EX-99.1 2 a2015q1fs.htm EXHIBIT 99.1 2015 Q1 FS



Silver Standard Resources Inc.
Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2015 and 2014
(unaudited)







Silver Standard Resources Inc.
Condensed Consolidated Interim Financial Statements for the three months ended March 31, 2015
 

CONTENTS
 
Financial Statements
 
 
 
 
 
 
 
 
 
 
Notes to the Condensed Consolidated Financial Statements
 
 
 
 
 
 
 
 
Statements of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Shareholders’ Equity
 
 
 
 
Statements of (Loss)
 
 
 
 
 
 
Additional Disclosures
 
 
 



 
 
2 | Page

Silver Standard Resources Inc.
Condensed Consolidated Interim Statements of Financial Position
(expressed in thousands of United States dollars)
 
Note
March 31

December 31

 
 
2015

2014

 
 
$ 

$

Current assets
 
 
 
Cash and cash equivalents
 
175,595

184,643

Trade and other receivables
4
52,472

49,824

Marketable securities
5
91,492

104,785

Other current financial assets
6
29,981

19,443

Inventory
7
124,176

129,228

Assets held for sale
 
3,899

3,895

 
 
477,615

491,818

Non-current assets
 
 
 
Property, plant and equipment
8
443,419

439,074

Income tax receivable
9
19,019

—

Value added tax receivable
10
34,455

29,473

Non-current inventory
7
3,318

4,326

Other non-current financial assets
6
11,434

21,558

Total assets
 
989,260

986,249

 
 
 
 
Current liabilities
 
 
 
Trade and other payables
11
50,147

56,645

Provisions
12
63,511

60,303

Current debt
 
5,669

5,922

 
 
119,327

122,870

Non-current liabilities
 
 
 
Deferred income tax liabilities
 
30,416

29,050

Non-current provisions
12
61,974

57,945

Convertible notes
13
199,813

197,134

Total liabilities
 
411,530

406,999

 
 
 
 
Shareholders' equity
 
 
 
Share capital
 
707,034

707,034

Other reserves
 
(23,339
)
(12,723
)
Equity component of convertible notes
 
68,347

68,347

Retained deficit
 
(174,312
)
(183,408
)
Total shareholders' equity attributable to our shareholders
 
577,730

579,250

Total liabilities and equity
 
989,260

986,249

 
 
 
 
Events after the reporting date (note 6)
 
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements
Approved by the Board of Directors and authorized for issue on May 12, 2015
"Richard D. Paterson"
 
"John Smith"
Richard D. Paterson, Director
 
John Smith, Director

 
 
3 | Page

Silver Standard Resources Inc.
Condensed Consolidated Interim Statements of Income (Loss)
(expressed in thousands of United States dollars, except per share amounts)

 
Note
 
Three months ended March 31
 
 
 
 
2015

2014

 
 
 
 
(restated note 2(b))

 
 
 
$

$

 
 
 
 
 
Revenue
 
 
111,721

33,736

Cost of sales
15
 
(81,319
)
(27,812
)
Income from mine operations
 
 
30,402

5,924

 
 
 
 
 
General and administrative expenses
 
 
(5,164
)
(6,914
)
Exploration, evaluation and reclamation expenses
 
 
(3,963
)
(3,376
)
Business acquisition costs
 
 
—

(1,972
)
Operating income (loss)
 
 
21,275

(6,338
)
 
 
 
 
 
Gain on sale of mineral property
6
 
—

15,939

Interest earned and other finance income
 
 
581

1,565

Interest expense and other finance costs
 
 
(6,252
)
(5,154
)
Unrealized gain on derivatives
 
 
—

1,708

Other (expense)
16
 
(342
)
(2,308
)
Foreign exchange (loss)
 
 
(2,761
)
(16,782
)
Income (loss) before tax
 
 
12,501

(11,370
)
 
 
 
 
 
Income tax recovery (expense)
 
 
(3,405
)
(1,069
)
 
 
 
 
 
Net income (loss) and net income (loss) attributable to shareholders
 
 
9,096

(12,439
)
 
 
 
 
 
Weighted average shares outstanding (thousands)
 
 
 
 
Basic
17
 
80,754

80,754

Diluted
17
 
94,141

80,754

 
 
 
 
 
Income (loss) per share
 
 
 
 
Basic
17
 
$0.11
$(0.15)
Diluted
17
 
$0.11
$(0.15)
The accompanying notes are an integral part of the condensed consolidated financial statements

 
 
4 | Page

Silver Standard Resources Inc.
Condensed Consolidated Interim Statements of Comprehensive (Loss)
(expressed in thousands of United States dollars)

 
 
Three months ended March 31
 
 
 
2015

2014

 
 
 
(restated note 2(b))

 
 
$

$

 
 
 
 
Net income (loss) for the period attributable to shareholders
 
9,096

(12,439
)
Other comprehensive (loss) income
 
 
 
Items that may be or have been reclassified to net income or loss:
 
 
 
Unrealized (loss) gain on marketable securities, net of tax
 
(11,282
)
11,965

    Cumulative translation adjustment
 
—

35

Other comprehensive (loss) income
 
(11,282
)
12,000

Total comprehensive (loss) attributable to shareholders
 
(2,186
)
(439
)
Total comprehensive (loss)
 
(2,186
)
(439
)
The accompanying notes are an integral part of the condensed consolidated financial statements

