Form 6-K SILVER STANDARD RESOURCE For: Sep 30

FREE Breaking News Alerts from StreetInsider.com!

E-mail Address

StreetInsider.com Top Tickers, 8/15/2026

1. AMAT
2. GLOB
3. SPY
4. RDDT
5. HTFL
6. SNDK
7. WDAY
8. ADYEN:NA
9. ADYYF
10. DVLT

November 6, 2015 6:02 AM EST


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For November 6, 2015
Commission File Number: 000-26424
SILVER STANDARD RESOURCES INC.
(Translation of registrant's name into English)

#800 - 1055 Dunsmuir Street
PO Box 49088, Bentall Postal Station
Vancouver, British Columbia
Canada V7X 1G4
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

[ ] Form 20-F   [x] Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [      ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [           ]

INCORPORATION BY REFERENCE

Exhibits 99.1 and 99.2 hereto are each hereby incorporated by reference into the registration statements on Form S-8 (File No. 333-185498, 333-196116 and 333-198092) of Silver Standard Resources Inc.

DOCUMENTS FILED AS PART OF THIS FORM 6-K

See the Exhibit Index hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
Silver Standard Resources Inc.
 
(Registrant)
 
 
 
Date: November 6, 2015
By:
Signed: “Gregory Martin”
 
 
Gregory Martin
 
Title:
Chief Financial Officer





SUBMITTED HEREWITH

Exhibits








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

 
 
7 | 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)


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.


 
 
8 | 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)

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
)



 
 
9 | 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)
(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.

 
 
10 | 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)
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


SILVER STANDARD RESOURCES INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION AND RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015


1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.







SILVER STANDARD RESOURCES INC.


MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION AND RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015


This Management's Discussion and Analysis ("MD&A") is intended to supplement the unaudited condensed consolidated interim financial statements of Silver Standard Resources Inc. ("we", "us" or "our") for the three and nine months ended September 30, 2015, and the related notes thereto, which have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB").

All figures are expressed in U.S. dollars except where otherwise indicated. This MD&A has been prepared as of November 5, 2015, and should be read in conjunction with the unaudited condensed consolidated interim financial statements for the three and nine months ended September 30, 2015.

Additional information, including our Annual Information Form and Annual Report on Form 40-F for the year ended December 31, 2014, is available on SEDAR at www.sedar.com, and on the EDGAR section of the U.S. Securities and Exchange Commission ("SEC") website at www.sec.gov.

This MD&A contains "forward-looking statements" that are subject to risk factors set out in a cautionary note contained in section 16 herein. We use certain non-GAAP financial measures in this MD&A; for a description of each of these measures, please see the discussion under "Non-GAAP Financial Measures" in section 12 of this MD&A.


1.THIRD QUARTER 2015 HIGHLIGHTS

▪
Delivered production to plan: Produced 41,262 ounces of gold at the Marigold mine and 2.6 million ounces of silver at the Pirquitas mine, for silver equivalent production of 5.6 million ounces.

▪
Continued trend of low gold cash costs: Reported cash costs of $719 per payable ounce of gold sold at the Marigold mine.

▪
Silver cash costs in line with expectations: Reported cash costs of $11.02 per payable ounce of silver sold at the Pirquitas mine.

▪
Strengthened corporate liquidity: Entered into a $75 million, three-year senior secured revolving credit facility and maintained a cash balance of $200 million.

▪
Continued exploration success at Marigold: Reported the discovery of a new gold mineralized zone, the HideOut area and the 8D area.

▪
Completed the acquisition of the Valmy Property: Acquired 2,844 hectare Valmy Property contiguous with the Marigold mine for $11.5 million in cash.

▪
Pursuing opportunity to extend operating life at the Pirquitas mine: Signed an agreement with Golden Arrow Resources Corporation to explore and evaluate the Chinchillas project, approximately 30 kilometers from the Pirquitas mine.

▪
Recorded impairment charge at Pirquitas: Non-cash, pre-tax impairment charge and write-downs of $42.2 million related to Pirquitas were recognized due to a decline in silver prices, including $7.7 million related to ore stockpiles within cost of sales and income from mine operations.





2


2.
OUTLOOK

This section of the MD&A provides management's production and cost estimates. Major capital and exploration expenditures are also discussed. See "Cautionary Notes Regarding Forward-Looking Statements and Mineral Reserves and Mineral Resources Estimates" in section 16 of this MD&A.
Our operating guidance, capital expenditures and exploration expenditures remain unchanged from that provided in our second quarter 2015 MD&A Outlook. For the full year 2015, we expect:

Operating Guidance
 
Pirquitas mine
Marigold mine
Gold Production
oz
—

195,000 - 205,000

Silver Production
Moz
9.5 - 10.5

—

Zinc Production
Mlb
10.0 - 12.0

—

Cash costs per payable ounce sold (1)
$/oz
10.50 - 11.50

700 - 750

Capital Expenditures (2)
$M
10

25

Capitalized Stripping Costs
$M
—

13

(1) We report the non-GAAP financial measures of cash costs per payable ounce of silver and gold sold to manage and evaluate operating performance at the Pirquitas mine and the Marigold mine. See “Non-GAAP Financial Measures” in section 12 of this MD&A.
(2) Includes capitalized exploration.




3


3.
BUSINESS OVERVIEW

We are a resource company focused on 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. Our focus is on safe profitable silver and gold production from the Pirquitas mine in Argentina and our Marigold mine in Nevada, U.S., respectively.

Our financial performance is impacted by both silver and gold prices. Silver prices weakened in the third quarter of 2015 with a decrease of 9% to an average of $14.91 per ounce from an average of $16.41 per ounce in the second quarter of 2015. Gold prices were also weaker in the third quarter of 2015, averaging $1,124 per ounce, below the $1,193 per ounce in the second quarter of 2015. At the end of the third quarter of 2015, silver prices closed at $14.65 per ounce and gold prices closed at $1,118 per ounce on September 30, 2015, however, the precious metals prices have shown some improvement following the quarter end.

The U.S. dollar remained strong through the third quarter of 2015 with expectations of higher U.S. interest rates continuing, although rates have remained unchanged. The continued economic uncertainty and global geographical tensions in the Middle East and Europe have also added to the extreme volatility of the commodity price environment. In addition, weakening in the Chinese economy has reduced the expected demand for precious metals by China. Subsequent to quarter end, metal prices improved and the U.S. dollar slightly weakened.

During the third quarter of 2015, oil prices averaged $47.42 per barrel, well below price levels experienced over the last three years. Diesel is a significant consumable at our operations and the decline in diesel prices is having a positive impact on our cost structure at the Marigold mine. As a result, during the second quarter of 2015 we instigated a program to hedge a portion of our diesel usage to manage price risk of this consumable. In Argentina, diesel prices are regulated by the government, so the positive impact on diesel cost at the Pirquitas mine has not been as significant.

In addition to the global macroeconomic environment, the Pirquitas mine operates within a tightly-controlled regulatory environment in Argentina. The Central Bank of Argentina regulates U.S. dollar flows into and out of the country, with Central Bank approval required for all foreign exchange transactions. Argentina continues to experience high inflation with a currency that, generally, depreciates against our reporting currency, the U.S. dollar. During the third quarter of 2015, the pace of Argentine peso devaluation was slow but still devalued by approximately 3% and closed on September 30, 2015, at an exchange rate of 9.41 Argentine pesos for 1 U.S. dollar. Local inflation in the third quarter of 2015 exceeded this devaluation, pressuring our Argentine peso denominated costs when reported in U.S. dollars. Value added tax ("VAT") recovery remains a highly regulated, complex and, at times, lengthy collection process; however, we recovered $2.9 million of VAT in the third quarter of 2015. All of these factors directly impact our business in Argentina.

On September 24, 2015, we completed the acquisition of the Valmy Property, contiguous with our Marigold mine in Nevada, U.S. for $11.5 million in cash from Newmont Mining Corporation ("Newmont").

On September 30, 2015, we signed an agreement ("Agreement") with Golden Arrow Resources Corporation ("Golden Arrow") to explore and evaluate its Chinchillas silver-lead-zinc project, located approximately 30 kilometers from the Pirquitas mine. The details of the Agreement are further described in section 5 of this MD&A.




4


4.
RESULTS OF OPERATIONS

Consolidated results of operations

The following table presents consolidated operating information for our Marigold and Pirquitas mines. Additional operating information is provided in the sections relating to the individual mines.

 
 Three months ended
 Operating data
September 30 2015

June 30 2015

March 31 2015

December 31 2014

September 30 2014

 
 
 
 
 
 
 Consolidated production and sales:
 
 
 
 
 
 Silver produced ('000 oz)
2,576

2,443

2,732

2,222

2,551

 Zinc produced ('000 lbs) (1)
2,076

2,674

3,837

4,817

7,030

 Silver sold ('000 oz)
2,819

2,623

2,909

2,764

1,859

 Zinc sold ('000 lbs) (1)
2,352

4,936

2,769

8,745

8,062

 
 
 
 
 
 
 Gold produced (oz)
41,262

48,685

55,598

67,113

40,442

 Gold sold (oz)
39,525

48,121

55,865

68,748

38,245

 
 
 
 
 
 
 Silver equivalent production ('000 oz) (2)
5,636

5,952

6,768

6,910

5,114

 
 
 
 
 
 
 Realized gold price ($/oz) (3)
1,110

1,205

1,210

1,200

1,267

 Realized silver price ($/oz) (3)
14.97

16.72

16.67

17.18

19.99

 
 
 
 
 
 
 Cash costs ($/oz) - payable silver from Pirquitas mine (3)
11.02

9.45

11.25

11.76

12.22

 Cash costs ($/oz) - payable gold from Marigold mine (3)
719

717

612

665

997

 Cash costs ($/oz) - payable silver equivalent from both mines (3)
10.32

9.74

9.57

10.78

14.29

 
 
 
 
 
 
 Financial data ($000s)
 
 
 
 
 
 Revenue
77,191

95,818

111,721

122,830

79,269

 (Loss) income from mine operations (4)
(7,396
)
16,319

30,402

12,996

6,258


(1) 
Data for zinc production and sales relate only to zinc in zinc concentrate as any zinc metal within our silver concentrate does not generate revenue.
(2) 
Silver equivalent ounces have been established using the realized silver and gold prices in the quarter and applied to the recovered metal content of the gold bullion produced by the Marigold mine.
(3) 
We report the non-GAAP financial measures of cash costs per payable ounce of precious metals sold and realized metal prices to manage and evaluate operating performance at our mines. For a better understanding and a reconciliation of these measures to cost of sales, as shown in our consolidated statements of comprehensive income, please refer to “Non-GAAP Financial Measures” in section 12 of this MD&A.
(4) 
(Loss) income from mine operations for the quarters ended September 30, 2015 and December 31, 2014, include $7.7 million and $11.3 million, respectively, of non-cash write-down of stockpile inventory at the Pirquitas mine to its net realizable value ("NRV").



5


Marigold mine, U.S.

 
 Three months ended
 Operating data
September 30 2015

June 30 2015

March 31 2015

December 31 2014

September 30 2014

 Total material mined (kt)
18,425

19,051

18,556

18,426

18,832

 Waste removed (kt)
11,242

14,163

14,861

14,587

13,821

 Strip ratio
1.6

2.9

4.0

3.8

2.8

 Mining cost ($/t mined)
1.65

1.48

1.57

1.62

1.61

 Total ore stacked (kt)
7,183

4,888

3,695

3,839

5,011

 Gold stacked grade (g/t)
0.43

0.33

0.59

0.84

0.53

 Processing cost ($/t processed)
0.66

0.79

1.09

1.06

0.86

 Gold recovery (%)
69.7

67.6

74.7

73.0

73.0

 
 
 
 
 
 
 Gold produced (oz)
41,262

48,685

55,598

67,113

40,442

 Gold sold (oz)
39,525

48,121

55,865

68,748

38,245

 
 
 
 
 
 
 Realized gold price ($/oz) (1)
1,110

1,205

1,210

1,200

1,267

 
 
 
 
 
 
 Cash costs ($/oz) (1)
719

717

612

665

997

 Total costs ($/oz) (1)
926

885

728

778

1,095

 
 
 
 
 
 
 Financial data ($000s)
 
 
 
 
 
 Revenue
43,836

57,958

67,566

82,508

48,395

 Income from mine operations
7,288

15,395

26,954

29,006

6,566

 Capital investments
8,931

5,255

4,768

4,375

4,486

 Cash based capitalized deferred stripping
—

—

12,543

16,866

1,910

 Exploration expenditures (2)
1,944

1,978

1,551

3,224

796


(1) 
We report the non-GAAP financial measures of realized gold prices, cash costs and total costs per payable ounce of gold sold to manage and evaluate operating performance at the Marigold mine. For a better understanding and a reconciliation of these measures to cost of sales, as shown in our consolidated statements of comprehensive income, please refer to “Non-GAAP Financial Measures” in section 12 of this MD&A.
(2) 
Includes capitalized and expensed exploration expenses.

