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Derivative Financial Instruments | 3 Months Ended
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Mar. 31, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS Palmarejo Gold Production Royalty On January 21, 2009, the Company's subsidiary, Coeur Mexicana S.A. de C.V. ("Coeur Mexicana"), entered into a gold production royalty agreement with a subsidiary of Franco-Nevada Corporation. The royalty covers 50% of the life of mine production from the Palmarejo mine and adjacent properties. The royalty transaction includes a minimum obligation of 4,167 gold ounces per month and terminates when payments of 400,000 gold ounces have been made. At March 31, 2015, a total of 72,414 gold ounces remain outstanding under the obligation. The price volatility associated with the minimum royalty obligation is considered an embedded derivative. The Company is required to recognize the change in fair value of the remaining minimum obligation due to changing gold prices. Unrealized gains are recognized in periods when the gold price has decreased from the previous period and unrealized losses are recognized in periods when the gold price increases. The fair value of the embedded derivative is reflected net of the Company's current credit adjusted risk free rate, which was 7.6% and 11.8% at March 31, 2015 and December 31, 2014, respectively. The fair value of the embedded derivative at March 31, 2015 and December 31, 2014 was a liability of $19.3 million and $21.9 million, respectively. For the three months ended March 31, 2015 and 2014, the mark-to-market adjustments were losses of $1.5 million and $10.2 million, respectively. Payments on the royalty obligation decrease the carrying amount of the minimum obligation and the derivative liability. Each monthly payment is an amount equal to the greater of the minimum of 4,167 ounces of gold or 50% of actual gold production multiplied by the excess of the monthly average market price of gold above $412 per ounce, subject to a 1% annual inflation adjustment. For the three months ended March 31, 2015 and 2014, realized losses on settlement of the liabilities were $4.2 million and $6.2 million, respectively. The mark-to-market adjustments and realized losses are included in Fair value adjustments, net. Concentrate Sales Contracts The Company's concentrate sales to third-party smelters, in general, provide for a provisional payment based upon preliminary assays and forward 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 derivatives do not qualify for hedge accounting and are marked to market through earnings each period until final settlement. Changes in silver and gold prices resulted in provisional pricing mark-to-market gains of $0.9 million and $0.9 million in the three months ended March 31, 2015 and 2014, respectively. At March 31, 2015, the Company had outstanding provisionally priced sales of 0.5 million ounces of silver and 33,084 ounces of gold at prices of $16.67 and $1,224, respectively. Silver and Gold Options At March 31, 2015, the Company has outstanding put spread contracts on 2.7 million ounces of silver. The weighted average high and low strike prices on the silver put spreads are $17.00 per ounce and $15.50 per ounce, respectively. If the market price of silver and gold were to average less than the high strike price but more than the low strike price during the contract period, the Company would receive the difference between the average market price and the high strike price for the contracted volume over the contract period. If the market price of silver and gold were to average less than the low strike price during the contract period, the Company would receive the difference between the average market price and the high strike price for the contracted volume over the contract period, and the Company would be required to pay the difference between the average market price and the low strike price for the contracted volume over the contract period. The put spread contracts are generally net cash settled and expire during the second quarter of 2015. At March 31, 2015, the fair market value of the put spreads was a net asset of $1.5 million. At December 31, 2014, the Company had outstanding put spread contracts