Financial Instruments and Related Risks (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Financial Assets and Liabilities by Categories

(a)

Financial assets and liabilities by categories


At December 31, 2017	Loans and receivables		Available -for-sale		Fair value through profit or loss			Held to maturity/other financial liabilities			Effective hedging instruments		Total
Financial assets
Cash and cash equivalents	$	—	$	—	$	186		$	—		$	—	$	186
Short-term investments		48		—		—			—			—		48
Accounts receivable arising from sales of metal concentrates		—		—		110			—			—		110
Investments in securities		—		178		—			—			—		178
Derivative assets designated as hedging instruments		—		—		—			—			2		2
Derivative assets not designated as hedging instruments		—		—		1			—			—		1
Other current and non-current financial assets		33		—		—			—			—		33

Total financial assets	$	81	$	178	$	297		$	—		$	2	$	558

Financial liabilities
Debt	$	—	$	—	$	—		$	(2,483	)	$	—	$	(2,483	)
Deferred payment obligation		—		—		—			(182	)		—		(182	)
Accounts payable and accrued liabilities		—		—		—			(547	)		—		(547	)
Derivative liabilities not designated as hedging instruments		—		—		(2	)		—			—		(2	)
Other current and non-current financial liabilities		—		—		—			(257	)		—		(257	)

Total financial liabilities	$	—	$	—	$	(2	)	$	(3,469	)	$	—	$	(3,471	)


At December 31, 2016	Loans and receivables		Available- for-sale		Fair value through profit or loss			Held to maturity/other financial liabilities			Effective hedging instruments		Total
Financial assets
Cash and cash equivalents	$	—	$	—	$	157		$	—		$	—	$	157
Short-term investments		43		—		—			—			—		43
Accounts receivable arising from sales of metal concentrates		—		—		77			—			—		77
Investments in securities		—		114		—			—			—		114
Derivative assets not designated as hedging instruments		—		—		7			—			—		7
Other current and non-current financial assets		39		—		—			—			—		39

Total financial assets	$	82	$	114	$	241		$	—		$	—	$	437

Financial liabilities
Debt	$	—	$	—	$	—		$	(2,510	)	$	—	$	(2,510	)
Accounts payable and accrued liabilities		—		—		—			(478	)		—		(478	)
Derivative liabilities designated as hedging instruments		—		—		(22	)		—			—		(22	)
Other current and non-current financial liabilities		—		—		—			(259	)		—		(259	)

Total financial liabilities	$	—	$	—	$	(22	)	$	(3,247	)	$	—	$	(3,269	)

Summary of Net Gain (Loss) on Derivatives Not Designated as Hedging Instrument

The net (loss) gain on derivatives not designated as hedging instruments for the years ended December 31 were comprised of the following:


	2017			2016
Realized losses
Foreign currency, lead and zinc contracts	$	—		$	(6	)
Other		(1	)		—

		(1	)		(6	)

Unrealized (losses) gains
Foreign currency, lead and zinc contracts		(2	)		—
Other		—			9

		(2	)		9

	$	(3	)	$	3

Summary of Unrealized Gains (Losses) on Available-for-Sale Investments Recognized in OCI

The Company’s investments in securities are designated as available-for-sale. The unrealized (losses) gains on available-for-sale investments recognized in OCI for the years ended December 31 were as follows:


	2017			2016
Mark-to-market (losses) gains on available-for-sale securities	$	(17	)	$	86
Deferred income tax expense in OCI		—			(11	)

Unrealized (losses) gains on available-for-sale securities, net of tax		(17	)		75
Reclassification adjustment for realized gains on disposition of available-for-sale securities recognized in net earnings, net of tax of $1 million (2016 – $11 million)		(15	)		(12	)

	$	(32	)	$	63

Summary of Fair Value Measurements of Financial Assets and Liabilities Measured at Fair Value

The levels in the fair value hierarchy into which the Company’s financial assets and liabilities that are measured and recognized on the Consolidated Balance Sheets at fair value on a recurring basis were categorized as follows:


	At December 31, 2017					At December 31, 2016
	Level 1		Level 2			Level 1		Level 2
Cash and cash equivalents	$	186	$	—		$	157	$	—
Accounts receivable arising from sales of metal concentrates		—		110			—		77
Investments in securities		178		—			114		—
Derivative assets designated as cash flow hedges		—		2			—		—
Derivative assets not designated as cash flow hedges		—		1			—		7
Derivative liabilities designated as cash flow hedges		—		—			—		(22	)
Derivative liabilities not designated as cash flow hedges		—		(2	)		—		—

Summary of Fair Values of Financial Assets and Liabilities Not Already Measured at Fair Value

At December 31, 2017, the fair values of the Company’s notes payable and deferred payment obligation, as compared to the carrying amounts, were as follows:

Level

Input

Carrying
amount ⁽¹⁾

Fair value

$1.0 billion notes

Closing price

994

1,087

$1.5 billion notes

Closing price

1,507

1,530

Deferred payment obligation

4.75

% ⁽²⁾

182

⁽¹⁾

Includes accrued interest payable.

