EX-99.1 2 a2015q3fs.htm EXHIBIT 99.1 Exhibit



Silver Standard Resources Inc.
Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015 and 2014
(unaudited)







Silver Standard Resources Inc.
Condensed Consolidated Interim Financial Statements for the three and nine months ended
September 30, 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
September 30

December 31

 
 
2015

2014

 
 
$ 

$

Current assets
 
 
 
Cash and cash equivalents
 
200,017

184,643

Trade and other receivables
4
48,201

49,824

Marketable securities
5
107,827

104,785

Inventory
6
147,788

129,228

Other current assets
7
3,909

23,338

 
 
507,742

491,818

Non-current assets
 
 
 
Property, plant and equipment
8
389,641

439,074

Income tax receivable
10
18,158

—

Value added tax receivable
11
32,149

29,473

Other non-current assets
7
7,076

25,884

Total assets
 
954,766

986,249

 
 
 
 
Current liabilities
 
 
 
Trade and other payables
12
62,880

56,645

Provisions
13
68,079

60,303

Current debt
 
3,715

5,922

 
 
134,674

122,870

Non-current liabilities
 
 
 
Deferred income tax liabilities
 
27,634

29,050

Non-current provisions
13
60,912

57,945

Convertible notes
14
205,277

197,134

Total liabilities
 
428,497

406,999

 
 
 
 
Shareholders' equity
 
 
 
Share capital
 
707,034

707,034

Other reserves
 
(41,868
)
(12,723
)
Equity component of convertible notes
 
68,347

68,347

Retained deficit
 
(207,244
)
(183,408
)
Total shareholders' equity attributable to our shareholders
 
526,269

579,250

Total liabilities and equity
 
954,766

986,249

 
 
 
 
Events after the reporting period (note 21)
 
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements
Approved by the Board of Directors and authorized for issue on November 5, 2015
"Richard D. Paterson"
 
"Paul Benson"
Richard D. Paterson, Director
 
Paul Benson, Director

 
 
3 | Page

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

 
Note
Three months ended September 30
 
 
Nine months ended September 30
 
 
 
2015

2014

 
2015

2014

 
 
 
(restated note 2(b))

 
 
(restated note 2(b))

 
 
$

$

 
$

$

 
 
 
 
 
 
 
Revenue
 
77,191

79,269

 
284,730

177,292

Cost of sales
16
(84,587
)
(73,011
)
 
(245,405
)
(154,088
)
(Loss) income from mine operations
 
(7,396
)
6,258

 
39,325

23,204

 
 
 
 
 
 
 
General and administrative expenses
15(e)
(5,700
)
(4,376
)
 
(18,067
)
(15,874
)
Exploration, evaluation and reclamation expenses
 
(3,147
)
(5,523
)
 
(11,012
)
(13,211
)
Business acquisition costs
 
—

(263
)
 
—

(5,299
)
Impairment charges
9
(34,490
)
—

 
(34,490
)
—

Operating income (loss)
 
(50,733
)
(3,904
)
 
(24,244
)
(11,180
)
 
 
 
 
 
 
 
Gain on sale of mineral property
7
—

—

 
—

15,939

Interest earned and other finance income
 
194

578

 
1,069

2,767

Interest expense and other finance costs
 
(6,361
)
(7,592
)
 
(19,060
)
(18,071
)
Unrealized (loss) gain on derivatives
 
(33
)
694

 
(33
)
2,788

Other (expenses)
17
(2,414
)
(2,831
)
 
(4,503
)
(8,933
)
Foreign exchange (loss)
 
(3,209
)
(4,545
)
 
(6,533
)
(22,336
)
(Loss) income before income tax
 
(62,556
)
(17,600
)
 
(53,304
)
(39,026
)
 
 
 
 
 
 
 
Income tax recovery (expense)
 
3,140

24

 
(4,276
)
(1,145
)
 
 
 
 
 
 
 
Net (loss) and net (loss) attributable to shareholders
 
(59,416
)
(17,576
)
 
(57,580
)
(40,171
)
 
 
 
 
 
 
 
Weighted average shares outstanding (thousands)
 
 
 
 
 
 
Basic
 
80,754

80,754

 
80,754

80,754

Diluted
 
80,754

80,754

 
80,754

80,754

 
 
 
 
 
 
 
(Loss) per share
 
 
 
 
 
 
Basic
 
$(0.74)
$(0.22)
 
$(0.71)
$(0.50)
Diluted
 
$(0.74)
$(0.22)
 
$(0.71)
$(0.50)
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)

 
Note
Three months ended September 30
 
 
Nine months ended September 30
 
 
 
2015

2014

 
2015

2014

 
 
 
(restated note 2(b))

 
 
(restated note 2(b))

 
 
$

$

 
$

$

 
 
 
 
 
 
 
Net (loss) for the period attributable to shareholders
 
(59,416
)
(17,576
)
 
(57,580
)
(40,171
)
Other comprehensive income (loss)
 
 

 

 
 
 
Items that will not be reclassified to net income or loss:
 
 
 
 
 
 
Unrealized gain (loss) on marketable securities at FVTOCI, net of tax
 
8,431

(48,037
)
 
2,824

3,215

Items that will be reclassified to net income or loss:
 
 
 
 
 
 
Unrealized (loss) on effective portion of derivative, net of tax
 
(329
)
—

 
(329
)
—

Realized gain on effective portion of derivative, net of tax
 
108

—

 
108

—

Realized loss recycled to net income or loss
17
—

987

 
—

2,258

    Cumulative translation adjustment
 
—

—

 
—

35

Other comprehensive income (loss)
 
8,210

(47,050
)
 
2,603

5,508

Total comprehensive (loss) attributable to shareholders
 
(51,206
)
(64,626
)
 
(54,977
)
(34,663
)
Total comprehensive (loss)
 
(51,206
)
(64,626
)
 
(54,977
)
(34,663
)
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
15
—

—

1,413

—

—

1,413

Total comprehensive income (loss) for the period
 
—

—

5,508

—

(40,171
)
(34,663
)
Balance, September 30, 2014
 
80,754

707,034

(21,966
)
68,347

(97,186
)
656,229

 
 