Mine production

The Marigold mine produced 41,262 gold ounces in the third quarter of 2015, 15% lower than the second quarter production of 48,685 ounces due to the reduction in stacked ore grade in the second quarter of 2015. This reduction was in line with our annual production schedule, which expected lower production in the second and third quarters followed by a stronger fourth quarter.

During the third quarter of 2015, the Marigold mine moved 18.4 million tonnes of material, of which 7.2 million tonnes of ore were delivered to the heap leach pads at a gold grade of 0.43g/t, representing approximately 70,000 recoverable ounces of gold stacked. This compares to 19.1 million tonnes of material moved in the second quarter of 2015, of which 4.9 million tonnes of ore containing a gold grade of 0.33g/t were stacked, representing approximately 35,000 recoverable ounces of gold. The grade mined in the third quarter was 30% higher than the second quarter, as mining progressed deeper into the Mackay pit.

The strip ratio decreased by 45%, to 1.6:1 in the third quarter from 2.9:1 in the second quarter, due to the continued positive reconciliation of ore tonnes as well as mining in a deeper part of the Mackay pit. The increase in both tonnes and grade of ore stacked on the leach pads in the third quarter is expected to result in increased gold production in the fourth quarter of 2015 as previously guided. During the third quarter, we completed construction of the new leach pad

6


and stacked sufficient ore to commence leaching. Gold recovery was 70% in the third quarter compared to 68% in the second quarter due to the higher grade mined.

Mine operating costs

Cash costs and total costs per payable ounce of gold sold are non-GAAP financial measures. Please see the discussion under "Non-GAAP Financial Measures" in section 12 of this MD&A.

Cash costs, which include all costs of inventory, refining and royalties, were $719 per payable ounce of gold sold in the third quarter of 2015, comparable to $717 per payable ounce of gold sold in the second quarter of 2015, with the increase resulting from higher operating costs being offset by more recoverable ounces placed on the leach pads. Mining unit costs increased to $1.65 per tonne in the third quarter, from $1.48 per tonne in the second quarter. This was principally due to additional ore tonnage that required hauling to the leach pads, one of our longest hauls, and a premature failure of the swing bearing on one of the hydraulic shovels, requiring the use of higher cost wheel loaders.

Total costs, which include depreciation, depletion and amortization, were $926 per payable ounce of gold sold in the third quarter of 2015, compared to $885 per payable ounce of gold sold in the second quarter of 2015 due to higher depletion and depreciation cost per unit.

Mine sales

A total of 39,525 ounces of gold was sold at an average price of $1,110 per ounce during the third quarter of 2015, a decrease of 18% from the 48,121 ounces of gold sold during the second quarter of 2015 at an average price of $1,205 per ounce. The decrease in sales is primarily a function of lower production, however we also had approximately 2,700 ounces of gold bullion that remained unsold due to timing of production, and was sold early in the fourth quarter.

Exploration

In our news release dated July 6, 2015, we reported the discovery of the 8D area and presented initial results from the assay program of drill hole samples with a “zero” value in the drillhole database. During the third quarter, exploration drilling at Marigold also identified a new mineralized center outside the current resource envelope, named the HideOut area. Results were reported in our news release dated September 18, 2015. A total of 3,860 meters in 15 reverse circulation drillholes was completed at the HideOut area in the third quarter of 2015.

On September 24, 2015, we completed the acquisition of the Valmy Property from Newmont. This 2,844 hectare land package, surrounding the Marigold mine to the east, south and west, historically produced 196,000 ounces of gold in the period between 2002 and 2005, as previously reported by Newmont in 2005. The addition of this property increases our total land holding at the Marigold mine by over 35% to 10,759 hectares. Data review of the previous drillhole information commenced in the fourth quarter. We expect to include Mineral Resources from Valmy to our year-end Mineral Resources and Mineral Reserves Statement published in February 2016. We also expect to conduct exploration drilling on the Valmy Property in 2016 subject to obtaining the requisite permits and other approvals.



7


Pirquitas mine, Argentina

 
Three months ended
Operating data
September 30 2015


June 30 2015

March 31 2015

December 31 2014

September 30 2014

Total material mined (kt)
2,746

3,087

3,355

3,816

4,315

Waste removed (kt)
2,219

2,320

2,585

3,168

3,831

Strip ratio
4.2

3.0

3.4

4.9

7.9

Silver mined grade (g/t)
188

172

184

150

160

Zinc mined grade (%)
0.33

0.69

0.73

0.97

1.36

Mining cost ($/t mined)
3.94

3.39

2.90

3.18

2.93

Ore milled (kt)
410

347

379

372

407

Silver mill feed grade (g/t)
238

262

267

222

248

Zinc mill feed grade (%)
0.57

0.69

0.89

1.12

1.79

Processing cost ($/t milled)
21.53

22.69

21.46

22.46

23.30

Silver recovery (%)
82.0

83.7

83.9

83.8

78.7

Zinc recovery (%) (1)
40.1

50.9

51.4

52.6

43.8

 
 
 
 
 
 
Silver produced ('000 oz)
2,576

2,443

2,732

2,222

2,551

Zinc produced ('000 lbs) (1)
2,076

2,674

3,837

4,817

7,030

Silver sold ('000 oz)
2,819

2,623

2,909

2,764

1,859

Zinc sold ('000 lbs) (1)
2,352

4,936

2,769

8,745

8,062

 
 
 
 
 
 
Realized silver price ($/oz) (2)
14.97

16.72

16.67

17.18

19.99

 
 
 
 
 
 
Cash costs ($/oz) (2)
11.02

9.45

11.25

11.76

12.22

Total costs ($/oz) (2)
16.54

15.23

16.00

17.40

17.11

 
 
 
 
 
 
Financial data ($000s)
 
 
 
 
 
Revenue
33,355

37,860

44,155

40,322

30,874

(Loss) income from mine operations (3)
(14,684
)
924

3,448

(16,010
)
(308
)
Capital investments
2,500

2,962

1,552

2,033

2,376

Cash based capitalized deferred stripping
—

—

—

—

3,946

Exploration expenditures (4)
1,124

1,912

1,283

1,284

173


(1) 
Data for zinc recovery, production and sales relate only to zinc in zinc concentrate as any zinc metal within our silver concentrate does not generate revenue.
(2) 
We report the non-GAAP financial measures of realized silver prices, cash costs and total costs per payable ounce of silver sold to manage and evaluate operating performance at the Pirquitas mine. For a better understanding and a reconciliation of these measures to cost of sales, as shown in our consolidated statements of comprehensive income, please refer to “Non-GAAP Financial Measures” in section 12 of this MD&A.
(3) 
Income (loss) from mine operations for the quarters ended September 30, 2015, and December 31, 2014, include $7.7 million and $11.3 million, respectively, of non-cash write-down of stockpile inventory to its NRV.
(4) 
Includes capitalized and expensed exploration expenses.

Mine production

The Pirquitas mine produced 2.6 million ounces of silver during the third quarter of 2015, higher than the 2.4 million ounces produced in the second quarter. The quarter-on-quarter increase in silver production is primarily due to the higher amount of ore milled, as silver mill feed grade and recovery remained relatively in line with the previous quarter. The mine also produced 2.1 million pounds of zinc in zinc concentrate during the third quarter of 2015, a reduction from the second quarter of 2015 production of 2.7 million pounds and in line with the falling zinc head grade.

Consistent with our mine plan, total material mined has been declining with 2,746,000 tonnes mined in the third quarter of 2015, 11% less than in the second quarter of 2015. In addition, the strip ratio increased to 4.2:1 from 3.0:1 in the second quarter of 2015.

8


Approximately 410,000 tonnes of ore was milled during the third quarter of 2015, compared to 347,000 tonnes in the second quarter of 2015. Ore was milled at an average rate of 4,454 tonnes per day during the third quarter of 2015, 12% above the mill’s nominal design and 17% higher than the average milling rate of 3,815 tonnes per day in the second quarter of 2015.

Ore milled during the third quarter of 2015 contained an average silver grade of 238 g/t, lower than the 262 g/t reported in the second quarter of 2015. As a result, the average silver recovery rate of 82.0% was lower than the average recovery rate of 83.7% in the second quarter of 2015.

Mine operating costs

Cash costs and total costs per payable ounce of silver sold are non-GAAP financial measures. Please see the discussion under "Non-GAAP Financial Measures" in section 12 of this MD&A.

Cash costs, which include cost of inventory, treatment and refining costs and by-product credits, were $11.02 per payable ounce of silver sold in the third quarter of 2015 compared to $9.45 per payable ounce of silver sold in the second quarter of 2015. Cost of inventory was higher compared to the second quarter of 2015 due to lower by-product credits in the third quarter of 2015 resulting from lower zinc sales, higher mining costs due to longer and deeper haul profiles and higher truck maintenance costs.

Total costs, which add silver export duties, depreciation, depletion and amortization to cash costs, were $16.54 per payable ounce of silver sold in the third quarter of 2015, higher than the $15.23 per payable ounce of silver sold in the second quarter of 2015. Depletion, depreciation and amortization was slightly lower on a per unit sold basis in the third quarter of 2015, compared to the second quarter of 2015. Silver export duties were higher than in the previous quarter due to timing of shipments.

We remain focused on costs and driving further operational efficiencies that will sustain cash flows in a lower silver price environment while pursuing alternatives for mine life extension.

Mine sales

In the third quarter of 2015, we sold 2.8 million ounces of silver, 8% higher than sales of 2.6 million ounces of silver in the second quarter of 2015. We also sold 2.4 million pounds of zinc in the third quarter of 2015, compared to the 4.9 million pounds sold in the second quarter of 2015. Sales of both metals were in line with our mine plan.

Exploration

As reported in our news release dated September 21, 2015, we completed the underground drilling program beneath the San Miguel open pit at the Pirquitas mine. High grade silver mineralization was intersected on all three veins explored, known as Chocaya, Oploca North and Oploca South veins. The underground drill program at the Pirquitas mine is targeting the expansion and upgrade of Mineral Resources underlying the San Miguel open pit.
During the program, 41 drillholes were completed from underground drill stations. All veins remain open laterally and at depth. An engineering study is being undertaken to evaluate the potential to exploit this mineralization from underground. This engineering study will also include the previously drilled Cortaderas silver-zinc vein, located approximately 650 meters north of the current open pit. The results are expected in early 2016.

Chinchillas project

We announced in a news release dated October 1, 2015 that we had entered into an agreement with Golden Arrow to explore, evaluate and seek to develop the silver-lead-zinc deposit at Chinchillas located approximately 30 kilometers from Pirquitas.  The initial work is directed towards confirming the Mineral Resource base at Chinchillas, as further described in section 5 of this MD&A.

9


Fiscal stability agreement and regulatory environment

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 concentrate for projects with fiscal stability agreements pre-dating 2002 and the Federal Government has asserted that the Pirquitas mine is subject to this duty. We have challenged the legality of the export duty applied to silver concentrate 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 concentrate (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 requiring 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 $6.6 million in export duties, for which we have filed for recovery. In accordance with the Injunction, we have not been paying export duties on silver concentrate but continue to accrue export duties. At September 30, 2015, we have accrued a liability totaling $64.2 million (December 31, 2014 - $56.1 million), for 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 condensed consolidated interim statement of income (loss).


10


5.
REVIEW OF PROJECTS

Chinchillas Project, Argentina

On September 30, 2015, we signed the Agreement with Golden Arrow to explore and evaluate the Chinchillas silver-lead-zinc project, which is situated approximately 30 kilometers from the Pirquitas mine.

Under the terms of the Agreement, we will evaluate the Chinchillas property during a period of up to 18 months (the "Preliminary Period") as a mining operation to supply feed to the Pirquitas plant beginning in the second half of 2017. We have committed to spend a minimum of $4 million for pre-development activities. Our initial expectation is that expenditures may total up to an estimated $12.6 million based on the success of the pre-development activities, including exploration, mine planning, metallurgical studies, permitting and engineering studies.

We have agreed to pay Golden Arrow up to C$2 million during the Preliminary Period in four C$0.5 million cash installments. The first installment was paid on signing the Agreement and the remaining three payments are conditional upon completion of project milestones. Following signing of the Agreement, Golden Arrow initiated the process to obtain the necessary court and shareholder approvals required to form the joint venture under a plan of arrangement (the "Arrangement").

