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Note 8 - Derivative Instruments | 9 Months Ended
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Sep. 30, 2025
Disclosure Text Block [Abstract] |
Derivative Instruments | Note 8. Derivative Instruments General Our current risk management policy provides that up to 75% of five years of our foreign currency and forecasted metals price exposure may be covered under a derivatives program, with certain other limitations. 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 or currency exchange rate exceeds the contract price for quantities of our production and/or forecasted costs covered under contract positions. Foreign Currency Our wholly-owned non-US subsidiaries owning the Casa Berardi and Keno Hill operations are USD-functional currency entities which routinely incur expenses denominated in CAD. Such expenses expose us to exchange rate fluctuations, for which we have a program to manage our exposure to fluctuations of these subsidiaries' future operating and capital costs denominated in CAD. The program related to forecasted cash operating costs at Casa Berardi and Keno Hill utilizes forward contracts to buy CAD, and only those related to Casa Berardi are designated as cash flow hedges. As of September 30, 2025, we have a total of 246 forward contracts outstanding to buy a total of CAD $167.7 million having a notional amount of USD $122.9 million to hedge the following exposures for 2025 through 2026: • Forecasted cash operating expenditures at Casa Berardi of CAD $53.2 million at an average CAD-to-USD exchange rate of 1.3248. • Forecasted cash operating expenditures at Keno Hill of CAD $65.5 million at an average CAD-to-USD exchange rate of 1.3821. • Forecasted capital expenditures at Casa Berardi of CAD $6.5 million at an average CAD-to-USD exchange rate of 1.3399. • Forecasted capital expenditures at Keno Hill of CAD $35.8 million at an average CAD-to-USD exchange rate of 1.3934. • Forecasted exploration expenditures at Keno Hill of CAD $4.2 million at an average CAD-to-USD exchange rate of 1.3920. • Forecasted Corporate expenditures of CAD $2.5 million at an average CAD-to-USD exchange rate of 1.3657. As of September 30, 2025 and December 31, 2024, we recorded the following balances for the fair value of the foreign currency forward contracts (in millions):
|  | September 30, |  | December 31,
Balance sheet line item: |  | 2025 |  | 2024
Other current assets |  | $0.7 |  | $—
Other current liabilities |  | (2.0) |  | (8.2)
Other non-current liabilities |  | (0.2) |  | (2.0)
Net unrealized losses of $1.8 million related to the effective portion of the foreign currency forward contracts designated as hedges are included in accumulated other comprehensive (loss) income as of September 30, 2025. Unrealized gains and losses will be transferred from accumulated other comprehensive (loss) income to current earnings as the hedged cash operating expenditures are recognized. We estimate $1.6 million in net unrealized losses included in accumulated other comprehensive (loss) income as of September 30, 2025 will be reclassified to current earnings in the next twelve months. Net realized losses of $0.7 million (2024: $1.5 million) and $3.5 million (2024: $3.0 million) for the three and nine months ended September 30, 2025 and 2024, respectively, on contracts related to cash operating expenditures which have been recognized were transferred from accumulated other comprehensive (loss) income and included in cost of sales and other direct production costs. Net losses of $2.0 million and net gains of $3.5 million for the three and nine months ended September 30, 2025, and a net gain of $0.5 million and a net loss of $1.9 million for the three and nine months ended September 30, 2024, respectively, were related to contracts not designated as hedges. No net unrealized gains or losses related to ineffectiveness of the hedges are included in fair value adjustments, net on our consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2025 and 2024, respectively. Metals Prices We are currently using financially-settled forward contracts to manage our 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 metals contracts at September 30, 2025 and December 31, 2024:
September 30, 2025 |  | Ounces/pounds under contract (in 000's except gold) |  |  | 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 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2025 settlements |  |  | 780 |  |  |  | — |  |  |  | 16,424 |  |  |  | 11,905 |  |  | $ | 39.15 |  |  | N/A |  | $ | 1.39 |  |  | $ | 1.00 |
2026 settlements |  |  | — |  |  |  | — |  |  |  | 3,748 |  |  |  | — |  |  | N/A |  |  | N/A |  | $ | 1.40 |  |  | N/A |
Contracts on forecasted sales |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2025 settlements |  |  | — |  |  |  | — |  |  |  | 2,425 |  |  |  | 4,850 |  |  | N/A |  |  | N/A |  | $ | 1.36 |  |  | $ | 0.99 |
2026 settlements |  |  | — |  |  |  | — |  |  |  | 37,644 |  |  |  | 53,903 |  |  | N/A |  |  | N/A |  | $ | 1.33 |  |  | $ | 1.03 |