 
 
 
 
 
 
Balance, December 31, 2014
 
80,754

707,034

(12,723
)
68,347

(183,408
)
579,250

Impact of adopting IFRS 9
2(b)(ii)
—

—

(33,744
)
—

33,744

—

Balance, January 1, 2015 (restated)
 
80,754

707,034

(46,467
)
68,347

(149,664
)
579,250

   Equity-settled share-based compensation
15
—

—

1,996

—

—

1,996

Total comprehensive income (loss) for the period
 
—

—

2,603

—

(57,580
)
(54,977
)
Balance, September 30, 2015
 
80,754

707,034

(41,868
)
68,347

(207,244
)
526,269

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 September 30
 
 
Nine months ended September 30
 
 
 
2015

2014

 
2015

2014

 
 
 
(restated 2(b))

 
 
(restated 2(b))

 
 
$

$

 
$

$

Cash flows from operating activities
 
 

 

 
 
 
Net (loss) for the period
 
(59,416
)
(17,576
)
 
(57,580
)
(40,171
)
Adjustments for:
 
 

 

 
 
 
Depreciation, depletion and amortization
 
19,957

9,672

 
57,303

22,069

Share-based payments
 
711

405

 
1,996

1,413

Net finance expense
 
5,897

7,014

 
16,815

15,304

(Gain) on sale of mineral property
 
—

—

 
—

(15,939
)
Impairment charges and inventory write-downs
 
42,206

—

 
42,206

—

(Gain) on derivative instrument
 
—

(694
)
 
—

(2,788
)
Other expense
 
1,300

2,615

 
3,497

8,145

Income tax (recovery) expense
 
(3,140
)
(24
)
 
4,276

1,145

Non-cash foreign exchange loss
 
2,367

6,047

 
4,983

17,120

Net changes in non-cash working capital items
20
(2,458
)
(1,103
)
 
(6,332
)
584

Cash generated by operating activities before value added taxes, interest and income taxes (paid) recovered
 
7,424

6,356

 
67,164

6,882

Value added taxes (paid)
 
(3,647
)
(6,016
)
 
(10,098
)
(13,570
)
Value added taxes recovered
 
2,945

16,867

 
10,730

23,218

Interest (paid)
 
(3,994
)
(3,810
)
 
(8,749
)
(7,619
)
Income taxes (paid)
 
(1,730
)
(211
)
 
(5,487
)
(2,944
)
Cash generated by operating activities
 
998

13,186

 
53,560

5,967

Cash flows from investing activities
 
 

 

 
 
 
Purchase of Marigold mine
 
—

7,268

 
—

(267,732
)
Purchase of property, plant and equipment
 
(13,023
)
(7,891
)
 
(27,711
)
(14,826
)
Production stripping capitalized costs
 
—

(4,491
)
 
(12,540
)
(19,187
)
Expenditures on exploration properties
 
(11,846
)
(562
)
 
(12,384
)
(3,167
)
Proceeds from sale of mineral property
7
—

—

 
20,000

17,500

Proceeds from sale of marketable securities
 
—

29,027

 
—

39,267

Taxes paid on sale of mineral properties
 
—

—

 
—

(16,780
)
Decrease (increase) in restricted cash
 
7,500

(1,856
)
 
17,701

(17,606
)
Interest received
 
81

192

 
399

1,595

Tax deposit (paid)
10
—

—

 
(19,231
)
—

Dividends received
 
—

—

 
—

166

Cash generated (used) by investing activities
 
(17,288
)
21,687

 
(33,766
)
(280,770
)
Cash flows from financing activities
 
 

 

 
 
 
Repayment of bank loan
 
—

—

 
(1,649
)
—

Cash (used) by financing activities
 
—

—

 
(1,649
)
—

Effect of foreign exchange rate changes on cash and cash equivalents
 
(921
)
(1,861
)
 
(2,771
)
(5,680
)
(Decrease) increase in cash and cash equivalents
 
(17,211
)
33,012

 
15,374

(280,483
)
Cash and cash equivalents, beginning of period
 
217,228

102,162

 
184,643

415,657

Cash and cash equivalents, end of period
 
200,017

135,174

 
200,017

135,174


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

 
 
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Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 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 Market 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. 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 International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting. 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 and the voluntary adoption of IFRS 9, Financial Instruments: Classification and Measurement ("IFRS 9"), which had an initial application date of April 1, 2015. The impact of this adoption is discussed in note 2(b)(ii) below.

These statements were authorized for issue by the Board of Directors on November 5, 2015.

b)
Change in accounting policies
(i)Exploration and evaluation expenditures
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.


 
 
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Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

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

For the nine months ended September 30, 2014, the following adjustments were recorded to the consolidated statements of (loss):

 
 
Adjustments for change in accounting policy

 
Nine months ended September 30, 2014
As previously reported

Exploration and evaluation

As currently reported

 
$

$

$

Exploration, evaluation and reclamation (expenses)
(4,469
)
(8,742
)
(13,211
)
Gain on sale of mineral property
9,240

6,699

15,939

Other (expense) income
(9,783
)
850

(8,933
)
Income tax (expense)
(952
)
(193
)
(1,145
)
(Decrease) in net income
 
(1,386
)
 
 
 
 
 
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

($0.48
)

($0.02
)

($0.50
)
Diluted

($0.48
)

($0.02
)

($0.50
)

For the three months ended September 30, 2014, the following adjustments were recorded to the consolidated statements of (loss):

 
 
Adjustments for change in accounting policy

 
Three months ended September 30, 2014
As previously reported

Exploration and evaluation

As currently reported

 
$

$

$

Exploration, evaluation and reclamation (expenses)
(2,560
)
(2,963
)
(5,523
)
Other (expense) income
(2,949
)
118

(2,831
)
Income tax (expense)
90

(66
)
24

(Decrease) in net income
 
(2,911
)
 
 
 
 
 
Weighted average shares outstanding (thousands)
 
 
 