If we elect to proceed, we will enter into a joint venture with 1049708 B.C. Ltd. ("New GAR"), a Golden Arrow entity that, following the completion of the Arrangement, will be owned by Golden Arrow's current shareholders, whereby we will be the majority partner and operator. The joint venture would be comprised of our Pirquitas property and Golden Arrow's Chinchillas property to be owned by us and New GAR on a 75%/25% basis, respectively. We may elect to exercise our option at any time over the Preliminary Period. Upon entering into the joint venture, 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 Preliminary Period.

Technical planning for a pre-feasibility study on Chinchillas commenced in late third quarter of 2015. Key activities in the fourth quarter will include approximately 5,000 meters of resource infill drilling, and initial geotechnical, hydrological and metallurgical studies. We will also commence environmental baseline studies and community engagement programs.

Other Projects

At our San Luis Project in Peru, we continue to examine alternative strategies for community engagement and for advancing the San Luis project.

At the Pitarrilla project in Mexico, we are advancing scoping studies on underground options and continue to keep the properties in good standing and fulfill our community and other project related commitments.

At the Berenguela project in Peru, we are continuing with conceptual engineering studies and metallurgical test work to evaluate development scenarios for this asset.


11



6.
SUMMARIZED FINANCIAL RESULTS

The following table sets out selected financial results for each of the eight most recently completed quarters, expressed in thousands of U.S. dollars, except per share amounts:

 
2015
2014
2013
 
30-Sep

30-Jun

31-Mar

31-Dec

30-Sep

30-Jun

31-Mar

31-Dec

 
 
 
 
 
(restated) (1)

(restated) (1)

(restated) (1)

(restated) (1)

 
$000s


$000s

$000s

$000s

$000s

$000s

$000s

$000s

Revenue
77,191

95,818

111,721

122,830

79,269

64,287

33,736

49,026

(Loss) Income from mine operations
(7,396
)
16,319

30,402

12,996

6,258

11,022

5,924

3,985

Net (loss) income before tax
(62,556
)
(3,316
)
12,501

(56,789
)
(17,600
)
(10,057
)
(11,370
)
45,652

Net (loss) income after tax
(59,416
)
(7,327
)
9,096

(86,222
)
(17,576
)
(10,157
)
(12,439
)
36,212

 
 
 
 
 
 
 
 
 
Basic (loss) earnings per share
(0.74
)
(0.09
)
0.11

(1.07
)
(0.22
)
(0.13
)
(0.15
)
0.57

Diluted (loss) earnings per share
(0.74
)
(0.09
)
0.11

(1.07
)
(0.22
)
(0.13
)
(0.15
)
0.57

 
 
 
 
 
 
 
 
 
Cash and cash equivalents
200,017

217,228

175,595

184,643

135,174

102,162

396,413

415,657

Total assets
954,766

996,549

989,260

986,249

1,036,624

1,098,898

1,019,711

1,032,735

Working capital
373,068

379,767

358,288

368,948

363,420

427,544

586,979

577,345

Non-current financial liabilities
205,277

202,517

199,813

197,134

194,570

192,050

189,580

187,130


(1) Restated for the change in the exploration and evaluation costs accounting policy as described in Note 2 of our audited consolidated financial statements for the year ended December 31, 2014.

The acquisition of Marigold in April 2014 generated an increase in revenues and income from mine operations from the second quarter of 2014 onwards. Otherwise, the volatility in revenue over the past eight quarters has resulted from fluctuations in commodity prices and sales volumes. There are no significant seasonal fluctuations in the results for the presented periods. Following a significant decrease in the second half of 2013, the average realized silver price per ounce was fairly consistent in the first three quarters of 2014. Silver prices decreased again in the fourth quarter of 2014, remained at this lower level in the first half of 2015 and decreased further in the third quarter of 2015. Income (loss) from mine operations in the fourth quarter of 2014 and the third quarter of 2015 was affected by the non-cash write-down of stockpile inventory at the Pirquitas mine to its NRV. Excluding the effect of these inventory write-downs, income from mine operations followed a similar trend to revenue over the two year period presented, except for the fourth quarter of 2014 and the first half of 2015, when income from the Marigold mine had a significant positive impact.

Net income (loss) before income tax has fluctuated significantly over the past eight quarters, heavily influenced by significant transactions and commodity prices. In the fourth quarter of 2014 and in the third quarter of 2015, we recorded impairment charges of $51.6 million and $42.2 million, respectively, against the carrying value of the Pirquitas mine, including write-downs of stockpile inventory at the mine to its NRV. In the first quarter of 2014, we sold the Challacollo project in Chile, generating a gain before tax of $15.9 million. This gain was offset by a significant foreign exchange loss of $15.9 million from the devaluation of the Argentine peso. In the fourth quarter of 2013, we sold the San Agustin project in Mexico, which generated a gain before tax of $67.8 million.

Three months ended September 30, 2015 compared to the three months ended September 30, 2014

Realized silver and gold price is a non-GAAP financial measure. Please, see the discussion under "Non-GAAP Financial Measures" in section 12 of this MD&A.

Net loss for the three months ended September 30, 2015 was $59.4 million ($0.74 per share), compared to a net loss of $17.6 million ($0.22 per share) in the same period of 2014. In the third quarter of 2015, we recognized a non-cash impairment charge of $34.5 million against the Pirquitas mine and non-cash write-down of $7.7 million of stockpiles.

12


The following is a summary and discussion of the other significant components of income and expenses recorded during the current quarter compared to the same period in the prior year.

In the three months ended September 30, 2015, we recognized total revenues of $77.2 million, compared to $79.3 million in the comparative period of 2014. We realized lower prices of both precious metals, but this was largely offset by higher volume sold from the Pirquitas mine in the third quarter of 2015 than in the comparative period.

•
At the Pirquitas mine, we recognized revenues of $33.4 million in the third quarter of 2015, $2.5 million higher than the $30.9 million in the same period in 2014. The increase in revenue was primarily the function of significantly higher volumes of silver ounces sold in the third quarter of 2015 than in the comparative period in 2014 (2.8 million ounces compared to 1.9 million ounces), which was partially offset by a lower silver price and lower zinc sales. Realized silver prices in the third quarter of 2015 averaged $14.97 per ounce, excluding the impact of period-end price adjustments, compared to $19.99 per ounce in the same period in 2014. Zinc sales of 2.4 million pounds in the third quarter of 2015 were significantly lower than the 8.1 million pounds sold in the third quarter of 2014. There were negative mark to market price adjustments in the third quarter of 2015 of $4.3 million, compared to negative adjustments of $5.5 million in the comparative period of 2014. At September 30, 2015, sales contracts containing 2.4 million ounces of silver were subject to final price settlement over the next four months.

•
Revenues in the third quarter of 2015 from the Marigold mine were $43.8 million from the sale of 39,525 ounces of gold, realizing an average gold price of $1,110 per payable ounce, compared to revenues of $48.4 million from the sale of 38,245 ounces of gold in the third quarter of 2014, at $1,267 per payable ounce.

Cost of sales for the third quarter of 2015 was $84.6 million, compared to $73.0 million in the third quarter of 2014, with the increase mainly due to the higher sales from the Pirquitas mine even though at lower per unit costs.

•
In the third quarter of 2015, cost of sales from the Pirquitas mine was $48.0 million compared with $31.2 million in the third quarter of 2014, resulting in loss from mine operations of $14.7 million in the third quarter of 2015, compared to loss of $0.3 million in the third quarter of 2014. The third quarter of 2015 was negatively impacted by a non-cash write-down of low grade stockpile inventory of $7.7 million. Excluding the inventory write-down, in the third quarter of 2015, the Pirquitas mine recognized a negative gross margin of 21%, significantly lower than the negative gross margin of 1% in the third quarter of 2014, which was mainly due to the lower realized silver prices in the period. On a per unit basis, the cost of inventory was lower by 29% in the third quarter of 2015 compared to the third quarter of 2014.

•
At Marigold, cost of sales in the third quarter of 2015 was $36.5 million generating income from mine operations of $7.3 million, equal to a gross margin of 17%. This compares to cost of sales of $41.8 million in the third quarter of 2014, generating income from operations of $6.6 million and a gross margin of 14%.

General and administrative expenses in the three months ended September 30, 2015, of $5.7 million were higher than the $4.4 million recorded in the three months ended September 30, 2014. This increase is principally due to higher non-cash share-based compensation of $2.1 million, as our improved relative share performance compared with peers through 2015 resulted in an increased expense in the third quarter of 2015, which was partially offset by a weaker Canadian dollar.

Exploration and evaluation costs of $3.1 million for the three months ended September 30, 2015, were lower than the $5.5 million for the three months ended September 30, 2014, as exploration spend was limited at most projects, except for the exploration programs conducted at the Marigold and Pirquitas mines.

During the third quarters of 2015 and 2014, we recorded interest expense and other finance costs of $6.4 million and $7.6 million, respectively. In each period, such expense and costs are mainly attributable to our convertible senior notes issued in 2013 (the "2013 Notes"). The higher finance costs in the third quarter of 2014 were due to higher transaction costs and bank charges.

13



We recorded foreign exchange losses for the three months ended September 30, 2015, of $3.2 million compared to losses of $4.5 million in the three months ended September 30, 2014. Our main foreign exchange exposures are related to net monetary assets denominated in Argentine pesos, and Canadian and Australian dollars. During the three months ended September 30, 2015, this loss resulted from the weakening of the Argentine peso, Canadian dollar and Australian dollar against the U.S. dollar, whereas in the comparative period, it was mainly the weakening of the Argentine peso against the U.S. dollar.

For the three months ended September 30, 2015, we recorded an income tax recovery of $3.1 million compared to an immaterial income tax expense in the three months ended September 30, 2014. The total income tax recovery in the quarter consists of a current tax expense of $3.4 million and a deferred tax recovery of $6.5 million. Income tax expense is the result of the profitable operations at Marigold, concentrate and gold sales activities in Canada and payment of interest withholding tax in Argentina. Offsets to income tax expense include losses generated through corporate general and administrative expenses, and a reversal of a deferred tax liability from December 31, 2014 as well as the reversal of a prior year tax accrual.

The insignificant tax expense in the three months ended September 30, 2014, was a result of various credits offsetting our tax expense from the Nevada Net Proceeds of Minerals Tax, gains on the sale of the marketable securities and interest withholding tax in Argentina. Those offsets to income tax expense in this period include losses generated through corporate general and administrative expenses, non-deductible acquisition costs, and a reclassification of the current interest withholding tax expense to a deferred income tax asset on the basis it was scheduled to be utilized against future income taxes as a foreign tax credit.

During the third quarter of 2015, we recognized an unrealized gain of $8.4 million on marketable securities in other comprehensive income, compared to a loss of $48.0 million in the third quarter of 2014 due to price movements of the underlying securities held.

Nine months ended September 30, 2015 compared to the nine months ended September 30, 2014

Realized silver and gold price is a non-GAAP financial measure. Please, see the discussion under "Non-GAAP Financial Measures" in section 12 of this MD&A.

Net loss for the nine months ended September 30, 2015 was $57.6 million ($0.71 per share), compared to a net loss of $40.2 million ($0.50 per share) in the same period of 2014. For the nine months ended September 30, 2015, we were negatively impacted by a non-cash impairment charge of $34.5 million against the Pirquitas mine and non-cash write-down of $7.7 million of stockpiles. The following is a summary and discussion of the other significant components of income and expenses recorded during the nine months ended September 30, 2015, compared to the same period in the prior year.

In the nine months ended September 30, 2015, we recognized total revenues of $284.7 million, compared to $177.3 million in the comparative period of 2014. The main reason for the increase is the acquisition of the Marigold mine in April 2014, which contributed a total of $169.4 million of revenues in the first three quarters of 2015 compared to $76.4 million in the comparative period in 2014. Additionally, the Pirquitas mine sold higher volumes of silver concentrate in the first nine months of 2015 compared to the same period in 2014, albeit these were partially offset by the lower realized silver price in the period. Also, we had significantly lower sales of zinc in the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014.

•
At the Pirquitas mine, we recognized revenues of $115.4 million in the nine months ended September 30, 2015, $14.5 million higher than the $100.9 million in the same period in 2014. The increase in revenue was primarily the function of significantly higher volumes of silver ounces sold in the nine months ended September 30, 2015 than in the comparative period in 2014 (8.4 million ounces compared to 5.4 million ounces), which was almost entirely offset by lower silver prices and lower zinc sales. Realized silver prices in the nine months ended September 30, 2015, averaged $16.13 per ounce, excluding the impact of period-

14


end price adjustments, compared to $20.07 per ounce in the same period in 2014. Zinc sales of 10.1 million pounds in the nine months ended September 30, 2015, were significantly lower than the 23.6 million pounds sold in the comparative period of 2014. There were negative mark to market price adjustments in the nine months ended September 30, 2015, of $7.0 million, compared to negative adjustments of $5.2 million in the comparative period of 2014. At September 30, 2015, sales contracts containing 2.4 million ounces of silver were subject to final price settlement over the next four months.

•
Revenues in the nine months ended September 30, 2015, from the Marigold mine were $169.4 million from the sale of 143,511 ounces of gold, realizing an average gold price of $1,181 per ounce. This compares to revenues of $76.4 million from the sale of 60,235 ounces of gold at $1,273 per ounce in the nine months ended September 30, 2014. The main reason for the increase in the current period is the fact that we did not own the Marigold mine during the first quarter in 2014 and also reflects significantly higher quarterly sales in 2015 compared to 2014, even though the higher volumes were partially offset by lower realized price per ounce of gold sold.

Cost of sales for the nine months ended September 30, 2015, was $245.4 million, compared to $154.1 million in the nine months ended September 30, 2014, mainly due to the acquisition of the Marigold mine, which comprised $119.7 million in cost of sales in the nine months ended September 30, 2015, and $66.6 million in the nine months ended September 30, 2014.

•
In the nine months ended September 30, 2015, cost of sales from the Pirquitas mine was $125.7 million compared to $87.5 million in the nine months ended September 30, 2014, resulting in loss from mine operations of $10.3 million in the nine months ended September 30, 2015, compared to income of $13.4 million in the nine months ended September 30, 2014. In the nine months ended September 30, 2015, we recognized a non-cash write-down of stockpile inventory of $7.7 million. Excluding this write-down, in the first three quarters of 2015, the Pirquitas mine realized a negative gross margin of 2%, lower than the positive gross margin of 13% in the comparative period of 2014, which was mainly due to the lower realized silver prices in the period. On a per unit basis, the cost of inventory was lower by 24% in the nine months ended September 30, 2015 compared to the same period in 2014.

•
In the nine months ended September 30, 2015, cost of sales from the Marigold mine was $119.7 million generating income from mine operations of $49.6 million, equal to a gross margin of 29%, compared to cost of sales of $66.6 million and an income from mine operations of $9.8 million in the nine months ended September 30, 2014, generating a gross margin of 13%. The main reason for the increase in the current nine month period is the fact that we did not own the Marigold mine during the first quarter in 2014, and also higher volumes sold in 2015. Costs on a unit basis were lower in 2015 translating to improved margins despite the lower gold prices realized.

General and administrative expenses in the nine months ended September 30, 2015, of $18.1 million were higher than the $15.9 million recorded in the nine months ended September 30, 2014. This increase is principally due to higher non-cash share-based compensation of $6.2 million, partially offset by a weaker Canadian dollar.

Exploration and evaluation costs of $11.0 million for the nine months ended September 30, 2015, were lower than the $13.2 million for the nine months ended September 30, 2014, mainly due to limited spend on projects other than the exploration activities performed at Marigold and Pirquitas.

In the nine months ended September 30, 2014, we incurred $5.3 million of business acquisition costs relating to the acquisition of the Marigold mine, whereas there we no such costs in the nine months ended September 30, 2015.

During the nine months ended September 30, 2015 and 2014, we recorded interest expense and other finance costs of $19.1 million and $18.1 million, respectively. In each period, such expense and costs are mainly attributable to our 2013 Notes. The higher finance costs in the nine months ended September 30, 2015, were due to interest paid on our Argentine peso-denominated loan facility in Argentina and non-cash accretion of reclamation liabilities.

15



We recorded foreign exchange losses for the nine months ended September 30, 2015, of $6.5 million compared to losses of $22.3 million in the nine months ended September 30, 2014. Our main foreign exchange exposures are related to net monetary assets denominated in Argentine pesos, and Canadian and Australian dollars. During the nine months ended September 30, 2015, this loss resulted from these currencies weakening against the U.S. dollar. The loss was significantly lower in the nine months of 2015 mainly because the Argentine peso weakened by 11%, compared to 27% in the same period of 2014, and also due to lower underlying Argentine peso exposure due to the reduction of our VAT receivables balance. In January 2014, there was a single significant devaluation event of the Argentine peso when the currency devalued by approximately 25%, which caused a loss of approximately $12 million in our Argentine peso-denominated VAT receivables balance at that time.

For the nine months ended September 30, 2015, we recorded an income tax expense of $4.3 million compared to an income tax expense of $1.1 million in the nine months ended September 30, 2014. In the first nine months of 2015, the income tax expense was primarily the result of the profitable operations at Marigold, concentrate and gold sales activities in Canada, disposition of Pretium Resources Inc. shares, and payment of interest withholding tax in Argentina. In the nine months ended September 30, 2014, the tax expense was primarily the result of the taxable sale of the Challacollo project in Chile.

During the nine months ended September 30, 2015, we recognized an unrealized gain of $2.8 million on marketable securities in other comprehensive income, compared to $3.2 million in the nine months ended September 30, 2014, which resulted from the higher increase in market value of securities classified as at fair value through other comprehensive income (“FVTOCI”) in the comparable period. During the nine months ended September 30, 2014, we also recognized a realized gain of $2.3 million on previously impaired marketable securities and securities designated at fair value through profit and loss (“FVTPL”).


7.
LIQUIDITY

At September 30, 2015, we had $200.0 million of cash and cash equivalents, an increase of $15.4 million from December 31, 2014. Our cash flows from operations were strong at $53.6 million and we also received $20.0 million of deferred consideration from the sale of the San Agustin project in Mexico in 2013. These cash flows were partially offset by the required deposit of $19.2 million in order to object to the Notice of Reassessment (“NOR”) from the Canada Revenue Agency ("CRA"), as further discussed below, $12.5 million of capitalized stripping at the Marigold mine, $11.5 million for the acquisition of the Valmy Property and $27.7 million of investments in plant and equipment, which will benefit future periods.

In addition, the release of $17.7 million of cash that had been restricted for reclamation bonding and other purposes, improved our working capital position. At September 30, 2015, compared to December 31, 2014, our working capital position increased to $373.1 million from $368.9 million. We manage our liquidity position with the objectives of ensuring sufficient funds available to meet planned operating requirements and providing support to fund strategic growth initiatives. We manage our liquidity position with the objectives of ensuring sufficient funds available to meet planned operating requirements and providing support to fund strategic growth initiatives.

Of our cash and cash equivalents balance, $197.2 million was held in Canada, the United States, Europe and Australia. At September 30, 2015, we held $1.2 million cash in Argentina. The government of Argentina regulates U.S. dollar inflows and outflows which restricts our ability to repatriate cash generated by the Pirquitas mine, but we continue to repatriate cash from Argentina where possible under a fixed schedule of debt repayments. All cash is invested in short term investments or high interest savings accounts under our investment policy with maturities of 90 days or less providing us with sufficient liquidity to meet our generally foreseeable corporate needs.

Our cash balance at September 30, 2015, along with projected operating cash flows are expected to be sufficient to fund planned exploration, development and corporate activities over the next twelve months from the date of this MD&A. We are continuing our cost reduction strategy to preserve our capital and to discharge liabilities as they

16


become due, while implementing various optimization activities at our operations to improve cash generating capacity of each mine.

On January 27, 2015, we received the NOR from the CRA in the amount of approximately C$41.4 million plus interest of C$6.6 million 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$24.1 million ($19.2 million) to the CRA and have recorded this amount plus accrued interest as a non-current income tax receivable. On April 20, 2015, we filed a Notice of Objection with the CRA and, on September 15, 2015, we filed a Notice of Appeal with the Tax Court of Canada.

On August 4, 2015, we entered into a new $75 million senior secured revolving credit facility (the "Credit Facility") with a syndicate of three leading Canadian banks. 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. The term of the Credit Facility is three years. All debts, liabilities and obligations under the Credit Facility are guaranteed by our material subsidiaries and secured by our assets and certain of our material subsidiaries, and the pledges of certain of our material subsidiaries. The Credit Facility may be used for reclamation bonding, working capital and other general corporate purposes. At September 30, 2015, we had utilized $7.5 million of the Credit Facility to support a certain letter of credit.


8.
CAPITAL RESOURCES

Our capital consists of items included in shareholders' equity and debt, net of cash and cash equivalents as follows:

 
September 30

December 31

 
2015

2014

 
$000s

$000s

Shareholders' equity
707,034

707,034

Convertible notes
205,277

197,134

 
912,311

904,168

 
 
 
Less: cash and cash equivalents
(200,017
)
(184,643
)
 
712,294

719,525


Following the closing of the Credit Facility on August 4, 2015, we are subject to certain financial covenants. At September 30, 2015, we were in compliance with these covenants. There was no other externally imposed capital requirement to which we are subject and with which we had not complied.

As at September 30, 2015, we had 80,754,434 common shares outstanding and 3,265,156 stock options outstanding which are exercisable into common shares at exercise prices ranging between C$5.83 and C$28.78.










17


Outstanding share data

The authorized capital consists of an unlimited number of common shares without par value. As at November 5, 2015, the following common shares and options were outstanding:

 
Number of shares

Exercise price
Remaining life
 
 
C$
(years)
Capital stock
80,826,484

 
 
Stock options
3,193,106

5.83 - 28.78
2.23 - 6.78
Fully diluted
84,019,590

 
 



9.
FINANCIAL INSTRUMENTS AND RELATED RISKS

We are exposed to a variety of financial risks as a result of our operations, including market risk (which includes price risk, currency risk and interest rate risk), credit risk and liquidity risk. Our overall risk management strategy seeks to reduce potential adverse effects on our financial performance. Risk management is carried out under policies approved by our Board of Directors.
We may, from time to time, use foreign exchange contracts, commodity price contracts, equity hedges and interest rate swaps to manage our exposure to fluctuations in foreign currency, metal and energy prices, marketable security values and interest rates. We do not have a practice of trading derivatives.
The risks associated with our financial instruments, and the policies on how we mitigate those risks, are set out below. This is not intended to be a comprehensive discussion of all risks.
a)Market Risk
This is the risk that the fair values of financial instruments will fluctuate owing to changes in market prices. The significant market risks to which we are exposed are price risk, currency risk and interest rate risk.
(i)   Price Risk
This is the risk that the fair values or future cash flows of our financial instruments will fluctuate because of changes in market prices. Income from mine operations in the next year depends on the metal prices for gold, silver, and to a lesser extent, zinc. These prices are affected by numerous factors that are outside of our control such as:
▪global or regional consumption patterns;
▪the supply of, and demand for, these metals;
▪speculative activities;
▪the availability and costs of metal substitutes;
▪inflation; and
▪political and economic conditions, including interest rates and currency values.
The principal financial instrument that we hold which is impacted by commodity prices are our silver and zinc concentrate trade receivables. The majority of these sales agreements are subject to pricing terms that settle within one to three months after delivery of concentrate, and this adjustment period represents our trade receivable exposure to variations in commodity prices.
We have not hedged the price of gold or silver as part of our overall corporate strategy.

18


During the second quarter of 2015, we instigated a program to hedge a portion of our diesel consumption at the Marigold mine with the objective of securing future costs during this period of lower prices. We executed swap and option contracts under a risk management policy approved by our Board of Directors.
There has been no other significant change in our objectives and policies for managing this risk and no significant change in our exposure to this risk during the nine months ended September 30, 2015.
(ii) Currency Risk
Currency risk is the risk that the fair values or future cash flows of our financial instruments will fluctuate because of changes in foreign currency rates. Our financial instruments are exposed to currency risk where those instruments are denominated in currencies that are not the same as their functional currency; exchange gains and losses in these situations impact comprehensive income.
We monitor and manage this risk with the objective of ensuring our group-wide exposure to negative fluctuations in currencies against the U.S. dollar is managed. As at September 30, 2015, we have not entered into any derivatives to mitigate this risk.

