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Fair Value Measurement
 6 Months Ended
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