XML 46 R16.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Derivative Financial Instruments | 12 Months Ended
--- | ---
Dec. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS Provisional Metal Sales The Company enters into sales contracts with third-party smelters, refiners and off-take customers which, in some 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. Zinc Options At December 31, 2018, the Company has outstanding Asian (or average value) put and call option contracts in net-zero-cost collar arrangements on a volume of 300 metric tons of zinc per month commencing in April 2018 and settling in January 2019. The weighted average strike prices on the put and call contracts are $3,000 and $4,050 per metric ton, respectively. The contracts are generally net cash settled and, if the price of zinc at the time of the expiration is between the put and call prices, would expire at no cost to the Company. Interest Rate Swap The Company is a party to an interest rate swap contract in which it will receive variable-rate interest and pay fixed-rate interest. The Company uses this instrument to manage its exposure to changes in interest rates related to its Revolving Credit Facility (see Note 18 -- Debt). The interest rate swap derivative instrument is not designated as a hedge from an accounting standpoint and hedge accounting is not applied. The notional amount is used to measure interest to be paid or received. The interest rate swap derivative instrument became effective June 2018 with a contractual term of twelve months and net settles monthly. At December 31, 2018, the Company had the following derivative instruments that settle as follows:
In thousands except average prices and notional ounces | 2019 |  | Thereafter
Provisional silver sales contracts | $ | 3,559 |  |  | $ | — |
Average silver price per ounce | $ | 14.62 |  |  | $ | — |
Notional ounces | 243,383 |  |  | — |
Provisional gold sales contracts | $ | 31,936 |  |  | $ | — |
Average gold price per ounce | $ | 1,257 |  |  | $ | — |
Notional ounces | 25,411 |  |  | — |
Provisional zinc sales contracts | $ | 6,334 |  |  | $ | — |
Average zinc price per pound | $ | 1.20 |  |  | $ | — |
Notional pounds | 5,270,793 |  |  | — |
Provisional lead sales contracts | $ | 2,360 |  |  | $ | — |
Average lead price per pound | $ | 0.92 |  |  | $ | — |
Notional pound | 2,568,165 |  |  | — |
Zinc put options purchased | $ | 2,700 |  |  | $ | — |
Average zinc strike price per metric ton | $ | 3,000 |  |  | $ | — |
Notional metric tons | 900 |  |  | — |
Zinc call options sold | $ | (3,645 | ) |  | $ | — |
Average zinc strike price per metric ton | $ | 4,050 |  |  | $ | — |
Notional metric tons | 900 |  |  | — |
Fixed interest rate swap payable | $ | 636 |  |  | $ | — |
Fixed Interest rate | 2.46 | % |  | — |
Notional dollars | $ | 50,000 |  |  | $ | — |
Variable interest rate swap receivable | $ | 653 |  |  | $ | — |
Average variable interest rate | 2.50 | % |  | $ | — |
Notional dollars | $ | 50,000 |  |  | $ | — |
The following summarizes the classification of the fair value of the derivative instruments:
| December 31, 2018
In thousands | Prepaid expenses and other |  | Accrued liabilities and other
Provisional metal sales contracts | $ | 784 |  |  | $ | 644 |
Zinc options | 113 |  |  | — |
Interest rate swaps | 17 |  |  | — |
| $ | 914 |  |  | $ | 644 |
| December 31, 2017
In thousands | Prepaid expenses and other |  | Accrued liabilities and other
Provisional metal sales contracts | $ | 251 |  |  | $ | 222 |
The following represent mark-to-market gains (losses) on derivative instruments for the years ended December 31, 2018, 2017, and 2016 and 2017, respectively (in thousands):
|  | Year ended December 31,
Financial statement line | Derivative | 2018 |  | 2017 |  | 2016
Revenue | Provisional metal sales contracts | $ | 111 |  |  | $ | 631 |  |  | $ | (239 | )
Fair value adjustments, net | Palmarejo gold production royalty | — |  |  | — |  |  | (5,866 | )
Fair value adjustments, net | Zinc options | 753 |  |  | — |  |  | — |
Fair value adjustments, net | Silver and gold options | — |  |  | — |  |  | (1,582 | )
Fair value adjustments, net | Interest rate swaps | (60 | ) |  | — |  |  | — |
|  | $ | 804 |  |  | $ | 631 |  |  | $ | (7,687 | )
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 institutions management deems credit-worthy and limits credit exposure to each institution. The Company does not anticipate non-performance by any of its counterparties.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration