Silver Standard Resources Inc.
(a development stage company)
Consolidated Balance Sheets
As at September 30, 2009
(expressed in thousands of US dollars – unaudited)
September 30 | December 31 | ||||||||
Note | 2009 | 2008 | |||||||
$ | $ | ||||||||
Assets | |||||||||
Current assets | |||||||||
Cash and cash equivalents | 42,886 | 72,013 | |||||||
Accounts receivable | 3,307 | 2,772 | |||||||
Marketable securities | 3 | 11,037 | 10,923 | ||||||
Supplies inventories | 4 | 4,580 | - | ||||||
Prepaid expenses and deposits | 1,915 | 1,106 | |||||||
63,725 | 86,814 | ||||||||
Restricted cash | 1,929 | 1,793 | |||||||
Other investments | 6 | 24,902 | 21,803 | ||||||
Convertible debenture | 5 | 5,487 | 5,973 | ||||||
Valued added tax recoverable | 48,968 | 30,332 | |||||||
Mineral properties and property, plant, and equipment | 7 | 573,248 | 421,190 | ||||||
718,259 | 567,905 | ||||||||
Liabilities and Shareholders' Equity | |||||||||
Current liabilities | |||||||||
Accounts payable and accrued liabilities | 33,927 | 31,313 | |||||||
Accrued interest on convertible notes | 8 | 536 | 2,066 | ||||||
Current portion of taxes payable | 1,960 | 11,715 | |||||||
Current portion of asset retirement obligations | 266 | 234 | |||||||
36,689 | 45,328 | ||||||||
Asset retirement obligations | 3,771 | 3,229 | |||||||
Taxes payable | 3,370 | 3,370 | |||||||
Future income tax liability | 30,145 | 22,335 | |||||||
Long-term convertible notes | 8 | 109,027 | 104,046 | ||||||
183,002 | 178,308 | ||||||||
Non-controlling interest | 496 | 496 | |||||||
Shareholders' Equity | |||||||||
Share capital | 9a | 533,296 | 389,655 | ||||||
Value assigned to stock options | 9b | 40,625 | 36,502 | ||||||
Value assigned to convertible notes | 37,383 | 37,383 | |||||||
Contributed surplus | 510 | 510 | |||||||
Accumulated other comprehensive income | (17,606 | ) | (19,569 | ) | |||||
Deficit | (59,447 | ) | (55,380 | ) | |||||
534,761 | 389,101 | ||||||||
718,259 | 567,905 |
Commitments (note 13)
Approved on behalf of the Board of Directors
“John R. Brodie” “Peter W. Tomsett”
John R. Brodie, FCA Peter W. Tomsett
(Director) (Director)
The accompanying notes are an integral part of the consolidated financial statements.
Silver Standard Resources Inc.
(a development stage company)
Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss)
(expressed in thousands of US dollars, except per share amounts – unaudited)
Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||
Note | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||
$ | $ | $ | $ | |||||||||||||||||
Exploration and mineral property costs | ||||||||||||||||||||
Property examination and exploration | 73 | 72 | 183 | 238 | ||||||||||||||||
Reclamation and accretion | 86 | 51 | 258 | 172 | ||||||||||||||||
(159 | ) | (123 | ) | (441 | ) | (410 | ) | |||||||||||||
Expenses | ||||||||||||||||||||
General and administration | 2,547 | 1,972 | 7,213 | 6,074 | ||||||||||||||||
Depreciation | 7 | 59 | 78 | 165 | 225 | |||||||||||||||
Stock-based compensation | 9b | 1,247 | 2,600 | 4,770 | 7,436 | |||||||||||||||
Foreign exchange gain | (2,932 | ) | (1,591 | ) | (4,598 | ) | (3,300 | ) | ||||||||||||
(921 | ) | (3,059 | ) | (7,550 | ) | (10,435 | ) | |||||||||||||
Other income (expenses) | ||||||||||||||||||||
Investment income | 233 | 978 | 814 | 2,565 | ||||||||||||||||
Gain on sale of marketable securities | 3 | 71 | - | 1,824 | 2,090 | |||||||||||||||
Gain on sale of mineral properties | 7 | - | 31,463 | 167 | 31,463 | |||||||||||||||
Gain (write-down) on other investments, net | 5, 6 | 136 | - | 388 | (17,903 | ) | ||||||||||||||
Financing fees | 8 | - | - | - | (3,773 | ) | ||||||||||||||
Interest expense on convertible notes | 8 | - | (681 | ) | - | (2,726 | ) | |||||||||||||
Gain on sale of silver bullion | - | - | - | 23,699 | ||||||||||||||||
Write-down of mineral properties | 7 | - | - | (377 | ) | - | ||||||||||||||
Unrealized gain (loss) on financial instruments held-for-trading | 5 | 158 | (888 | ) | 141 | 491 | ||||||||||||||
598 | 30,872 | 2,957 | 35,906 | |||||||||||||||||
Earnings (Loss) before income taxes | (482 | ) | 27,690 | (5,034 | ) | 25,061 | ||||||||||||||
Income taxes expense (recovery): | ||||||||||||||||||||
Current income tax | - | 12,842 | (900 | ) | 12,842 | |||||||||||||||
Future income tax | 3 | (387 | ) | 2,897 | (67 | ) | 3,853 | |||||||||||||
(387 | ) | 15,739 | (967 | ) | 16,695 | |||||||||||||||
Earnings (Loss) for the period | (95 | ) | 11,951 | (4,067 | ) | 8,366 | ||||||||||||||
Weighted average shares outstanding (thousands) | ||||||||||||||||||||
Basic | 70,143 | 62,699 | 67,864 | 62,687 | ||||||||||||||||
Diluted | 70,143 | 63,070 | 67,864 | 63,149 | ||||||||||||||||
Earnings (Loss) per common share | ||||||||||||||||||||
Basic and diluted earnings (loss) per share | (0.00 | ) | 0.19 | (0.06 | ) | 0.13 | ||||||||||||||
Comprehensive income (loss) | ||||||||||||||||||||
Earnings (Loss) for the period | (95 | ) | 11,951 | (4,067 | ) | 8,366 | ||||||||||||||
Other comprehensive income (loss) | ||||||||||||||||||||
Unrealized gain (loss) on sale of marketable securities, net of tax | 3 | 1,943 | (14,080 | ) | 1,841 | (16,998 | ) | |||||||||||||
Reclassification of realized gain on sale of marketable securities, net of tax | 3 | (59 | ) | - | (1,513 | ) | (1,734 | ) | ||||||||||||
Foreign exchange gain on marketable securities | 3 | 702 | - | 1,635 | - | |||||||||||||||
Translation adjustment on foreign operations | 2 | - | (19,852 | ) | - | (35,779 | ) | |||||||||||||
Other comprehensive income (loss) for the period | 2,586 | (33,932 | ) | 1,963 | (54,511 | ) | ||||||||||||||
Comprehensive income (loss) for the period | 2,491 | (21,981 | ) | (2,104 | ) | (46,145 | ) |
The accompanying notes are an integral part of the consolidated financial statements.
Silver Standard Resources Inc.
(a development stage company)
Consolidated Statements of Cash Flows
(expressed in thousands of US dollars - unaudited)
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||
Note | 2009 | 2008 | 2009 | 2008 | |||||
$ | $ | $ | $ | ||||||
Operating activities | |||||||||
Earnings (Loss) for the period | (95 | ) | 11,951 | (4,067 | ) | 8,366 | |||
Items not affecting cash | |||||||||
Depreciation | 59 | 78 | 165 | 225 | |||||
Stock-based compensation | 9b | 1,247 | 2,600 | 4,770 | 7,436 | ||||
Asset retirement obligations | 76 | 37 | 221 | 116 | |||||
Gain on sale of marketable securities | 3 | (71 | ) | - | (1,824 | ) | (2,090 | ) | |
Gain on sale of mineral properties | 7 | - | (31,463 | ) | (167 | ) | (31,463 | ) | |
Gain on sale of silver bullion | - | - | - | (23,699 | ) | ||||
Unrealized (gain) loss on held-for-trading financial instruments | (158 | ) | 888 | (141 | ) | (491 | ) | ||
Accretion expense on convertible notes | - | 331 | - | 1,283 | |||||
Interest income on convertible debenture | (139 | ) | (162 | ) | (519 | ) | (162 | ) | |
Write-down of mineral properties | 7 | - | - | 377 | - | ||||
Write-down of convertible debenture and other investments | 5, 6 | - | - | 2,002 | 17,903 | ||||
Future income tax expense | 3 | (387 | ) | 2,897 | (67 | ) | 3,853 | ||
Increase in non-current taxes payable | - | 3,180 | - | 3,180 | |||||
Unrealized foreign exchange gain | (1,873 | ) | (3,162 | ) | (3,280 | ) | (7,404 | ) | |
Increase (decrease) in non-cash working capital items | 10 | (4,336 | ) | 1,917 | (16,543 | ) | 3,911 | ||
Cash used in operating activities | (5,677 | ) | (10,908 | ) | (19,073 | ) | (19,036 | ) | |
Financing activities | |||||||||
Shares issued for cash | 9 | 51,030 | 218 | 151,786 | 1,661 | ||||
Share issue costs | 9 | (3,124 | ) | - | (8,921 | ) | - | ||
Proceeds from issuance of convertible notes | 8 | - | - | - | 138,000 | ||||
Financing costs related to equity portion of convertible notes financing | 8 | - | - | - | (1,473 | ) | |||
Cash generated by financing activities | 47,906 | 218 | 142,865 | 138,188 | |||||
Investing activities | |||||||||
Mineral property costs | (8,274 | ) | (12,407 | ) | (16,941 | ) | (25,500 | ) | |
Property, plant and equipment | (37,420 | ) | (39,368 | ) | (121,368 | ) | (92,913 | ) | |
Increase in value added tax recoverable, net | (6,681 | ) | (5,042 | ) | (18,636 | ) | (10,409 | ) | |
Proceeds from sale of mineral property | - | 22,435 | - | 22,435 | |||||
Proceeds from sale of silver bullion | - | - | - | 39,648 | |||||
Proceeds from sale of marketable securities | 197 | - | 4,026 | 2,780 | |||||
Cash used in investing activities | (52,178 | ) | (34,382 | ) | (152,919 | ) | (63,959 | ) | |
Increase (decrease) in cash and cash equivalents | (9,949 | ) | (45,072 | ) | (29,127 | ) | 55,193 | ||
Cash and cash equivalents - Beginning of period | 52,835 | 181,865 | 72,013 | 81,600 | |||||
Cash and cash equivalents - End of period | 42,886 | 136,793 | 42,886 | 136,793 | |||||
Supplementary cash flow information (note 10) |
The accompanying notes are an integral part of the consolidated financial statements.
Silver Standard Resources Inc.