The Argentine government requires the repatriation of export revenues into Argentina and, where cash flows exceed our current cash repatriation schedule, this results in an increase to our Argentine peso-dominated cash balance. In Argentina, the official Argentine peso exchange rate published is significantly lower than the parallel market rate (also referred to as the Blue rate). We use the official Argentine peso exchange rate for all re-measurement purposes which is consistent with the economic reality that foreign currency transactions entered into or paid out of Argentina are required to be converted at the official exchange rate. A sudden devaluation of the Argentine peso to a rate closer to the parallel market rate would materially impact the value of our Argentine peso-denominated cash and VAT receivables in U.S. dollar terms, but would improve our operating costs in U.S. dollar terms, all else being equal. We are actively seeking ways to mitigate the risk on our cash balance of a devaluation of the Argentine peso, and therefore, where possible, we are repatriating cash from Argentina under a fixed schedule of debt repayments and have entered into an Argentine peso-denominated loan facility.
There has been no significant change in our objectives and policies for managing this risk and no significant change in our exposure to this risk during the nine months ended September 30, 2015.
(iii)  Interest Rate Risk
Interest rate risk is the risk that the fair values or future cash flows of our financial instruments will fluctuate because of changes in market interest rates. Interest rate risk mainly arises from the interest rate impact on our cash and cash equivalents and our Argentine peso-denominated loan facility in Argentina, because these are the only financial instruments we hold that are impacted by interest based on variable market interest rates. Our 2013 Notes have fixed interest rates and are not exposed to fluctuations in interest rates; a change in interest rates would impact the fair value of the instruments, but because we record our 2013 Notes at amortized cost, there would be no impact on our financial results. We monitor our exposure to interest rates closely and have not entered into any derivative contracts to manage our risk.
There has been no significant change in our objectives and policies for managing this risk and no significant change in our exposure to this risk during the nine months ended September 30, 2015.
b)
Credit Risk
Credit risk is the risk that a third party might fail to discharge its obligations under the terms of a financial contract. Our credit risk is limited to the following instruments:
Credit risk related to financial institutions and cash deposits Under our investment policy, investments are made only in highly rated financial institutions, and corporate and government securities. We diversify our holdings and consider the risk of loss associated with investments to be low.

Credit risk related to trade receivables We are exposed to credit risk through our trade receivables on concentrate sales, which are principally with internationally-recognized counterparties. Payments of receivables are scheduled,

19


routine and received within a contractually agreed time frame. We manage this risk by requiring provisional payments of at least 75% of the value of the concentrate shipped and through utilizing multiple counterparties.

Credit risk related to other financial assets All other receivable balances are expected to be collectible in full due to the nature of the counterparties and/or a previous history of collectability.

We also have credit risk through our significant VAT receivables balance that is collectible from the government of Argentina. The balance is expected to be recoverable in full; however, due to legislative rules and the complex collection process, a significant portion of the asset is classified as non-current until government approval of the recovery claim is approved.
c)
Liquidity Risk
Liquidity risk is the risk that we will not be able to meet our financial obligations as they fall due. We manage our liquidity risk through a rigorous planning and budgeting process, which is reviewed and updated on a regular basis, to help determine the funding requirements to support our current operations, expansion and development plans, and by managing our capital structure. Our objective is to ensure that there are sufficient committed financial resources to meet our business requirements for a minimum of twelve months.
Argentine government regulation of U.S. dollar inflows and outflows restricts the ability to repatriate cash generated by the Pirquitas mine, although we are repatriating cash from Argentina under a fixed schedule of debt repayments, which has an impact on overall corporate liquidity.
A detailed discussion of our liquidity position as at September 30, 2015, is included in section 7 of this MD&A.

Our cash balance at September 30, 2015, along with projected operating cash flows, are expected to be sufficient to fund planned exploration, development and corporate activities over the next twelve months from the date of this MD&A.


10.
OTHER RISKS AND UNCERTAINTIES

We are subject to a number of risks and uncertainties, each of which could have an adverse effect on our operating results, business prospects or financial position.

For a comprehensive list of the risks and uncertainties affecting our business, please refer to the section entitled "Risk Factors" in our Annual Information Form for the year ended December 31, 2014, which is available at www.sedar.com, and our Annual Report on Form 40-F for the year ended December 31, 2014, which is available on the EDGAR section of the SEC website at www.sec.gov.


11.
RELATED PARTY TRANSACTIONS

We did not enter into any related party transactions during the nine months ended September 30, 2015.


20



12.
NON-GAAP FINANCIAL MEASURES

The non-GAAP financial measures presented do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be directly comparable to similar measures presented by other issuers. The data presented is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These non-GAAP measures should be read in conjunction with our consolidated financial statements.

Non-GAAP financial measures - Cash costs and total costs per payable ounce of precious metals sold

We use the non-GAAP financial measures of cash costs and total costs per payable ounce of precious metals sold to manage and evaluate operating performance. We believe that, in addition to conventional measures prepared in accordance with GAAP, certain investors use this information to evaluate our performance and ability to generate cash flows. Accordingly, the data presented is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

The following table provides a reconciliation of our condensed consolidated interim statements of (loss) income to cash costs and total costs for the three month periods indicated below:

21


 
September 30 2015

June 30 2015

March 31 2015

December 31 2014

September 30 2014

 
$000s

$000s

$000s

$000s

$000s

Pirquitas mine
 
 
 
 
 
Cost of sales (A)
48,039

36,936

40,707

56,332

31,182

Add: Treatment and refining costs
4,633

3,880

5,208

5,132

3,734

Less: By-product revenue
(1,206
)
(3,884
)
(2,047
)
(6,268
)
(6,166
)
Less: Inventory NRV adjustment
(7,716
)
—

—

(11,262
)
—

Total Costs
43,750

36,932

43,868

43,934

28,750

 
 
 
 
 
 
Less: Depreciation, depletion and amortization
(11,610
)
(12,570
)
(9,912
)
(12,427
)
(5,640
)
Less: Export duties on silver concentrate
(2,995
)
(1,440
)
(3,120
)
(1,810
)
(2,581
)
Cash Costs
29,145

22,922

30,836

29,697

20,529

 
 
 
 
 
 
 
 
 
 
 
 
Marigold mine
 
 
 
 
 
Cost of sales (B)
36,548

42,563

40,612

53,502

41,829

Add: Treatment and refining costs
39

41

43

49

34

Less: By-product revenue
(13
)
(12
)
(13
)
(15
)
(11
)
Total Costs
36,574

42,592

40,642

53,536

41,852

 
 
 
 
 
 
Less: Depreciation, depletion and amortization
(8,192
)
(8,102
)
(6,447
)
(7,772
)
(3,741
)
Cash Costs
28,382

34,490

34,195

45,764

38,111

 
 
 
 
 
 
Cost of sales, per consolidated interim statement of (loss) income (A+B)
84,587

79,499

81,319

109,834

73,011

 
 
 
 
 
 
 
 
 
 
 
 
 Pirquitas mine
 
 
 
 
 
 Payable ounces of silver sold (oz)
2,644,933

2,425,701

2,741,396

2,525,166

1,680,502

 Total Costs per silver ounce ($/oz)
16.54

15.23

16.00

17.40

17.11

 Cash Costs per silver ounce ($/oz)
11.02

9.45

11.25

11.76

12.22

 
 
 
 
 
 
 Marigold mine
 
 
 
 
 
 Payable ounces of gold sold (oz)
39,500

48,100

55,830

68,801

38,218

 Total Costs per gold ounce ($/oz)
926

885

728

778

1,095

 Cash Costs per gold ounce ($/oz)
719

717

612

665

997

 
 
 
 
 
 
Precious metals equivalency
 
 
 
 
 
 Total cash cost (for all metals produced) ($000s)
57,527

57,412

65,031

75,461

58,640

 Equivalent payable silver ounces sold (1) (oz)
5,574,030

5,892,831

6,793,519

6,998,809

4,102,646

 Cash Costs per equivalent silver ounces sold ($/oz)
10.32

9.74

9.57

10.78

14.29


(1) Silver equivalent ounces have been established using realized silver and gold prices per ounce in the period and applied to the recovered metal content of the gold bullion sold by the Marigold mine.


22


Non-GAAP financial measures - realized metal prices

Average realized price per ounce of silver sold in each reporting period excludes the period end price adjustments and final settlements on concentrate shipments. The price adjustments do not apply to gold bullion sales.

Non-GAAP financial measures - adjusted net income (loss)

We have included the non-GAAP financial performance measures of adjusted income (loss) before tax, adjusted income tax (expense), adjusted net income (loss) and adjusted basic earnings (loss) per share. Adjusted net earnings excludes gains/losses and other costs incurred for acquisitions and disposals of mineral properties, impairment charges, unrealized and realized gains/losses on financial instruments, significant non-cash foreign exchange impacts as well as other significant non-cash, non-recurring items. We exclude these items from net income (loss) to provide a measure which allows investors to evaluate the operating results of our underlying core operations and our ability to generate liquidity through operating cash flow to fund working capital requirements, future capital expenditures and service outstanding debt. We believe that, in addition to conventional measures prepared in accordance with GAAP, certain investors may use this information to evaluate our performance. Accordingly, the data presented is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

We have revised the calculation presented for the three and nine months ended September 30, 2014, to include adjustments for certain non-cash and non-recurring items that we consider provides an improved measure to evaluate the operating results of our underlying core operations.

The following table provides a reconciliation of adjusted net income (loss) to the consolidated financial statements:
 
Three months ended September 30
 
2015

2014

 
$000s

 $000s

 
 
 
Net (loss) before tax
(62,556
)
(17,600
)
Adjusted for:
 
 
Business acquisition and integration costs
—

263

Non-cash finance income and expense
3,705

3,017

Non-recurring disposals of fixed assets
1,457

—

Write-down of inventory to NRV
7,716

—

Impairment charges
34,490

—

Gain on marketable securities
—

(1,202
)
Non-cash foreign exchange loss
3,128

2,472

Other non-recurring items
216

(704
)
Adjusted (loss) before tax
(11,844
)
(13,754
)
 
 
 
Income tax recovery
3,140

24

Adjusted for:
 


Other non-recurring tax items
47

(192
)
Change in prior period estimates
(1,470
)
1,131

Adjusted income tax recovery
1,717

963

 
 
—

Adjusted net (loss)
(10,127
)
(12,791
)
 
 
 
Weighted average shares outstanding (000's)
80,754

80,754

 
 
 
Adjusted basic (loss) per share ($)
(0.13
)
(0.16
)

23


 
Nine months ended September 30
 
2015

2014

 
$000s

 $000s

 
 
 
Net (loss) before tax
(53,304
)
(39,026
)
Adjusted for:
 
 
Gain on sale and write-off of mineral properties
—

(15,939
)
Business acquisition and integration costs
—

5,299

Non-cash finance income and expense
10,373

8,897

Non-recurring disposals of fixed assets
1,457

—

Write-down of inventory to NRV
7,716

—

Write-down of exploration projects
—

699

Impairment charges
34,490

—

Loss on marketable securities
—

3,038

Non-cash foreign exchange loss
5,468

14,960

Other non-recurring items
837

377

Adjusted income (loss) before tax
7,037

(21,695
)
 
 
 
Income tax (expense)
(4,276
)
(1,145
)
Adjusted for:
 
 
Other non-recurring tax items
(3,713
)
2,278

Change in prior period estimates

(4,939
)
1,206

Adjusted income tax (expense) recovery
(12,928
)
2,339

 
 
—

Adjusted net (loss)
(5,891
)
(19,356
)
 
 
 
Weighted average shares outstanding (000's)
80,754

80,754

 
 
 
Adjusted basic (loss) per share ($)
(0.07
)
(0.24
)


13.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Basis of preparation and accounting policies
Our condensed consolidated interim financial statements have been prepared in accordance with IFRS as issued by the 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 our condensed consolidated interim 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)) of our condensed consolidated interim financial statements) 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 impacts of this adoption are discussed below.
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.


24


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

 
 
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) income:

 
 
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
)
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.

25


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 our audited consolidated financial statements for the year ended December 31, 2014 are unaffected.
Financial assets
We classify our financial assets in the following categories: at FVTPL, FVTOCI or at amortized cost. We determine the classification of financial assets at initial recognition. The classification for debt instruments is driven by the entity’s 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 or liabilities 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 (loss) income.
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.
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

26


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) income 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 $33.7 million with a corresponding adjustment to accumulated other comprehensive income.
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.
Hedge accounting
In addition to the early adoption of IFRS 9, we also applied hedge accounting. 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 statements 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) income, 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 statements of (loss) income. Amounts accumulated in equity are transferred to the consolidated statements of (loss) income 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

27


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) income 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 statements of (loss) income.
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 statements of (loss) income.
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.
Pronouncements affecting our financial statements presentation or disclosure

The following new and amended IFRS pronouncements were 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.

Critical Accounting Estimates and Judgments
The preparation of financial statements in conformity with IFRS requires the use of judgments and/or estimates that affect the amounts reported and disclosed in the consolidated financial statements and related notes. These judgments and estimates are based on management’s best knowledge of the relevant facts and circumstances, having regard to previous experience, but actual results may differ materially from the amounts included in the financial statements. The critical judgments and estimates applied in the preparation of the our unaudited condensed 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.


14.
FUTURE ACCOUNTING CHANGES

The below new standards have been issued but are not yet effective:

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

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


28



15.
INTERNAL CONTROL OVER FINANCIAL REPORTING AND DISCLOSURE CONTROLS AND PROCEDURES

Management is responsible for establishing and maintaining adequate internal control over financial reporting and disclosure controls and procedures. Any system of internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. There have been no changes in our internal control over financial reporting or disclosure controls and procedures during the three months ended September 30, 2015, that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.


