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Fair Value Measurement | 6 Months Ended
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Jun. 30, 2018
Fair Value Measurement |
Fair Value Measurement | 18. Fair Value Measurement Fair value accounting establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below: Level 1Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). As required by accounting guidance, assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following table sets forth certain of the Company’s assets measured at fair value by level within the fair value hierarchy as of June 30, 2018 and December 31, 2017:
|  | 2018 |  | 2017 |  | Input Hierarchy Level
|  | (in thousands) |  |
Cash and cash equivalents: |  |  |  |  |  |  |  |
Bank deposits |  | $ | 26,645 |  | $ | 22,390 |  | Level 1
Gold and silver rounds/bullion |  |  | 3,664 |  |  | 3,812 |  | Level 1
Accounts receivable: |  |  |  |  |  |  |  |
Receivables from provisional concentrate sales |  |  | 1,727 |  |  | 2,884 |  | Level 2
|  | $ | 32,036 |  | $ | 29,086 |  |
Cash and cash equivalents consist primarily of cash deposits and are valued at cost, which approximates fair value. Gold and silver rounds/bullion consist of precious metals used for investment purposes and in the dividend program which are valued using quoted market prices. Please see Note 4 for additional information. The Company determined that it was not practicable to estimate the fair value of its non-current investment in equity securities of $0.2 million and as such, it is reported at cost. There have been no events or changes in circumstances that may have a significant adverse effect on the investment. Trade accounts receivable include amounts due to the Company for deliveries of concentrates and doré sold to customers. Concentrate sales contracts provide for provisional pricing as specified in such contracts. These sales contain an embedded derivative related to the provisional pricing mechanism which is bifurcated and accounted for as a derivative. At the end of each reporting period, the Company records an adjustment to sales to reflect the mark-to-market of outstanding provisional invoices based on the forward price curve. Because these provisionally priced sales have not yet settled as of the reporting date, the mark-to-market adjustment related to these invoices is included in accounts receivable as of each reporting date. At June 30, 2018 and December 31, 2017, the Company had an unrealized loss of $2.3 million and an unrealized gain of $0.4 million, respectively, included in its accounts receivable on the accompanying Condensed Consolidated Balance Sheets. Please see Note 14 for additional information. Gains and losses related to changes in the fair value of these financial instruments were included in the Company’s Condensed Consolidated Statements of Operations as shown in the following table:
|  | Three months ended June 30, |  | Six months ended June 30, |  |
|  | 2018 |  | 2017 |  | 2018 |  | 2017 |  | Statement of Operations Classification
|  | (in thousands) |  |
Realized/unrealized derivative (loss) gain |  | $ | (2,303) |  | $ | (24) |  | $ | (1,732) |  | $ | 511 |  | Sales, net
Gold and silver rounds/bullion (loss) gain |  | $ | (160) |  | $ | (148) |  | $ | (144) |  | $ | 154 |  | Other expense, net
Realized/Unrealized Derivatives The following tables summarize the Company’s realized/unrealized derivatives (in thousands).
|  | Gold |  | Silver |  | Copper |  | Lead |  | Zinc |  | Total
Three months ended June 30, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Realized gain (loss) |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | -
Unrealized (loss) gain |  | $ | (38) |  | $ | 13 |  | $ | (103) |  | $ | (138) |  | $ | (2,037) |  | $ | (2,303)
|  | Gold |  | Silver |  | Copper |  | Lead |  | Zinc |  | Total
Three months ended June 30, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Realized gain (loss) |  | $ | 177 |  | $ | 236 |  | $ | 23 |  | $ | 12 |  | $ | (220) |  | $ | 228
Unrealized (loss) gain |  | $ | (138) |  | $ | (236) |  | $ | (7) |  | $ | 2 |  | $ | 127 |  | $ | (252)
|  | Gold |  | Silver |  | Copper |  | Lead |  | Zinc |  | Total
Six months ended June 30, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Realized gain (loss) |  | $ | 14 |  | $ | (53) |  | $ | 53 |  | $ | (5) |  | $ | 991 |  | $ | 1,000
Unrealized gain (loss) |  | $ | 62 |  | $ | 162 |  | $ | (203) |  | $ | (161) |  | $ | (2,592) |  | $ | (2,732)
|  | Gold |  | Silver |  | Copper |  | Lead |  | Zinc |  | Total
Six months ended June 30, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Realized gain (loss) |  | $ | 129 |  | $ | 190 |  | $ | 37 |  | $ | 48 |  | $ | (177) |  | $ | 227
Unrealized gain (loss) |  | $ | 32 |  | $ | (9) |  | $ | 19 |  | $ | 60 |  | $ | 182 |  | $ | 284

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
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