 
 
5 | Page

Silver Standard Resources Inc.
Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity
(expressed in thousands of United States dollars)

 
Note
Common Shares
Other

Equity

Retained

Total

 
 
Shares

Amount

reserves

component of

deficit

equity

 
 
 
 
(restated note 2(b))

convertible notes

(restated note 2(b))

(restated note 2(b))

 
 
000's

$

$

$

$

$

Balance, January 1, 2014
 
80,754

707,034

(28,887
)
68,347

(57,015
)
689,479

   Equity-settled share-based compensation
14
—

—

352

—

—

352

Total comprehensive income (loss) for the period
 
—

—

12,000

—

(12,439
)
(439
)
Balance, March 31, 2014
 
80,754

707,034

(16,535
)
68,347

(69,454
)
689,392

 
 
 
 
 
 
 
 
Balance January 1, 2015
 
80,754

707,034

(12,723
)
68,347

(183,408
)
579,250

   Equity-settled share-based compensation
14
—

—

666

—

—

666

Total comprehensive (loss) income for the period
 
—

—

(11,282
)
—

9,096

(2,186
)
Balance, March 31, 2015
 
80,754

707,034

(23,339
)
68,347

(174,312
)
577,730

The accompanying notes are an integral part of the condensed consolidated financial statements

 
 
6 | Page

Silver Standard Resources Inc.
Condensed Consolidated Interim Statements of Cash Flows
(expressed in thousands of United States dollars)

 
Note
Three months ended March 31
 
 
 
2015

2014

 
 
 
(restated 2(b))

 
 
$

$

Cash flows from operating activities
 
 
 
Net income (loss) for the period
 
9,096

(12,439
)
Adjustments for:
 
 
 
Depreciation, depletion and amortization
 
16,537

5,364

Share-based payments
 
666

352

Net finance expense
 
5,671

3,589

(Gain) on sale of mineral property
 
—

(15,939
)
(Gain) on derivative instrument
 
—

(1,708
)
Other (income)
 
232

2,231

Income tax (recovery) expense
 
3,405

1,069

Non-cash foreign exchange loss
 
2,419

12,906

Net changes in non-cash working capital items
20
(868
)
8,469

Cash generated by operating activities before value added taxes, interest and income taxes recovered (paid)
 
37,158

3,894

Value added taxes (paid)
 
(3,849
)
(3,108
)
Value added taxes recovered
 
3,200

3,003

Interest (paid)
 
(4,329
)
(3,809
)
Income taxes (paid)
 
(1,373
)
(1,475
)
Cash generated (used) by operating activities
 
30,807

(1,495
)
Cash flows from investing activities
 
 
 
Purchase of property, plant and equipment
 
(6,148
)
(1,952
)
Production stripping capitalized costs
 
(12,682
)
(4,228
)
Expenditures on exploration properties
 
(317
)
(924
)
Proceeds from sale of mineral property
6
—

7,500

Taxes paid on sale of mineral properties
 
—

(15,853
)
Interest received
 
164

1,565

Tax deposit paid
9
(19,231
)
—

Cash (used) by investing activities
 
(38,214
)
(13,892
)
Effect of foreign exchange rate changes on cash and cash equivalents
 
(1,641
)
(3,857
)
(Decrease) in cash and cash equivalents
 
(9,048
)
(19,244
)
Cash and cash equivalents, beginning of period
 
184,643

415,657

Cash and cash equivalents, end of period
 
175,595

396,413


Supplemental cash flow information (note 20)
The accompanying notes are an integral part of the condensed consolidated financial statements

 
 
7 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)


1.
NATURE OF OPERATIONS

Silver Standard Resources Inc. ("we", "us" or "our") is a company incorporated under the laws of the Province of British Columbia, Canada and our shares are publicly listed on the Toronto Stock Exchange in Canada and the NASDAQ Global Markets in the United States. Together with our subsidiaries, we (the “Group”) are principally engaged in the operation, acquisition, exploration, and development of precious metal resource properties located in the Americas. With the acquisition of the Marigold mine on April 4, 2014, we have two producing mines and a portfolio of silver resource dominant projects located throughout the Americas. Silver Standard Resources Inc. is the ultimate parent of the Group.

Our address is Suite 800, 1055 Dunsmuir Street, PO Box 49088, Vancouver, British Columbia, V7X 1G4.

Our strategic focus is to optimize the production of silver and gold from our Pirquitas mine in Argentina and Marigold mine in Nevada, U.S., respectively, and to advance, as market and project conditions permit, other principal development projects including the Pitarrilla project in Mexico and the San Luis project in Peru and our other projects within our project pipeline towards development and commercial production.


2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these condensed consolidated interim financial statements are set out below.

a)
Basis of preparation
These condensed consolidated interim financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2014.
These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting and International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The comparative information has also been prepared on this basis.
The accounting policies applied in the preparation of these condensed interim consolidated financial statements are consistent with those applied and disclosed in our audited consolidated financial statements for the year ended December 31, 2014, except for the application of the amendments to existing IFRSs (note 2(d)) which were effective January 1, 2015

These statements were authorized for issue by the Board of Directors on May 12, 2015.

b)
Change in accounting policies
During the year ended December 31, 2014, we elected to change our accounting policy with respect to exploration and evaluation expenditures, consistent with IFRS 6, Exploration for and Evaluation of Mineral Resources and IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, in order to enhance the relevance and reliability to the decision-making needs of the users of our financial statements. Prior to this change, our policy was to capitalize exploration and evaluation expenditures on properties that we have the legal rights to explore, until commercially viable. We have elected to expense all exploration and evaluation expenses until such time that we believe that further expenditures will provide probable future economic benefit. Our policy is disclosed in note 2(i) of our audited consolidated financial statements for the year ended December 31, 2014.