16.
CAUTIONARY NOTES REGARDING FORWARD-LOOKING STATEMENTS AND MINERAL RESERVES AND MINERAL RESOURCES ESTIMATES

This MD&A contains forward-looking information within the meaning of Canadian securities laws and forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 (collectively, “forward-looking statements”). All statements, other than statements of historical fact, are forward-looking statements.

Generally, forward-looking statements can be identified by the use of words or phrases such as “expects,” “anticipates,” “plans,” “projects,” “estimates,” “assumes,” “intends,” “strategy,” “goals,” “objectives,” “potential,” or variations thereof, or stating that certain actions, events or results “may,” “could,” “would,” “might” or “will” be taken, occur or be achieved, or the negative of any of these terms or similar expressions. The forward-looking statements in this MD&A relate to, among other things: future production of silver, gold and other metals; future costs of inventory, and cash costs and total costs per payable ounce of silver, gold and other metals sold; the prices of silver, gold and other metals; the effects of laws, regulations and government policies affecting our operations or potential future operations; future successful development of our projects; the sufficiency of our current working capital, anticipated operating cash flow or our ability to raise necessary funds; estimated production rates for silver, gold and other metals produced by us; timing of production and the cash costs and total costs of production at the Pirquitas mine and the Marigold mine; the estimated cost of sustaining capital; ongoing or future development plans and capital replacement, improvement or remediation programs; the estimates of expected or anticipated economic returns from our mining projects, including future sales of metals, concentrate or other products produced by us; our plans and expectations for our properties and operations; and the potential benefits to be derived from entering into a joint venture with Golden Arrow; the likelihood of Silver Standard exercising its option and the completion of the transaction; the outcome of Silver Standard’s evaluation of the Chinchillas project; estimated pre-development expenditures; timing of Chinchillas providing a supply feed to the Pirquitas plant; payments to be made to Golden Arrow; and receipt of the necessary approvals of the court and Golden Arrow’s shareholders.

These forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those expressed or implied, including, without limitation, the following: uncertainty of production, development plans and cost estimates for the Pirquitas mine, the Marigold mine and our projects; our ability to replace Mineral Reserves; commodity price fluctuations; political or economic instability and unexpected regulatory changes; currency fluctuations, particularly the value of the Argentine peso against the U.S. dollar; the possibility of future losses; general economic conditions; fully realizing our interest in Pretium Resources Inc. (“Pretium”) and our other marketable securities, including the price of and market for Pretium’s common shares and such other marketable securities; potential export duty and related interest on current and past production of silver concentrate from the Pirquitas mine; recoverability and tightened controls over the VAT collection process in Argentina; counterparty and market risks related to the sale of our concentrate and metals; uncertainty in the accuracy of Mineral Reserves and Mineral Resources estimates and in our ability to extract mineralization profitably; differences in U.S. and Canadian practices for reporting Mineral Reserves and Mineral Resources; lack of suitable infrastructure or damage to existing infrastructure; future development risks, including

29


start-up delays and operational issues; our ability to obtain adequate financing for further exploration and development programs; uncertainty in acquiring additional commercially mineable mineral rights; delays in obtaining or failure to obtain governmental permits, or non-compliance with permits we have obtained; our ability to attract and retain qualified personnel and management and potential labour unrest, including labour actions by our unionized employees at the Pirquitas mine; governmental regulations, including health, safety and environmental regulations, increased costs and restrictions on operations due to compliance with such regulations; reclamation and closure requirements for our mineral properties; unpredictable risks and hazards related to the development and operation of a mine or mineral property that are beyond our control; assessments by taxation authorities in multiple jurisdictions, including the recent reassessment by the CRA; claims and legal proceedings, including adverse rulings in current or future litigation against us and/or our directors or officers; compliance with anti-corruption laws and increased regulatory compliance costs; complying with emerging climate change regulations and the impact of climate change; recoverability of deferred consideration to be received in connection with recent divestitures; uncertainties related to title to our mineral properties and the ability to obtain surface rights; our insurance coverage; civil disobedience in the countries where our mineral properties are located; operational safety and security risks; actions required to be taken by us under human rights law; our ability to access, when required, mining equipment and services; competition in the mining industry for mineral properties; shortage or poor quality of equipment or supplies; our ability to complete and successfully integrate an announced acquisition; conflicts of interest that could arise from some of our directors’ and officers’ involvement with other natural resource companies; information systems security risks; certain terms of our convertible notes; our senior secured revolving credit facility; and those other various risks and uncertainties identified under the heading “Risk Factors” in our most recent Annual Information Form filed with the Canadian securities regulatory authorities and included in our most recent Annual Report on Form 40-F filed with the SEC.

This list is not exhaustive of the factors that may affect any of our forward-looking statements. Our forward-looking statements are based on what our management considers to be reasonable assumptions, beliefs, expectations and opinions based on the information currently available to it. Assumptions have been made regarding, among other things, our ability to carry on our exploration and development activities, our ability to meet our obligations under our property agreements, the timing and results of drilling programs, the discovery of Mineral Resources and Mineral Reserves on our mineral properties, the timely receipt of required approvals and permits, including those approvals and permits required for successful project permitting, construction and operation of our projects, the price of the minerals we produce, the costs of operating and exploration expenditures, our ability to operate in a safe, efficient and effective manner, our ability to obtain financing as and when required and on reasonable terms, and our ability to continue operating the Pirquitas mine and the Marigold mine. You are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. We cannot assure you that actual events, performance or results will be consistent with these forward-looking statements, and management’s assumptions may prove to be incorrect. Our forward-looking statements reflect current expectations regarding future events and operating performance and speak only as of the date hereof and we do not assume any obligation to update forward-looking statements if circumstances or management’s beliefs, expectations or opinions should change other than as required by applicable law. For the reasons set forth above, you should not place undue reliance on forward-looking statements.

Qualified Persons

Except as otherwise set out herein, the scientific and technical information contained in this MD&A relating to the Pirquitas mine has been reviewed and approved by Trevor J. Yeomans, ACSM, P.Eng., and F. Carl Edmunds, P. Geo., each of whom is a Qualified Person under National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”). Mr. Yeomans is our Director of Metallurgy and Mr. Edmunds is our Chief Geologist, Exploration. The scientific and technical information contained in this MD&A relating to the Marigold mine has been reviewed and approved by Thomas Rice and James N. Carver, each of whom is a SME Registered Member and a Qualified Person under NI 43-10. Mr. Rice is our Technical Services Manager and Mr. Carver is our Chief Geologist at the Marigold mine.



30


Cautionary Note Regarding Mineral Reserves and Mineral Resources Estimates

This MD&A includes Mineral Reserves and Mineral Resources classification terms that comply with reporting standards in Canada and the Mineral Reserves and the Mineral Resources estimates are made in accordance with NI 43-101. NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. These standards differ significantly from the requirements of the SEC set out in SEC Industry Guide 7. Consequently, Mineral Reserves and Mineral Resources information included in this MD&A is not comparable to similar information that would generally be disclosed by domestic U.S. reporting companies subject to the reporting and disclosure requirements of the SEC. Under SEC standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically produced or extracted at the time the reserve determination is made.

In addition, the SEC’s disclosure standards normally do not permit the inclusion of information concerning “Measured Mineral Resources,” “Indicated Mineral Resources” or “Inferred Mineral Resources” or other descriptions of the amount of mineralization in mineral deposits that do not constitute “reserves” by U.S. standards in documents filed with the SEC. U.S. investors should understand that “Inferred Mineral Resources” have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. Moreover, the requirements of NI 43-101 for identification of “reserves” are also not the same as those of the SEC, and reserves reported by us in compliance with NI 43-101 may not qualify as “reserves” under SEC standards. Accordingly, information concerning mineral deposits set forth herein may not be comparable with information made public by companies that report in accordance with U.S. standards.


31


Form 52-109F2
Certification of Interim Filings
Full Certificate

I, Paul Benson, Chief Executive Officer of Silver Standard Resources Inc., certify the following:
1.
Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Silver Standard Resources Inc. (the “issuer”) for the interim period ended September 30, 2015.

2.
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3.
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4.
Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.

5.
Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i)
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii)
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b)
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

5.1
Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is based on criteria established in “Internal Control - Integrated Framework” issued by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2
N/A

5.3
N/A





6.
Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on January 1, 2015 and ended on September 30, 2015 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

Date: November 5, 2015



Signed "Paul Benson"        
Paul Benson
Chief Executive Officer





Form 52-109F2
Certification of Interim Filings
Full Certificate

I, Gregory Martin, Chief Financial Officer of Silver Standard Resources Inc., certify the following:
1.
Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Silver Standard Resources Inc. (the “issuer”) for the interim period ended September 30, 2015.

2.
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3.
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4.
Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.

5.
Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i)
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii)
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b)
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

5.1
Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is based on criteria established in “Internal Control - Integrated Framework” issued by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2
N/A

5.3
N/A





6.
Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on January 1, 2015 and ended on September 30, 2015 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

Date: November 5, 2015



Signed "Gregory Martin"        
Gregory Martin
Chief Financial Officer





November 5, 2015
News Release 15-25
SILVER STANDARD REPORTS THIRD QUARTER 2015 RESULTS
VANCOUVER, B.C. - Silver Standard Resources Inc. (NASDAQ: SSRI) (TSX: SSO) (“Silver Standard”) reports consolidated financial results for the third quarter ended September 30, 2015.

Paul Benson, President and CEO said, "This was a solid quarter with both mines performing to plan in terms of production and cash costs. Importantly, we have set up the mines, particularly Marigold, for a strong fourth quarter and are well on track to achieve our guidance metrics at both. This, along with our strong balance sheet, with over $300 million in cash and marketable securities, and added liquidity through our revolving credit facility, enables us to pursue growth opportunities and continue creating shareholder value."

Third Quarter 2015 Highlights:
(All figures are in U.S. dollars unless otherwise noted)

▪
Delivered production to plan: Produced 41,262 ounces of gold at the Marigold mine and 2.6 million ounces of silver at the Pirquitas mine, for silver equivalent production of 5.6 million ounces.

▪
Continued trend of low gold cash costs: Reported $719 per payable ounce of gold sold at the Marigold mine.

▪
Silver cash costs in line with expectations: Reported $11.02 per payable ounce of silver sold at the Pirquitas mine.

▪
Strengthened corporate liquidity: Entered into a $75 million, three-year senior secured revolving credit facility and maintained a cash balance of $200 million.

▪
Continued exploration success at Marigold: Reported the discovery of two new gold mineralized zones, the HideOut area and the 8D area.

▪
Completed the acquisition of the Valmy Property: Acquired 2,844 hectare land package contiguous with the Marigold mine for $11.5 million in cash.

▪
Pursuing opportunity to extend operating life at the Pirquitas mine: Signed an agreement with Golden Arrow Resources Corporation to explore and evaluate the Chinchillas project, located approximately 30 kilometers from the Pirquitas mine.

▪
Recorded impairment charge at Pirquitas: Non-cash, pre-tax impairment charge and write-downs of $42.2 million related to Pirquitas were recognized due to a decline in silver prices, including $7.7 million related to ore stockpiles within cost of sales and income from mine operations.


Page 1


Marigold mine, U.S.
 
 Three months ended
Operating data
September 30 2015

June 30 2015

March 31 2015

December 31 2014

September 30 2014

Total material mined (kt)
18,425

19,051

18,556

18,426

18,832

Waste removed (kt)
11,242

14,163

14,861

14,587

13,821

Strip ratio
1.6

2.9

4.0

3.8

2.8

Mining cost ($/t mined)
1.65

1.48

1.57

1.62

1.61

Total ore stacked (kt)
7,183

4,888

3,695

3,839

5,011

Gold stacked grade (g/t)
0.43

0.33

0.59

0.84

0.53

Processing cost ($/t processed)
0.66

0.79

1.09

1.06

0.86

Gold recovery (%)
69.7

67.6

74.7

73.0

73.0

 
 
 
 
 
 
Gold produced (oz)
41,262

48,685

55,598

67,113

40,442

Gold sold (oz)
39,525

48,121

55,865

68,748

38,245

 
 
 
 
 
 
Realized gold price ($/oz) (1)
1,110

1,205

1,210

1,200

1,267

 
 
 
 
 
 
Cash costs ($/oz) (1)
719

717

612

665

997

Total costs ($/oz) (1)
926

885

728

778

1,095

 
 
 
 
 
 
Financial data ($000s)
 
 
 
 
 
Revenue
43,836

57,958

67,566

82,508

48,395

Income from mine operations
7,288

15,395

26,954

29,006

6,566

Capital investments
8,931

5,255

4,768

4,375

4,486

Cash based capitalized deferred stripping
—

—

12,543

16,866

1,910

Exploration expenditures (2)
1,944

1,978

1,551

3,224

796

(1)
We report the non-GAAP financial measures of realized gold prices, cash costs and total costs per payable ounce of gold sold to manage and evaluate operating performance at the Marigold mine. See “Cautionary Note Regarding Non-GAAP Measures”.
(2) Includes capitalized and expensed exploration expenses.

