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Note 9 - Derivative Instruments | 12 Months Ended
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Dec. 31, 2022
Notes To Financial Statements [Abstract] |
Derivative Instruments and Hedging Activities Disclosure [Text Block] | Note 9: Derivative Instruments General Our current risk management policy provides that up to 75% of five years foreign currency, lead and zinc metals price and silver and gold price exposure may be covered under a derivatives program with certain other limitations. The silver and gold price program can only establish a floor (puts). We are not currently utilizing this silver and gold program. Our program also utilizes derivatives to manage price risk exposure created from when revenue is recognized from a shipment of concentrate until final settlement. These instruments expose us to (i) credit risk in the form of non-performance by counterparties for contracts in which the contract price exceeds the spot price of the hedged commodity or foreign currency and (ii) price risk to the extent that the spot price exceeds the contract price for quantities of our production and/or forecasted costs covered under contract positions. Foreign Currency Our wholly-owned subsidiaries owning the Casa Berardi operation as well as the recently acquired Keno Hill development property which Alexco owned are USD-functional entities which routinely incur expenses denominated in CAD. Such expenses expose us to exchange rate fluctuations between the USD and CAD. We have a program to manage our exposure to fluctuations in the USD exchange rate for these subsidiaries' future operating and capital costs denominated in CAD. The program utilizes forward contracts to buy CAD, some of which are designated as cash flow hedges. As of December 31, 2022, we have 278 forward contracts outstanding to buy a total of CAD$499 million having a notional amount of USD$377.4 million and have CAD-to-USD exchange rates ranging between 1.26 and 1.37920. The CAD contracts that are designed as cash flow hedges of forecasted cash operating costs at Casa Berardi to be incurred from 2023 through 2026 are to purchase CAD$427.4 million having a notional amount value of USD$325.1 million and have CAD-to-USD exchange rates ranging between 1.26 and 1.3765. As of December 31, 2022 and 2021, we recorded the following balances for the fair value of the contracts (in millions):
|  | December 31, |
Balance sheet line item: |  | 2022 |  |  | 2021 |
Other current assets |  | $ | 1.1 |  |  | $ | 2.7 |
Other non-current assets |  |  | 0.4 |  |  |  | 2.5 |
Current derivative liabilities |  |  | 4.0 |  |  | — |
Non-current derivative liabilities |  |  | 3.6 |  |  |  | 0.0 |
Net unrealized losses of approximately $7.1 million related to the effective portion of the hedges were included in accumulated other comprehensive income (loss) as of December 31, 2022. Unrealized gains and losses will be transferred from accumulated other comprehensive loss to current earnings as the underlying operating expenses are recognized. We estimate approximately $3.7 million in net unrealized losses included in accumulated other comprehensive income (loss) as of December 31, 2022 would be reclassified to current earnings in the next twelve months. Net realized gains of approximately $0.8 million on contracts related to underlying expenses which have been recognized were transferred from accumulated other comprehensive loss and included in cost of sales and other direct production costs for the year ended December 31, 2022. Net unrealized gains of approximately $0.1 million related to contracts not designated as hedges and no net unrealized gains or losses related to ineffectiveness of the hedges were included in fair value adjustments, net on our consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2022. Metals Prices We are currently using financially-settled forward contracts to manage the exposure to: • changes in prices of silver, gold, zinc and lead contained in our concentrate shipments between the time of shipment and final settlement; and • changes in prices of zinc and lead (but not silver and gold) contained in our forecasted future concentrate shipments. The following tables summarize the quantities of metals committed under forward sales contracts at December 31, 2022 and 2021:
December 31, 2022 |  | Ounces/pounds under contract (in 000's) |  |  | Average price per ounce/pound |
|  | Silver |  |  | Gold |  |  | Zinc |  |  | Lead |  |  | Silver |  |  | Gold |  |  | Zinc |  |  | Lead |
|  | (ounces) |  |  | (ounces) |  |  | (pounds) |  |  | (pounds) |  |  | (ounces) |  |  | (ounces) |  |  | (pounds) |  |  | (pounds) |
Contracts on provisional sales |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2023 settlements |  |  | 3,124 |  |  |  | 8 |  |  |  | 18,629 |  |  |  | 11,960 |  |  | $ | 21.55 |  |  | $ | 1,795 |  |  | $ | 1.38 |  |  | $ | 0.98 |
Contracts on forecasted sales |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2023 settlements |  |  | — |  |  |  | — |  |  |  | 37,533 |  |  |  | 75,618 |  |  | N/A |  |  | N/A |  |  | $ | 1.34 |  |  | $ | 1.00 |
2024 settlements |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 45,856 |  |  | N/A |  |  | N/A |  |  | N/A |  |  | $ | 0.99 |