 
 
8 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

For the three months ended March 31, 2014, the following adjustments were recorded to the consolidated statements of income (loss):

 
 
Adjustments for change in accounting policy

 
Three months ended March 31, 2014
As previously reported

Exploration and evaluation

As currently reported

 
$

$

$

Exploration, evaluation and reclamation (expenses)
(714
)
(2,662
)
(3,376
)
Gain on sale of mineral property
9,240

6,699

15,939

Other (expense) income
(2,754
)
446

(2,308
)
Income tax (expense)
(1,005
)
(64
)
(1,069
)
Increase in net income
 
4,419

 
 
 
 
 
Weighted average shares outstanding (thousands)
 
 
 
Basic
80,754

80,754

80,754

Diluted
80,754

80,754

80,754

 
 
 
 
Decrease in (loss) per share
 
 
 
Basic

($0.21
)

$0.06


($0.15
)
Diluted

($0.21
)

$0.06


($0.15
)

c)
Significant accounting judgments and estimates
The preparation of financial statements in conformity with IFRS requires the use of judgments and/or estimates that affect the amounts reported and disclosed in the consolidated financial statements and related notes. These judgments and estimates are based on management’s best knowledge of the relevant facts and circumstances, having regard to previous experience, but actual results may differ materially from the amounts included in the financial statements. The critical judgments and estimates applied in the preparation of the our unaudited condensed interim consolidated financial statements for the three months ended March 31, 2015 are consistent with those applied and disclosed in note 2(u) to our audited consolidated financial statements for the year ended December 31, 2014.

d)
Pronouncements affecting our financial statements presentation or disclosure
The following new and amended IFRS pronouncements were adopted during the three months ended March 31, 2015:

Operating segments
IFRS 8, Operating segments was amended to require disclosure of the judgments made by management in aggregating operating segments, including a description of the segments which have been aggregated and the economic indicators which have been assessed in determining that the aggregated segments share similar economic characteristics. The amendment was effective for annual periods commencing on or after July 1, 2014 and does not have a material impact on our consolidated financial statements.

 
 
9 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

e)
Future accounting changes
The following new standards have been issued but are not yet effective:

Revenue from contracts with customers
The IASB has replaced IAS 18, Revenue in its entirety with IFRS 15, Revenue from contracts with customers (“IFRS 15”) which is intended to establish a new control-based revenue recognition model and change the basis for deciding whether revenue is to be recognized over time or at a point in time. IFRS 15 is effective for annual periods commencing on or after January 1, 2017. We are currently evaluating the impact the standard is expected to have on our financial statements.

IFRS 9, Financial Instruments: Classification and Measurement
The complete version of IFRS 9, Financial Instruments: Classification and Measurement ("IFRS 9") was issued in July 2014. It replaces the guidance in IAS 39 Financial Instruments: Recognition and Measurement ("IAS 39") that relates to the classification and measurement of financial assets and financial liabilities. The standard is effective for annual periods beginning on or after January 1, 2018.

In subsequent phases, the IASB will address hedge accounting and impairment of financial assets. We will quantify the effect in conjunction with the other phases, when the final standard, including all phases, is issued.

Amendments
Amendments to standards and interpretations include the following:

IFRS 7, Financial instruments: Disclosure: Amended to require additional disclosures on transition from IAS 39 to IFRS 9. Effective on adoption of IFRS 9, which is effective for annual periods commencing on or after January 1, 2018.

There are no other IFRS or IFRIC interpretations that are not yet effective that would be expected to have a material impact on us.


 
 
10 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

3.
PURCHASE OF MARIGOLD MINE

On April 4, 2014, we completed the acquisition of a 100% interest in the Marigold mine, an open pit operating gold mine in Nevada, U.S., from subsidiaries of Goldcorp Inc. and Barrick Gold Corporation for a purchase price of $267,732,000 after post-closing adjustments. The purchase price was paid in cash from our existing cash on hand.

The acquisition is a business combination and has been accounted for in accordance with the measurement and recognition provisions of IFRS 3, Business Combinations ("IFRS 3"). IFRS 3 requires that the purchase consideration be allocated to the assets acquired and liabilities assumed in a business combination based upon their estimated fair values at the date of acquisition.

The purchase price has been allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition. Fair values are determined based on third party appraisals, discounted cash flow models, and quoted market prices, as deemed appropriate. Acquisition costs, in the form of advisory, legal and other professional fees, which were associated with the transaction to acquire Marigold were expensed as incurred and during the three months ended March 31, 2014 amounted to $1,972,000.

