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Derivative Financial Instruments | 9 Months Ended
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Sep. 30, 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 legacy adjacent properties, excluding production from the recently acquired Paramount Gold and Silver Corp ("Paramount") properties. The royalty transaction includes a minimum obligation of 4,167 gold ounces per month and terminates when payments on 400,000 gold ounces have been made. At September 30, 2015, a total of 45,996 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 19.5% and 11.8% at September 30, 2015 and December 31, 2014, respectively. The fair value of the embedded derivative at September 30, 2015 and December 31, 2014 was a liability of $9.0 million and $21.9 million, respectively. The mark-to-market adjustments were gains of $3.0 million and $8.7 million for the three months ended and gains of $1.8 million and losses of $6.6 million for the nine months ended September 30, 2015 and 2014, 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. Realized losses on settlement of the liabilities were $3.3 million and $5.0 million for the three months ended and $11.0 million and $16.6 million for the nine months ended September 30, 2015 and 2014, respectively. The mark-to-market adjustments and realized losses are included in Fair value adjustments, net. Provisional Silver and Gold Sales The Company enters into sales contracts with third-party smelters and refiners which, in most cases, provide for a provisional payment based upon preliminary assays and quoted metal prices. The provisionally priced sales contracts contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable recorded 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 losses of $0.1 million and $0.7 million in the three months ended and gains of $0.4 million and $0.2 million in the nine months ended September 30, 2015 and 2014, respectively. At September 30, 2015, the Company had outstanding provisionally priced sales of 0.6 million ounces of silver and 39,069 ounces of gold at prices of $14.65 and $1,147, respectively. Silver and Gold Options At December 31, 2014, the Company had outstanding put spread contracts on 1.3 million ounces of silver and 24,000 ounces of gold, all of which settled in the nine months ended September 30, 2015. 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 and nine months ended September 30, 2014, the Company recorded unrealized gains of $3.1 million and $0.2 million, respectively, related to outstanding options which were included in Fair value adjustments, net. The Company recognized realized gains of $1.1 million and realized losses of $0.9 million during the three months ended and realized gains of $2.7 million and realized losses of $1.3 million during the nine months ended September 30, 2015 and 2014, respectively, from settled contracts. At September 30, 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 | $ | 11,760 |  |  | $ | 20,543 |  |  | $ | — |
Average gold price in excess of minimum contractual deduction | $ | 706 |  |  | $ | 700 |  |  | $ | — |
Notional ounces | 16,668 |  |  | 29,328 |  |  | — |
Provisional silver sales | $ | 8,234 |  |  | $ | — |  |  | $ | — |
Average silver price | $ | 14.65 |  |  | $ | — |  |  | $ | — |
Notional ounces | 562,063 |  |  | — |  |  | — |
Provisional gold sales | $ | 44,812 |  |  | $ | — |  |  | $ | — |
Average gold price | $ | 1,147 |  |  | $ | — |  |  | $ | — |
Notional ounces | 39,069 |  |  | — |  |  | — |
The following summarizes the classification of the fair value of the derivative instruments:
| September 30, 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 | — |  |  | — |  |  | 9,024 |  |  | — |
Concentrate sales contracts | 120 |  |  | 551 |  |  | — |  |  | — |
| $ | 120 |  |  | $ | 551 |  |  | $ | 9,024 |  |  | $ | — |
| 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 and nine months ended September 30, 2015, and 2014 (in thousands):
|  |  | Three months ended September 30, |  | Nine months ended September 30,
Financial statement line | Derivative |  | 2015 |  | 2014 |  | 2015 |  | 2014
Revenue | Concentrate sales contracts |  | $ | 82 |  |  | $ | (684 | ) |  | $ | 373 |  |  | $ | 188 |
Costs applicable to sales | Foreign exchange contracts |  | — |  |  | — |  |  | — |  |  | (924 | )
Fair value adjustments, net | Foreign exchange contracts |  | — |  |  | (57 | ) |  | — |  |  | 901 |
Fair value adjustments, net | Palmarejo gold royalty |  | 2,983 |  |  | 8,736 |  |  | 1,823 |  |  | (6,560 | )
Fair value adjustments, net | Silver and gold options |  | 1,051 |  |  | 3,081 |  |  | 2,662 |  |  | 213 |
|  |  | $ | 4,116 |  |  | $ | 11,076 |  |  | $ | 4,858 |  |  | $ | (6,182 | )
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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