Basic
80,754

80,754

80,754

Diluted
80,754

80,754

80,754

 
 
 
 
Increase in (loss) per share
 
 
 
Basic

($0.18
)

($0.04
)

($0.22
)
Diluted

($0.18
)

($0.04
)

($0.22
)



 
 
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Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
(ii)Financial instruments under IFRS 9
We have early adopted all of the requirements of IFRS 9 as of April 1, 2015. IFRS 9 uses a single approach to determine whether a financial asset is classified and measured at amortized cost or fair value, replacing the multiple rules in IAS 39, Financial Instruments: Recognition and Measurement (“IAS 39”). The approach in IFRS 9 is based on how an entity manages its financial instruments and the contractual cash flow characteristics of the financial asset. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward in IFRS 9, so our accounting policy with respect to financial liabilities is unchanged.
As a result of the early adoption of IFRS 9, we have changed our accounting policy for financial assets retrospectively, for assets that were recognized at the date of application. The change did not impact the carrying value of any of our financial assets on transition date. The main area of change is the accounting for equity securities previously classified as available for sale.
The following is the new accounting policy for financial assets under IFRS 9. All other aspects of our accounting policy for financial instruments as disclosed in note 2(q) to the consolidated financial statements for the year ended December 31, 2014 are unaffected:
Financial assets
We classify our financial assets in the following categories: at fair value through profit and loss (“FVTPL”), fair value through other comprehensive income (“FVTOCI”) or at amortized cost. We determine the classification of financial assets at initial recognition. The classification of debt instruments is driven by our business model for managing the financial assets and their contractual cash flow characteristics. Equity instruments that are held for trading (including all equity derivative instruments) are classified as FVTPL, for other equity instruments, on the day of acquisition we can make an irrevocable election (on an instrument-by-instrument basis) to designate them as at FVTOCI.
Our accounting policy for each of the categories is as follows:
Financial assets at FVTPL Financial assets carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the consolidated statement of (loss) income. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets held at FVTPL are included in the consolidated statement of (loss) income in the period in which they arise.
Financial assets at FVTOCI Investments in equity instruments at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are measured at fair value, with gains and losses arising from changes in fair value recognized in other comprehensive income (loss).
Financial assets at amortized cost A financial asset is measured at amortized cost if the objective of the business model is to hold the financial asset for the collection of contractual cash flows, and the asset's contractual cash flows are comprised solely of payments of principal and interest. They are classified as current assets or non-current assets based on their maturity date, and are initially recognized at fair value and subsequently carried at amortized cost less any impairment.
Derivative financial instruments When we enter into derivative contracts, these are intended to reduce the exposures related to assets and liabilities, or forecast transactions.
The classification approach described above is applied to all financial assets, including those that contain embedded derivatives, without the need to separate the embedded derivative from the host contract. Commodity-based embedded derivatives resulting from provisional sales prices of metals in concentrate are classified as FVTPL with changes in value recognized in revenue.
Impairment of financial assets at amortized cost We recognize a loss allowance for expected credit losses on financial assets that are measured at amortized cost.

 
 
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Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
At each reporting date, we measure the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset has not increased significantly since initial recognition, we measure the loss allowance for the financial asset at an amount equal to twelve month expected credit losses.
Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be objectively related to an event occurring after the impairment was recognized.
Derecognition of financial assets Financial assets are derecognized when the investments mature or are sold, and substantially all the risks and rewards of ownership have been transferred. Gains and losses on derecognition of financial assets classified as FVTPL or amortized cost are recognized within finance income or other income and finance costs, respectively. Gains or losses on financial assets classified as FVTOCI remain within accumulated other comprehensive income.
We completed a detailed assessment of our financial assets as at April 1, 2015. The following table shows the original classification under IAS 39 and the new classification under IFRS 9:
 
Original classification
New classification
Financial assets
IAS 39
IFRS 9
Cash and cash equivalents
FVTPL
FVTPL
Marketable securities
Available-for-sale
FVTOCI
Marketable securities
FVTPL
FVTOCI
Trade receivable
Amortized cost
Amortized cost
Concentrate trade receivables
Embedded derivate separately identified as FVTPL
Whole contract FVTPL
Trade payable
Amortized cost
Amortized cost
We elected to classify our marketable securities as FVTOCI as they are not considered to be held for trading, and this presentation will prevent the consolidated statement of (loss) from being impacted by value changes of these non-operating assets.
As we are not restating prior periods we have recognized the effects of retrospective application at the beginning of the annual reporting period that includes the date of initial application. Therefore, the adoption of IFRS 9 resulted in a decrease to opening retained deficit on January 1, 2015 of $33,744,000 with a corresponding adjustment to accumulated other comprehensive income (loss).
(iii)IFRS 7 amendments
IFRS 7, Financial Instruments: Disclosure has been amended to require additional disclosures on transition from IAS 39 to IFRS 9. These amendments are effective upon adoption of IFRS 9. As such, we have adopted these amendments as at April 1, 2015.

 
 
11 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
(iv)Hedge accounting
In addition to the early adoption of IFRS 9, we also applied hedge accounting during the six months ended September 30, 2015. The accounting policy for hedge accounting is as follows:
Derivative Instruments Derivative instruments are recorded at fair value on the consolidated statement of financial position, classified based on contractual maturity. Derivative instruments are classified as either hedges of the fair value of recognized assets or liabilities or of firm commitments (“fair value hedges”), hedges of highly probable forecast transactions (“cash flow hedges”) or non-hedge derivatives. Derivatives designated as either a fair value or cash flow hedge that are expected to be highly effective in achieving offsetting changes in fair value or cash flows are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated. Derivative assets and derivative liabilities are shown separately in the consolidated statement of financial position unless there is a legal right to offset and intent to settle on a net basis.
Fair Value Hedges Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the consolidated statement of (loss), together with any changes in the fair value of the hedged asset or liability or firm commitment that is attributable to the hedged risk.
Cash Flow Hedges The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in equity. The gain or loss relating to the ineffective portion is recognized in the consolidated statement of (loss) income. Amounts accumulated in equity are transferred to the consolidated statements of (loss) in the period when the forecasted transaction impacts earnings. When the forecasted transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously deferred in equity are transferred from equity and included in the measurement of the initial carrying amount of the asset or liability.
When a derivative designated as a cash flow hedge expires or is sold and the forecasted transaction is still expected to occur, any cumulative gain or loss relating to the derivative that is recorded in equity at that time remains in equity and is recognized in the consolidated statements of (loss) when the forecasted transaction occurs. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was recorded in equity is immediately transferred to the consolidated statement of (loss).
Non-Hedge Derivatives Derivative instruments that do not qualify as either fair value or cash flow hedges are recorded at their fair value at the balance sheet date, with changes in fair value recognized in the consolidated statement of (loss).
As at September 30, 2015 we had entered into certain contracts to hedge the cost of diesel, with the objective of reducing the volatility of reported income from mine operations. We have applied hedge accounting for these contracts.