December 31, 2021 |  | Ounces/pounds under contract (in 000's) |  |  | Average price per ounce/pound |
|  | Silver |  |  | Gold |  |  | Zinc |  |  | Lead |  |  | Silver |  |  | Gold |  |  | Zinc |  |  | Lead |
|  | (ounces) |  |  | (ounces) |  |  | (pounds) |  |  | (pounds) |  |  | (ounces) |  |  | (ounces) |  |  | (pounds) |  |  | (pounds) |
Contracts on provisional sales |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2022 settlements |  |  | 1,814 |  |  |  | 6 |  |  |  | 13,371 |  |  |  | 4,575 |  |  | $ | 23.02 |  |  | $ | 1,812 |  |  | $ | 1.39 |  |  | $ | 0.96 |
Contracts on forecasted sales |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2022 settlements |  |  | — |  |  |  | — |  |  |  | 57,706 |  |  |  | 59,194 |  |  | N/A |  |  | N/A |  |  | $ | 1.28 |  |  | $ | 0.98 |
2023 settlements |  |  | — |  |  |  | — |  |  |  | 76,280 |  |  |  | 71,650 |  |  | N/A |  |  | N/A |  |  | $ | 1.29 |  |  | $ | 1.00 |
Effective November 1, 2021, we designated the contracts for lead and zinc contained in our forecasted future shipments as hedges for accounting purposes, with gains and losses deferred to accumulated other comprehensive loss until the hedged product ships. Prior to November 1, 2021, these contracts did not qualify for hedge accounting and were therefore marked-to-market through earnings each period. The forward contracts for silver and gold contained in our concentrate shipments have not been designated as hedges and are marked-to-market through earnings each period. At December 31, 2022 and 2021, we recorded the following balances for the fair value of forward and put option contracts held at that time (in millions):
|  | December 31, 2022 |  |  | December 31, 2021 |
Balance sheet line item: |  | Contracts in an asset position |  |  | Contracts in a liability position |  |  | Net asset (liability) |  |  | Contracts in an asset position |  |  | Contracts in a liability position |  |  | Net asset (liability) |
Other current assets |  | $ | 1.2 |  |  | $ | — |  |  | $ | 1.2 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Other non-current assets |  |  | 0.1 |  |  |  | — |  |  |  | 0.1 |  |  |  | — |  |  |  | — |  |  |  | — |
Current derivatives liability |  |  | 0.0 |  |  |  | (12.1 | ) |  |  | (12.1 | ) |  |  | 0.7 |  |  |  | (20.1 | ) |  |  | (19.4 | )
Non-current derivatives liability |  |  | 0.0 |  |  |  | (2.5 | ) |  |  | (2.5 | ) |  |  | 0.4 |  |  |  | (18.9 | ) |  |  | (18.5 | )
Net realized and unrealized gains of approximately $16.8 million related to the effective portion of the contracts designated as hedges were included in accumulated other comprehensive loss as of December 31, 2022. Realized and unrealized gains and losses will be transferred from accumulated other comprehensive loss to current earnings as the underlying forecasted sales transaction is recognized. We estimate approximately $8.4 million in net realized and unrealized gains included in accumulated other comprehensive loss as of December 31, 2022 will be reclassified to current earnings in the next twelve months. The realized gains arose due to cash settlement of zinc contracts prior to maturity in 2022 for proceeds of $17.4 million. There were no early settlements in 2021 or 2020. We recognized a net loss of $5.8 million, including a $6.0 million loss transferred from accumulated other comprehensive income(loss) during 2022 on the contracts utilized to manage exposure to changes in prices of metals in our concentrate shipments, which is included in sales of products. The net loss recognized on the contracts offsets gains related to price adjustments on our provisional concentrate sales due to changes to silver, gold, lead and zinc prices between the time of sale and final settlement. We recognized a $32.9 million net loss during 2021 on the contracts utilized to manage exposure to changes in prices for forecasted future sales prior to their hedge designation. The net loss on these contracts is included in the fair value adjustments, net line item under other income (expense), as they relate to forecasted future sales, as opposed to sales that have already taken place but are subject to final pricing as discussed in the preceding paragraph. The net loss for 2021 is the result of increasing silver, gold, zinc and lead prices. Credit-risk-related Contingent Features Certain of our derivative contracts contain cross default provisions which provide that a default under our revolving credit agreement would cause a default under the derivative contract. As of December 31, 2022, we have not posted any collateral related to these contracts. The fair value of derivatives in a net liability position related to these arrangements was $22.2 million as of December 31, 2022, and includes accrued interest but excludes any adjustment for nonperformance risk. If we were in breach of any of these provisions at December 31, 2022, we could have been required to settle our obligations under the agreements at their termination value of $22.2 million.

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- 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 https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
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