(a development stage company)
Statements of Shareholders’ Equity
For the nine months ended September 30, 2009
(expressed in thousands of US dollars, except share amounts - unaudited)
Common Shares | ||||||||||||||||||||||||||||||||
Number of shares | Amount | Values assigned | Values assigned to | Contributed Surplus | Accumulated other | Retained earnings | Total shareholders' | |||||||||||||||||||||||||
(thousands) | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
Balance, December 31, 2006 | 61,646 | 370,196 | 17,460 | - | 510 | 6,308 | (19,832 | ) | 374,642 | |||||||||||||||||||||||
- | ||||||||||||||||||||||||||||||||
Transition adjustment of EIC-172 to opening balance | - | - | - | - | - | 21,210 | 4,363 | 25,573 | ||||||||||||||||||||||||
Issued for cash: | - | |||||||||||||||||||||||||||||||
Exercise of options | 887 | 10,973 | - | - | - | - | - | 10,973 | ||||||||||||||||||||||||
Exercise of warrants | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
For mineral property | 9 | 338 | - | - | - | - | - | 338 | ||||||||||||||||||||||||
Value assigned to options granted | - | - | 14,443 | - | - | - | - | 14,443 | ||||||||||||||||||||||||
Value of options exercised | - | 4,197 | (4,197 | ) | - | - | - | - | - | |||||||||||||||||||||||
Donations | 27 | 893 | - | - | - | - | - | 893 | ||||||||||||||||||||||||
Other comprehensive income | - | - | - | - | - | 67,019 | - | 67,019 | ||||||||||||||||||||||||
Loss for the year | - | - | - | - | - | - | (33,965 | ) | (33,965 | ) | ||||||||||||||||||||||
Balance, December 31, 2007 | 62,569 | 386,597 | 27,706 | - | 510 | 94,537 | (49,434 | ) | 459,916 | |||||||||||||||||||||||
Issued for cash: | ||||||||||||||||||||||||||||||||
Exercise of options | 186 | 2,192 | - | - | - | - | - | 2,192 | ||||||||||||||||||||||||
Value assigned to options granted | - | - | 9,662 | - | - | - | - | 9,662 | ||||||||||||||||||||||||
Value of options exercised | - | 866 | (866 | ) | - | - | - | - | - | |||||||||||||||||||||||
Value assigned to convertible notes | - | - | - | 37,383 | - | - | - | 37,383 | ||||||||||||||||||||||||
Other comprehensive loss | - | - | - | - | - | (114,106 | ) | - | (114,106 | ) | ||||||||||||||||||||||
Loss for the year | - | - | - | - | - | - | (5,946 | ) | (5,946 | ) | ||||||||||||||||||||||
Balance, December 31, 2008 | 62,755 | 389,655 | 36,502 | 37,383 | 510 | (19,569 | ) | (55,380 | ) | 389,101 | ||||||||||||||||||||||
Issued for cash: | ||||||||||||||||||||||||||||||||
Public offering | 5,826 | 99,037 | - | - | - | - | - | 99,037 | ||||||||||||||||||||||||
Share issue costs | - | (5,648 | ) | - | - | - | - | - | (5,648 | ) | ||||||||||||||||||||||
Exercise of options | 28 | 365 | - | - | - | - | - | 365 | ||||||||||||||||||||||||
Value assigned to options granted | - | - | 1,937 | - | - | - | - | 1,937 | ||||||||||||||||||||||||
Value of options exercised | - | 139 | (139 | ) | - | - | - | - | - | |||||||||||||||||||||||
Other comprehensive loss | - | - | - | - | - | (91 | ) | - | (91 | ) | ||||||||||||||||||||||
Loss for the period | - | - | - | - | - | - | (2,598 | ) | (2,598 | ) | ||||||||||||||||||||||
Balance, March 31, 2009 | 68,609 | 483,548 | 38,300 | 37,383 | 510 | (19,660 | ) | (57,978 | ) | 482,103 | ||||||||||||||||||||||
Issued for cash: | ||||||||||||||||||||||||||||||||
Exercise of options | 100 | 1,354 | - | - | - | - | - | 1,354 | ||||||||||||||||||||||||
Share issue costs | - | (149 | ) | - | - | - | - | - | (149 | ) | ||||||||||||||||||||||
Value assigned to options granted | - | - | 1,625 | - | - | - | - | 1,625 | ||||||||||||||||||||||||
Value of options exercised | - | 585 | (585 | ) | - | - | - | - | - | |||||||||||||||||||||||
Other comprehensive loss | - | - | - | - | - | (532 | ) | - | (532 | ) | ||||||||||||||||||||||
Loss for the period | - | - | - | - | - | - | (1,374 | ) | (1,374 | ) | ||||||||||||||||||||||
Balance, June 30, 2009 | 68,709 | 485,338 | 39,340 | 37,383 | 510 | (20,192 | ) | (59,352 | ) | 483,027 | ||||||||||||||||||||||
Issued for cash: | ||||||||||||||||||||||||||||||||
Public offering | 2,998 | 50,963 | - | - | - | - | - | 50,963 | ||||||||||||||||||||||||
Share issue costs | - | (3,124 | ) | - | - | - | - | - | (3,124 | ) | ||||||||||||||||||||||
Exercise of options | 5 | 67 | - | - | - | - | - | 67 | ||||||||||||||||||||||||
Value assigned to options granted | - | - | 1,337 | - | - | - | - | 1,337 | ||||||||||||||||||||||||
Value of options exercised | - | 52 | (52 | ) | - | - | - | - | - | |||||||||||||||||||||||
Other comprehensive income | - | - | - | - | - | 2,586 | - | 2,586 | ||||||||||||||||||||||||
Loss for the period | - | - | - | - | - | - | (95 | ) | (95 | ) | ||||||||||||||||||||||
Balance, September 30, 2009 | 71,712 | 533,296 | 40,625 | 37,383 | 510 | (17,606 | ) | (59,447 | ) | 534,761 |
The accompanying notes are an integral part of the consolidated financial statements.
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
1. NATURE OF OPERATIONS
We are a development stage company that, since 1994, has assembled a portfolio of silver-dominant projects, which are located in seven countries in the Americas and Australia.
We are focused on advancing our five principal projects. These include the Pirquitas project, the San Luis project, the Pitarrilla project, the Diablillos project and the Snowfield project. In addition to our five principal projects, we hold a geologically-diverse portfolio of other predominantly silver projects in various stages of exploration.
Management has estimated that we will have adequate funds from existing working capital and other assets to meet our corporate, development, administrative and property obligations for the coming year, including the planned completion of construction of the Pirquitas project. We will periodically need to obtain additional financing to advance our principal projects and pursue other opportunities, and while we have been successful in the past, there can be no assurance that we will be able to do so in the future.
The recoverability of the amounts shown for mineral properties and related deferred costs is dependent upon the existence of economically recoverable reserves, our ability to obtain necessary financing to complete the development, and upon future profitable production. The amounts shown as deferred expenditures and property acquisition costs represent net costs to date, less amounts amortized and/or written-off, and do not necessarily represent present or future values.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These unaudited interim consolidated financial statements follow the same accounting policies as our most recent audited annual consolidated financial statements except for the changes relating to foreign currency translation (see “Changes in Accounting Policies” below). These statements do not contain all of the information required for annual financial statements and should be read in conjunction with our annual consolidated financial statements. In the opinion of management, all of the adjustments necessary to fairly present the consolidated financial statements set forth herein have been made. We have reclassified certain comparative figures to reflect the presentation used in our most recent annual consolidated financial statements, including reclassification of expenditures on the Pirquitas project from mineral property costs to property, plant and equipment expenditures under investing activities on the Consolidated Statement of Cash Flows; reclassification of pre-operating costs from construction costs to development property costs under the property, plant and equipment note; and consolidating general and administration expenses, salaries and employee benefits and professional fees as general and administration expenses on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).
Changes in Accounting Policies
Foreign currency translation
Effective January 1, 2009, we determined that our functional currency had changed from the Canadian dollar to the US dollar as a result of a change in the nature of our operations.
5
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Due to the development of the Pirquitas project as well as our other principal projects in countries other than Canada, a significant portion of our costs are incurred in US dollars. Our recent debt and equity financings were completed in US dollars and we now hold majority of our cash and cash equivalents in US dollars. With commercial production anticipated to commence at our Pirquitas project in 2009, our revenue stream will also be denominated in US dollars. Concurrent with the change in functional currency, we have also adopted the US dollar as our reporting currency.
As a result of the change in our functional currency, effective January 1, 2009, our integrated foreign currency operations have been translated to US dollars using the temporal method on a prospective basis. Under the temporal method, monetary assets and liabilities are translated at the exchange rate in effect at the balance sheet date; non-monetary items are translated at historic exchange rates; and income and expense items are translated at the average exchange rate for the period. Translation gains and losses are recognized in the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).
The comparative financial statements and corresponding notes have been restated from Canadian dollars to US dollars using the current rate method. Under this method, all assets and liabilities are translated into US dollars at the exchange rate prevailing at the balance sheet date; expense items are translated at the average rate of exchange for the period; one-time income or expense items are translated at the exchange rate on the date of the transaction; and the resulting translation adjustment is recorded as a cumulative translation adjustment (“CTA”) in accumulated other comprehensive income. See note 14 for effect of the change in reporting currency on prior year comparative figures.
Mining Exploration Costs
Effective March 27, 2009, we adopted Emerging Issues Committee (“EIC”) Abstract 174, “Mining Exploration Costs”. This standard provides guidance on the capitalization of exploration costs related to mining properties, in particular, and on impairment of long-lived assets. The adoption of this standard did not have a significant impact on our consolidated financial statements.
Goodwill and Intangible Assets
Effective January 1, 2009, we adopted Canadian Institute of Chartered Accountants Handbook (“CICA”) Section 3064, “Goodwill and Intangible Assets”, which replaced CICA Section 3062, “Goodwill and Other Intangible Assets,” and CICA Section 3450, “Research and Development Costs,” and EIC-27, “Revenues and Expenditures During the Pre-operating Period”. The standard reinforces the principle-based approach to the recognition of assets only in accordance with the definition of an asset and the criteria for asset recognition; and clarifies the application of the concept of matching revenues and expenses such that the current practice of recognizing assets that may not meet the definition and recognition criteria are eliminated. The adoption of this standard did not have a material impact on our consolidated financial statements.
6
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Credit Risk and the Fair Value of Financial Assets and Financial Liabilities
Effective January 1, 2009, we adopted EIC Abstract 173, “Credit Risk and the Fair Value of Financial Assets and Financial Liabilities”. This standard requires companies to take into account their own credit risk and the credit risk of the counterparty in determining the fair value of financial assets and financial liabilities, including derivative instruments. The adoption of this standard did not have a material impact on our consolidated financial statements.
Recent Accounting Pronouncements
Recent accounting pronouncements issued which may impact us in the future are as follows:
Business combinations and related sections
CICA Handbook Section 1582, “Business Combinations” and Section 1601, “Non-Controlling Interests”, replaces Sections 1581 and 1600, respectively. The new standards revise guidance on the determination of the carrying amount of assets acquired and liabilities assumed, goodwill and accounting for non-controlling interests at the time of a business combination. These standards are effective January 1, 2011 prospectively, with early adoption permitted. We are currently assessing the impact of the new standards on our consolidated financial statements.
Financial instruments
Amendments to CICA Handbook Section 3855, “Financial Instruments – Recognition and Measurement” were published by the CICA in July 2009 effective for fiscal years beginning on or after November 1, 2008. Amendments to this section have added guidance concerning the assessment of embedded derivatives upon reclassification of a financial asset out of the held-for-trading category; changed the categories into which a debt instrument is required or permitted to be classified; changed the impairment model for held-to-maturity financial assets to the incurred credit loss model of CICA Handbook Section 3025, “Impaired Loans”; and require reversal of previously recognized impairment losses on available-for-sale financial assets in specified circumstances.
Additional amendments to Section 3855 related to clarification on the recognition of prepayment options embedded in a debt instrument and on the calculation of interest on a financial asset after recognition of an impairment loss are effective January 1, 2011 on a prospective basis, with early adoption permitted.
CICA Handbook Section 3862, “Financial Instruments – Disclosures” has also been amended to improve financial instrument disclosures to include additional disclosure requirements about fair value measurement for financial instruments and liquidity risk disclosures. The amendments to Section 3862 are effective for fiscal years beginning on or after September 30, 2009.
We are currently assessing the impact of the new standards on our consolidated financial statements.
7
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
3. MARKETABLE SECURITIES
At September 30, 2009, we held marketable securities with total fair value of $11,037,000 (December 31, 2008 - $10,923,000) and total cost of $7,548,000 (December 31, 2008 - $8,533,000).
Effective September 30, 2008, we retrospectively adopted EIC-172, “Income Statement Presentation of a Tax Loss Carryforward Recognized Following an Unrealized Gain in Other Comprehensive Income”, which required the tax benefit from the recognition of previously unrecognized tax loss carryforwards consequent to the recording of unrealized gains in other comprehensive income, such as unrealized gains on available-for-sale financial assets, to be recognized in net income. The adoption of this standard resulted in a reclassification of $2,897,000 and $3,853,000 during the three and nine months ended September 30, 2008 from other comprehensive loss to future income tax expense.
During the three and nine months ended September 30, 2009, we recorded unrealized gains of $2,342,000 (2008 – unrealized loss of $16,977,000) and $2,219,000 (2008 – unrealized loss of $20,495,000), respectively, in other comprehensive income on marketable securities designated as available-for-sale. The unrealized gains resulted in a future income tax recovery of $399,000 (2008 – expense of $2,897,000) for the three months ended September 30, 2009 and $378,000 (2008 – expense of $3,497,000) for the nine months ended September 30, 2009, representing the tax expense (benefit) arising on recognition of previously unrecognized loss (gain) carryforwards, with a corresponding impact on other comprehensive loss. Foreign exchange gains of $702,000 (2008 - - $nil) and $1,635,000 (2008 - $nil) for the three and nine months ended September 30, 2009 related to marketable securities were recorded in other comprehensive loss.
During the three months ended September 30, 2009, we recorded a gain on sale of marketable securities of $71,000 (2008 - $nil) in net earnings, resulting in a corresponding reversal of an unrealized gain of $59,000 (2008 - $nil) from other comprehensive income and $12,000 (2008 - $nil) from future income tax recovery.
During the nine months ended September 30, 2009, we recorded a gain on sale of marketable securities of $1,824,000 (2008 - $2,090,000) in net earnings, resulting in a corresponding reversal of an unrealized gain of $1,513,000 (2008 - - $1,734,000) from other comprehensive income and $311,000 (2008 - $356,000) from future income tax recovery.
4. SUPPLIES INVENTORIES
At September 30, 2009, we had $4,580,000 (2008 - $nil) in material and supplies inventories, which will be used for production at the Pirquitas mine in Argentina. Inventories are valued at the lower of average cost and net realizable value. |
8
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
5. | CONVERTIBLE DEBENTURE |
In July 2008 we received a C$10 million convertible debenture (“Debenture”) from Aurcana Corporation (“Aurcana”) as part of the consideration we received for the sale of the Shafter Silver Project. In July 2009, Aurcana negotiated a revision to the coupon rate on the debenture from 3% per year to 1.5% in the first year and 4% per year thereafter. We received our first coupon payment of C$150,000 on July 15, 2009. As a result of this restructuring, during the nine months ended September 30, 2009 we recorded a write-down of our accrued interest and convertible debenture of $118,000 and $1,884,000, respectively, included in write-down on other investments.