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 unaudited condensed consolidated interim financial statements for the nine months ended September 30, 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.

 
 
12 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

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

d)
Pronouncement affecting our financial statements presentation or disclosure
The following new and amended IFRS pronouncement was adopted during the nine months ended September 30, 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.

e)
Future accounting changes
The following new standard has been issued but is 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, 2018. We are currently evaluating the impact the standard is expected to have on our consolidated financial statements.

There are no other IFRS or International Financial Reporting Interpretations Committee ("IFRIC") interpretations that are not yet effective that would be expected to have a material impact on our consolidated financial statements.


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 the Marigold mine were expensed as incurred and during the nine months ended September 30, 2014 amounted to $5,299,000.


 
 
13 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

3.
PURCHASE OF MARIGOLD MINE (Cont'd)

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 nine months ended September 30, 2014 would have been approximately $222,928,000 and our consolidated net loss for the nine months ended September 30, 2014 would have been $39,902,000.


4.
TRADE AND OTHER RECEIVABLES

 
September 30, 2015

December 31, 2014

 
$

$

Trade receivables
27,160

26,529

Tax receivables
6,818

5,389

Value added tax receivables (note 11)
3,137

8,054

Prepayments and deposits
8,184

6,068

Other receivables
2,902

3,784

 
48,201

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 September 30, 2015 or December 31, 2014.


 
 
14 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

5.
MARKETABLE SECURITIES

We have designated all of our marketable securities as FVTOCI to reduce the impact of fair value movements in the consolidated statement of (loss) to appropriately represent the results of our core operating assets.

The movement in marketable securities during the nine months ended September 30, 2015 and the year ended December 31, 2014 is comprised of the following:

 
September 30, 2015

December 31, 2014

 
$

$

Balance, beginning of period
104,785

129,267

Additions (1)
1,062

9,188

Disposals (1)
(1,315
)
(37,322
)
Fair value adjustments through profit and loss (2)
—

(10,060
)
Fair value adjustments through other comprehensive income
18,232

22,699

Foreign exchange adjustments
(14,937
)
(8,987
)
Balance, end of period
107,827

104,785


(1) 
We derecognized a portion of our investment in Pretium Resources Inc. ("Pretium") in exchange for shares of Golden Arrow Resources Corporation ("Golden Arrow"). The fair value at the date of disposition was C$7.66 per Pretium share, which resulted in a cumulative loss of $322,000 which remains in other comprehensive income.

(2) 
During 2014, we recorded unrealized losses on previously impaired marketable securities and marketable securities classified as FVTPL under IAS 39.


6.
INVENTORY

 
September 30, 2015

December 31, 2014

 
$ 

$

Current:
 
 
Finished goods
17,309

25,221

Stockpiled ore
19,425

17,896

Leach pad inventory
81,395

56,250

Materials and supplies
29,659

29,861

 
147,788

129,228

Non-current:
 


Materials and supplies
3,222

4,326

 
151,010

133,554


During the nine months ended September 30, 2015, we wrote-down stockpiled ore to its net realizable value ("NRV"), recording a charge of $7,716,000. The cost of inventory held at its NRV at September 30, 2015 was $19,425,000 (December 31, 2014 - $Nil).


 
 
15 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

7.
OTHER ASSETS

 
September 30, 2015
December 31, 2014
 
Current

Non-current

Current

Non-current

 
$

$

$

$

Financial assets:
 
 
 
 
Restricted cash (1)
—

1,900

—

19,604

Deferred consideration (2, 3)
—

1,954

19,443

1,954

Non-financial assets:
 
 
 
 
Assets held for sale
3,909

—

3,895

—

Non-current inventory (note 6)
—

3,222

—

4,326

 
3,909

7,076

23,338

25,884


(1) 
We have cash and security deposits in relation to our close down and restoration provisions of $1,900,000 (December 31, 2014 - $12,104,000). As of December 31, 2014, we also had cash collateral supporting an Argentine peso-denominated loan facility of $7,500,000.

(2) 
On May 5, 2015, we received $20,000,000 of deferred consideration from the sale of the San Agustin project located in Mexico, 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 Resources Corporation ("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 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 nine months ended September 30, 2014. The deferred consideration is secured against the Challacollo mineral claims and the shares of the entity holding the Challacollo project.


 
 
16 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 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:
 
September 30, 2015
 
Plant and equipment

Assets under construction

Mineral properties

Exploration and evaluation assets (1)

Total

Cost
 
 
 
 
 
Balance, January 1, 2015
439,415

19,988

118,277

64,241

641,921

Additions
579

24,948

19,098

12,730

57,355

Disposals
(5,506
)
—

—

—

(5,506
)
Change in estimate of close down and restoration provision
—

—

1,460

—

1,460

Impairment charges (note 9)
(34,490
)
—

—

—

(34,490
)
Transfers
29,796

(30,667
)
—

871

—

Balance, end of period
429,794

14,269

138,835

77,842

660,740

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

(38,601
)
—

(202,847
)
Charge for the year
(50,951
)
—

(18,395
)
—

(69,346
)
Disposals
1,094

—

—

—

1,094

Balance, end of period
(214,103
)
—

(56,996
)
—

(271,099
)
 
 
 
 
 
 
Net book value at September 30, 2015
215,691

14,269

81,839

77,842

389,641

 
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


(1) 
On September 24, 2015, we completed the acquisition of the Valmy Property, contiguous with our Marigold Mine in Nevada, U.S. for $11,685,000 in cash from Newmont Mining Corporation.