December 31, 2024 |  | Ounces/pounds under contract (in 000's except gold) |  |  | 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 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2025 settlements |  |  | 1,535 |  |  |  | 2 |  |  |  | 20,834 |  |  |  | 14,661 |  |  | $ | 31.46 |  |  | $ | 2,673 |  |  | $ | 1.40 |  |  | $ | 0.97 |
Contracts on forecasted sales |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2025 settlements |  |  | — |  |  |  | — |  |  |  | 59,194 |  |  |  | 47,840 |  |  | N/A |  |  | N/A |  |  | $ | 1.39 |  |  | $ | 0.99 |
2026 settlements |  |  | — |  |  |  | — |  |  |  | 6,283 |  |  |  | 52,911 |  |  | N/A |  |  | N/A |  |  | $ | 1.41 |  |  | $ | 1.03 |
Since the first quarter of 2025, we have and continue to utilize financially-settled zero cost collars ("Collars") to manage our exposure to changes in the price of precious metals contained in both our provisional, forecasted Keno Hill future concentrate shipments and forecasted Casa Berardi gold sales. These Collars provide us a contractual right to receive at least the minimum price if market prices fall below the minimum price level specified in the contracts, while limiting our potential gains to the maximum price level specified in the contracts, even if market prices rise higher. This strategy helps protect us from significant price drops while still allowing for some upside potential within the minimum and maximum price range. For the three and nine months ended September 30, 2025, these collar s had net losses of $6.3 million and $6.5 million, respecti vely. For accounting purposes, they are not designated as hedges. The following table summarize the quantities of silver ounces committed under collars at September 30, 2025.
Settlement Period |  | Production Protected |  |  | Minimum Price |  |  | Maximum Price |
|  | (ounces) |  |  | ($) |  |  | ($) |
Contracts on provisional sales |  |  |  |  |  |  |  |  |
2025 settlements |  |  | 25,000 |  |  |  | 39.00 |  |  |  | 45.50 |
Contracts on forecasted sales |  |  |  |  |  |  |  |  |
2025 settlements |  |  | 690,000 |  |  |  | 30.00 |  |  |  | 40.08 |
2026 settlements |  |  | 1,300,000 |  |  |  | 33.13 |  |  |  | 53.82 |
We've also protected 4,000 ounces of gold production from Casa Berardi through the use of Collars with a minimum price of $3,000 and maximum price of $4,840 per ounce for settlement in the first quarter of 2026. We recorded the following balances for the fair value of the forward metals and collar contracts as of September 30, 2025 and December 31, 2024 (in millions):
|  | September 30, |  | December 31,
Balance sheet line item: |  | 2025 |  | 2024
Other current assets |  | $2.1 |  | $11.5
Other non-current assets |  | 1.0 |  | 6.6
Other current liabilities |  | (6.3) |  | —
Other non-current liabilities |  | (0.2) |  | —
Net realized and unrealized gains of $8.9 million related to the effective portion of the forward metals contracts designated as hedges were included in accumulated other comprehensiv e income (loss) as of September 30, 2025. Unrealized gains and losses will be transferred from accumulated other comprehensive income (loss) to current earnings as the underlying forecasted sales are recognized. We estimate $8.6 million in net realized and unrealized gains included in accumulated other comprehensive income (loss) as of September 30, 2025 would 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 and zinc and lead contracts during 2023 for net proceeds of $17.4 million and $8.5 million, respectively, of which $0.1 million remains to be recognized during the remainder of the year. We recognized a net loss of $14.0 million (2024: $0.6 million net gain), including a $5.1 million gain transferred from accumulated other comprehensive income (loss) (2024: $2.1 million gain transferred from accumulated other comprehensive income), during the three months ended September 30, 2025. We recognized a net loss of $16.0 million (2024: $8.8 million net loss), including a $10.8 million gain transferred from accumulated other comprehensive income (loss) (2024: $7.1 million gain transferred from accumulated other comprehensive income), during the nine months ended September 30, 2025. These gains and losses were recognized on the contracts utilized to manage exposure to prices of metals in our concentrate shipments, which are included in sales. The net losses and gains recognized on the contracts offset gains and losses 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. Credit-risk-related Contingent Features Certain of our derivative contracts contain cross default provisions which provide that a default under our Credit Agreement would cause a default under the derivative contract. As of September 30, 2025, we have not posted any collateral related to these contracts. The fair value of derivatives in a net liability position related to these agreements was $13.8 million as of September 30, 2025, which includes accrued interest but excludes any adjustment for nonperformance risk. If we were in breach of any of these provisions at September 30, 2025, we could have been required to settle our obligations under the agreements at their termination value of $13.8 million.

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