Note 9 - Fair Value Measurement

6 Months Ended

Jun. 30, 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 June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
(Loss) gain on derivative contracts	$	(689	)	$	(17,313	)	$	(893	)	$	(16,840	)
Unrealized gain (loss) on investments in equity securities		(15,739	)		(750	)		(9,639	)		(4,256	)
Gain on disposition or exchange of investments		—			—			69			1,158
Total fair value adjustments, net	$	(16,428	)	$	(18,063	)	$	(10,463	)	$	(19,938	)

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 June 30, 2022		Balance at December 31, 2021		Input Hierarchy Level
Assets:
Cash and cash equivalents:
Money market funds and other bank deposits	$	198,193	$	210,010	Level 1
Current and non-current investments
Equity securities		23,931		14,470	Level 1
Trade accounts receivable:
Receivables from provisional concentrate sales		17,828		36,437	Level 2
Restricted cash balances:
Certificates of deposit and other deposits		1,041		1,053	Level 1
Derivative contracts - current and non-current derivatives assets:
Foreign exchange contracts		2,414		5,207	Level 2
Metal forward and put option contracts		20,406		—	Level 2
Total assets	$	263,813	$	267,177
Liabilities:
Derivative contracts - current derivatives liabilities and other non-current liabilities:
Foreign exchange contracts	$	529	$	8	Level 2
Metal forward and put option contracts		4,221		37,873	Level 2
Total liabilities	$	4,750	$	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.

Our non-current available for sale securities consist of marketable equity securities of companies in the mining industry which are valued using quoted market prices for each security.

Trade accounts receivable from provisional concentrate sales are subject to final pricing and valued using quoted prices based on forward curves for the particular metals.  The embedded derivative contained in our concentrate sales is adjusted to fair market value through earnings each period prior to final settlement.

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 costs incurred at our Casa Berardi unit (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.  We also use financially-settled forward contracts to manage the exposure to changes in prices of silver, gold, zinc and lead contained in our forecasted future sales (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 June 30, 2022, our Senior Notes and IQ Notes were recorded at their carrying value of $469.9 million and $37.9 million, respectively, net of unamortized initial purchaser discount/premium and issuance costs. The estimated fair values of our Senior Notes and IQ Notes were $453.3 million and $35.8 million, respectively, at June 30, 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 8.2%, are utilized to estimate the fair value of the IQ Notes. See Note 7 for more information.