The following table shows the allocation of the purchase price to assets acquired and liabilities assumed, based on estimates of fair value, including a summary of major classes of consideration transferred, and the recognized amounts of assets acquired and liabilities assumed at the acquisition date:

 
$

Purchase consideration
275,000

Working capital adjustment
(7,268
)
Consideration
267,732

 
 
Trade and other receivables
5,162

Inventory
76,104

Property, plant and equipment
 
Mineral properties
50,823

Plant and equipment
157,880

Assets under construction
9,561

Trade and other payables
(17,067
)
Close-down and restoration provision
(14,731
)
Net identifiable assets acquired
267,732


Had the Marigold mine been consolidated from the start of January 1, 2014, our consolidated revenue for the three months ended March 31, 2014 would have been approximately $79,372,000 and our consolidated net loss for the three months ended March 31, 2014 would have been $16,589,000.


 
 
11 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

4.
TRADE AND OTHER RECEIVABLES

 
March 31, 2015

December 31, 2014

 
$

$

Trade receivables
34,228

26,529

Tax receivables
6,756

5,389

Value added tax receivables (note 10)
5,056

8,054

Prepayments and deposits
4,536

6,068

Other receivables
1,896

3,784

 
52,472

49,824


We expect full recovery of the trade receivables amounts outstanding and, therefore, no allowance has been recorded against these receivables. No trade receivables are past due and all are expected to be settled within twelve months.

We do not hold any collateral for any receivable amounts outstanding at March 31, 2015 and December 31, 2014.


5.
MARKETABLE SECURITIES

The movement in marketable securities during the three months ended March 31, 2015 and the year ended December 31, 2014 is comprised of the following:

 
March 31, 2015

December 31, 2014

 
$

$

Balance, beginning of period
104,785

129,267

Additions
—

9,188

Disposals
—

(37,322
)
Fair value adjustments through profit and loss
(67
)
(10,060
)
Fair value adjustments through other comprehensive income
(3,500
)
22,699

Foreign exchange adjustments
(9,726
)
(8,987
)
Balance, end of period
91,492

104,785



6.
OTHER FINANCIAL ASSETS

 
March 31, 2015
December 31, 2014
 
Current

Non-current

Current

Non-current

 
$

$

$

$

Restricted cash (1)
10,122

9,480

—

19,604

Deferred consideration (2,3)
19,859

1,954

19,443

1,954

 
29,981

11,434

19,443

21,558


(1) 
We have cash and security deposits in relation to our close down and restoration provisions of $12,102,000 and Argentine peso loan facility of $7,500,000. During the three months ended March 31, 2015, we reclassified $10,122,000 of the restricted cash from non-current to current.

 
 
12 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

6.
OTHER FINANCIAL ASSETS (Cont'd)

(2) 
On May 5, 2015, subsequent to period end, we received $20,000,000 of deferred consideration from the sale of the San Agustin project, which closed in December 2013.

(3) 
On February 6, 2014, we completed the sale of our 100% interest in the Challacollo project located in Chile to Mandalay. Under the terms of the agreement, the total aggregate consideration was comprised of $7,500,000 in cash, 12,000,000 common shares of Mandalay with a fair value of $9,188,000 at closing, deferred consideration of 5,000,000 common of shares of Mandalay issued at the end of the first quarter in which commercial production has commenced, and cash equivalent of 240,000 ounces of silver paid in eight quarterly installments (based on the average quarterly silver price) beginning the quarter immediately following the quarter in which commercial production has commenced. In addition, we received a 2% net smelter return ("NSR") royalty on silver sales in excess of 36 million ounces, up to a maximum of $5,000,000 from the project. The fair value of consideration received was $18,644,000 and we recorded a gain on the sale of this mineral property of $15,939,000 before tax expense of $1,351,000 during the three months ended March 31, 2014. The deferred consideration is secured against the Challacollo mineral claims and the shares of the entity holding the Challacollo project.


7.
INVENTORY

 
March 31, 2015

December 31, 2014

 
$ 

$

Current:
 
 
Finished goods
22,229

25,221

Stockpiled ore
19,236

17,896

Leach pad inventory
52,700

56,250

Materials and supplies
30,011

29,861

 
124,176

129,228

Non-current:
 


Materials and supplies
3,318

4,326

 
127,494

133,554


The cost of inventory held at net realizable value ("NRV") at March 31, 2015 was $Nil (December 31, 2014 - $Nil).


 
 
13 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

8.
PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment comprise the following:
 
March 31, 2015
 
Plant and equipment

Assets under construction

Mineral properties

Exploration and evaluation assets

Total

Cost
 
 
 
 
 
Balance, January 1, 2015
439,415

19,988

118,277

64,241

641,921

Additions
358

5,857

15,707

438

22,360

Disposals
(1,112
)
—

(238
)
—

(1,350
)
Change in estimate of close down and restoration provision
—

—

3,703

—

3,703

Transfers
18,847

(18,847
)
—

—

—

Balance, end of period
457,508

6,998

137,449

64,679

666,634

 
 
 
 
 
 
Accumulated depreciation
 
 
 
 
 
Balance, January 1, 2015
(164,246
)
—

(38,601
)
—

(202,847
)
Charge for the year
(17,160
)
—

(3,470
)
—

(20,630
)
Disposals
262

—

—

—

262

Balance, end of period
(181,144
)
—

(42,071
)
—

(223,215
)
 
 
 
 
 
 
Net book value at March 31, 2015
276,364

6,998

95,378

64,679

443,419

 
December 31, 2014
 
Plant and equipment

Assets under construction

Mineral
properties

Exploration and evaluation assets

Total

Cost
 
 
 
 
 