⁽²⁾

Represents the Company’s current rate of borrowing.

Summary of Company's Exposure to Credit Risk

The Company’s maximum exposure to credit risk was as follows:


	At December 31 2017		At December 31 2016
Cash and cash equivalents	$	186	$	157
Short term investments		48		43
Accounts receivable arising from sales of metal concentrates		110		77
Other current and non-current financial assets		29		8
Current and non-current derivative assets		3		7
Accrued interest receivable (note 20(a))		4		31

	$	380	$	323

Summary of Remaining Contractual Maturities of Company's Financial Liabilities and Operating and Capital Commitments

The following table summarizes the remaining contractual maturities of the Company’s financial liabilities and operating and capital commitments, shown in contractual undiscounted cashflows:


	At December 31, 2017										At December 31, 2016
	Within 1 year		2 to 3 years		4 to 5 years		Over 5 years		Total		Total
Financial liabilities
Accounts payable and accrued liabilities	$	570	$	—	$	—	$	—	$	570	$	462
Derivative liabilities designated as hedging instruments (note 26(b))		—		—		—		—		—		22
Derivative liabilities not designated as hedging instruments (note 26(b))		2		—		—		—		2		—
Debt repayments (principal portion) (note 24)		500		—		550		1,450		2,500		2,530
Deferred payment obligation (note 7(a))		37		78		67		—		182		—
Other		1		9		2		17		29		23

		1,110		87		619		1,467		3,283		3,037
Other commitments
Capital expenditure commitments ^{(1) (2)}		409		347		100		—		856		75
Operating expenditure commitments ⁽²⁾		218		4		245		152		619		161
Reclamation and closure cost obligations (note 25)		54		54		33		1,432		1,573		1,786
Interest payments on debt (note 23)		71		163		133		546		913		1,006
Minimum rental and lease payments⁽³⁾		4		8		8		15		35		35
Other		5		11		—		—		16		81

	761		587		519		2,145		4,012		3,144

	$	1,871	$	674	$	1,138	$	3,612	$	7,295	$	6,181

⁽¹⁾

Contractual commitments are defined as agreements that are enforceable and legally binding. Certain of the contractual commitments may contain cancellation clauses; however, the Company discloses the contractual maturities of the Company’s operating and capital commitments based on management’s intent to fulfill the contract.

⁽²⁾	Includes the capital and operating commitment for the Coffee project.

⁽³⁾	Excludes the Company’s minimum finance lease payments (note 24).

Summary of Company's Exposure to Currency Risk

As of December 31, 2017, the Company was primarily exposed to currency risk through the following financial assets and liabilities, income and other taxes receivables (payables) and deferred income tax assets and liabilities denominated in foreign currencies:


	Financial asset and liabilities
	Cash and cash equivalents		Accounts receivable and other current and non-current assets		Accounts payable and accrued liabilities and non-current liabilities			Sales and indirect taxes recoverable		Income taxes receivable (payable), current and non-current			Deferred income tax liabilities
At December 31, 2017
Canadian dollar	$	5	$	10	$	(231	)	$	24	$	35		$	(270	)
Mexican peso		3		18		(112	)		174		(203	)		(2,273	)
Argentine peso		14		—		(57	)		80		1			(396	)

	$	22	$	28	$	(400	)	$	278	$	(167	)	$	(2,939	)

At December 31, 2016
Canadian dollar	$	—	$	9	$	(217	)	$	17	$	4		$	(708	)
Mexican peso		11		—		(88	)		146		(127	)		(2,354	)
Argentine peso		1		—		(41	)		200		(2	)		(558	)

	$	12	$	9	$	(346	)	$	363	$	(125	)	$	(3,620	)

During the year ended December 31, 2017, the Company recognized a net foreign exchange loss of $23 million (year ended December 31, 2016 – $68 million), and a net foreign exchange gain of $9 million in income tax expense on income taxes receivable (payable) and deferred income taxes (year ended December 31, 2016 – loss of $162 million). Based on the Company’s net foreign currency exposures at December 31, 2017, depreciation or appreciation of applicable foreign currencies against the US dollar would have resulted in the following decrease or increase in the Company’s net earnings:


At December 31, 2017	Possible exposure ⁽¹⁾			Impact on earnings excluding currency exposure related to taxes		Impact on earnings from foreign exchange exposure related to taxes
Canadian dollar		10	%	$	14	$	145
Mexican peso		20	%		15		82
Argentine peso		15	%		5		75

⁽¹⁾

Calculated based on fluctuations of foreign exchange rates during the twelve months ended December 31, 2017.