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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2016
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS
|  | Three months ended September 30, |  | Nine months ended September 30,
In thousands |  | 2016 |  | 2015 |  | 2016 |  | 2015
Palmarejo royalty obligation embedded derivative |  | $ | (110 | ) |  | $ | 2,983 |  |  | $ | (5,866 | ) |  | $ | 1,823 |
Rochester net smelter returns (“NSR”) royalty obligation |  | (851 | ) |  | 1,752 |  |  | (5,787 | ) |  | 596 |
Silver and gold options |  | — |  |  | 1,051 |  |  | (1,582 | ) |  | 1,238 |
Fair value adjustments, net |  | $ | (961 | ) |  | $ | 5,786 |  |  | $ | (13,235 | ) |  | $ | 3,657 |
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 September 30, 2016
In thousands | Total |  | Level 1 |  | Level 2 |  | Level 3
Assets: |  |  |  |  |  |  |
Equity securities | $ | 6,208 |  |  | $ | 6,201 |  |  | $ | — |  |  | $ | 7 |
Liabilities: |  |  |  |  |  |  |
Rochester NSR royalty obligation | 12,278 |  |  | — |  |  | — |  |  | 12,278 |
Other derivative instruments, net | 130 |  |  | — |  |  | 130 |  |  | — |
| $ | 12,408 |  |  | $ | — |  |  | $ | 130 |  |  | $ | 12,278 |
| Fair Value at December 31, 2015
In thousands | Total |  | Level 1 |  | Level 2 |  | Level 3
Assets: |  |  |  |  |  |  |
Equity securities | $ | 2,766 |  |  | $ | 2,756 |  |  | $ | — |  |  | $ | 10 |
Liabilities: |  |  |  |  |  |  |
Palmarejo royalty obligation embedded derivative | $ | 4,957 |  |  | $ | — |  |  | $ | — |  |  | $ | 4,957 |
Rochester NSR royalty obligation | 9,593 |  |  | — |  |  | — |  |  | 9,593 |
Other derivative instruments, net | 508 |  |  | — |  |  | 508 |  |  | — |
| $ | 15,058 |  |  | $ | — |  |  | $ | 508 |  |  | $ | 14,550 |
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 equity 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 silver and gold options and other derivative instruments, net, which relate to concentrate and certain doré sales contracts and foreign exchange contracts, are valued using pricing models, which require inputs that are 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. The fair values of the Palmarejo royalty obligation embedded derivative and Rochester NSR royalty obligation were estimated based on observable market data including contractual terms, forward silver and gold prices, yield curves, and credit spreads, as well as the Company’s current mine plan which is considered a significant unobservable input. Therefore, the Company has classified these obligations as Level 3 financial liabilities. Based on current mine plans, 1.9 years was used to estimate the fair value of the Rochester NSR royalty obligation at September 30, 2016. At September 30, 2016, there was no balance outstanding related to the Palmarejo royalty obligation embedded derivative as a result of the satisfaction of the minimum ounce obligation under the Palmarejo gold production royalty obligation in the third quarter of 2016. No assets or liabilities were transferred between fair value levels in the nine months ended September 30, 2016. The following tables present the changes in the fair value of the Company's Level 3 financial assets and liabilities for the three and nine months ended September 30, 2016:
| Three Months Ended September 30, 2016
In thousands | Balance at the beginning of the period |  | Revaluation |  | Settlements |  | Balance at the end of the period
Assets: |  |  |  |  |  |  |
Equity securities | $ | 7 |  |  | $ | — |  |  | $ | — |  |  | $ | 7 |
Liabilities: |  |  |  |  |  |  |
Palmarejo royalty obligation embedded derivative | $ | 3,317 |  |  | $ | 110 |  |  | $ | (3,427 | ) |  | $ | — |
Rochester NSR royalty obligation | $ | 12,559 |  |  | $ | 851 |  |  | $ | (1,132 | ) |  | $ | 12,278 |
| Nine Months Ended September 30, 2016
In thousands | Balance at the beginning of the period |  | Revaluation |  | Settlements |  | Balance at the end of the period
Assets: |  |  |  |  |  |  |
Equity securities | $ | 10 |  |  | $ | — |  |  | $ | (3 | ) |  | $ | 7 |
Liabilities: |  |  |  |  |  |  |
Palmarejo royalty obligation embedded derivative | $ | 4,957 |  |  | $ | 5,866 |  |  | $ | (10,823 | ) |  | $ | — |
Rochester NSR royalty obligation | $ | 9,593 |  |  | $ | 5,787 |  |  | $ | (3,102 | ) |  | $ | 12,278 |
The fair value of financial assets and liabilities carried at book value in the financial statements at September 30, 2016 and December 31, 2015 is presented in the following table:
| September 30, 2016
In thousands | Book Value |  | Fair Value |  | Level 1 |  | Level 2 |  | Level 3
Liabilities: |  |  |  |  |  |  |  |  |
7.875% Senior Notes due 2021(1) | $ | 363,596 |  |  | $ | 378,577 |  |  | $ | — |  |  | $ | 378,577 |  |  | $ | — |
(1) | Net of unamortized debt issuance costs and premium received of $4.4 million.
| December 31, 2015
In thousands | Book Value |  | Fair Value |  | Level 1 |  | Level 2 |  | Level 3
Liabilities: |  |  |  |  |  |  |  |  |
3.25% Convertible Senior Notes due 2028 | $ | 712 |  |  | $ | 693 |  |  | $ | — |  |  | $ | 693 |  |  | $ | — |
7.875% Senior Notes due 2021(1) | 373,433 |  |  | 227,487 |  |  | — |  |  | 227,487 |  |  | — |
Term Loan due 2020(2) | 94,489 |  |  | 99,500 |  |  | — |  |  | 99,500 |  |  | — |
San Bartolomé Lines of Credit | 4,571 |  |  | 4,571 |  |  | — |  |  | 4,571 |  |  | — |
Palmarejo gold production royalty obligation | 15,207 |  |  | 15,580 |  |  | — |  |  | — |  |  | 15,580 |
(1) | Net of unamortized debt issuance costs and premium received of $5.3 million.
(2) | Net of unamortized debt issuance costs of $5.0 million.
The fair values of the Convertible Notes and 7.875% Senior Notes due 2021 (the “Senior Notes”) outstanding were estimated using quoted market prices. The fair value of the Term Loan due 2020 (the “Term Loan”) approximates book value (excluding unamortized debt issuance costs) as the liability is secured, has a variable interest rate, and lacks significant credit concerns. The fair value of the San Bartolomé line of credit approximates book value due to the short-term nature of the liability and absence of significant interest rate or credit concerns. The fair value of the Palmarejo gold production royalty obligation is estimated based on observable market data including contractual terms, forward silver and gold prices, yield curves, and credit spreads, as well as the Company’s current mine plan which is considered a significant unobservable input.

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19207-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13537-108611 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13504-108611 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13433-108611 + Details
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