Balance, January 1, 2014
288,701

10,337

34,160

60,076

393,274

Additions
3,126

20,493

43,487

4,283

71,389

Acquisition of Marigold (note 3)
157,880

9,561

50,823

—

218,264

Disposals and reclassifications
(7,860
)
—

—

—

(7,860
)
Costs written off
—

—

—

(145
)
(145
)
Change in estimate of close down and restoration provision
—

—

7,222

27

7,249

Impairment charges
(22,835
)
—

(17,415
)
—

(40,250
)
Transfers
20,403

(20,403
)
—

—

—

Balance, end of period
439,415

19,988

118,277

64,241

641,921

 
 
 
 
 
 
Accumulated depreciation
 
 
 
 
 
Balance, January 1, 2014
(119,553
)
—

(25,084
)
—

(144,637
)
Charge for the year
(48,828
)
—

(13,517
)
—

(62,345
)
Disposals
4,135

—

—

—

4,135

Balance, end of period
(164,246
)
—

(38,601
)
—

(202,847
)
 
 
 
 
 
 
Net book value at December 31, 2014
275,169

19,988

79,676

64,241

439,074


No items of property, plant and equipment have been pledged as security for liabilities.


 
 
14 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

9.
INCOME TAX RECEIVABLE

On January 27, 2015, we received a Notice of Reassessment (“NOR”) from the Canada Revenue Agency (“CRA”) in the amount of approximately C$41,400,000 plus interest of C$6,580,000 related to the tax treatment of the 2010 sale of shares of our subsidiary that owned and operated the Snowfield and Brucejack projects. The CRA has asserted that the sale was on account of income and not capital, as we recorded it. Our management strongly disagrees with the CRA’s position in the reassessment. In order to appeal the reassessment, we were required to make a minimum payment of 50% of the reassessed amount claimed by the CRA under the NOR plus interest accrued to the date of the NOR. On February 26, 2015, we paid the required C$24,090,000 ($19,231,000) to the CRA and have recorded this amount plus accrued interest as a non-current income tax receivable. On April 20, 2015, we filed a Notice of Objection with the CRA and plan on filing, if necessary, a Notice of Appeal with the Tax Court of Canada.

Although the outcome of this matter cannot be predicted with certainty, we intend to contest the matter vigorously, and believe we will ultimately prevail based on the merits of our position. At this time we have not recognized an income tax provision for this amount. However, we will continue to evaluate our tax provisions as the matter progresses through appeals and, if necessary, the litigation process. If the CRA's position is ultimately sustained, it would have a material impact on earnings and financial resources in the period that the matter is ultimately resolved.


10.
VALUE ADDED TAX RECEIVABLE

 
March 31, 2015

December 31, 2014

 
$ 

$

Current
5,056

8,054

Non-current
34,455

29,473

 
39,511

37,527


Value added tax ("VAT") paid in Argentina in relation to the Pirquitas mine became recoverable under Argentina law once the mine reached the production stage and we apply to the Argentina government to recover the applicable VAT on an ongoing basis. There have, at times, been significant delays in obtaining final approvals and, therefore, the collection of VAT and the classification reflects best estimates of timing of recoveries. Despite the procedural delays, we believe that the remaining balance is fully recoverable and have not provided an allowance.

The VAT receivables balance in Argentina is denominated in Argentine peso. Accordingly, foreign currency fluctuations could materially impact the value of the VAT receivables in U.S. dollars.


11.
TRADE AND OTHER PAYABLES

 
March 31, 2015

December 31, 2014

 
$

$

Trade payables
18,299

23,552

Accrued liabilities
27,809

28,909

Income taxes payable
2,813

1,028

Accrued interest on convertible notes (note 13)
1,226

3,156

 
50,147

56,645



 
 
15 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

12.
PROVISIONS

 
March 31, 2015
December 31, 2014
 
Current

Non-current

Current

Non-current

 
$

$

$

$

Export duties on silver concentrate (1)
59,178

—

56,058

—

Close down and restoration provision (2)
4,333

61,974

4,245

57,945

 
63,511

61,974

60,303

57,945


(1) 
We entered into a fiscal stability agreement (the “Fiscal Agreement”) with the Federal Government of Argentina in 1998 for production from the Pirquitas mine. In December 2007, the National Customs Authority of Argentina (Dirección Nacional de Aduanas) levied an export duty of approximately 10% from concentrates for projects with fiscal stability agreements pre-dating 2002 and the Federal Government has asserted that the Pirquitas mine is subject to this export duty. We have challenged the legality of the export duty applied to silver concentrates and the matter is currently under review by the Federal Court (Jujuy) in Argentina.

The Federal Court (Jujuy) granted an injunction in our favor effective September 29, 2010 that prohibited the Federal Government from withholding the 10% export duty on silver concentrates (the “Injunction”), pending the decision of the courts with respect to our challenge of the legality of the application of the export duty. The Injunction was appealed by the Federal Government but upheld by each of the Federal Court of Appeal (Salta) on December 5, 2012 and the Federal Supreme Court of Argentina on September 17, 2013. The Federal Government also appealed the refund we claimed for the export duties paid before the Injunction, as well as matters of procedure related to the uncertainty of the amount reclaimed; however, on May 3, 2013, such appeal was dismissed by the Federal Court of Appeal (Salta). In September 2014, the Federal Tax Authority in Argentina filed an application with the Federal Court (Jujuy) to lift the Injunction and require payment of the export duty and payment of applied interest charges. We filed a response to such application on October 14, 2014 and a decision is pending.