At September 30, 2009, the carrying value of the debenture was $5,487,000 (December 31, 2008 - $5,973,000). Of this amount, $5,291,000 (December 31, 2008 - - $5,923,000) represents the carrying value of the note receivable component estimated using the discounted cash flow model method and $196,000 (December 31, 2008 - $50,000) represents the fair value of the conversion feature using the Black Scholes method.
For the three months ended September 30, 2009, interest and accretion income of $216,000 (September 30, 2008 - $225,000) was recorded in earnings in relation to the note receivable component and an unrealized gain of $158,000 (September 30, 2008 - unrealized loss of $888,000) was recorded in relation to adjusting the fair value of the conversion feature.
For the nine months ended September 30, 2009, interest and accretion income of $720,000 (September 30, 2008 - $225,000) was recorded in earnings in relation to the note receivable component and an unrealized gain of $141,000 (September 30, 2008 – unrealized gain of $491,000) was recorded in relation to adjusting the fair value of the conversion feature.
6. OTHER INVESTMENTS
As at September 30, 2009, we had a total of $53,257,000 (C$57,102,000) invested in Canadian asset-backed commercial paper (“ABCP”). At the dates at which the Company acquired the investments, the non-bank sponsored ABCP was rated R-1 high by DBRS Limited (“DBRS”), the highest credit rating for commercial paper. In August 2007, the ABCP market experienced liquidity problems and was subsequently frozen. In September 2007, a Pan Canadian Investors Committee for Third-Party Structured ABCP (the “Committee”), consisting of a panel of major ABCP investors, was formed to restructure the affected ABCP trusts. In January 2009, the Committee successfully completed the restructuring and we have now received the restructured notes with a face value of $53,294,000 (C$57,142,000). At the time of receipt of the restructured notes, we received a retroactive interest payment on our original notes covering the period from August 2007 to August 2008 of $1,630,000. During the nine months ended September 30, 2009, we received additional retroactive interest payments totaling $624,000 covering the period from September 2008 to January 2009 and $136,000 in interest payments on the restructured notes. Interest income received from other investments was recorded to net loss for the period as a gain on other investments.
9
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
6. OTHER INVESTMENTS (Cont’d)
The face value of the restructured notes is allocated as follows:
Notes | Expected Maturity Date | Legal Maturity Date | Interest Rate (1) | Face Amount $C(000) | ||||
MAVII Class A-1 | January 22, 2017 | July 15, 2056 | BA - 0.5% | 26,542 | ||||
MAVII Class A-2 | January 22, 2017 | July 15, 2056 | BA - 0.5% | 21,944 | ||||
MAVII Class B | January 22, 2017 | July 15, 2056 | BA - 0.5% | 3,983 | ||||
MAVII Class C | January 22, 2017 | July 15, 2056 | BA + 20% | 1,623 | ||||
54,092 | ||||||||
(1) BA represents Canadian dollar bankers acceptance interest rates with a maturity of 90 days. |
We also received MAVII IA Tracking Notes with a face value of C$3,050,000.
As no secondary market has been developed for these restructured notes as at September 30, 2009, we estimated the fair value of the restructured notes using a valuation technique which incorporates a probability weighted approach applied to discounted future cash flows from the restructured notes and the fair value of our investments based on the indicative values contained in a report issued by J.P. Morgan, financial advisor to the Committee. Based on management’s best estimate, the fair value of the restructured notes at September 30, 2009 approximates its carrying value of $24,902,000 (December 31, 2008 - $21,803,000). As a result, no impairment was recorded for the three and nine months ended September 30, 2009 (three months ended September 30, 2008 - $nil, nine months ended September 30, 2008 - $17,903,000).
There is no certainty regarding the development of a secondary market for the restructured notes and therefore the fair value reported may change materially in subsequent periods.
10
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
7. MINERAL PROPERTY COSTS AND PROPERTY, PLANT AND EQUIPMENT
Mineral property costs and property, plant and equipment consist of the following:
September 30, 2009 | December 31, 2008 | |||||||||||||||||||||||||
Accum. | Net Book | Accum. | Net Book | |||||||||||||||||||||||
Cost | Amort. | Value | Cost | Amort. | Value | |||||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Mineral property costs | 186,000 | - | 186,000 | 162,872 | - | 162,872 | ||||||||||||||||||||
Development property costs | 153,199 | - | 153,199 | 95,960 | - | 95,960 | ||||||||||||||||||||
Construction in progress | 213,434 | - | 213,434 | 142,777 | - | 142,777 | ||||||||||||||||||||
Mining equipment and machinery | 23,625 | (4,570 | ) | 19,055 | 18,728 | (869 | ) | 17,859 | ||||||||||||||||||
Other | 2,965 | (1,405 | ) | 1,560 | 2,829 | (1,107 | ) | 1,722 | ||||||||||||||||||
579,223 | (5,975 | ) | 573,248 | 423,166 | (1,976 | ) | 421,190 |
During the three and nine months ended September 30, 2009, we recorded $742,000 (2008 - $256,000) and $3,999,000 (2008 - $785,000), respectively, of depreciation on property, plant, and equipment of which $59,000 (2008 - $78,000) and $165,000 (2008 - $225,000) was charged to the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) and $683,000 (2008 - $178,000) and $3,834,000 (2008 - $560,000) was deferred as mineral property costs.
11
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
7. MINERAL PROPERTY COSTS AND PROPERTY, PLANT AND EQUIPMENT (Cont’d)
Mineral Property Costs
Exploration | ||||||
and | Total | Total | ||||
Acquisition | development | Future tax | September 30 | December 31 | ||
costs | costs | effects | 2009 | 2008 | ||
$ | $ | $ | $ | $ | ||
Exploration Projects | ||||||
Argentina | ||||||
Diablillos | 4,516 | 11,604 | - | 16,120 | 14,803 | |
Other | 18 | 196 | - | 214 | 189 | |
Australia | ||||||
Bowdens | 8,902 | 7,315 | 3,388 | 19,605 | 18,834 | |
Other | 2 | 211 | - | 213 | 204 | |
Canada | ||||||
Silvertip | 1,485 | 261 | - | 1,746 | 1,742 | |
Snowfield | 102 | 17,496 | - | 17,598 | 7,719 | |
Sulphurets | 1,954 | 1,025 | - | 2,979 | 2,979 | |
Sunrise Lake | 1,008 | 64 | - | 1,072 | 1,066 | |
Chile | ||||||
Challacollo | 2,660 | 4,359 | 590 | 7,609 | 7,026 | |
Other | 41 | 267 | - | 308 | 265 | |
Mexico | ||||||
Pitarrilla | 10,982 | 48,181 | 2,135 | 61,298 | 56,992 | |
San Marcial | 1,020 | 464 | 87 | 1,571 | 1,706 | |
Veta Colorada | 3,688 | 899 | 215 | 4,802 | 4,689 | |
Other | 811 | 1,870 | - | 2,681 | 2,265 | |
Peru | ||||||
Berenguela | 10,595 | 3,148 | 6,285 | 20,028 | 19,013 | |
San Luis | 457 | 17,741 | 1,017 | 19,215 | 14,951 | |
Other | - | - | - | - | 162 | |
United States | ||||||
Candelaria | 2,434 | 3,233 | 691 | 6,358 | 5,772 | |
Maverick Springs | 565 | 1,892 | 126 | 2,583 | 2,495 | |
51,240 | 120,226 | 14,534 | 186,000 | 162,872 | ||
Development Projects | ||||||
Argentina | ||||||
Pirquitas | 45,980 | 91,608 | 15,611 | 153,199 | 95,960 |
In June 2009, we completed the sale of our remaining 25% interest in the San Juan property located in Durango State, Mexico to Orko Silver Corp. (“Orko”). Under the terms of the agreement, Orko paid us total consideration of $202,000, consisting of 306,000 shares of Orko. The sale resulted in a gain of $167,000.
12
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
7. MINERAL PROPERTY COSTS AND PROPERTY, PLANT AND EQUIPMENT (Cont’d)
On July 17, 2008, we closed the sale of the Shafter Silver Project in Presidio County, Texas, to Aurcana Corporation (“Aurcana”). Under the terms of the agreement, Aurcana paid us total consideration of $38,133,000 (C$38,210,000) consisting of $22,954,000 (C$23,000,000) in cash, 15 million Aurcana common shares with a fair value of $6,886,000 and a $9,980,000 (C$10,000,000) convertible debenture with a fair value of $8,293,000. After deducting transaction costs of $519,000, sale of the Shafter Silver Project resulted in a gain on sale of mineral property of $31,463,000 (after-tax gain of $18,120,000).
During the nine months ended September 30, 2009, we allowed our mineral rights for the La Bandera project ($58,000) in Mexico and Veca project ($319,000) in Peru to lapse. As a result, a $377,000 write-down of mineral property was recorded to net loss for the period.
In February 2008, we sold $138,000,000 in senior convertible notes (“Notes”) for net proceeds of $132,753,000 after payment of commissions and expenses related to the offering. The unsecured Notes mature on March 1, 2028 and bear an interest rate of 4.5% per annum, payable semi-annually. The Notes are convertible into our common shares at a fixed conversion rate, subject to certain anti-dilution adjustments, only in the following events:
a. | during specified consecutive trading periods, the market price of our common shares exceeds 130% of the conversion price of the Notes, |
b. | the trading price of the Notes falls to 97% or less of the amount equal to the then prevailing price of our common shares, multiplied by the applicable conversion rate, |
c. | the Notes are called for redemption, |
d. | upon the occurrence of specified corporate transactions, or |
e. | during specified periods in early 2013 and 2028. |
The fair value of the debt portion of the Notes at initial recognition was estimated using a discounted cash flow model method. The fair value of the equity component was estimated using the residual value method. The debt component of the Notes is accreted over an expected life of 5 years using the effective interest method. Total financing fees associated with the transaction were $5,246,000, of which $3,773,000 was charged to net income for the period and $1,473,000 was charged to equity.
At September 30, 2009, the carrying value of accrued interest related to the Notes was $536,000 (December 31, 2008 - $2,066,000) and the long-term portion was $109,027,000 (December 31, 2008 - $104,046,000). For the three months ended September 30, 2009, interest expense and accretion expense related to the convertible notes was $1,565,000 (2008 - $1,536,000) and $1,708,000 (2008 - $1,491,000), respectively. For the nine months ended September 30, 2009, interest expense and accretion expense related to the Notes was $4,644,000 (2008 - $3,591,000) and $4,981,000 (2008 - $3,306,000), respectively. All interest and accretion expense incurred during the three and nine months ended September 30, 2009 was capitalized to construction in progress. During the three and nine months ended September 30, 2008, interest and accretion expense of $2,346,000 and $4,171,000, respectively, was capitalized to construction in progress and $681,000 and $2,726,000, respectively, was recognized as expense.
13
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
9. SHAREHOLDERS’ EQUITY
(a) | Authorized Share Capital |
Our authorized share capital consists of an unlimited number of common shares without par value.
During the three months ended September 30, 2009, we closed a public share offering of 2,997,816 common shares at a price of $17.00 per share, for aggregate gross proceeds of $50,963,000. After deducting underwriting fees and estimated offering expenses of $3,124,000, net proceeds were $47,839,000.
During the nine months ended September 30, 2009, we closed public share offerings of 8,823,529 common shares at a price of $17.00 per share, for aggregate gross proceeds of $150,000,000. After deducting underwriting fees and estimated offering expenses during the nine months ended September 30, 2009 of $8,921,000, net proceeds were $141,079,000.
(b) Options
At September 30, 2009, the total number of options outstanding was 4,898,750 with exercise prices ranging from C$10.50 to C$40.62 with weighted average remaining lives of 3.2 years. This represents 6.8% of issued and outstanding capital.
During the nine months ended September 30, 2009, 120,000 options were granted to employees exercisable over a 10 year period at a strike price of C$23.57 and average fair value of C$13.02. During the nine months ended September 30, 2008, 180,000 options were granted to employees and consultants exercisable over a 5 year period at a strike price between C$29.02 and C$32.08 and average fair value of C$9.86 based on the Black-Scholes option pricing model.
