company's non-recurring Level 3 fair value measurements:



Description	Valuation technique	Unobservable input	Range / Weighted Average
Property, plant, and equipment, Mining properties and Right of Use Assets	Discounted cash flow	Discount rate	7.5%
		Long-term silver price per Oz	$17.00
		Long-term zinc price per pound	$1.07
		Long-term lead price per pound	$0.93

The fair value of financial assets and liabilities carried at book value in the financial statements at December 31, 2019 and December 31, 2018 is presented in the following table:



	December 31, 2019
In thousands	Book Value		Fair Value		Level 1		Level 2		Level 3
Liabilities:
2024 Senior Notes⁽¹⁾	$	226,885	$	228,585	$	—	$	228,585	$	—
Revolving Credit Facility⁽²⁾	$	—	$	—	$	—	$	—	$	—

⁽¹⁾Net of unamortized debt issuance costs of $3.1 million.

⁽²⁾Unamortized debt issuance costs of $2.3 million included in Other Non-Current Assets.



	December 31, 2018
In thousands	Book Value		Fair Value		Level 1		Level 2		Level 3
Assets:
Manquiri Notes Receivable	$	5,487	$	5,487	$	—	$	—	$	5,487
Liabilities:
2024 Senior Notes⁽¹⁾	$	245,854	$	220,446	$	—	$	220,446	$	—
Revolving Credit Facility⁽²⁾	$	135,000	$	135,000	$	—	$	135,000	$	—

⁽¹⁾Net of unamortized debt issuance costs of $4.1 million.

⁽²⁾Unamortized debt issuance costs of $2.2 million included in Other Non-Current Assets.

The fair value of the Manquiri Notes Receivable (as defined in Note 22 -- Discontinued Operations) is estimated based on observable and unobservable data including yield curves and credit spreads, therefore, the Company classifies the Manquiri Notes Receivable in Level 3 of the fair value hierarchy; see Note 22 -- Discontinued Operations for additional detail.

The fair value of the 2024 Senior Notes was estimated using quoted market prices. The fair value of the Revolving Credit Facility approximates book value as the liability is secured, has a variable interest rate, and lacks significant credit concerns.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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