on 1.3 million ounces of silver and 24,000 ounces of gold. The weighted average high and low strike prices on the silver put spreads were $18.00 per ounce and $16.00 per ounce, respectively. The weighted average high and low strike prices on the gold put spreads were $1,200 and $1,050, respectively. During the three months ended March 31, 2015 and 2014, the Company recorded unrealized losses of $0.2 million and $1.5 million, respectively, related to outstanding options which were included in Fair value adjustments, net. The Company also recognized realized losses of $0.8 million and realized gains of $0.3 million resulting from expiring and terminated contracts during the three months ended March 31, 2015 and 2014, respectively. At March 31, 2015, the Company had the following derivative instruments that settle in each of the years indicated:
In thousands except average prices and notional ounces | 2015 |  | 2016 |  | Thereafter
Palmarejo gold production royalty | $ | 39,043 |  |  | $ | 23,712 |  |  | $ | — |
Average gold price in excess of minimum contractual deduction | $ | 781 |  |  | $ | 771 |  |  | $ | — |
Notional ounces | 50,004 |  |  | 30,744 |  |  | — |
Silver concentrate sales contracts | $ | 9,129 |  |  | $ | — |  |  | $ | — |
Average silver price | $ | 16.67 |  |  | $ | — |  |  | $ | — |
Notional ounces | 547,611 |  |  | — |  |  | — |
Gold concentrate sales contracts | $ | 40,495 |  |  | $ | — |  |  | $ | — |
Average gold price | $ | 1,224 |  |  | $ | — |  |  | $ | — |
Notional ounces | 33,084 |  |  | — |  |  | — |
Silver put options purchased | $ | 45,900 |  |  | $ | — |  |  | $ | — |
Average silver strike price | $ | 17.00 |  |  | $ | — |  |  | $ | — |
Notional ounces | 2,700,000 |  |  | — |  |  | — |
Silver put options sold | $ | (41,850 | ) |  | $ | — |  |  | $ | — |
Average silver strike price | $ | 15.50 |  |  | $ | — |  |  | $ | — |
Notional ounces | 2,700,000 |  |  | — |  |  | — |
The following summarizes the classification of the fair value of the derivative instruments:
| March 31, 2015
In thousands | Prepaid expenses and other |  | Accrued liabilities and other |  | Current portion of royalty obligation |  | Non-current portion of royalty obligation
Palmarejo gold production royalty | — |  |  | — |  |  | 14,541 |  |  | 4,709 |
Silver and gold options | 2,066 |  |  | 529 |  |  | — |  |  | — |
Concentrate sales contracts | 541 |  |  | 431 |  |  | — |  |  | — |
| $ | 2,607 |  |  | $ | 960 |  |  | $ | 14,541 |  |  | $ | 4,709 |
| December 31, 2014
| Prepaid expenses and other |  | Accrued liabilities and other |  | Current portion of royalty obligation |  | Non-current portion of royalty obligation
Palmarejo gold production royalty | — |  |  | — |  |  | 14,405 |  |  | 7,507 |
Silver and gold options | 3,882 |  |  | 1,039 |  |  | — |  |  | — |
Concentrate sales contracts | 43 |  |  | 848 |  |  | — |  |  | — |
| $ | 3,925 |  |  | $ | 1,887 |  |  | $ | 14,405 |  |  | $ | 7,507 |
The following represent mark-to-market gains (losses) on derivative instruments for the three months ended March 31, 2015, and 2014 (in thousands):
|  |  | Three months ended March 31,
Financial statement line | Derivative |  | 2015 |  | 2014
Revenue | Concentrate sales contracts |  | $ | 914 |  |  | $ | 879 |
Costs applicable to sales | Foreign exchange contracts |  | — |  |  | (924 | )
Fair value adjustments, net | Foreign exchange contracts |  | — |  |  | 968 |
Fair value adjustments, net | Palmarejo gold royalty |  | (1,545 | ) |  | (10,237 | )
Fair value adjustments, net | Silver and gold options |  | (1,046 | ) |  | (1,494 | )
|  |  | $ | (1,677 | ) |  | $ | (10,808 | )
Credit Risk The credit risk exposure related to any derivative instrument is limited to the unrealized gains, if any, on outstanding contracts based on current market prices. To reduce counter-party credit exposure, the Company enters into contracts with financial institutions management deems credit worthy and limits credit exposure to each institution. The Company does not anticipate non-performance by any of its counterparties. In addition, to allow for situations where derivative positions may need to be revised, the Company transacts only in markets that management considers highly liquid.

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