The allocation of fair value of options during the period was as follows:
Three Months Ended September 30 | Nine Months Ended September 30 | |||
2009 | 2008 | 2009 | 2008 | |
$ | $ | $ | $ | |
Consolidated Balance Sheets | ||||
Mineral property costs | 91 | 41 | 130 | 29 |
Consolidated Statements of Loss and Comprehensive Loss | ||||
Stock based compensation - Employee salaries and benefits | 1,090 | 1,905 | 3,945 | 5,975 |
Stock based compensation - General and administration | 157 | 695 | 825 | 1,461 |
1,247 | 2,600 | 4,770 | 7,436 | |
Total stock based compensation | 1,338 | 2,641 | 4,900 | 7,465 |
14
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
10. SUPPLEMENTARY CASH FLOW INFORMATION
Three Months Ended | Nine Months Ended | |||||||
September 30 | September 30 | |||||||
2009 | 2008 | 2009 | 2008 | |||||
Non-cash working capital activities | $ | $ | $ | $ | ||||
Accounts receivable | (943 | ) | (1,283 | ) | (653 | ) | 15 | |
Prepaid expenses and deposits | (288 | ) | (4,818 | ) | (809 | ) | (6,427 | ) |
Inventories | (3,308 | ) | - | (4,580 | ) | - | ||
Accounts payable and current portion of ARO | 1,441 | (254 | ) | 526 | (210 | ) | ||
Accrued liabilities | 302 | 204 | 503 | 334 | ||||
Accrued interest on convertible debt | (1,540 | ) | (1,537 | ) | (1,530 | ) | 594 | |
Current portion of taxes payable | - | 9,605 | (10,000 | ) | 9,605 | |||
Increase (decrease) in non-cash working capital items | (4,336 | ) | 1,917 | (16,543 | ) | 3,911 | ||
Three Months Ended | Nine Months Ended | |||||||
September 30 | September 30 | |||||||
2009 | 2008 | 2009 | 2008 | |||||
Non-cash investing activities | $ | $ | $ | $ | ||||
Shares received for sale of mineral property | - | - | 388 | - | ||||
Interest and taxes paid | ||||||||
Interest paid | 3,105 | - | 6,210 | - | ||||
Taxes paid | - | - | 9,100 | - | ||||
11. RELATED PARTY TRANSACTIONS
During the three and nine months ended September 30, 2009, we recorded administrative, technical services and expense reimbursements of $38,000 (2008 - $305,000) and $377,000 (2008 - $1,099,000), respectively, from companies related by common directors or officers. At September 30, 2009, accounts receivable includes $15,000 (December 31, 2008 - $42,000) from these related parties. Amounts due from related parties are non-interest bearing and without specific terms of repayment. Transactions for expense reimbursement with related parties are at normal business terms.
15
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
12. SEGMENTED FINANCIAL INFORMATION
We have one operating segment, which is the exploration and development of mineral properties. Mineral property expenditures by property are detailed in note 7. Substantially all of our gains and losses were incurred in Canada. Segment assets by geographic location are as follows:
September 30, 2009 | ||||||||||||||||||||||||||||||||
Argentina | Australia | Canada | Chile | Mexico | Peru | United States | Total | |||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
Mineral property costs and property,plant and equipment | 402,022 | 19,818 | 24,391 | 7,917 | 70,546 | 39,613 | 8,941 | 573,248 | ||||||||||||||||||||||||
Total assets | 462,542 | 20,014 | 105,425 | 7,929 | 71,802 | 41,600 | 8,947 | 718,259 | ||||||||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||||||||||||||
Argentina | Australia | Canada | Chile | Mexico | Peru | United States | Total | |||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
Mineral property costs and property, plant and equipment | 271,589 | 19,036 | 14,531 | 7,292 | 65,901 | 34,575 | 8,266 | 421,190 | ||||||||||||||||||||||||
Total assets | 303,279 | 19,130 | 125,370 | 7,294 | 68,376 | 36,148 | 8,308 | 567,905 |
13. COMMITMENTS
As at September 30, 2009, we have committed to payments under contractual obligations as follows:
Less than 1 year | 1-3 years | 4-5 years | 5+ years | Total | |
$ | $ | $ | $ | $ | |
Lease obligations | 118 | 956 | 629 | - | 1,703 |
Asset retirement obligations | 268 | 1,537 | 1,123 | 2,452 | 5,380 |
Long-term convertible notes* | 6,210 | 12,420 | 144,210 | - | 162,840 |
6,596 | 14,913 | 145,962 | 2,452 | 169,923 |
* Convertible notes are due in 2028 but expected to be repaid in 2013. The notes bear an interest rate of 4.5% per annum and are convertible into common shares at a fixed conversion rate upon specified events.
16
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
14. EFFECT OF CHANGE IN REPORTING CURRENCY ON PRIOR YEAR COMPARATIVE FIGURES
Effective January 1, 2009, we determined that our reporting currency had changed from the Canadian dollar to the US dollar as a result of a change in the nature of our operations (note 2). The comparative figures were also translated into US dollars using the current rate method with the following effects:
Consolidated Balance Sheet
December 31, 2008 | ||||||||
As originally stated in C$ | As restated in US$ | |||||||
Assets | ||||||||
Current assets | 106,312 | 86,814 | ||||||
Restricted cash | 2,196 | 1,793 | ||||||
Other investments | 26,700 | 21,803 | ||||||
Convertible debenture | 7,315 | 5,973 | ||||||
Value added tax recoverable | 37,145 | 30,332 | ||||||
Mineral properties and property, plant and equipment | 515,790 | 421,190 | ||||||
695,458 | 567,905 | |||||||
Liabilities | ||||||||
Current liabilities | 55,510 | 45,328 | ||||||
Asset retirement obligations | 3,954 | 3,229 | ||||||
Taxes payable | 4,127 | 3,370 | ||||||
Future income tax liability | 27,351 | 22,335 | ||||||
Long-term convertible notes | 127,415 | 104,046 | ||||||
218,357 | 178,308 | |||||||
Non-controlling interest | 608 | 496 | ||||||
Shareholders' Equity | ||||||||
Share capital | 463,125 | 389,655 | ||||||
Value assigned to stock options | 41,164 | 36,502 | ||||||
Value assigned to convertible notes | 36,553 | 37,383 | ||||||
Contributed surplus | 649 | 510 | ||||||
Accumulated other comprehensive income | 2,772 | (19,569 | ) | |||||
Deficit | (67,770 | ) | (55,380 | ) | ||||
476,493 | 389,101 | |||||||
695,458 | 567,905 |
17
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
14. | EFFECT OF CHANGE IN REPORTING CURRENCY ON PRIOR YEAR COMPARATIVE FIGURES (Cont’d) |
Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss)
Three months ended September 30, 2008 | Nine months ended September 30, 2008 | |||||||||||||||
As originally stated in C$ | As restated in US$ | As originally stated in C$ | As restated in US$ | |||||||||||||
(Restated) | (Restated) | |||||||||||||||
Exploration and mineral property costs | (128 | ) | (123 | ) | (417 | ) | (410 | ) | ||||||||
Expenses | (3,185 | ) | (3,059 | ) | (10,625 | ) | (10,435 | ) | ||||||||
Other income | 30,911 | 30,872 | 35,304 | 35,906 | ||||||||||||
Future income taxes | (16,386 | ) | (15,739 | ) | (17,349 | ) | (16,695 | ) | ||||||||
Loss for the period | 11,212 | 11,951 | 6,913 | 8,366 | ||||||||||||
Deficit, beginning of period | (61,580 | ) | (53,019 | ) | (57,281 | ) | (49,434 | ) | ||||||||
Deficit, end of period | (50,368 | ) | (41,068 | ) | (50,368 | ) | (41,068 | ) | ||||||||
Loss for the period | 11,212 | 11,951 | 6,913 | 8,366 | ||||||||||||
Other comprehensive loss (gain) for the period | (14,659 | ) | (33,932 | ) | (19,343 | ) | (54,511 | ) | ||||||||
Comprehensive loss for the period | (3,447 | ) | (21,981 | ) | (12,430 | ) | (46,145 | ) |
18
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
14. | EFFECT OF CHANGE IN REPORTING CURRENCY ON PRIOR YEAR COMPARATIVE FIGURES (Cont’d) |
Consolidated Statement of Cash Flows
Three months ended September 30, 2008 | Nine months ended September 30, 2008 | |||||||||||||||
As originally stated in C$ | As restated in US$ | As originally stated in C$ | As restated in US$ | |||||||||||||
(Restated) | (Restated) | |||||||||||||||
Operating activities | ||||||||||||||||
Earnings for the period | 11,212 | 11,951 | 6,913 | 8,366 | ||||||||||||
Adjustments for items not affecting cash | (15,028 | ) | (22,859 | ) | (10,541 | ) | (27,402 | ) | ||||||||
Cash generated by (used in) operating activities | (3,816 | ) | (10,908 | ) | (3,628 | ) | (19,036 | ) | ||||||||
Financing activities | ||||||||||||||||
Proceeds from issuance of convertible notes | - | - | 134,936 | 138,000 | ||||||||||||
Financing costs related to equity portion of convertible notes financing | - | - | (1,440 | ) | (1,473 | ) | ||||||||||
Shares issued for cash | 227 | 218 | 1,676 | 1,661 | ||||||||||||
Cash generated by financing activities | 227 | 218 | 135,172 | 138,188 | ||||||||||||
Investing activities | ||||||||||||||||
Mineral property costs | (12,917 | ) | (12,407 | ) | (26,096 | ) | (25,500 | ) | ||||||||
Property, plant and equipment | (40,986 | ) | (39,368 | ) | (94,951 | ) | (92,913 | ) | ||||||||
Increase in value added tax recoverable (net) | (5,249 | ) | (5,042 | ) | (10,663 | ) | (10,409 | ) | ||||||||
Proceeds from sale of mineral property | 22,480 | 22,435 | 22,480 | 22,435 | ||||||||||||
Proceeds from sale of silver bullion | - | - | 39,244 | 39,648 | ||||||||||||
Proceeeds from sale of marketable securities | - | - | 2,800 | 2,780 | ||||||||||||
Cash generated by investing activities | (36,672 | ) | (34,382 | ) | (67,186 | ) | (63,959 | ) | ||||||||
Increase (decrease) in cash | (40,261 | ) | (45,072 | ) | 64,358 | 55,193 | ||||||||||
Cash, beginning of period | 185,248 | 181,865 | 80,629 | 81,600 | ||||||||||||
Cash, end of period | 144,987 | 136,793 | 144,987 | 136,793 |
19
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
15. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) |
Consolidated summarized balance sheets: |
September 30, 2009 | December 31, 2008 | ||||||||||||||||||||||||||
Canadian | Adjustments | U.S. | Canadian | Adjustments | U.S. | ||||||||||||||||||||||
GAAP | GAAP | GAAP | GAAP | ||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||
Current assets | 63,725 | - | 63,725 | 86,814 | - | 86,814 | |||||||||||||||||||||
Other investments | 24,902 | - | 24,902 | 21,803 | - | 21,803 | |||||||||||||||||||||
Convertible debenture | 5,487 | - | 5,487 | 5,973 | - | 5,973 | |||||||||||||||||||||
Value added tax recoverable | 48,968 | - | 48,968 | 30,332 | - | 30,332 | |||||||||||||||||||||
Mineral property costs (a)i) | 339,199 | (250,650 | ) | 88,549 | 258,832 | (222,951 | ) | 35,881 | |||||||||||||||||||
Other property, plant and equipment (a)vi) | 234,049 | 3,600 | 237,649 | 162,358 | 3,600 | 165,958 | |||||||||||||||||||||
Other assets | 1,929 | - | 1,929 | 1,793 | - | 1,793 | |||||||||||||||||||||
718,259 | (247,050 | ) | 471,209 | 567,905 | (219,351 | ) | 348,554 | ||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||
Current liabilities | 36,689 | - | 36,689 | 45,328 | - | 45,328 | |||||||||||||||||||||
Long-term convertibles note | 109,027 | - | 109,027 | 104,046 | - | 104,046 | |||||||||||||||||||||
Other liabilities (a)i) | 37,286 | (30,145 | ) | 7,141 | 28,934 | (22,335 | ) | 6,599 | |||||||||||||||||||
183,002 | (30,145 | ) | 152,857 | 178,308 | (22,335 | ) | 155,973 | ||||||||||||||||||||
Shareholders’ Equity | |||||||||||||||||||||||||||
Share capital (a)iii) | 533,296 | (950 | ) | 532,346 | 389,655 | (950 | ) | 388,705 | |||||||||||||||||||
Value assigned to: | |||||||||||||||||||||||||||
Stock options (a)v) | 40,625 | (4,186 | ) | 36,439 | 36,502 | (4,186 | ) | 32,316 | |||||||||||||||||||
Long-term convertible note (a)v) | 37,383 | - | 37,383 | 37,383 | - | 37,383 | |||||||||||||||||||||
Contributed surplus | 510 | - | 510 | 510 | - | 510 | |||||||||||||||||||||
Accumulated other comprehensive income (a)ii) | (17,606 | ) | 2,852 | (14,754 | ) | (19,569 | ) | 5,230 | (14,339 | ) | |||||||||||||||||
Deficit (a)i), (a)ii), (a)iii), (a)vi) | (59,447 | ) | (214,621 | ) | (274,068 | ) | (55,380 | ) | (197,110 | ) | (252,490 | ) | |||||||||||||||
534,761 | (216,905 | ) | 317,856 | 389,101 | (197,016 | ) | 192,085 | ||||||||||||||||||||
Non-controlling interest | 496 | - | 496 | 496 | - | 496 | |||||||||||||||||||||
718,259 | (247,050 | ) | 471,209 | 567,905 | (219,351 | ) | 348,554 |
20
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
15. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) (Cont’d) |
Consolidated summarized statements of loss: |
Three months ended September 30 | Nine months ended September 30 | |||||||
2009 | 2008 | 2009 | 2008 | |||||
$ | $ | $ | $ | |||||
Income (Loss) in accordance with Canadian GAAP | (95 | ) | 11,951 | (4,067 | ) | 8,366 | ||
Mineral property costs for the year (a)i) | (11,059 | ) | (16,506 | ) | (17,857 | ) | (29,765 | ) |
Future income tax expense on marketable securities (a)ii) | (387 | ) | 2,896 | (67 | ) | 3,853 | ||
Gain on sale of mineral property (a)i) | - | 6,948 | 35 | 6,948 | ||||
Mineral property costs written-off during the year (a)i) | - | - | 377 | - | ||||
Financing fees on convertible debt (a)vi) | - | - | - | 3,600 | ||||
Income (Loss) in accordance with U.S. GAAP | (11,541 | ) | 5,289 | (21,579 | ) | (6,998 | ) | |
Other comprehensive income (loss) in accordance with Canadian GAAP | 2,586 | (33,932 | ) | 1,963 | (54,511 | ) | ||
Translation adjustment | (632 | ) | 16,225 | (2,445 | ) | 16,331 | ||
Future income tax expense on marketable securities (a)ii) | 387 | (2,896 | ) | 67 | (3,853 | ) | ||
Other comprehensive income (loss) in accordance with U.S. GAAP | 2,341 | (20,603 | ) | (415 | ) | (42,033 | ) | |
Total comprehensive loss in accordance with U.S. GAAP | (9,200 | ) | (15,314 | ) | (21,994 | ) | (49,031 | ) |
Basic weighted-average common shares (000’s) | 70,143 | 62,699 | 67,864 | 62,687 | ||||
Diluted weighted-average common shares (000’s) | 70,143 | 63,070 | 67,864 | 62,687 | ||||
