XML 40 R25.htm IDEA: XBRL DOCUMENT

Fair Value Measurement

9 Months Ended

Sep. 30, 2021

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 1

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2

Quoted 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 3

Prices 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 September 30, 2021 and December 31, 2020:


		As of			As of
		September 30,			December 31,			Input Hierarchy Level
		2021			2020

		(in thousands)
Cash and cash equivalents		$	29,544		$	25,405		Level 1
Gold and silver rounds/bullion		$	559		$	671		Level 1
Accounts receivable, net		$	4,947		$	4,226		Level 2
Derivative liability - zinc zero cost collar		$	(144)		$	-		Level 2

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 which are valued using quoted market prices. Please see Note 5 for additional information.

Accounts receivable, net include amounts due to the Company for deliveries of concentrates and doré sold to customers, net of embedded derivatives mark-to-market value of $0.1 million as of September 30, 2021, and $0.2 million as of December 31, 2020. Concentrate sales contracts provide for provisional pricing as specified in such contracts. These sales contain an embedded derivative related to the provisional pricing mechanism and are 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 and included in its accounts receivable on the accompanying Condensed Consolidated Interim Balance Sheets related to mark-to-market adjustments. Please see Note 13 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 Interim Statements of Operations as shown in the following table:


		For the three months ended September 30,							For the nine months ended September 30,						Statement of Operations Classification
		2021			2020				2021			2020

	Note	(in thousands)
Realized and unrealized derivative (loss) gain, net	14	$	(478)		$	550			$	156		$	18		Sales, net
Unrealized gold and silver rounds/bullion (loss) gain	16	$	(55)		$	716			$	(86)		$	1,175		Other expense, net
Realized (loss) on zinc zero cost collar, net	16	$	(40)		$	-			$	(40)		$	-		Other expense, net

Realized/Unrealized Derivatives

The following tables summarize the Company’s realized/unrealized derivatives for the periods presented (in thousands):


		Gold			Silver			Copper			Lead			Zinc			Total
For the three months ended September 30, 2021
Realized (loss) gain		$	(110)		$	(295)		$	(4)		$	72		$	91		$	(246)
Unrealized gain (loss)			28			(11)			(16)			(84)			(149)			(232)
Total realized/unrealized derivatives, net		$	(82)		$	(306)		$	(20)		$	(12)		$	(58)		$	(478)


		Gold			Silver			Copper			Lead			Zinc			Total
For the three months ended September 30, 2020
Realized gain		$	132		$	339		$	89		$	16		$	77		$	653
Unrealized (loss)			(11)			(47)			(24)			(10)			(11)			(103)
Total realized/unrealized derivatives, net		$	121		$	292		$	65		$	6		$	66		$	550


		Gold			Silver			Copper			Lead			Zinc			Total
For the nine months ended September 30, 2021
Realized (loss) gain		$	(133)		$	(123)		$	63		$	146		$	251		$	204
Unrealized gain (loss)			58			10			(24)			(63)			(29)			(48)
Total realized/unrealized derivatives, net		$	(75)		$	(113)		$	39		$	83		$	222		$	156


		Gold			Silver			Copper			Lead			Zinc			Total
For the nine months ended September 30, 2020
Realized gain (loss)		$	651		$	451		$	20		$	(143)		$	(729)		$	250
Unrealized (loss) gain			(209)			(290)			(9)			41			235			(232)
Total realized/unrealized derivatives, net		$	442		$	161		$	11		$	(102)		$	(494)		$	18

For the zinc zero cost collar, when the prior month LME average zinc price is greater than the call price, positions settling in the period are recorded as a realized gain or loss, and unsettled positions are recorded as an unrealized gain or loss.

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 + Details