 
 
17 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

9.
IMPAIRMENT OF NON-CURRENT ASSETS

During the nine months ended September 30, 2015 and the year ended December 31, 2014, silver prices and respective long term forecasts have experienced a significant decline since July 2015, ending September 30, 2015 at $14.65 per ounce of silver. In addition, the book value of our net assets has exceeded our market capitalization, which was an indicator of potential impairment of the carrying value of our non-current assets. A similar downward trend in silver prices had also occurred during 2014, particularly in the fourth quarter. As a result, at both September 30, 2015 and December 31, 2014, we assessed the recoverable amount of the Pirquitas mine, which has been identified as a cash-generating unit (“CGU”).

Impairment testing on the Pirquitas mine

In both impairment assessments, the recoverable amount of the Pirquitas mine was determined to be the fair value less costs to dispose ("FVLCTD"), which is based upon the CGU's estimated future after-tax cash flows. The after-tax cash flows were determined based on life-of-mine (“LOM”) after-tax cash flow projections, which incorporate our estimates of forecast metal prices, production based on current estimates of recoverable Mineral Reserves and Mineral Resources, exploration potential, future operating costs and capital expenditures, inflation, and long-term foreign exchange rates. Metal prices included in the cash flow projections were based on market consensus forecasts. Projected cash flows are discounted using an estimated weighted average cost of capital of a market participant adjusted for asset specific risks. Management's estimate of the FVLCTD is classified as level 3 in the fair value hierarchy (note 19).

Significant assumptions and impact

Pricing
For the September 30, 2015 ("Q3 2015") and December 31, 2014 ("Q4 2014") impairment assessments, the real silver metal price assumptions were as follows:
Silver price assumptions
2015
2016
2017
Q3 2015
$15.75
$15.59
$16.86
Q4 2014
$17.50
$18.50
$19.00

Inflation and foreign exchange
Argentina's current inflationary environment continues to be elevated with the Argentine peso experiencing significant devaluation. A key assumption in the Pirquitas mine's current LOM after-tax cash flow projections is that total operating costs increased by inflation would be largely offset by a devaluation of the Argentine peso. Should this assumption regarding the future macroeconomic situation in Argentina change, and sustained inflation continue, without a commensurate change in the foreign exchange rate, the estimated recoverable amount could be adversely impacted.
Discount rate
The pre-tax discount rate adjusted for asset specific risks used for the Q3 2015 impairment assessment was 10% (Q4 2014 - 10%).
At Q3 2015, the recoverable amount of $110,777,000 (Q4 2014 - $180,007,000) was lower than the carrying value of the CGU and therefore we recorded an impairment charge of $34,490,000 (Q4 2014 - $40,250,000) before tax, ($34,490,000 net of tax (Q4 2014 - $40,250,000)) against the carrying value of the Pirquitas mine and its plant and equipment.

Sensitivity
Average silver prices would have to increase by approximately 15% (Q4 2014 - 12%) for the remaining LOM to be break-even. In addition, due to the short remaining mine life the assessment of FVLCTD is not materially sensitive to a change in discount rate.

 
 
18 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

10.
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, equivalent to $18,158,000 as at September 30, 2015. On April 20, 2015, we filed a Notice of Objection with the CRA and, on September 15, 2015, we filed 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 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.


11.
VALUE ADDED TAX RECEIVABLE

 
September 30, 2015

December 31, 2014

 
$ 

$

Current
3,137

8,054

Non-current
32,149

29,473

 
35,286

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 pesos. Accordingly, foreign currency fluctuations could materially impact the value of the VAT receivables in U.S. dollars.


12.
TRADE AND OTHER PAYABLES

 
September 30, 2015

December 31, 2014

 
$

$

Trade payables
23,044

23,552

Accrued liabilities
35,779

28,909

Income taxes payable
2,820

1,028

Accrued interest on convertible notes (note 14)
1,237

3,156

 
62,880

56,645



 
 
19 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

13.
PROVISIONS

 
September 30, 2015
December 31, 2014
 
Current

Non-current

Current

Non-current

 
$

$

$

$

Export duties on silver concentrate (1)
64,190

—

56,058

—

Close down and restoration provision (2)
3,889

60,912

4,245

57,945

 
68,079

60,912

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 September 30, 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 $5.3 million to $8.9 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 (loss) income.

 
 
20 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

13.
PROVISIONS (Cont'd)

(2) 
The changes in the close down and restoration provision during the nine months ended September 30, 2015 and the year ended December 31, 2014 were as follows:
 
September 30, 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
(1,574
)
(1,839
)
Accretion expense
2,787

3,640

Foreign exchange gain
(62
)
(113
)
Revisions and new estimated cash flows
1,460

8,570

 
 
 
Balance, end of period
64,801

62,190

 
 
 
Less: current portion of close down and restoration provision
(3,889
)
(4,245
)
Non-current close down and restoration provision
60,912

57,945


The revision in the estimated cash flows during the nine months ended September 30, 2015 was due to additional disturbance at Marigold mine from waste dump expansion.


14.
CONVERTIBLE NOTES AND CREDIT FACILITY

(a)Convertible notes

The movement in the debt portion of the convertible notes during the nine months ended September 30, 2015 and the year ended December 31, 2014 is comprised of the following:
 
September 30, 2015

December 31, 2014

 
$

$

Balance, beginning of period
200,290

190,287

Accretion of discount
8,144

10,003

Interest accrued in period
5,699

7,619

Interest paid
(7,619
)
(7,619
)
Balance, end of period
206,514

200,290

Accrued interest outstanding
(1,237
)
(3,156
)
Non-current portion of convertible notes outstanding
205,277

197,134


(b)Credit facility

On August 4, 2015, we entered into a $75 million senior secured revolving credit facility (the "Credit Facility") with a syndicate of banks. The Credit Facility may be used for reclamation bonding, working capital and other general corporate purposes.