Basic and diluted loss per share | (0.16 | ) | 0.08 | (0.32 | ) | (0.11 | ) |
21
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
15. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) (Cont’d) |
Consolidated summarized statements of cash flows: |
Three months ended September 30 | Nine months ended September 30 | |||||||
2009 | 2008 | 2009 | 2008 | |||||
$ | $ | $ | $ | |||||
Cash flows from operating activities | ||||||||
Pursuant to Canadian GAAP | (5,677 | ) | (10,908 | ) | (19,073 | ) | (19,036 | ) |
Mineral property costs (a)i) | (8,274 | ) | (12,407 | ) | (16,941 | ) | (25,500 | ) |
Financing fees on convertible debt (a)vi) | - | - | - | 3,600 | ||||
Pursuant to U.S. GAAP | (13,951 | ) | (23,315 | ) | (36,014 | ) | (40,936 | ) |
Cash flows from financing activities | ||||||||
Pursuant to Canadian GAAP | 47,906 | 218 | 142,865 | 138,188 | ||||
Financing fees on convertible debt (a)vi) | - | - | - | (3,600 | ) | |||
Pursuant to U.S. GAAP | 47,906 | 218 | 142,865 | 134,588 | ||||
Cash flows from investing activities | ||||||||
Pursuant to Canadian GAAP | (52,178 | ) | (34,382 | ) | (152,919 | ) | (63,959 | ) |
Mineral property costs (a)i) | 8,274 | 12,407 | 16,941 | 25,500 | ||||
Pursuant to U.S. GAAP | (43,904 | ) | (21,975 | ) | (135,978 | ) | (38,459 | ) |
a) | We prepare our consolidated financial statements in accordance with accounting principles generally accepted in Canada (“Canadian GAAP”), which differ in certain respects from those principles that we would have followed had our consolidated financial statements been prepared in accordance with accounting principles generally accepted in the United States and requirements promulgated by the Securities and Exchange Commission (“SEC”) (collectively “U.S. GAAP”). The major differences between Canadian and U.S. GAAP and their effect on the consolidated financial statements are summarized below: |
i) | Under Canadian GAAP, the costs of acquiring mineral properties and related exploration and development expenditures are deferred. SEC staff have interpreted U.S. GAAP to require that mineral property exploration and land use costs must be expensed as incurred until commercially mineable deposits are determined to exist within a particular property, as cash flows cannot be reasonably estimated prior to such determination. For U.S. GAAP purposes, we have expensed all land use costs for mineral properties and deferred exploration costs that have been incurred by us, excluding periodic option payments meeting the definition of a mineral right, for which commercially mineable reserves do not exist. Future income taxes related to mineral property costs are reversed accordingly. |
22
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
15. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) (Cont’d) |
When proven and probable reserves are determined for a property and a final feasibility study prepared, any subsequent exploration and development costs of the property would be capitalized. Periodic option payments that meet the definition of a mineral property right, as defined in EITF 04-2, "Whether Mineral Rights are Tangible or Intangible Assets” (Codified within Accounting Standards Codification (“ASC”) 930), are viewed as a tangible asset and capitalized. Capitalized option payments are amortized over the option period as defined in the related option agreement. Once in production, any subsequent development costs would be treated as production costs charged to production. In early April 2006, a Feasibility Study Update for the Pirquitas property was completed. This study defined proven and probable reserves and, as a consequence, exploration and development costs relating to this property from March 31, 2006 have been deferred under U.S. GAAP.
In June 2009, we completed the sale of our remaining 25% interest in the San Juan property located in Durango State, Mexico to Orko (note 7). The sale resulted in a gain of $167,000 for Canadian GAAP after deducting the carrying value of the property. For U.S. GAAP, the gain on sale was increased by $35,000 reflecting the lower carrying value of the mineral property for U.S. GAAP purposes.
On July 17, 2008, we closed the sale of the Shafter Silver Project (note 7). For Canadian GAAP, the sale resulted in a gain of $31,463,000 after deducting the carrying value of disposed assets and liabilities and transaction costs. For U.S. GAAP, the gain on sale of mineral property was increased by $6,948,000, reflecting the lower carrying value of mineral property costs under U.S. GAAP.
For Canadian GAAP, cash flows relating to mineral property exploration and land use costs are reported as investing activities. For U.S. GAAP, these costs are characterized as operating activities.
ii) | Under U.S. GAAP, securities that are available-for-sale are recorded at fair value and unrealized gains or losses are included as part of comprehensive income. An impairment on available-for-sale securities is recorded in income if such loss is determined to be other than temporary. |
Under Canadian GAAP, prior to January 1, 2007, marketable securities were valued at the lower of cost and market with any write-down recorded as a charge to earnings. Effective January 1, 2007, upon adoption of new CICA Handbook Section 3855, marketable securities have been designated as available-for-sale financial assets and are recorded at fair value consistent with U.S. GAAP. We recognized an adjustment of $25,573,000 to the opening balance of accumulated other comprehensive income, representing the unrealized gain on available-for-sale marketable securities held by us at January 1, 2007 under Canadian GAAP. No similar adjustment would be recognized under U.S. GAAP in 2007. Consequently, GAAP differences related to available-for-sale securities have been eliminated effective January 1, 2007.
23
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
15. MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) (Cont’d)
Under Canadian GAAP, as described in note 3, effective September 30, 2008, the Company adopted the provisions of EIC-172 which required the tax benefits recognized consequent to the recording of unrealized gains in comprehensive income to be recognized in net income. Under U.S. GAAP, no similar provisions exist and such tax benefits would be recorded in other comprehensive income. For U.S. GAAP purposes, opening deficit as at January 1, 2007 would decrease and other comprehensive income would decrease by $4,363,000. Other comprehensive loss would increase and income tax recovery (expense) would decrease by $387,000 (2008 – expense of $2,897,000) and $67,000 (2008 – expense of $3,853,000) for the three and nine months ended September 30, 2009.
iii) | Under Canadian GAAP, before the introduction of CICA Handbook Section 1581, “Business Combinations”, the fair value of shares issued by an acquirer to effect a business combination was based on the quoted market price of shares at the date of acquisition. Under U.S. GAAP, before the introduction of FAS 141R (Codified within ASC 805), the fair value of shares issued is based on the market price surrounding the date the business combination agreement is agreed to and announced. |
iv) | Canadian GAAP provides for investments in jointly controlled entities to be accounted for using proportionate consolidation. Under U.S. GAAP, investments in incorporated joint ventures are to be accounted for using the equity method. Under an accommodation of the SEC, the accounting for joint ventures need not be reconciled from Canadian to U.S. GAAP. The different accounting treatment affects only the presentation and classification of financial statement items and not net income or shareholders’ equity. |
v) | For U.S. GAAP purposes, we previously accounted for employee stock-based compensation arrangements using the intrinsic value method prescribed in Accounting Principles Board “APB”) Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations. Accordingly, since stock options are granted at exercise prices that are at or above the quoted market value of our common shares at the date of grant, there is no compensation cost recognized by the company for options granted to employees. We adopted the fair value based method of accounting for employee stock-based compensation under U.S. GAAP effective January 1, 2005 using the modified prospective transition method. Under this method, we recognized employee stock-based compensation beginning January 1, 2005 as if the fair value method had been used to account for all employee awards granted, modified, or settled in fiscal years beginning after December 15, 1994. |
For Canadian GAAP purposes, we adopted, as of January 1, 2004, the CICA’s amendments to Section 3870, “Stock-Based Compensation and other Stock-Based Payments”, which required the fair value method to be applied to employee stock-based compensation.
24
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
15. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) (Cont’d) |
Effective January 1, 2006, we adopted Statement of Financial Accounting Standard (“SFAS”) No. 123R, “Share Based Payment” (“SFAS 123R”, Codified within ASC 718) for all employee stock-based awards granted, modified or settled after the effective date using the fair value measurement method. Compensation cost is recognized over the period during which an employee is required to provide service in exchange for the award – the requisite service period. For unvested awards outstanding as of the effective date, compensation was recognized based upon the grant-date fair value determined under SFAS No. 123 “Accounting for Stock-Based Compensation”. Upon adoption of SFAS 123R using the modified prospective method, there was no cumulative effect adjustment required and no differences exist between the accounting for employee stock-based compensation expense in 2006 to December 31, 2008 between Canadian and U.S. GAAP.
vi) | Under U.S. GAAP, financing fees on convertible debt are capitalized and amortized using the effective interest rate method. Financing fees were expensed under Canadian GAAP resulting in a GAAP difference. Accordingly, financing fees charged to net income would decrease by $3,600,000. In addition, under U.S. GAAP, related financing costs are classified as financing activities. |
b) | Other disclosures |
The following additional information would be presented if these consolidated financial statements were presented in accordance with U.S. GAAP:
i) | Accounts receivable |
September 30 | December 31 | |
2009 | 2008 | |
$ | $ | |
Value added tax | (366) | 241 |
Other receivables | 3,673 | 2,531 |
3,307 | 2,772 |
25
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
15. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) (Cont’d) |
ii) | Financial instruments |
September 30, 2009 | |||||||||||||
Other | |||||||||||||
Held for | Loans & | Available | financial | Carrying | Fair | ||||||||
trading | receivables | for sale | liabilities | value | value | ||||||||
Financial assets | ($) | ($) | ($) | ($) | ($) | ($) | |||||||
Cash and cash equivalents | 42,886 | - | - | - | 42,886 | 42,886 | |||||||
Marketable securities (note 3) | - | - | 11,037 | - | 11,037 | 11,037 | |||||||
Accounts receivable | - | 3,307 | - | - | 3,307 | 3,307 | |||||||
Restricted cash | - | - | 1,929 | - | 1,929 | 1,929 | |||||||
Other investments (note 6) | - | - | 24,902 | - | 24,902 | 24,902 | |||||||
Convertible debenture (note 5) (1) | 196 | 5,291 | - | - | 5,487 | 5,487 | |||||||
43,082 | 8,598 | 37,868 | - | 89,548 | 89,548 | ||||||||
Financial liabilities | |||||||||||||
Accounts payable and and accrued liabilities | - | - | - | 33,927 | 33,927 | 33,927 | |||||||
Convertible notes (note 8) (2) | - | - | - | 109,563 | 109,563 | 121,578 | |||||||
- | - | - | 143,490 | 143,490 | 155,505 | ||||||||
December 31, 2008 | |||||||||||||
Other | |||||||||||||
Held for | Loans & | Available | financial | Carrying | Fair | ||||||||
trading | receivables | for sale | liabilities | value | value | ||||||||
Financial assets | ($) | ($) | ($) | ($) | ($) | ($) | |||||||
Cash and cash equivalents | 72,013 | - | - | - | 72,013 | 72,013 | |||||||
Marketable securities (note 3) | - | - | 10,923 | - | 10,923 | 10,923 | |||||||
Accounts receivable | - | 2,772 | - | - | 2,772 | 2,772 | |||||||
Restricted cash | - | - | 1,793 | - | 1,793 | 1,793 | |||||||
Other investments (note 6) | - | - | 21,803 | - | 21,803 | 21,803 | |||||||
Convertible debenture (note 5) (1) | 50 | 5,923 | - | - | 5,973 | 6,904 | |||||||
72,063 | 8,695 | 34,519 | - | 115,277 | 116,208 | ||||||||
Financial liabilities | |||||||||||||
Accounts payable and and accrued liabilities | - | - | - | 31,313 | 31,313 | 31,313 | |||||||
Convertible notes (note 8) (2) | - | - | - | 106,112 | 106,112 | 91,191 | |||||||
- | - | - | 137,425 | 137,425 | 122,504 | ||||||||
(1) The fair value of convertible debenture is estimated using the discounted cash flow method at market rate on the balance sheet date. | |||||||||||||
(2) The fair value of convertible notes is estimated using average market quoted price provided by market makers in over-the-counter market on the balance sheet date. | |||||||||||||
26
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
15. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) (Cont’d) |
iii) | Counterparty credit risk |
Credit risk arises from the non-performance by counterparties of contractual financial obligations. Our credit risk arises primarily with respect to our money market investments, convertible debenture receivable and investment in asset-backed commercial papers.