As of March 31, 2015, we have paid $6,646,000 in export duties, against which we have filed for recovery. In accordance with the Injunction, we have not been paying export duties on silver concentrates but continue to accrue export duties, with no accrual for interest charges, and have recorded a corresponding increase in cost of sales in the relevant period. The application of interest charges is uncertain, but if applied from the date each duty was levied and based on current U.S. dollar rates, such charges are estimated to be in the range of $4.3 million to $7.3 million. The final amount of export duties and interest, if any, to be paid or refunded depends on a number of factors including the outcome of litigation. Changes in our assessment of this matter could result in material adjustments to our consolidated statement of income (loss).

 
 
16 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

12.
PROVISIONS (Cont'd)

(2) 
The changes in the close down and restoration provision during the three months ended March 31, 2015 and the year ended December 31, 2014 were as follows:
 
March 31, 2015

December 31, 2014

 
$ 

$

Balance, January 1
62,190

37,201

 
 
 
Provision from acquisition of Marigold mine (note 3)
—

14,731

Liabilities settled during the period
(505
)
(1,839
)
Accretion expense
917

3,640

Foreign exchange gain
(43
)
(113
)
Revisions and new estimated cash flows
3,748

8,570

 
 
 
Balance, December 31
66,307

62,190

 
 
 
Less: current portion of close down and restoration provision in trade and other payables
(4,333
)
(4,245
)
Non-current close down and restoration provision
61,974

57,945


The revision in the estimated cash flows during the three months ended March 31, 2015 was due to additional disturbance at Marigold mine from waste dump expansion.


13.
CONVERTIBLE NOTES

The movement in the debt portion of the convertible notes during the three months ended March 31, 2015 and the year ended December 31, 2014 is comprised of the following:
 
March 31, 2015

December 31, 2014

 
$

$

Balance, beginning of period
200,290

190,287

Accretion of discount
2,679

10,003

Interest accrued in period
1,879

7,619

Interest paid
(3,809
)
(7,619
)
Balance, end of period
201,039

200,290

Accrued interest outstanding
(1,226
)
(3,156
)
Non-current portion of convertible notes outstanding
199,813

197,134



 
 
17 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

14.
SHARE CAPITAL AND SHARE-BASED PAYMENTS

(a)Stock options
The changes in stock options issued during the three months ended March 31, 2015 and the year ended December 31, 2014 are as follows:
 
March 31, 2015
December 31, 2014
 
Number of stock options

Weighted average exercise price (C$/option)

Number of stock options

Weighted average exercise price (C$/option)

 
 
 
 
 
Outstanding, beginning of period
2,377,065

12.68

1,754,944

16.05

     Granted
866,900

5.83

1,016,578

8.07

     Expired
—

—

(74,246
)
(14.14
)
     Forfeited
—

—

(320,211
)
(16.19
)
Outstanding, end of period
3,243,965

10.85

2,377,065

12.68


For options granted during the three months ended March 31, 2015, the option valuations were based on an average expected option life of 4.2 years, a risk free interest rate of 1.2%, a dividend yield of nil, and volatility of 56.0%.
During the three months ended March 31, 2015, options granted had an average fair value of C$2.61 per option.
(b)Deferred Share Units (“DSUs”)
During the three months ended March 31, 2015 and the year ended December 31, 2014, the following DSUs were outstanding to non-executive directors:
 
March 31, 2015

December 31, 2014

 
Number of DSUs

Number of DSUs

Outstanding, beginning of period
335,680

251,019

     Granted
41,854

106,486

     Redeemed
—

(21,825
)
Outstanding, end of period
377,534

335,680


The DSUs granted in the three months ended March 31, 2015 had a fair value of C$5.57 per unit. The DSUs are cash-settled instruments and, therefore, the fair value of the outstanding DSUs at the end of each reporting period is recognized as an accrued liability with the associated compensation cost recorded in general and administrative expenses. As at March 31, 2015, the fair value of outstanding DSUs was C$5.72 per unit.

Subsequent to the reporting period, on April 7, 2015, 33,000 DSUs were settled at a fair value of C$6.01 per unit.

 
 
18 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

14.
SHARE CAPITAL AND SHARE-BASED PAYMENTS (Cont'd)

(c)Restricted Share Units (“RSUs”)
During the three months ended March 31, 2015 and the year ended December 31, 2014, the following RSUs were outstanding to employees:
 
March 31, 2015

December 31, 2014

 
Number of RSUs

Number of RSUs

Outstanding, beginning of period
330,414

129,498

     Granted
27,615

297,480

     Settled
(29,090
)
(53,905
)
     Forfeited
(13,047
)
(42,659
)
Outstanding, end of period
315,892

330,414


The RSUs granted in the three months ended March 31, 2015 had a weighted average fair value of C$7.26 per unit. RSUs settled in the three months ended March 31, 2015 were settled at a weighted average fair value of C$6.00 per unit. As at March 31, 2015, the fair value of outstanding RSUs was C$5.72 per unit.