The term of the Credit Facility is three years, maturing on August 4, 2018. Amounts that are borrowed under the Credit Facility will incur variable interest at London Interbank Offered Rate plus an applicable margin ranging from 2.75% to 3.75% determined based on our net leverage ratio. The Credit Facility also provides for financial letters of credit at 66% of the applicable margin and undrawn fees are 25% of the applicable margin.

 
 
21 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

14.
CONVERTIBLE NOTES AND CREDIT FACILITY (Cont'd)

All debts, liabilities and obligations under the Credit Facility are guaranteed by our material subsidiaries and secured by our assets, certain of our material subsidiaries, and the pledges of material subsidiaries. In connection with the Credit Facility, we must also maintain certain net tangible worth and ratios for interest coverage and net leverage. As at September 30, 2015 we were in compliance with these covenants.

As at September 30, 2015, we had utilized $7,500,000 of the Credit Facility to support a certain letter of credit, and transaction costs relating to the Credit Facility totaled $938,000 and are being recognized over the term of the Credit Facility.


15.
SHARE CAPITAL AND SHARE-BASED PAYMENTS

(a)Stock options
The changes in stock options issued during the nine months ended September 30, 2015 and the year ended December 31, 2014 are as follows:
 
September 30, 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
1,519,656

6.70

1,016,578

8.07

     Expired
—

—

(74,246
)
(14.14
)
     Forfeited
(631,565
)
(17.64
)
(320,211
)
(16.19
)
Outstanding, end of period
3,265,156

8.94

2,377,065

12.68


For options granted during the nine months ended September 30, 2015, the weighted average option valuations were based on an expected option life of 4.2 years, a risk free interest rate of 1.0%, a dividend yield of nil, and volatility of 57.9%.
During the nine months ended September 30, 2015, options granted had a weighted average fair value of C$3.16 per option.

 
 
22 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

15.
SHARE CAPITAL AND SHARE-BASED PAYMENTS (Cont'd)
(b)Deferred Share Units (“DSUs”)
During the nine months ended September 30, 2015 and the year ended December 31, 2014, the following DSUs were outstanding to non-executive directors:
 
September 30, 2015

December 31, 2014

 
Number of DSUs

Number of DSUs

Outstanding, beginning of period
335,680

251,019

     Granted
109,406

106,486

     Redeemed
(32,933
)
(21,825
)
Outstanding, end of period
412,153

335,680


The DSUs granted in the nine months ended September 30, 2015 had a weighted average fair value of C$6.39 per unit. DSUs settled in the nine months ended September 30, 2015 were settled at a fair value of C$6.01 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 September 30, 2015, the fair value of outstanding DSUs was C$8.70 per unit.

(c)Restricted Share Units (“RSUs”)
During the nine months ended September 30, 2015 and the year ended December 31, 2014, the following RSUs were outstanding to employees:
 
September 30, 2015

December 31, 2014

 
Number of RSUs

Number of RSUs

Outstanding, beginning of period
330,414

129,498

     Granted
473,815

297,480

     Settled
(124,548
)
(53,905
)
     Forfeited
(39,604
)
(42,659
)
Outstanding, end of period
640,077

330,414


The RSUs granted in the nine months ended September 30, 2015 had a weighted average fair value of C$6.18 per unit. RSUs settled in the nine months ended September 30, 2015 were settled at a weighted average fair value of C$6.67 per unit. As at September 30, 2015, the fair value of outstanding RSUs was C$8.70 per unit.

 
 
23 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

15.
SHARE CAPITAL AND SHARE-BASED PAYMENTS (Cont'd)

(d)Performance Share Units (“PSUs”)
During the nine months ended September 30, 2015 and the year ended December 31, 2014, the following PSUs were outstanding to senior executives:
 
September 30, 2015

December 31, 2014

 
Number of PSUs

Number of PSUs

Outstanding, beginning of period
323,000

177,729

     Granted
390,850

253,600

     Settled
—

(24,903
)
     Forfeited
(110,517
)
(83,426
)
Outstanding, end of period
603,333

323,000


The PSUs granted in the nine months ended September 30, 2015 had a weighted average fair value of C$5.57 per unit. As at September 30, 2015, the weighted average fair value of outstanding PSUs was C$16.11 per unit.

(e)Share-based compensation
Total share-based compensation, including all equity and cash-settled arrangements, for the nine months ended September 30, 2015 and 2014 has been recognized in the condensed consolidated interim financial statements as follows:
 
Three months ended September 30
 
 
Nine months ended September 30
 
 
2015

2014

 
2015

2014

 
$

$

 
$

$

Equity-settled
 
 
 
 
 
Cost of inventory
33

18

 
73

22

General and administrative expense
667

429

 
1,898

1,507

Exploration, evaluation and reclamation expenses
11

(42
)
 
25

(116
)
Cash-settled
 
 
 
 
 
Cost of inventory
447

145

 
1,005

334

General and administrative expense
1,437

(1,102
)
 
4,251

730

Exploration, evaluation and reclamation expenses
26

(112
)
 
58

9

Total
2,621

(664
)
 
7,310

2,486



 
 
24 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

16.
COST OF SALES

 
Three months ended September 30
 
 
Nine months ended September 30
 
 
2015

2014

 
2015

2014

 
$ 

$

 
$ 

$

Cost of inventory
53,731

60,487

 
172,253

124,626

Depletion, depreciation and amortization
19,802

9,381

 
56,833

21,202

Export duties (note 13)
3,338

3,143

 
8,603

8,260

Write-down of stockpiles (note 6)
7,716

—

 
7,716

—

 
84,587

73,011

 
245,405

154,088



17.
OTHER (EXPENSES)

 
Three months ended September 30
 
 
Nine months ended September 30
 
 
2015

2014

 
2015

2014

 
 
(restated note 2(b))

 
 