Effective September 2007, we manage our credit risk on money market investments by investing only in obligations of any Province of Canada, Canada or the United States of America or their respective agencies, obligations of enterprises sponsored by any of the above governments; bankers’ acceptances purchased in the secondary market and having received the highest credit rating from a recognized rating agency in Canada or the United States, with a term of less than 90 days; and bank term deposits and bearer deposit notes, with a term of less than 90 days.
Our maximum exposure to credit risk at the reporting date is the carrying value of cash and cash equivalents, other receivables, convertible debenture receivable (see note 5) and other investments (see note 6). At September 30, 2009 and December 31, 2008, there were no significant concentrations of credit risk and no amounts were held as collateral.
iv) | Development stage enterprise |
We meet the definition of a development stage enterprise under SFAS No. 7, “Accounting and Reporting by Development Stage Enterprises” (“SFAS 7”, Codified within ASC 915). The following additional disclosures are required under U.S. GAAP:
Consolidated summarized statements of loss and deficit and cash flows since October 1, 1993, the date we made a strategic decision to concentrate on the acquisition and exploration of silver mineral properties in North, Central and South America.
27
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
15. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) (Cont’d) |
Consolidated loss and deficit:
October 1, 1993 | ||||
(inception) to | ||||
September 30, 2009 | ||||
$ | ||||
Mineral property exploration and reclamation | 271,026 | |||
General and administration, salaries, professional fees | 88,444 | |||
Other income | (84,646 | ) | ||
Net loss for the period from October 1, 1993 to September 30, 2009, being the deficit accumulated during the development stage | 274,824 | |||
Opening retained earnings, October 1, 1993 | (755 | ) | ||
Ending deficit, September 30, 2009 | 274,069 |
Consolidated cash flows:
October 1, 1993 | ||||
(inception) to | ||||
September 30, 2009 | ||||
$ | ||||
Operating activities | (218,522 | ) | ||
Investing activities | (323,692 | ) | ||
Financing activities | 584,225 | |||
Increase in cash and cash and cash equivalents | 42,011 | |||
Cash and cash equivalents – October 1, 1993 | 875 | |||
Cash and cash equivalents – September 30, 2009 | 42,886 |
28
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
15. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) (Cont’d) |
v) | Additional shareholders’ equity disclosure required under SFAS 7 |
Value | Compre- | |||||||||||||||||||||||||||||||||||||||||
Common Shares | Sub- | Values | Values | assigned to | hensive | Retained | Total | |||||||||||||||||||||||||||||||||||
Issue | Number of | scriptions | assigned | assigned | convertible | Contributed | income (loss) | earnings (deficit) | shareholders’ | |||||||||||||||||||||||||||||||||
Price | shares | Amount | receivable | to options | to warrants | notes | Surplus | equity | ||||||||||||||||||||||||||||||||||
$ | '000s | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Balance October 1, 1993 | 3,410 | 1,758 | - | - | - | - | - | - | 755 | 2,513 | ||||||||||||||||||||||||||||||||
Issued for cash | 0.58 | 2,810 | 1,631 | - | - | - | - | - | - | - | 1,631 | |||||||||||||||||||||||||||||||
Non-cash | ||||||||||||||||||||||||||||||||||||||||||
- Mineral properties | 0.56 | 25 | 14 | - | - | - | - | - | - | - | 14 | |||||||||||||||||||||||||||||||
- Allotted but not issued | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
- Assigned values to options issued | - | 241 | - | - | - | - | - | - | - | 241 | ||||||||||||||||||||||||||||||||
Gain (loss) for year | - | - | - | - | - | - | - | 1,626 | 120 | 1,746 | ||||||||||||||||||||||||||||||||
Balance September 30, 1994 | 6,245 | 3,644 | - | - | - | - | - | 1,626 | 875 | 6,145 | ||||||||||||||||||||||||||||||||
Issued for cash | ||||||||||||||||||||||||||||||||||||||||||
- Private placement | 0.78 | 2,570 | 2,004 | - | - | - | - | - | - | - | 2,004 | |||||||||||||||||||||||||||||||
Non-cash | ||||||||||||||||||||||||||||||||||||||||||
- Mineral properties | 3.20 | 15 | 48 | - | - | - | - | - | - | - | 48 | |||||||||||||||||||||||||||||||
- Allotted shares issued | 3.16 | 75 | 237 | - | - | - | - | - | - | - | 237 | |||||||||||||||||||||||||||||||
- Assigned values to options issued | - | 14 | - | - | - | - | - | - | - | 14 | ||||||||||||||||||||||||||||||||
Gain (loss) for year | - | - | - | - | - | - | - | (809 | ) | (1,903 | ) | (2,712 | ) | |||||||||||||||||||||||||||||
Balance September 30, 1995 | 8,905 | 5,947 | - | - | - | - | - | 817 | (1,028 | ) | 5,736 | |||||||||||||||||||||||||||||||
Issued for cash | ||||||||||||||||||||||||||||||||||||||||||
- Private placement | 3.30 | 2,550 | 8,426 | - | - | - | - | - | - | - | 8,426 | |||||||||||||||||||||||||||||||
- Special warrants | 3.10 | 2,000 | 6,190 | - | - | - | - | - | - | - | 6,190 | |||||||||||||||||||||||||||||||
Non-cash | ||||||||||||||||||||||||||||||||||||||||||
- Mineral properties | 4.02 | 85 | 343 | - | - | - | - | - | - | - | 343 | |||||||||||||||||||||||||||||||
- Finder's fees | - | (429 | ) | - | - | - | - | - | - | - | (429 | ) | ||||||||||||||||||||||||||||||
- Assigned values to options issued | - | 13 | - | - | - | - | - | - | - | 13 | ||||||||||||||||||||||||||||||||
Gain (loss) for year | - | - | - | - | - | - | - | (45 | ) | (6,866 | ) | (6,911 | ) | |||||||||||||||||||||||||||||
Balance December 31, 1996 | 13,540 | 20,490 | - | - | - | - | - | 772 | (7,894 | ) | 13,368 | |||||||||||||||||||||||||||||||
Issued for cash | ||||||||||||||||||||||||||||||||||||||||||
- Private placement | 3.87 | 680 | 2,631 | - | - | - | - | - | - | - | 2,631 | |||||||||||||||||||||||||||||||
- Exercise of options | 4.43 | 25 | 111 | - | - | - | - | - | - | - | 111 | |||||||||||||||||||||||||||||||
- For special warrants | 3.33 | 745 | 2,478 | - | - | - | - | - | - | - | 2,478 | |||||||||||||||||||||||||||||||
Non-cash | ||||||||||||||||||||||||||||||||||||||||||
- Mineral properties | 3.83 | 311 | 1,192 | - | - | - | - | - | - | - | 1,192 | |||||||||||||||||||||||||||||||
- Finder's fees | 3.87 | 20 | 77 | - | - | - | - | - | - | - | 77 | |||||||||||||||||||||||||||||||
- Assigned values to options issued | - | 627 | - | - | - | - | - | - | - | 627 | ||||||||||||||||||||||||||||||||
- Share issue costs | - | (245 | ) | - | - | - | - | - | - | - | (245 | ) | ||||||||||||||||||||||||||||||
Gain (loss) for year | - | - | - | - | - | - | - | (416 | ) | (14,359 | ) | (14,775 | ) | |||||||||||||||||||||||||||||
Balance December 31, 1997 | 15,321 | 27,361 | - | - | - | - | - | 356 | (22,253 | ) | 5,464 |
29
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
15. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) (Cont’d) |
Value | Compre- | |||||||||||||||||||||||||||||||||||||||||
Common Shares | Sub- | Values | Values | assigned to | hensive | Retained | Total | |||||||||||||||||||||||||||||||||||
Issue | Number of | scriptions | assigned | assigned | convertible | Contributed | income | earnings | shareholders’ | |||||||||||||||||||||||||||||||||
Price | shares | Amount | receivable | to options | to warrants | notes | Surplus | (loss) | (deficit) | equity | ||||||||||||||||||||||||||||||||
$ | '000s | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Issued for cash | ||||||||||||||||||||||||||||||||||||||||||
- Private placement | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
- Exercise of options | 4.41 | 10 | 44 | - | - | - | - | - | - | - | 44 | |||||||||||||||||||||||||||||||
- For special warrants | 4.26 | 630 | 2,681 | - | - | - | - | - | - | - | 2,681 | |||||||||||||||||||||||||||||||
Non-cash | ||||||||||||||||||||||||||||||||||||||||||
- Mineral properties | 2.97 | 85 | 252 | - | - | - | - | - | - | - | 252 | |||||||||||||||||||||||||||||||
- Assigned values to options issued | - | 120 | - | - | - | - | - | - | - | 120 | ||||||||||||||||||||||||||||||||
- Share issue costs | - | (221 | ) | - | - | - | - | - | - | - | (221 | ) | ||||||||||||||||||||||||||||||
Gain (loss) for year | - | - | - | - | - | - | - | (351 | ) | (4,941 | ) | (5,292 | ) | |||||||||||||||||||||||||||||
Balance December 31, 1998 | 16,046 | 30,237 | - | - | - | - | - | 5 | (27,194 | ) | 3,048 | |||||||||||||||||||||||||||||||
Issued for cash | ||||||||||||||||||||||||||||||||||||||||||
- Private placement | 1.08 | 1,388 | 1,504 | - | - | - | - | - | - | - | 1,504 | |||||||||||||||||||||||||||||||
- Exercise of options | 1.35 | 101 | 136 | - | - | - | - | - | - | - | 136 | |||||||||||||||||||||||||||||||
- Exercise of warrants | 1.49 | 568 | 848 | - | - | - | - | - | - | - | 848 | |||||||||||||||||||||||||||||||
Non-cash | ||||||||||||||||||||||||||||||||||||||||||
- Mineral properties | 1.70 | 50 | 85 | - | - | - | - | - | - | - | 85 | |||||||||||||||||||||||||||||||
- On business combination | 1.35 | 2,285 | 3,097 | - | - | - | - | - | - | - | 3,097 | |||||||||||||||||||||||||||||||
- Share issue costs | - | (90 | ) | - | - | - | - | - | - | - | (90 | ) | ||||||||||||||||||||||||||||||
Gain (loss) for year | - | - | - | - | - | - | - | 6 | (6,710 | ) | (6,704 | ) | ||||||||||||||||||||||||||||||
Balance December 31, 1999 | 20,438 | 35,817 | - | - | - | - | - | 11 | (33,904 | ) | 1,924 | |||||||||||||||||||||||||||||||
Issued for cash | ||||||||||||||||||||||||||||||||||||||||||
- Private placement | 1.16 | 1,633 | 1,896 | - | - | - | - | - | - | - | 1,896 | |||||||||||||||||||||||||||||||
- Exercise of options | 1.35 | 807 | 1,093 | - | - | - | - | - | - | - | 1,093 | |||||||||||||||||||||||||||||||
- Exercise of warrants | 1.24 | 1,274 | 1,577 | - | - | - | - | - | - | - | 1,577 | |||||||||||||||||||||||||||||||
Non-cash | ||||||||||||||||||||||||||||||||||||||||||
- Mineral properties | 1.72 | 28 | 47 | - | - | - | - | - | - | - | 47 | |||||||||||||||||||||||||||||||
- Finder's fees | 1.16 | 87 | 101 | - | - | - | - | - | - | - | 101 | |||||||||||||||||||||||||||||||
- Fractional shares repurchased | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
- Share issue costs | - | (104 | ) | - | - | - | - | - | - | - | (104 | ) | ||||||||||||||||||||||||||||||
Gain (loss) for year | - | - | - | - | - | - | - | (10 | ) | (4,470 | ) | (4,480 | ) | |||||||||||||||||||||||||||||
Balance December 31, 2000 | 24,267 | 40,427 | - | - | - | - | - | 1 | (38,374 | ) | 2,054 | |||||||||||||||||||||||||||||||
Issued for cash | ||||||||||||||||||||||||||||||||||||||||||
- Private placement | 1.82 | 1,914 | 3,478 | - | - | - | - | - | - | - | 3,478 | |||||||||||||||||||||||||||||||
- Exercise of options | 1.59 | 1,941 | 3,076 | - | - | - | - | - | - | - | 3,076 | |||||||||||||||||||||||||||||||
- Exercise of warrants | 1.21 | 1,733 | 2,091 | - | - | - | - | - | - | - | 2,091 | |||||||||||||||||||||||||||||||
Non-cash | ||||||||||||||||||||||||||||||||||||||||||
- Mineral properties | 2.23 | 1,000 | 2,230 | - | - | - | - | - | - | - | 2,230 | |||||||||||||||||||||||||||||||
- Finder's fees | 1.82 | 59 | 108 | - | - | - | - | - | - | - | 108 | |||||||||||||||||||||||||||||||
- Assigned value to warrants issued | - | - | - | - | 252 | - | - | - | - | 252 | ||||||||||||||||||||||||||||||||
- Share issue costs | - | (128 | ) | - | - | - | - | - | - | - | (128 | ) | ||||||||||||||||||||||||||||||
Gain (loss) for year | - | - | - | - | - | - | - | - | (11,852 | ) | (11,852 | ) | ||||||||||||||||||||||||||||||
Balance December 31, 2001 | 30,914 | 51,282 | - | - | 252 | - | - | 1 | (50,226 | ) | 1,309 |
30
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
15. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) (Cont’d) |
Value | Compre- | |||||||||||||||||||||||||||||||||||||||||