Mine production

The Marigold mine produced 41,262 gold ounces in the third quarter of 2015, 15% lower than the second quarter production of 48,685 ounces due to the reduction in stacked ore grade in the second quarter of 2015. This reduction was in line with our annual production schedule, which expected lower production in the second and third quarters followed by a stronger fourth quarter.

During the third quarter of 2015, the Marigold mine moved 18.4 million tonnes of material, of which 7.2 million tonnes of ore were delivered to the heap leach pads at a gold grade of 0.43g/t, representing approximately 70,000 recoverable ounces of gold stacked. This compares to 19.1 million tonnes of material moved in the second quarter of 2015, of which 4.9 million tonnes of ore containing a gold grade of 0.33g/t were stacked, representing approximately 35,000 recoverable ounces of gold. The grade mined in the third quarter was 30% higher than the second quarter, as mining progressed deeper into the Mackay pit.

The strip ratio decreased by 45%, to 1.6:1 in the third quarter from 2.9:1 in the second quarter, due to the continued positive reconciliation of ore tonnes as well as mining in a deeper part of the Mackay pit. The increase in both tonnes and grade of ore stacked on the leach pads in the third quarter is expected to result in increased gold production in the fourth quarter of 2015 as previously guided. During the third quarter, we

Page 2


completed construction of the new leach pad and stacked sufficient ore to commence leaching. Gold recovery was 70% in the third quarter compared to 68% in the second quarter due to the higher grade mined.

Mine operating costs

Cash costs, which include all costs of inventory, refining and royalties, were $719 per payable ounce of gold sold in the third quarter of 2015, comparable to $717 per payable ounce of gold sold in the second quarter of 2015, with the increase resulting from higher operating costs being offset by more recoverable ounces placed on the leach pads. Mining unit costs increased to $1.65 per tonne in the third quarter, from $1.48 per tonne in the second quarter. This was principally due to additional ore tonnage that required hauling to the leach pads, one of our longest hauls, and a premature failure of the swing bearing on one of the hydraulic shovels, requiring the use of higher cost wheel loaders.

Total costs, which include depreciation, depletion and amortization, were $926 per payable ounce of gold sold in the third quarter of 2015, compared to $885 per payable ounce of gold sold in the second quarter of 2015 due to higher depletion and depreciation cost per unit.

Cash costs and total costs per payable ounce of gold sold are non-GAAP financial measures. See “Cautionary Note Regarding Non-GAAP Measures”.

Mine sales

A total of 39,525 ounces of gold was sold at an average price of $1,110 per ounce during the third quarter of 2015, a decrease of 18% from the 48,121 ounces of gold sold during the second quarter of 2015 at an average price of $1,205 per ounce. The decrease in sales is primarily a function of lower production, however we also had approximately 2,700 ounces of gold bullion that remained unsold due to timing of production, and was sold early in the fourth quarter.

Exploration

In our news release dated July 6, 2015, we reported the discovery of the 8D area and presented initial results from the assay program of drill hole samples with a “zero” value in the drillhole database. During the third quarter, exploration drilling at Marigold also identified a new mineralized center outside the current resource envelope, named the HideOut area. Results were reported in our news release dated September 18, 2015. A total of 3,860 meters in 15 reverse circulation drillholes was completed at the HideOut area in the third quarter of 2015.

On September 24, 2015, we completed the acquisition of the Valmy Property from Newmont Mining Corporation ("Newmont"). This 2,844 hectare land package, surrounding the Marigold mine to the east, south and west, historically produced 196,000 ounces of gold in the period between 2002 and 2005, as previously reported by Newmont in 2005. The addition of this property increases our total land holding at the Marigold mine by over 35% to 10,759 hectares. Data review of the previous drillhole information commenced in the fourth quarter. We expect to include Mineral Resources from Valmy to our year-end Mineral Resources and Mineral Reserves Statement published in February 2016. We also expect to conduct exploration drilling on the Valmy Property in 2016 subject to obtaining the requisite permits and other approvals.






Page 3


Pirquitas mine, Argentina
 
Three months ended
Operating data
September 30 2015

June 30 2015

March 31 2015

December 31 2014

September 30 2014

Total material mined (kt)
2,746

3,087

3,355

3,816

4,315

Waste removed (kt)
2,219

2,320

2,585

3,168

3,831

Strip ratio
4.2

3.0

3.4

4.9

7.9

Silver mined grade (g/t)
188

172

184

150

160

Zinc mined grade (%)
0.33

0.69

0.73

0.97

1.36

Mining cost ($/t mined)
3.94

3.39

2.90

3.18

2.93

Ore milled (kt)
410

347

379

372

407

Silver mill feed grade (g/t)
238

262

267

222

248

Zinc mill feed grade (%)
0.57

0.69

0.89

1.12

1.79

Processing cost ($/t milled)
21.53

22.69

21.46

22.46

23.30

Silver recovery (%)
82.0

83.7

83.9

83.8

78.7

Zinc recovery (%) (1)
40.1

50.9

51.4

52.6

43.8

 
 
 
 
 
 
Silver produced ('000 oz)
2,576

2,443

2,732

2,222

2,551

Zinc produced ('000 lbs) (1)
2,076

2,674

3,837

4,817

7,030

Silver sold ('000 oz)
2,819

2,623

2,909

2,764

1,859

Zinc sold ('000 lbs) (1)
2,352

4,936

2,769

8,745

8,062

 
 
 
 
 
 
Realized silver price ($/oz)(2)
14.97

16.72

16.67

17.18

19.99

 
 
 
 
 
 
Cash costs ($/oz) (2)
11.02

9.45

11.25

11.76

12.22

Total costs ($/oz) (2)
16.54

15.23

16.00

17.40

17.11

 
 
 
 
 
 
Financial data ($000s)
 
 
 
 
 
Revenue
33,355

37,860

44,155

40,322

30,874

(Loss) income from mine operations (3)
(14,684
)
924

3,448

(16,010
)
(308
)
Capital investments
2,500

2,962

1,552

2,033

2,376

Cash based capitalized deferred stripping
—

—

—

—

3,946

Exploration expenditures (4)
1,124

1,912

1,283

1,284

173

(1)
Data for zinc production and sales relate only to zinc in zinc concentrate as any zinc metal within our silver concentrate does not generate revenue.
(2)
We report the non-GAAP financial measures of realized silver prices, and cash costs and total costs per payable ounce of silver sold to manage and evaluate operating performance at the Pirquitas mine. See “Cautionary Note Regarding Non-GAAP Measures”.
(3)
Income (loss) from mine operations for the quarters ended September 30, 2015, and December 31, 2014, include $7.7 million and $11.3 million, respectively, of non-cash write-down of stockpile inventory to its net realizable value.
(4)
Includes capitalized and expensed exploration expenses.

Mine production

The Pirquitas mine produced 2.6 million ounces of silver during the third quarter of 2015, higher than the 2.4 million ounces produced in the second quarter. The quarter-on-quarter increase in silver production is primarily due to the higher amount of ore milled, as silver mill feed grade and recovery remained relatively in line with the previous quarter. The mine also produced 2.1 million pounds of zinc in zinc concentrate during the third quarter of 2015, a reduction from the second quarter of 2015 production of 2.7 million pounds and in line with the falling zinc head grade.


Page 4


Consistent with our mine plan, total material mined has been declining with 2,746,000 tonnes mined in the third quarter of 2015, 11% less than in the second quarter of 2015. In addition, the strip ratio increased to 4.2:1 from 3.0:1 in the second quarter of 2015.

Approximately 410,000 tonnes of ore was milled during the third quarter of 2015, compared to 347,000 tonnes in the second quarter of 2015. Ore was milled at an average rate of 4,454 tonnes per day during the third quarter of 2015, 12% above the mill’s nominal design and 17% higher than the average milling rate of 3,815 tonnes per day in the second quarter of 2015.

Ore milled during the third quarter of 2015 contained an average silver grade of 238 g/t, lower than the 262 g/t reported in the second quarter of 2015. As a result, the average silver recovery rate of 82.0% was lower than the average recovery rate of 83.7% in the second quarter of 2015.

Mine operating costs

Cash costs, which include cost of inventory, treatment and refining costs and by-product credits, were $11.02 per payable ounce of silver sold in the third quarter of 2015 compared to $9.45 per payable ounce of silver sold in the second quarter of 2015. Cost of inventory was higher compared to the second quarter of 2015 due to lower by-product credits in the third quarter of 2015 resulting from lower zinc sales, higher mining costs due to longer and deeper haul profiles and higher truck maintenance costs.

Total costs, which add silver export duties, depreciation, depletion and amortization to cash costs, were $16.54 per payable ounce of silver sold in the third quarter of 2015, higher than the $15.23 per payable ounce of silver sold in the second quarter of 2015. Depletion, depreciation and amortization was slightly lower on a per unit sold basis in the third quarter of 2015, compared to the second quarter of 2015. Silver export duties were higher than in the previous quarter due to timing of shipments.

We remain focused on costs and driving further operational efficiencies that will sustain cash flows in a lower silver price environment while pursuing alternatives for mine life extension.

Cash costs and total costs per payable ounce of silver sold are non-GAAP financial measures. See “Cautionary Note Regarding Non-GAAP Measures”.

Mine sales

In the third quarter of 2015, we sold 2.8 million ounces of silver, 8% higher than sales of 2.6 million ounces of silver in the second quarter of 2015. We also sold 2.4 million pounds of zinc in the third quarter of 2015, compared to the 4.9 million pounds sold in the second quarter of 2015. Sales of both metals were in line with our mine plan.

Exploration

As reported in our news release dated September 21, 2015, we completed the underground drilling program beneath the San Miguel open pit at the Pirquitas mine. High grade silver mineralization was intersected on all three veins explored, known as Chocaya, Oploca North and Oploca South veins. The underground drill program at the Pirquitas mine is targeting the expansion and upgrade of Mineral Resources underlying the San Miguel open pit.

During the program, 41 drillholes were completed from underground drill stations. All veins remain open laterally and at depth. An engineering study is being undertaken to evaluate the potential to exploit this mineralization from underground. This engineering study will also include the previously drilled Cortaderas

Page 5


silver-zinc vein, located approximately 650 meters north of the current open pit. The results are expected in early 2016.

Chinchillas project

We announced in a news release dated October 1, 2015 that we had entered into an agreement with Golden Arrow Resources Corporation to explore, evaluate and seek to develop the silver-lead-zinc deposit at Chinchillas located approximately 30 kilometers from Pirquitas. The initial work is directed towards confirming the Mineral Resource base at Chinchillas. Technical planning for a pre-feasibility study on Chinchillas commenced in late third quarter of 2015. Key activities in the fourth quarter will include approximately 5,000 meters of resource infill drilling, and initial geotechnical, hydrological and metallurgical studies. We will also commence environmental baseline studies and community engagement programs.

Outlook

This section of the news release provides management's production and cost estimates. Major capital and exploration expenditures are also discussed. See "Cautionary Note Regarding Forward-Looking Statements."
Our operating guidance, capital expenditures and exploration expenditures remain unchanged from that provided in our second quarter 2015 MD&A Outlook. For the full year 2015, we expect:

Operating Guidance
 
Pirquitas mine
Marigold mine
Gold Production
oz
—

195,000 - 205,000

Silver Production
Moz
9.5 - 10.5

—

Zinc Production
Mlb
10.0 - 12.0

—

Cash costs per payable ounce sold (1)
$/oz
10.50 - 11.50

700 - 750

Capital Expenditures (2)
$M
10

25

Capitalized Stripping Costs
$M
—

13

(1) We report the non-GAAP financial measures of cash costs per payable ounce of silver and gold sold to manage and evaluate operating performance at the Pirquitas mine and the Marigold mine. See “Cautionary Note Regarding Non-GAAP Measures”.
(2) Includes capitalized exploration.


Page 6


Financial Results

Mine Operations
▪
Revenues were $77.2 million in the third quarter of 2015, compared to $79.3 million in the third quarter of 2014. Negative mark to market price adjustments of $4.3 million impacted revenues in the third quarter of 2015, compared to negative adjustments of $5.5 million in the comparative period of 2014. Cost of sales was $84.6 million, including $19.8 million of non-cash depletion, depreciation and amortization and $7.7 million non-cash write-down of stockpiles at the Pirquitas mine, in the quarter ended September 30, 2015. This compares to cost of sales of $73.0 million, including non-cash depletion, depreciation and amortization of $9.4 million in the quarter ended September 30, 2014.