(d)Performance Share Units (“PSUs”)
During the three months ended March 31, 2015 and the year ended December 31, 2014, the following PSUs were outstanding to senior executives:
 
March 31, 2015

December 31, 2014

 
Number of PSUs

Number of PSUs

Outstanding, beginning of period
347,902

177,729

     Granted
390,850

253,600

     Settled
—

(24,903
)
     Forfeited
(24,902
)
(58,524
)
Outstanding, end of period
713,850

347,902


The PSUs granted in the three months ended March 31, 2015 had a weighted average fair value of C$5.57 per unit. As at March 31, 2015, the weighted average fair value of outstanding PSUs was C$3.80 per unit.

 
 
19 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

14.
SHARE CAPITAL AND SHARE-BASED PAYMENTS (Cont'd)

(e)Share-based compensation
Total share-based compensation, including all equity and cash-settled arrangements, for the three months ended March 31, 2015 and 2014 has been recognized in the condensed consolidated interim financial statements as follows:
 
Three months ended March 31
 
 
2015

2014

 
$

$

Equity-settled
 
 
Cost of inventory
10

—

General and administrative expense
650

449

Exploration, evaluation and reclamation expenses
6

(97
)
Cash-settled
 
 
Cost of inventory
98

47

General and administrative expense
284

2,037

Exploration, evaluation and reclamation expenses
(16
)
188

Total
1,032

2,624



15.
COST OF SALES

 
Three months ended March 31
 
 
2015

2014

 
$ 

$

Cost of inventory
61,591

19,905

Depletion, depreciation and amortization
16,359

5,080

Export duties (note 12)
3,369

2,827

 
81,319

27,812



16.
OTHER (EXPENSES)

 
Three months ended March 31
 
 
2015

2014

 
 
(restated note 2(b))

 
$

$

Unrealized (loss) on marketable securities (1)
(67
)
(2,310
)
(Loss) on disposal of fixed assets
(834
)
—

Other income
559

2

 
(342
)
(2,308
)

(1)  
During the three months ended March 31, 2015 and 2014, we recorded unrealized losses on previously impaired marketable securities and marketable securities classified as held-for-trading.


 
 
20 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

17.
EARNINGS (LOSS) PER SHARE

The calculations of basic and diluted earnings per share for the three months ended March 31, 2015 and 2014 are based on the following:
 
Three months ended March 31
 
 
2015

2014

 
 
(restated note 2(b))

 
 
 
Basic net earnings (loss)
$
9,096

$
(12,439
)
Adjustment for dilutive instruments:
 
 
Interest saving on convertible notes, net of tax
1,409

—

Earnings (loss) used in the calculation of diluted earnings (loss) per share
10,505

(12,439
)
 
 
 
Weighted average number of common shares issued (thousands)
80,754

80,754

Adjustments for dilutive instruments:
 
 
Stock options (thousands)
137

—

Convertible notes (thousands)
13,250

—

Weighted average number of common shares for diluted earnings (loss) per share (thousands)
94,141

80,754

 
 
 
Basic earnings (loss) per share

$0.11


($0.15
)
Diluted earnings (loss) per share

$0.11


($0.15
)


18.
OPERATING SEGMENTS

The following is a summary of the reported amounts of income or loss, and the carrying amounts of assets and liabilities by operating segment:
Three months ended March 31, 2015
Pirquitas mine

Marigold mine

Exploration and evaluation properties

Other reconciling items (i)

Total

 
$ 

$

$

$

$

Revenue
44,155

67,566

—

—

111,721

Cost of inventory
(27,426
)
(34,165
)
—

—

(61,591
)
Depletion, depreciation and amortization
(9,912
)
(6,447
)
—

—

(16,359
)
Export duties
(3,369
)
—

—

—

(3,369
)
Cost of sales
(40,707
)
(40,612
)
—

—

(81,319
)
Income from mine operations
3,448

26,954

—

—

30,402

 
 
 
 
 
 
Exploration, evaluation and reclamation expenses
(1,205
)
(1,086
)
(1,530
)
(142
)
(3,963
)
Operating income (loss)
2,228

25,867

(1,626
)
(5,194
)
21,275

(Loss) income before income tax
(600
)
25,615

(1,241
)
(11,273
)
12,501

 
 
 
 
 
 
Interest income and other finance income
16

8

—

557

581

Interest expense and other finance costs
(1,432
)
(128
)
(18
)
(4,674
)
(6,252
)
Income tax (expense) recovery
—

(9,978
)
3,754

2,819

(3,405
)
 
 
 
 
 
 
As at March 31, 2015
 
 
 
 
 
Total assets
241,341

363,006

100,355

284,558

989,260

Non-current assets
134,320

253,608

91,840

31,877

511,645

Total liabilities
(122,514
)
(62,115
)
(8,838
)
(218,063
)
(411,530
)

 
 
21 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

18.
OPERATING SEGMENTS (Cont'd)

Three months ended March 31, 2014
    Pirquitas mine

Marigold mine

Exploration and evaluation properties (restated note 2(b))

Other reconciling items (i)

Total (restated note 2(b))

 
$

$

$

$

$

Revenue
33,736

—

—

—

33,736

Cost of inventory
(19,905
)
—

—

—

(19,905
)
Depletion, depreciation and amortization
(5,080
)
—

—

—

(5,080
)
Export duties
(2,827
)
—

—

—

(2,827
)
Cost of sales
(27,812
)
—

—

—

(27,812
)
Income from mine operations
5,924

—

—

—

5,924

 
 