(restated note 2(b))

 
$

$

 
$

$

(Loss) on disposal of fixed assets
(2,449
)
(362
)
 
(4,435
)
(362
)
(Loss) on sale of marketable securities (1)
—

(3,730
)
 
—

(5,219
)
Unrealized gain (loss) on marketable securities (1)
—

1,202

 
—

(3,038
)
Other income (loss)
35

59

 
(68
)
(314
)
 
(2,414
)
(2,831
)
 
(4,503
)
(8,933
)

(1)  
As discussed in note 2(b)(ii), effective April 1, 2015, we adopted IFRS 9, which resulted in a change in our accounting policy for marketable securities, but comparatives have not been restated to illustrate the change in accounting policy. Under IFRS 9, no realized or unrealized gains or losses are recorded in the consolidated statement of (loss) income for marketable securities designated as FVTOCI. As a result, had other expenses been restated for items still recognized at January 1, 2015, total other loss would have been $4,033,000 in the three months ended September 30, 2014 and a loss of $5,895,000 in the nine months ended September 30, 2014.


 
 
25 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

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 September 30, 2015
Pirquitas mine

Marigold mine

Exploration and evaluation properties

Other reconciling items (i)

Total

 
$ 

$

$

$

$

Revenue
33,355

43,836

—

—

77,191

Cost of inventory
(25,375
)
(28,356
)
—

—

(53,731
)
Depletion, depreciation and amortization
(11,610
)
(8,192
)
—

—

(19,802
)
Export duties
(3,338
)
—

—

—

(3,338
)
Write-down of stockpiles
(7,716
)
—

—

—

(7,716
)
Cost of sales
(48,039
)
(36,548
)
—

—

(84,587
)
(Loss) income from mine operations
(14,684
)
7,288

—

—

(7,396
)
 
 
 
 
 
 
Exploration, evaluation and reclamation expenses
(994
)
(572
)
(1,209
)
(372
)
(3,147
)
Impairment charge
(34,490
)
—

—

—

(34,490
)
Operating (loss) income
(50,441
)
6,483

(1,304
)
(5,471
)
(50,733
)
(Loss) before income tax
(53,517
)
(759
)
(1,585
)
(6,695
)
(62,556
)
 
 
 
 
 
 
Interest income and other finance income
12

36

—

146

194

Interest expense and other finance costs
(1,140
)
(201
)
(19
)
(5,001
)
(6,361
)
Income tax (expense) recovery
(32
)
2,196

20

956

3,140

 
 
 
 
 
 
As at September 30, 2015
 
 
 
 
 
Total assets
147,986

366,313

98,049

342,418

954,766

Non-current assets
82,403

249,186

92,003

23,432

447,024

Total liabilities
(132,129
)
(60,112
)
(8,091
)
(228,165
)
(428,497
)

Three months ended September 30, 2014
    Pirquitas mine

Marigold mine

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

Other reconciling items (i)

Total (restated note 2(b))

 
$

$

$

$

$

Revenue
30,874

48,395

—

—

79,269

Cost of inventory
(22,399
)
(38,088
)
—

—

(60,487
)
Depletion, depreciation and amortization
(5,640
)
(3,741
)
—

—

(9,381
)
Export duties
(3,143
)
—

—

—

(3,143
)
Cost of sales
(31,182
)
(41,829
)
—

—

(73,011
)
(Loss) income from mine operations
(308
)
6,566

—

—

6,258

 
 
 
 
 
 
Exploration, evaluation and reclamation expenses
(149
)
—

(4,105
)
(1,269
)
(5,523
)
Operating (loss) income
(1,032
)
6,447

(1,866
)
(7,453
)
(3,904
)
(Loss) income before income tax
(6,461
)
5,435

(1,585
)
(14,989
)
(17,600
)
 
 
 
 
 
 
Interest income and other finance income
165

2

—

411

578

Interest expense and other finance costs
(2,253
)
(158
)
(26
)
(5,155
)
(7,592
)
Income tax recovery (expense)
75

(418
)
367

—

24

 
 
 
 
 
 
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
)

 
 
26 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

18.
OPERATING SEGMENTS (Cont'd)

Nine months ended September 30, 2015
Pirquitas mine

Marigold mine

Exploration and evaluation properties

Other reconciling items (i)

Total

 
$ 

$

$

$

$

Revenue
115,370

169,360

—

—

284,730

Cost of inventory
(75,271
)
(96,982
)
—

—

(172,253
)
Depletion, depreciation and amortization
(34,092
)
(22,741
)
—

—

(56,833
)
Export duties
(8,603
)
—

—

—

(8,603
)
Write-down of stockpiles
(7,716
)
—

—

—

(7,716
)
Cost of sales
(125,682
)
(119,723
)
—

—

(245,405
)
Income from mine operations
(10,312
)
49,637

—

—

39,325

 
 
 
 
 
 
Exploration, evaluation and reclamation expenses
(4,110
)
(2,226
)
(4,058
)
(618
)
(11,012
)
Impairment charge
(34,490
)
—

—

—

(34,490
)
Operating (loss) income
(49,656
)
47,302

(4,234
)
(17,656
)
(24,244
)
(Loss) income before income tax
(58,738
)
39,188

(3,559
)
(30,195
)
(53,304
)
 
 
 
 
 
 
Interest income and other finance income
37

56

—

976

1,069

Interest expense and other finance costs
(3,913
)
(421
)
(57
)
(14,669
)
(19,060
)
Income tax (expense) recovery
(232
)
(11,292
)
3,663

3,585

(4,276
)

Nine months ended September 30, 2014
    Pirquitas mine

Marigold mine

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

Other reconciling items (i)

Total (restated note 2(b))

 
$

$

$

$

$

Revenue
100,871

76,421

—

—

177,292

Cost of inventory
(62,480
)
(62,146
)
—

—

(124,626
)
Depletion, depreciation and amortization
(16,757
)
(4,445
)
—

—

(21,202
)
Export duties
(8,260
)
—

—

—

(8,260
)
Cost of sales
(87,497
)
(66,591
)
—

—

(154,088
)
Income from mine operations
13,374

9,830

—

—

23,204

 
 