▪
Loss from mine operations, including the non-cash stockpile write-down, was $7.4 million in the third quarter of 2015, compared to income from mine operations of $6.3 million in the third quarter of 2014.

Net Income
▪
Net loss was $59.4 million, or $0.74 per share in the third quarter of 2015, mainly due to the recognition of a non-cash, pre-tax impairment charge and write-downs of $42.2 million related to the Pirquitas mine, including $7.7 million of stockpiles within cost of sales and income from operations. This compares to net loss of $17.6 million, or $0.22 per share in the third quarter of 2014.

▪
Adjusted net loss was $10.1 million, or $0.13 per share, in the third quarter of 2015 compared to adjusted net loss of $12.8 million, or $0.16 per share, in the third quarter of 2014.

Liquidity
▪
Cash and cash equivalents was $200.0 million as of September 30, 2015, an increase from $184.6 million as of December 31, 2014. In the first nine months of 2015, we generated cash from operating activities of $53.6 million, received $20.0 million of deferred consideration from the sale of the San Agustin project, and decreased restricted cash by $17.7 million, replacing cash for bonding requirements with surety bonds. These inflows were partially offset by $19.2 million deposited with the Canada Revenue Agency as required to appeal the Notice of Reassessment. Marketable securities totaled $107.8 million at September 30, 2015, compared to $104.8 million at December 31, 2014. Working capital was $373.1 million at September 30, 2015, compared to $368.9 million at December 31, 2014.


Page 7


Selected Financial Data
($000's, except per share amounts)

This summary of selected financial data should be read in conjunction with our management’s discussion and analysis of the financial position and results of operations for the three and nine months ended September 30, 2015 (“MD&A”), the unaudited condensed consolidated interim financial statements for the three and nine months ended September 30, 2015 and September 30, 2014, and the audited consolidated financial statements for the year ended December 31, 2014.
 
Three Months Ended September 30, 2015
Three Months Ended September 30, 2014
Revenue
77,191

79,269

(Loss) income from mine operations (1)
(7,396
)
6,258

Operating loss (2) (3)
(50,733
)
(3,904
)
Net loss (2) (3)
(59,416
)
(17,576
)
Basic loss per share (3)
(0.74
)
(0.22
)
Adjusted net loss (3)
(10,127
)
(12,791
)
Adjusted basic loss per share (3)
(0.13
)
(0.16
)
Cash generated by operating activities
998

13,186

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

Cash used in financing activities
—

—

 
 
 
Financial Position
September 30, 2015
December 31, 2014
Cash and cash equivalents
200,017

184,643

Marketable securities
107,827

104,785

Current assets – total
507,742

491,818

Current liabilities – total
134,674

122,870

Working capital
373,068

368,948

Total assets
954,766

986,249

(1)
Loss from mine operations for the quarter ended September 30, 2015 includes a $7.7 million non-cash write-down of stockpile inventory to its net realizable value at the Pirquitas mine.
(2)
Operating Loss and Net Loss for the quarter ended September 30, 2015 include non-cash, pre-tax impairment charge and write-downs of $42.2 million related to the Pirquitas mine.
(3)
For the three months ended September 30, 2014, values have been restated due to a change in accounting policy with respect to exploration and evaluation expenditures.

Qualified Persons
The scientific and technical information contained in this news release relating to the Pirquitas mine has been reviewed and approved by Trevor J. Yeomans, ACSM, P.Eng., and F. Carl Edmunds, P. Geo., each of whom is a Qualified Person under National Instrument 43-101 — Standards of Disclosure for Mineral Projects (“NI 43-101”). Mr. Yeomans is our Director of Metallurgy and Mr. Edmunds is our Chief Geologist, Exploration. The scientific and technical information contained in this news release relating to the Marigold mine has been reviewed and approved by Thomas Rice and James Carver, each of whom is a SME Registered Member and a Qualified Person under NI 43-101. Mr. Rice is our Technical Services Manager and Mr. Carver is our Chief Geologist at the Marigold mine.








Page 8


Risks and Uncertainties

For information regarding the risks and uncertainties affecting our business, please refer to the section entitled “Risk Factors” in our most recent Annual Information Form and Annual Report on Form 40-F filed with Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission ("SEC"), which is available at www.sedar.com, the EDGAR section of the SEC website at www.sec.gov, and on our website at www.silverstandard.com.

Management Discussion & Analysis and Conference Call

This news release should be read in conjunction with our unaudited condensed consolidated interim financial statements and the MD&A as filed with the Canadian Securities Administrators and available at www.sedar.com or our website at www.silverstandard.com.

▪
Conference call and webcast: Friday, November 6, 2015, at 11:00 a.m. EST.
 
Toll-free in North America:
+1 (800) 319-4610
 
All other callers:
+1 (416) 915-3239
 
Webcast:
ir.silverstandard.com

▪
The conference call will be archived and available at ir.silverstandard.com.
Audio replay will be available for two weeks by calling:
 
Toll-free in North America:
+1 (855) 669-9658, replay code 8956#

SOURCE: Silver Standard Resources Inc.
For further information contact:
W. John DeCooman, Jr.
Vice President, Business Development and Strategy
Silver Standard Resources Inc.
Vancouver, BC
N.A. toll-free: +1 (888) 338-0046
All others: +1 (604) 689-3846

To receive Silver Standard’s news releases by e-mail, please register using the Silver Standard website at www.silverstandard.com.


Cautionary Note Regarding Forward-Looking Statements

This news release contains forward-looking information within the meaning of Canadian securities laws and forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 (collectively, “forward-looking statements”). All statements, other than statements of historical fact, are forward-looking statements.
Generally, forward-looking statements can be identified by the use of words or phrases such as “expects,” “anticipates,” “plans,” “projects,” “estimates,” “assumes,” “intends,” “strategy,” “goals,” “objectives,” “potential,” or variations thereof, or stating that certain actions, events or results “may,” “could,” “would,” “might” or “will” be taken, occur or be achieved, or the negative of any of these terms or similar expressions. The forward-looking statements in this news release relate to, among other things: future production of silver, gold and other metals; future costs of inventory,

Page 9


and cash costs and total costs per payable ounce of silver, gold and other metals sold; the prices of silver, gold and other metals; the effects of laws, regulations and government policies affecting our operations or potential future operations; future successful development of our projects; the sufficiency of our current working capital, anticipated operating cash flow or our ability to raise necessary funds; estimated production rates for silver, gold and other metals produced by us; timing of production and the cash costs and total costs of production at the Pirquitas mine and the Marigold mine; the estimated cost of sustaining capital; ongoing or future development plans and capital replacement, improvement or remediation programs; the estimates of expected or anticipated economic returns from our mining projects, including future sales of metals, concentrate or other products produced by us; our plans and expectations for our properties and operations; and the potential benefits to be derived from entering into a joint venture with Golden Arrow; the likelihood of Silver Standard exercising its option and the completion of the transaction; the outcome of Silver Standard’s evaluation of the Chinchillas project; estimated pre-development expenditures; timing of Chinchillas providing a supply feed to the Pirquitas plant; payments to be made to Golden Arrow; and receipt of the necessary approvals of the court and Golden Arrow’s shareholders.

These forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those expressed or implied, including, without limitation, the following: uncertainty of production, development plans and cost estimates for the Pirquitas mine, the Marigold mine and our projects; our ability to replace Mineral Reserves; commodity price fluctuations; political or economic instability and unexpected regulatory changes; currency fluctuations, particularly the value of the Argentine peso against the U.S. dollar; the possibility of future losses; general economic conditions; fully realizing our interest in Pretium Resources Inc. (“Pretium”) and our other marketable securities, including the price of and market for Pretium’s common shares and such other marketable securities; potential export duty and related interest on current and past production of silver concentrate from the Pirquitas mine; recoverability and tightened controls over the value added tax collection process in Argentina; counterparty and market risks related to the sale of our concentrate and metals; uncertainty in the accuracy of Mineral Reserves and Mineral Resources estimates and in our ability to extract mineralization profitably; differences in U.S. and Canadian practices for reporting Mineral Reserves and Mineral Resources; lack of suitable infrastructure or damage to existing infrastructure; future development risks, including start-up delays and operational issues; our ability to obtain adequate financing for further exploration and development programs; uncertainty in acquiring additional commercially mineable mineral rights; delays in obtaining or failure to obtain governmental permits, or non-compliance with permits we have obtained; our ability to attract and retain qualified personnel and management and potential labour unrest, including labour actions by our unionized employees at the Pirquitas mine; governmental regulations, including health, safety and environmental regulations, increased costs and restrictions on operations due to compliance with such regulations; reclamation and closure requirements for our mineral properties; unpredictable risks and hazards related to the development and operation of a mine or mineral property that are beyond our control; assessments by taxation authorities in multiple jurisdictions, including the recent reassessment by the Canada Revenue Agency; claims and legal proceedings, including adverse rulings in current or future litigation against us and/or our directors or officers; compliance with anti-corruption laws and increased regulatory compliance costs; complying with emerging climate change regulations and the impact of climate change; recoverability of deferred consideration to be received in connection with recent divestitures; uncertainties related to title to our mineral properties and the ability to obtain surface rights; our insurance coverage; civil disobedience in the countries where our mineral properties are located; operational safety and security risks; actions required to be taken by us under human rights law; our ability to access, when required, mining equipment and services; competition in the mining industry for mineral properties; shortage or poor quality of equipment or supplies; our ability to complete and successfully integrate an announced acquisition; conflicts of interest that could arise from some of our directors’ and officers’ involvement with other natural resource companies; information systems security risks; certain terms of our convertible notes; our senior secured revolving credit facility; our announced acquisition of the Valmy property; and those other various risks and uncertainties identified under the heading “Risk Factors” in our most recent Annual Information Form filed with the Canadian securities regulatory authorities and included in our most recent Annual Report on Form 40-F filed with the SEC.

This list is not exhaustive of the factors that may affect any of our forward-looking statements. Our forward-looking statements are based on what our management considers to be reasonable assumptions, beliefs, expectations and opinions based on the information currently available to it. Assumptions have been made regarding, among other things, our ability to carry on our exploration and development activities, our ability to meet our obligations under our property agreements, the timing and results of drilling programs, the discovery of Mineral Resources and Mineral Reserves on our mineral properties, the timely receipt of required approvals and permits, including those approvals

Page 10


and permits required for successful project permitting, construction and operation of our projects, the price of the minerals we produce, the costs of operating and exploration expenditures, our ability to operate in a safe, efficient and effective manner, our ability to obtain financing as and when required and on reasonable terms and our ability to continue operating the Pirquitas mine and the Marigold mine. You are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. We cannot assure you that actual events, performance or results will be consistent with these forward-looking statements, and management’s assumptions may prove to be incorrect. Our forward-looking statements reflect current expectations regarding future events and operating performance and speak only as of the date hereof and we do not assume any obligation to update forward-looking statements if circumstances or management’s beliefs, expectations or opinions should change other than as required by applicable law. For the reasons set forth above, you should not place undue reliance on forward-looking statements.

Cautionary Note to U.S. Investors

This news release includes Mineral Reserves and Mineral Resources classification terms that comply with reporting standards in Canada and the Mineral Reserves and the Mineral Resources estimates are made in accordance with NI 43-101. NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. These standards differ significantly from the requirements of the SEC set out in Industry Guide 7. Consequently, Mineral Reserves and Mineral Resources information included in this news release is not comparable to similar information that would generally be disclosed by domestic U.S. reporting companies subject to the reporting and disclosure requirements of the SEC. Under SEC standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically produced or extracted at the time the reserve determination is made. In addition, the SEC’s disclosure standards normally do not permit the inclusion of information concerning “Measured Mineral Resources,” “Indicated Mineral Resources” or “Inferred Mineral Resources” or other descriptions of the amount of mineralization in mineral deposits that do not constitute “reserves” by U.S. standards in documents filed with the SEC. U.S. investors should understand that “Inferred Mineral Resources” have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. Moreover, the requirements of NI 43-101 for identification of “reserves” are also not the same as those of the SEC, and reserves reported by us in compliance with NI 43-101 may not qualify as “reserves” under SEC standards. Accordingly, information concerning mineral deposits set forth herein may not be comparable with information made public by companies that report in accordance with U.S. standards.

Cautionary Note Regarding Non-GAAP Measures

This news release includes certain terms or performance measures commonly used in the mining industry that are not defined under International Financial Reporting Standards (“IFRS”), including cost of inventory, cash costs and total costs per payable ounce of silver or gold sold, realized price per ounce of silver or gold sold, adjusted net income (loss) before tax, adjusted net income (loss) and adjusted basic earnings (loss) per share. We believe that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate our performance. The data presented is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These non-GAAP measures should be read in conjunction with our consolidated financial statements.

Page 11

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

SEC Filings