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Note 4 - Environmental and Reclamation Activities | 12 Months Ended
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Dec. 31, 2017
Notes to Financial Statements |
Environmental and Reclamation Activities [Text Block] | Note 4: Environmental and Reclamation Activities The liabilities accrued for our reclamation and closure costs at December 31, 2017 and 2016 were as follows (in thousands):
|  | 2017 |  |  | 2016 |
Operating properties: |  |  |  |  |  |  |  |
Greens Creek |  | $ | 41,677 |  |  | $ | 39,014 |
Lucky Friday |  |  | 9,911 |  |  |  | 9,194 |
Casa Berardi |  |  | 6,729 |  |  |  | 5,475 |
San Sebastian |  |  | 5,067 |  |  |  | 5,592 |
Non-operating properties: |  |  |  |  |  |  |  |
Troy mine |  |  | 12,724 |  |  |  | 16,167 |
Johnny M |  |  | 5,813 |  |  |  | 5,830 |
Republic |  |  | 1,500 |  |  |  | 1,500 |
All other sites |  |  | 2,624 |  |  |  | 2,808 |
Total |  |  | 86,045 |  |  |  | 85,580 |
Reclamation and closure costs, current |  |  | (6,679 | ) |  |  | (5,653 | )
Reclamation and closure costs, long-term |  | $ | 79,366 |  |  | $ | 79,927 |
The activity in our accrued reclamation and closure cost liability for the years ended December 31, 2017, 2016 and 2015 was as follows (in thousands):
Balance at January 1, 2015 |  | $ | 57,250 |
Accruals for estimated costs |  |  | 15,114 |
Accretion expense |  |  | 1,904 |
Revision of estimated cash flows due to changes in reclamation plans |  |  | 4,112 |
Addition due to development and production at our San Sebastian unit |  |  | 1,189 |
Liability addition due to acquisition of Revett |  |  | 17,513 |
Payment of reclamation obligations |  |  | (1,544 | )
Balance at December 31, 2015 |  |  | 95,538 |
Accruals for estimated costs |  |  | 705 |
Accretion expense |  |  | 3,158 |
Revision of estimated cash flows due to changes in reclamation plans |  |  | 2,759 |
Liability addition due to acquisition of Mines Management |  |  | 1,124 |
Payment of reclamation obligations |  |  | (17,704 | )
Balance at December 31, 2016 |  |  | 85,580 |
Accruals for estimated costs |  |  | 16 |
Accretion expense |  |  | 4,870 |
Revision of estimated cash flows due to changes in reclamation plans |  |  | (578 | )
Payment of reclamation obligations |  |  | (3,843 | )
Balance at December 31, 2017 |  | $ | 86,045 |
In June 2015, we completed the acquisition of Revett, giving us 100% ownership of the Troy mine and other interests in northwestern Montana (see Note 15 for more information). As a result, we recorded a $17.5 million liability for the present value of estimated costs for reclamation and closure of the Troy mine. Revett held an environmental risk transfer program ("insurance policy") which would have funded costs incurred prior to the expiration date of March 29, 2020 for reclamation at the Troy mine up to a maximum limit of $16.8 million. In the third quarter of 2016, we reached a settlement on the insurance policy for cash proceeds to us of $16.0 million. On each of June 15, 2016 and September 19, 2016, a Consent Decree settling environmental claims involving our wholly-owned subsidiary, CoCa Mines, Inc. ("CoCa") at the Nelson Tunnel/Commodore Waste Rock Pile site (Colorado) and Gilt Edge site (South Dakota), respectively, was approved and entered by the U.S. District Court in Colorado and South Dakota, respectively. Pursuant to the Consent Decrees, CoCa paid an aggregate of $6 million in August 2016 to the United States and the State of Colorado, and an aggregate of $3.9 million in November 2016 to the United States and the State of South Dakota (insurers and another potentially responsible party ("PRP") paid an additional $6.7 million to settle the Gilt Edge matter). As a result, CoCa has resolved the claims with respect to the Gilt Edge and Nelson Tunnel sites. During the negotiations leading up to these settlements, in the second quarter of 2015 we accrued $9.9 million by recording a liability for the total amount that would be paid by CoCa to settle these matters, and an asset for the amount to be recovered by CoCa from insurers and the other settling PRP with respect to the Gilt Edge site. Asset Retirement Obligations Below is a reconciliation as of December 31, 2017 and 2016 (in thousands) of the asset retirement obligations ("ARO") relating to our operating properties, which are included in our total accrued reclamation and closure costs of $86.0 million and $85.6 million, respectively, discussed above. The estimated reclamation and abandonment costs were discounted using credit adjusted, risk-free interest rates ranging from 5.75% to 14.5% from the time we incurred the obligation to the time we expect to pay the retirement obligation.
|  | 2017 |  |  | 2016 |
Balance January 1 |  | $ | 59,275 |  |  | $ | 53,433 |
Changes in obligations due to changes in reclamation plans |  |  | (578 | ) |  |  | 2,760 |
Accretion expense |  |  | 4,870 |  |  |  | 3,158 |
Payment of reclamation obligations |  |  | (183 | ) |  |  | (76 | )
Balance at December 31 |  | $ | 63,384 |  |  | $ | 59,275 |
In the fourth quarter of 2017, we updated the ARO at San Sebastian to include estimated costs for new underground mine development initiated in 2017 and to revise the timing for reclamation of the existing open pits, resulting in an increase in undiscounted costs of $0.5 million and decrease in the ARO asset and liability of $1.2 million. In the fourth quarter of 2017, we revised the ARO at Casa Berardi to include costs for reclamation related to the East Mine Crown Pillar open pit, resulting in an increase in undiscounted costs of $1.0 million and increase in the ARO asset and liability of $0.7 million. The ARO layers related to the changes described above were discounted using a credit adjusted, risk-free interest rate of 5.75% and inflation rates ranging from 2% to 4%.

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