 
 
 
 
Exploration, evaluation and reclamation expenses
(357
)
—

(10,819
)
(2,035
)
(13,211
)
Operating income (loss)
12,286

9,313

(8,607
)
(24,172
)
(11,180
)
(Loss) income before income tax
(12,182
)
8,040

(698
)
(34,186
)
(39,026
)
 
 
 
 
 
 
Interest income and other finance income
1,399

3

—

1,365

2,767

Interest expense and other finance costs
(4,006
)
(315
)
(91
)
(13,659
)
(18,071
)
Income tax (expense) recovery
—

(345
)
178

(978
)
(1,145
)

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

 
 
27 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

18.
OPERATING SEGMENTS (Cont'd)

Segment revenue by product
 
Three months ended September 30
 
 
Nine months ended September 30
 
 
2015

2014

 
2015

2014

 
%

%

 
%

%

Silver
42

31

 
38

47

Gold
57

60

 
59

43

Zinc
1

8

 
2

9

Other
1

1

 
1

1


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 one customer who accounted for 14% of total revenue during the nine months ended September 30, 2015, and three customers which individually accounted for between 10% and 11% of total revenue during the nine months ended September 30, 2014. Marigold mine's principal product is gold doré with the refined gold bullion sold to principally one customer, which accounted for 56% of total revenue during the nine months ended September 30, 2015 and 43% of total revenue during the nine months ended September 30, 2014.

Non-current assets by location
 
September 30, 2015

December 31, 2014

 
$

$

United States
252,234

242,013

Argentina
87,028

145,273

Mexico
71,815

72,967

Canada
24,359

22,277

Peru
11,588

11,901

Total
447,024

494,431



 
 
28 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

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 September 30, 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
—

27,160

—

27,160

—

26,529

—

26,529

Marketable securities
107,024

803

—

107,827

104,785

—

—

104,785

Other financial assets
—

—

1,954

1,954

—

—

1,954

1,954

Trade and other payables
—

6,107

—

6,107

—

3,281

—

3,281

Current debt
3,715

—

—

3,715

5,922

—

—

5,922

 
110,739

34,070

1,954

146,763

110,707

29,810

1,954

142,471

 
 
 
 
 
 
 
 
 
Non-recurring measurements
 
 
 
 
 
 
 
 
Inventory
—

—

56,978

56,978

—

—

63,024

63,024

Property, plant and equipment
—

—

48,383

48,383

—

—

107,414

107,414

 
—

—

105,361

105,361

—

—

170,438

170,438

 
 
 
 
 
 
 
 
 
Fair values disclosed
 
 
 
 
 
 
 
 
Convertible notes (note 14)
206,700

—

—

206,700

185,831

—

—

185,831

 
206,700

—

—

206,700

185,831

—

—

185,831


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

Marketable securities, consisting of FVTOCI 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-denominated 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 our 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.

Marketable securities with certain trading restrictions and derivative instruments are included in Level 2.

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

Other trade receivables (excluding receivables from provisional invoices) and accrued liabilities are carried at amortized cost, which approximates fair value due to their short-term nature.

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.

 
 
29 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

19.
FAIR VALUE MEASUREMENTS (Cont'd)

During the nine months ended September 30, 2015 and the year ended December 31, 2014, the Pirquitas mine CGU was written down to its recoverable amount. The recoverable amount became the carrying value and the property, plant and equipment within the CGU 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 nine months ended September 30, 2015 or during 2014.


20.
SUPPLEMENTAL CASH FLOW INFORMATION

Changes in working capital items during the three and nine months ended September 30, 2015 and 2014 are as follows:

 
Three months ended September 30
 
 
Nine months ended September 30
 
 
2015

2014

 
2015

2014

 
$ 

$

 
 
 
Trade and other receivables
825

(6,315
)
 
(1,561
)
14,636

Inventory
(14,269
)
(4,272
)
 
(15,868
)
(16,386
)
Trade and other payables
8,070

7,397

 
4,602

(2,713
)
Current provisions
2,916

2,087

 
6,495

5,047

 
(2,458
)
(1,103
)
 
(6,332
)
584

During the three and nine months ended September 30, 2015 and 2014 we conducted the following non-cash investing transactions:
 
Three months ended September 30
 
 
Nine months ended September 30
 
 
2015

2014

 
2015

2014

 
$

$

 
$

$

Shares received in exchange of marketable securities (note 5)
—

—

 
1,062

—

Shares disposed in exchange of marketable securities (note 5)
—

—

 
(1,315
)
—

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

—

 
—

9,188

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

—

 
—

1,954



 
 
30 | Page
Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2015
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

21.
EVENTS AFTER THE REPORTING PERIOD

Subsequent to the quarter end, on October 1, 2015, we entered into an agreement (the "Agreement") with Golden Arrow to explore and evaluate its Chinchillas silver-lead-zinc project, located in Jujuy Province, Argentina approximately 30 kilometers from the Pirquitas mine. Under the terms of the Agreement, we have committed to spend a minimum of $4,000,000 for pre-development activities. Expenditures may total up to $12,600,000 based on the success of pre-development activities, including exploration, mine planning, metallurgical studies, permitting and engineering studies. We have agreed to pay Golden Arrow up to C$2,000,000 during an 18-month preliminary period in four C$500,000 installments. The first installment was paid on signing of the Agreement and the remaining installments are conditional upon completion of project milestones.

If we elect to proceed, we will enter into an arrangement (the "Arrangement") with Golden Arrow whereby we will be the majority partner and operator. The Arrangement would be comprised of our Pirquitas property and Golden Arrow's Chinchillas property to be owned by us and Golden arrow on a 75%/25% basis, respectively. Upon entering into the Arrangement, we will pay Golden Arrow an amount equal to 25% of mine earnings generated by Pirquitas less certain expenditures for exploration (including Chinchillas pre-development expenditures), capital investment and closure costs incurred during the 18-month preliminary period.

 
 
31 | Page