 
 
 
 
Exploration, evaluation and reclamation expenses
(154
)
—

(2,992
)
(230
)
(3,376
)
Operating income (loss)
5,868

—

(3,077
)
(9,129
)
(6,338
)
(Loss) income before income tax
(9,937
)
—

3,661

(5,094
)
(11,370
)
 
 
 
 
 
 
Interest income and other finance income
945

—

—

620

1,565

Interest expense and other finance costs
(770
)
—

(38
)
(4,346
)
(5,154
)
Income tax (expense)
(75
)
—

(102
)
(892
)
(1,069
)
 
 
 
 
 
 
As at December 31, 2014
 
 
 
 
 
Total assets
245,819

343,411

101,798

295,221

986,249

Non-current assets
140,856

240,893

90,980

21,702

494,431

Total liabilities
(121,191
)
(45,401
)
(13,723
)
(226,684
)
(406,999
)

(i) Other reconciling items refer to items that are not reported as part of segment performance as they are managed on a corporate basis.

Segment revenue by product
 
Three months ended March 31
 
 
2015

2014

 
%

%

Silver
39

80

Gold
59

—

Zinc
2

18

Other
—

2


Segment revenue by location and major customers
Our Pirquitas mine sales are made to external customers located in various geographical areas. For the Pirquitas mine segment, we had six customers who individually accounted for between 10% and 36% of total revenue during the three months ended March 31, 2015, and five customers who individually accounted for between 15% and 23% of total revenue during the three months ended March 31, 2014. Marigold mine's principal product is gold doré with the refined gold bullion sold to one customer.


 
 
22 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

18.
OPERATING SEGMENTS (Cont'd)

Non-current assets by location
 
March 31, 2015

December 31, 2014

 
$

$

United States
256,665

242,013

Argentina
138,922

145,273

Mexico
71,575

72,967

Peru
11,676

11,901

Canada
32,807

22,277

Total
511,645

494,431



19.
FAIR VALUE MEASUREMENTS

Assets and liabilities that are held at fair value are categorized based on a valuation hierarchy which is determined by the following valuation methodology utilized:
 
Fair value at March 31, 2015
Fair value at December 31, 2014
 
Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

 
$ 

$

$

$

$ 

$

$

$

Recurring measurements
 
 
 
 
 
 
 
 
Trade receivables
—

34,228

—

34,228

—

26,529

—

26,529

Marketable securities
91,492

—

—

91,492

104,785

—

—

104,785

Other financial assets
—

—

1,954

1,954

—

—

1,954

1,954

Trade and other payables
—

2,716

—

2,716

—

3,281

—

3,281

Current debt
5,669

—

—

5,669

—

5,922

—

5,922

 
97,161

36,944

1,954

136,059

104,785

35,732

1,954

142,471

 
 
 
 
 
 
 
 
 
Non-recurring measurements
 
 
 
 
 
 
 
 
Property, plant and equipment
—

—

—

—

—

—

180,007

180,007

 
—

—

—

—

—

—

180,007

180,007

 
 
 
 
 
 
 
 
 
Fair values disclosed
 
 
 
 
 
 
 
 
Convertible notes (note 13)
188,116

—

—

188,116

185,831

—

—

185,831

 
188,116

—

—

188,116

185,831

—

—

185,831


Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities

Marketable securities, consisting of available-for-sale investments with no trading restrictions are valued using a market approach based upon unadjusted quoted prices in an active market obtained from securities exchanges. The Argentine peso loan facility is valued using the official foreign exchange rate on the cash value at the end of the period. The fair value disclosed for the convertible notes is also included in Level 1, as the basis of valuation uses a quoted price in an active market.

Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices)

Trade receivables from provisional invoices for concentrate sales are included in Level 2, as the basis of valuation uses quoted commodity prices.

 
 
23 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

19.
FAIR VALUE MEASUREMENTS (Cont'd)

Accrued liabilities relating to DSUs, RSUs, and PSUs are included in Level 2, as the basis of valuation uses quoted prices in active markets.

Level 3 – inputs for an asset or liability that are not based on observable market data (unobservable inputs)

The deferred consideration from the sale of the Challacollo project (note 6) is included in Level 3, as certain assumptions used in the calculation of the fair value are not based on observable market data.

During the year ended December 31, 2014 the Pirquitas Mine cash-generating unit was written down to its recoverable amount. The recoverable amount became the carrying value and will not be revalued, but certain assumptions used in the calculation of the recoverable amount are categorized as Level 3 in the fair value hierarchy.

There were no transfers into or out of Level 3 during the three months ended March 31, 2015 or during 2014.


20.
SUPPLEMENTAL CASH FLOW INFORMATION

Changes in working capital items during the three months ended March 31, 2015 and 2014 are as follows:

 
Three months ended March 31
 
 
2015

2014

 
$ 

$

Trade and other receivables
(4,119
)
12,935

Inventory
7,646

(2,266
)
Trade and other payables
(4,794
)
(3,983
)
Current provisions
399

1,783

 
(868
)
8,469

During the three months ended March 31, 2015 and 2014 we conducted the following non-cash investing transactions:
 
Three months ended March 31
 
 
2015

2014

 
$

$

Shares received for sale of mineral property (note 6)
—

9,188

Deferred consideration received for sale of mineral property (note 6)
—

1,954



 
 
24 | Page