Common Shares | Sub- | Values | Values | assigned to | hensive | Retained | Total | |||||||||||||||||||||||||||||||||||
Issue | Number of | scriptions | assigned | assigned | convertible | Contributed | income | earnings | shareholders’ | |||||||||||||||||||||||||||||||||
Price | shares | Amount | receivable | to options | to warrants | notes | Surplus | (loss) | (deficit) | equity | ||||||||||||||||||||||||||||||||
$ | '000s | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Issued for cash | ||||||||||||||||||||||||||||||||||||||||||
- Private placement | 3.26 | 4,750 | 15,459 | - | - | - | - | - | - | - | 15,459 | |||||||||||||||||||||||||||||||
- Exercise of options | 2.03 | 696 | 1,414 | - | - | - | - | - | - | - | 1,414 | |||||||||||||||||||||||||||||||
- Exercise of warrants | 2.40 | 1,584 | 3,806 | - | - | - | - | - | - | - | 3,806 | |||||||||||||||||||||||||||||||
Non-cash | ||||||||||||||||||||||||||||||||||||||||||
- Mineral properties | 4.90 | 199 | 973 | - | - | - | - | - | - | - | 973 | |||||||||||||||||||||||||||||||
- Finder's fees | 3.10 | 80 | 250 | - | - | - | - | - | - | - | 250 | |||||||||||||||||||||||||||||||
- On conversion of conv. Debenture | 4.49 | 361 | 1,619 | - | - | - | - | - | - | - | 1,619 | |||||||||||||||||||||||||||||||
- For mineral properties payables | 4.25 | 597 | 2,538 | - | - | - | - | - | - | - | 2,538 | |||||||||||||||||||||||||||||||
- Assigned values to options issued | - | - | - | 125 | - | - | - | - | - | 125 | ||||||||||||||||||||||||||||||||
- Assigned value of exercised op/wts | - | 262 | - | (10 | ) | (252 | ) | - | - | - | - | - | ||||||||||||||||||||||||||||||
- Donations | 3.17 | 10 | 32 | - | - | - | - | - | - | - | 32 | |||||||||||||||||||||||||||||||
- Share issue costs | - | (508 | ) | - | - | - | - | - | - | - | (508 | ) | ||||||||||||||||||||||||||||||
Gain (loss) for year | - | - | - | - | - | - | - | 809 | (14,920 | ) | (14,111 | ) | ||||||||||||||||||||||||||||||
Balance December 31, 2002 | 39,191 | 77,127 | - | 115 | - | - | - | 810 | (65,146 | ) | 12,906 | |||||||||||||||||||||||||||||||
Issued for cash | ||||||||||||||||||||||||||||||||||||||||||
- Private placement | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
- Exercise of options | 3.09 | 536 | 1,656 | - | - | - | - | - | - | - | 1,656 | |||||||||||||||||||||||||||||||
- Exercise of warrants | 3.09 | 2,780 | 8,580 | - | - | - | - | - | - | - | 8,580 | |||||||||||||||||||||||||||||||
- Subscriptions receive on warrants | - | - | 350 | - | - | - | - | - | - | 350 | ||||||||||||||||||||||||||||||||
Non-cash | ||||||||||||||||||||||||||||||||||||||||||
- Mineral properties | 5.38 | 88 | 474 | - | - | - | - | - | - | - | 474 | |||||||||||||||||||||||||||||||
- On settlement of interest | 5.82 | 10 | 58 | - | - | - | - | - | - | - | 58 | |||||||||||||||||||||||||||||||
- Assigned values to options issued | - | - | - | 145 | - | - | - | - | - | 145 | ||||||||||||||||||||||||||||||||
- Assigned value of exercised options | - | 128 | - | (128 | ) | - | - | - | - | - | - | |||||||||||||||||||||||||||||||
- Share issue costs | - | (42 | ) | - | - | - | - | - | - | - | (42 | ) | ||||||||||||||||||||||||||||||
Gain (loss) for year | - | - | - | - | - | - | - | 5,591 | (10,277 | ) | (4,686 | ) | ||||||||||||||||||||||||||||||
Balance December 31, 2003 | 42,605 | 87,981 | 350 | 132 | - | - | - | 6,401 | (75,423 | ) | 19,441 | |||||||||||||||||||||||||||||||
Issued for cash | ||||||||||||||||||||||||||||||||||||||||||
- Private placement | 9.68 | 2,955 | 28,609 | - | - | 5,254 | - | - | - | - | 33,863 | |||||||||||||||||||||||||||||||
- Exercise of options | 4.33 | 526 | 2,277 | - | - | - | - | - | - | - | 2,277 | |||||||||||||||||||||||||||||||
- Exercise of warrants | 3.84 | 2,687 | 10,311 | - | - | - | - | - | - | - | 10,311 | |||||||||||||||||||||||||||||||
Non-cash | ||||||||||||||||||||||||||||||||||||||||||
- Mineral properties | 14.92 | 2,680 | 39,991 | - | - | - | - | - | - | - | 39,991 | |||||||||||||||||||||||||||||||
- Finder’s fees | 9.69 | 31 | 303 | - | - | 148 | - | - | - | - | 451 | |||||||||||||||||||||||||||||||
- Assigned values to options issued | - | - | - | 41 | - | - | - | - | - | 41 | ||||||||||||||||||||||||||||||||
- Assigned value of exercised options | - | 118 | - | (66 | ) | - | - | - | - | - | 52 | |||||||||||||||||||||||||||||||
- shares issued on warrant subscriptions | 3.76 | 93 | 350 | (350 | ) | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
- Share issue costs | - | (1,166 | ) | - | - | - | - | - | - | - | (1,166 | ) | ||||||||||||||||||||||||||||||
Gain (loss) for year | - | - | - | - | - | - | - | - | (46,910 | ) | (46,910 | ) | ||||||||||||||||||||||||||||||
Adjustment for stock-based comp. | - | - | - | - | - | - | - | (4,631 | ) | - | (4,631 | ) | ||||||||||||||||||||||||||||||
Balance – December 31, 2004 | 51,577 | 168,774 | - | 107 | 5,402 | - | - | 1,770 | (122,333 | ) | 53,720 |
31
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
15. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) (Cont’d) |
Value | Compre- | |||||||||||||||||||||||||||||||||||||||||
Common Shares | Sub- | Values | Values | assigned to | hensive | Retained | Total | |||||||||||||||||||||||||||||||||||
Issue | Number of | scriptions | assigned | assigned | convertible | Contributed | income | earnings | shareholders’ | |||||||||||||||||||||||||||||||||
Price | shares | Amount | receivable | to options | to warrants | notes | Surplus | (loss) | (deficit) | equity | ||||||||||||||||||||||||||||||||
$ | '000s | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Issued for cash | ||||||||||||||||||||||||||||||||||||||||||
- Exercise of options | 5.13 | 259 | 1,329 | - | - | - | - | - | - | - | 1,329 | |||||||||||||||||||||||||||||||
- Exercise of warrants | 15.27 | 10 | 153 | - | - | - | - | - | - | - | 153 | |||||||||||||||||||||||||||||||
Non-cash | ||||||||||||||||||||||||||||||||||||||||||
- Mineral properties | 11.72 | 3 | 37 | - | - | - | - | - | - | - | 37 | |||||||||||||||||||||||||||||||
- Assigned values to options issued | - | - | - | 3,462 | - | - | - | - | - | 3,462 | ||||||||||||||||||||||||||||||||
- Assigned value of exercised options | - | 10 | - | (10 | ) | - | - | - | - | - | - | |||||||||||||||||||||||||||||||
- Assigned value of exercised warrants | - | 38 | - | - | (38 | ) | - | - | - | - | - | |||||||||||||||||||||||||||||||
Gain (loss) for year | - | - | - | - | - | - | - | 6,444 | (21,906 | ) | (15,462 | ) | ||||||||||||||||||||||||||||||
Balance – December 31, 2005 | 51,849 | 170,341 | - | 3,559 | 5,364 | - | - | 8,214 | (144,239 | ) | 43,239 | |||||||||||||||||||||||||||||||
Issued for cash | ||||||||||||||||||||||||||||||||||||||||||
- Public offering | 22.83 | 7,200 | 164,384 | - | - | - | - | - | - | - | 164,384 | |||||||||||||||||||||||||||||||
- Exercise of options | 8.63 | 669 | 5,773 | - | - | - | - | - | - | - | 5,773 | |||||||||||||||||||||||||||||||
- Exercise of warrants | 16.31 | 1,387 | 22,617 | - | - | - | - | - | - | - | 22,617 | |||||||||||||||||||||||||||||||
Non-cash | ||||||||||||||||||||||||||||||||||||||||||
- Mineral properties | 15.91 | 530 | 8,442 | - | - | - | - | - | - | - | 8,442 | |||||||||||||||||||||||||||||||
- Assigned values to options issued | - | - | - | 12,067 | - | - | - | - | - | 12,067 | ||||||||||||||||||||||||||||||||
- Assigned value of exercised options | - | 2,277 | - | (2,277 | ) | - | - | - | - | - | - | |||||||||||||||||||||||||||||||
- Assigned value of exercised warrants | - | 5,643 | - | - | (4,929 | ) | - | - | - | - | 714 | |||||||||||||||||||||||||||||||
- Donations | 18.71 | 11 | 206 | - | - | - | - | - | - | - | 206 | |||||||||||||||||||||||||||||||
- Share issue costs | - | (10,436 | ) | - | - | - | - | - | - | - | (10,436 | ) | ||||||||||||||||||||||||||||||
- Options expired/forfeited | - | - | - | (75 | ) | - | - | 75 | - | - | - | |||||||||||||||||||||||||||||||
- Warrants expired | - | - | - | - | (435 | ) | - | 435 | - | - | - | |||||||||||||||||||||||||||||||
Gain (loss) for year | - | - | - | - | - | - | - | 23,667 | (10,340 | ) | 13,327 | |||||||||||||||||||||||||||||||
Balance – December 31, 2006 | 61,646 | 369,247 | - | 13,274 | - | - | 510 | 31,881 | (154,579 | ) | 260,333 | |||||||||||||||||||||||||||||||
Issued for cash | ||||||||||||||||||||||||||||||||||||||||||
- Exercise of options | 3.71 | 887 | 10,973 | - | - | - | - | - | - | - | 10,973 | |||||||||||||||||||||||||||||||
Non-cash | ||||||||||||||||||||||||||||||||||||||||||
- Mineral properties | 6.55 | 9 | 337 | - | - | - | - | - | - | - | 337 | |||||||||||||||||||||||||||||||
- Assigned values to options granted | - | - | - | 14,443 | - | - | - | - | - | 14,443 | ||||||||||||||||||||||||||||||||
- Assigned value of exercised options | - | 4,197 | - | (4,197 | ) | - | - | - | - | - | - | |||||||||||||||||||||||||||||||
- Donations | 27 | 893 | - | - | - | - | - | - | - | 893 | ||||||||||||||||||||||||||||||||
Other comprehensive loss for year | - | - | - | - | - | - | - | 22,331 | - | 22,331 | ||||||||||||||||||||||||||||||||
Gain (loss) for year | - | - | - | - | - | - | - | - | (68,143 | ) | (68,143 | ) | ||||||||||||||||||||||||||||||
Balance - December 31, 2007 | 62,569 | 385,647 | - | 23,520 | - | - | 510 | 54,212 | (222,722 | ) | 241,167 | |||||||||||||||||||||||||||||||
Issued for cash | ||||||||||||||||||||||||||||||||||||||||||
- Exercise of options | 11.78 | 186 | 2,192 | - | - | - | - | - | - | - | 2,192 | |||||||||||||||||||||||||||||||
Non-cash | ||||||||||||||||||||||||||||||||||||||||||
- Assigned values to options granted | - | - | - | 9,662 | - | - | - | - | - | 9,662 | ||||||||||||||||||||||||||||||||
- Assigned value of exercised options | - | 866 | - | (866 | ) | - | - | - | - | - | - | |||||||||||||||||||||||||||||||
- Assigned value to convertible notes | - | - | - | - | - | 37,383 | - | - | - | 37,383 | ||||||||||||||||||||||||||||||||
Other comprehensive loss for year | - | - | - | - | - | - | - | (68,551 | ) | - | (68,551 | ) | ||||||||||||||||||||||||||||||
Gain (loss) for year | - | - | - | - | - | - | - | - | (29,768 | ) | (29,768 | ) | ||||||||||||||||||||||||||||||
Balance - December 31, 2008 | 62,755 | 388,705 | - | 32,316 | - | 37,383 | 510 | (14,339 | ) | (252,490 | ) | 192,085 |
32
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
15. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) (Cont’d) |
Value | Compre- | ||||||||||||||||||||||||||||||||||||||||||
Common Shares | Sub- | Values | Values | assigned to | hensive | Retained | Total | ||||||||||||||||||||||||||||||||||||
Issue | Number of | scriptions | assigned | assigned | convertible | Contributed | income | earnings | shareholders’ | ||||||||||||||||||||||||||||||||||
Price | shares | Amount | receivable | to options | to warrants | notes | Surplus | (loss) | (deficit) | equity | |||||||||||||||||||||||||||||||||
$ | '000s | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
Issued for cash | |||||||||||||||||||||||||||||||||||||||||||
- Public offering | 16.03 | 5,826 | 93,389 | - | - | - | - | - | - | - | 93,389 | ||||||||||||||||||||||||||||||||
- Exercise of options | 13.04 | 28 | 365 | - | - | - | - | - | - | - | 365 | ||||||||||||||||||||||||||||||||
Non-cash | |||||||||||||||||||||||||||||||||||||||||||
- Assigned values to options granted | - | - | - | 1,937 | - | - | - | - | - | 1,937 | |||||||||||||||||||||||||||||||||
- Assigned value of exercised options | - | 139 | - | (139 | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
Other comprehensive loss for year | - | - | - | - | - | - | - | (2,079 | ) | - | (2,079 | ) | |||||||||||||||||||||||||||||||
Gain (loss) for period | - | - | - | - | - | - | - | - | (5,958 | ) | (5,958 | ) | |||||||||||||||||||||||||||||||
Balance - March 31, 2009 | 68,609 | 482,598 | - | 34,114 | - | 37,383 | 510 | (16,418 | ) | (258,448 | ) | 279,739 | |||||||||||||||||||||||||||||||
Issued for cash | |||||||||||||||||||||||||||||||||||||||||||
- Exercise of options | 13.54 | 100 | 1,354 | - | - | - | - | - | - | - | 1,354 | ||||||||||||||||||||||||||||||||
- Share issue costs | - | (149 | ) | - | - | - | - | - | - | - | (149 | ) | |||||||||||||||||||||||||||||||
Non-cash | |||||||||||||||||||||||||||||||||||||||||||
- Assigned values to options granted | - | - | - | 1,625 | - | - | - | - | - | 1,625 | |||||||||||||||||||||||||||||||||
- Assigned value of exercised options | - | 585 | - | (585 | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
Other comprehensive loss for year | - | - | - | - | - | - | - | (677 | ) | - | (677 | ) | |||||||||||||||||||||||||||||||
Gain (loss) for period | - | - | - | - | - | - | - | - | (4,080 | ) | (4,080 | ) | |||||||||||||||||||||||||||||||
Balance - June 30, 2009 | 68,709 | 484,388 | - | 35,154 | - | 37,383 | 510 | (17,095 | ) | (262,528 | ) | 277,812 | |||||||||||||||||||||||||||||||
Issued for cash | |||||||||||||||||||||||||||||||||||||||||||
- Public offering | 17.00 | 2,998 | 50,963 | - | - | - | - | - | - | - | 50,963 | ||||||||||||||||||||||||||||||||
- Share issue costs | - | (3,124 | ) | - | - | - | - | - | - | - | (3,124 | ) | |||||||||||||||||||||||||||||||
- Exercise of options | 14.47 | 5 | 67 | - | - | - | - | - | - | - | 67 | ||||||||||||||||||||||||||||||||
Non-cash | |||||||||||||||||||||||||||||||||||||||||||
- Assigned values to options granted | - | - | - | 1,337 | - | - | - | - | - | 1,337 | |||||||||||||||||||||||||||||||||
- Assigned value of exercised options | - | 52 | - | (52 | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
Other comprehensive loss for year | - | - | - | - | - | - | - | 2,341 | - | 2,341 | |||||||||||||||||||||||||||||||||
Gain (loss) for period | - | - | - | - | - | - | - | - | (11,541 | ) | (11,541 | ) | |||||||||||||||||||||||||||||||
Balance - September 30, 2009 | 71,712 | 532,346 | - | 36,439 | - | 37,383 | 510 | (14,754 | ) | (274,069 | ) | 317,855 |
33
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
15. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) (Cont’d) |
vi) | Additional fair value disclosure required under SFAS No. 157 |
In September 2006, FASB issued SFAS No. 157, “Fair Value Measurement” (“SFAS 157”, Codified within ASC 820) to define fair value, establish a framework for measuring fair value and to expand disclosures about fair value measurements. The statement only applies to fair value measurements that are already required or permitted under current accounting standards and is effective for fiscal years beginning after November 15, 2007. The adoption of SFAS 157 for financial instruments, as required at January 1, 2008, did not have a material effect on the company’s results of operations or financial position. The adoption of SFAS 157 for non financial assets and non-financial liabilities on January 1, 2009, as required, and did not result in a material effect on the company’s results of operations or financial position.
SFAS 157 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The company’s Level 1 assets include the valuation of available-for–sale investments with no trading restrictions using a market approach based upon unadjusted quoted prices for identical assets in an active market. The company’s Level 2 assets include the valuation of convertible debenture receivable based on the discounted cash flow approach; derivatives based on the Black-Scholes model; and long-term convertible notes based on average market quoted price provided by market makers in the over-the-counter market on the balance sheet date. The company’s Level 3 assets include the valuation of other investments as determined using a probability-based discounted cash flow approach.
Fair market value | Quoted prices in active markets for identical assets | Significant other observable inputs | Significant unobservable inputs | |||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||||||
Available-for-sale securities | 11,037 | 11,037 | - | - | ||||||||||||
Convertible debenture receivable | 5,291 | - | 5,291 | - | ||||||||||||
Other Investments | 24,902 | - | - | 24,902 | ||||||||||||
Derivatives | 196 | - | 196 | - | ||||||||||||
Long-term convertible debt | (121,578 | ) | - | (121,578 | ) | - | ||||||||||
Total | (80,152 | ) | 11,037 | (116,091 | ) | 24,902 |
34
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
15. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) (Cont’d) |
vii) | Recently adopted accounting standards |
i) | In December 2007, FASB issued SFAS 160, “Non-controlling Interests in Consolidated Financial Statements” (“SFAS 160”, Codified within ASC 810), which specifies that non-controlling interests are to be treated as a separate component of equity, not as a liability or other item outside of equity. As a result of non-controlling interests being an element of equity, increases and decreases in the parent's ownership interest that leave control intact are accounted for as capital transactions. |
The statement is effective for business combinations entered into on or after December 15, 2008, and is to be applied prospectively to all non-controlling interests, except for the presentation and disclosure requirements which require retrospective application. The adoption of SFAS 160 non-controlling interests as required at January 1, 2009 did not have a material effect on the company’s results of operations or financial position; however, the company retrospectively applied the disclosure requirements in these consolidated financial statements.
ii) | In December 2007, the FASB issued a revised standard on accounting for business combinations, SFAS 141R (Codified within ASC 805) |
The statement is effective for periods beginning on or after December 15, 2008. We did not enter into a business combination during the nine months ended September 30, 2009; therefore, the adoption of SFAS 141R on January 1, 2009 did not have a material effect on the company’s results of operations or financial position.
iii) | In May 2008, FASB issued FASB Staff Position Accounting Principles Board 14-1 (“FSP APB 14-1”, Codified within ASC 470 and ASC 825), which revises the accounting treatment for convertible debt instruments that may be settled in cash upon conversion. FSP APB 14-1 requires the issuer to separately account for the liability and equity components of convertible debt instruments. The value assigned to the liability component would be the estimated fair value, as of the date of issuance, of similar debt without the conversion option, but including any other embedded features. The difference between the proceeds of the debt and the value allocated to the liability component would be recorded in equity. The standard is effective for periods beginning on or after December 15, 2008, and is to be applied retrospectively. The adoption of this standard on January 1, 2009 resulted in the elimination of the Canadian and United States GAAP difference on all balances with the exception of financing costs, which are expensed under Canadian GAAP and capitalized and amortized in accordance with U.S. GAAP. |
35
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
15. MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) (Cont’d)
The results of adopting this standard have been retrospectively applied in these consolidated financial statements, resulting in an increase of $2,813,000 in other property, plant and equipment, a decrease of $29,425,000 in long-term convertible note, an increase of $5,145,000 on deficit, a $37,383,000 increase in value assigned to convertible debt as at January 1, 2009.
iv) | In June 2008, FASB Task Force reached a consensus on EITF Issue No. 07-5, “Determining Whether an Instrument (or embedded Feature) is Indexed to an Entity’s Own Stock” (Codified within ASC 815). The standard provides that an equity-linked financial instrument (or embedded feature) would not be considered indexed to the entity’s own stock if the strike price is denominated in a currency other than the issuer’s functional currency. The Issue is effective for periods beginning on or after December 15, 2008. The effect of adopting this EITF on January 1, 2009 did not have a material effect on the company’s results of operations or financial position. |
v) | In June 2009, FASB issued SFAS 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB Statement No. 162” (“SFAS 168”, Codified within ASC 105). SFAS 168 identifies the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of this Statement, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification will become non-authoritative. This statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of this standard for the interim period ending September 30, 2009 resulted in additional disclosure included within these consolidated financial statements. |
viii) | Impact of recently issued accounting standards |
In August 2009, FASB amended SFAS 157 (Codified within ASC 820). The amendments address the impact of transfer restrictions on the fair value of a liability and the ability to use the fair value of a liability that is traded as an asset as an input to the valuation of the underlying liability. The amended standard also clarifies the application of certain valuation techniques. This standard is effective for interim and annual periods beginning after August 26, 2009. The Company is currently assessing the potential impact, if any, on its consolidated financial statements.
36
Silver Standard Resources Inc.
(a development stage company)
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009
(in US dollars, tabular amounts expressed in thousands, unless otherwise stated - unaudited)
15. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) (Cont’d) |
In June 2009, FASB issued SFAS 167, “Amendments to FASB Interpretation No. 46(R” (“SFAS 167”, not yet included in Codification). SFAS 167 eliminates FASB Interpretation 46(R)’s exceptions to consolidating qualifying special-purpose entities, contains new criteria for determining the primary beneficiary, and increases the frequency of required reassessments to determine whether a company is the primary beneficiary of a variable interest entity. SFAS 167 also contains a new requirement that any term, transaction, or arrangement that does not have a substantive effect on an entity’s status as a variable interest entity, a company’s power over a variable interest entity, or a company’s obligation to absorb losses or its right to receive benefits of an entity must be disregarded in applying FASB Interpretation 46(R)’s provisions. The elimination of the qualifying special-purpose entity concept and its consolidation exceptions means more entities will be subject to consolidation assessments and reassessments. SFAS 167 is effective for fiscal years beginning after November 15, 2009, and for interim periods within that first period, with earlier adoption prohibited. The Company is currently assessing the potential impacts, if any, on its consolidated financial statements.
In June 2009, the FASB issued SFAS 166, “Accounting for Transfers of Financial Assets — an amendment of FASB Statement No. 140” (“SFAS 166”, not yet included in Codification). SFAS 166 eliminates the concept of a qualifying special-purpose entity, creates more stringent conditions for reporting a transfer of a portion of a financial asset as a sale, clarifies other sale-accounting criteria, and changes the initial measurement of a transferor’s interest in transferred financial assets. SFAS 166 will be effective for transfers of financial assets in fiscal years beginning after November 15, 2009 and in interim periods within those fiscal years with earlier adoption prohibited. The Company is currently assessing the potential impacts, if any, on its consolidated financial statements.
37