SSR Mining 6K Condensed Consolidated Interim Financial Statements | SSRM 6 Nov 14

SILVER STANDARD RESOURCES INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION AND RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014


1.	THIRD QUARTER 2014 HIGHLIGHTS


2.	OUTLOOK


3.	BUSINESS OVERVIEW


4.	RESULTS OF OPERATIONS


5.	REVIEW OF PROJECTS


6.	SUMMARIZED FINANCIAL RESULTS


7.	LIQUIDITY


8.	CAPITAL RESOURCES


9.	FINANCIAL INSTRUMENTS AND RELATED RISKS


10.	OTHER RISKS AND UNCERTAINTIES


11.	RELATED PARTY TRANSACTIONS


12.	NON-GAAP FINANCIAL MEASURES


13.	CRITICAL ACCOUNTING POLICIES AND ESTIMATES


14.	FUTURE ACCOUNTING CHANGES


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


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

SILVER STANDARD RESOURCES INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION AND RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014

This Management's Discussion and Analysis ("MD&A") is intended to supplement the condensed consolidated interim financial statements of Silver Standard Resources Inc. ("we", "us" or "our") for the three and nine months ended September 30, 2014, and the related notes thereto, which have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB").

All figures are expressed in U.S. dollars except where otherwise indicated. This MD&A has been prepared as of November 5, 2014, and should be read in conjunction with the condensed consolidated interim financial statements for the three and nine months ended September 30, 2014.

Additional information, including our Annual Information Form and Form 40-F for the year ended December 31, 2013, is available on SEDAR at www.sedar.com, and on the EDGAR section of the U.S. Securities and Exchange Commission ("SEC") website at www.sec.gov.

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

1.THIRD QUARTER 2014 HIGHLIGHTS


▪	Produced a quarterly record of 2.6 million ounces of silver, 25% higher than in the previous quarter.


▪	Produced 40,442 ounces of gold, 83% higher than in the previous quarter and 23% higher than the third quarter guidance of 33,000 ounces. As a result, Marigold's production guidance has been revised higher.


▪	Reported cash costs of $997 per payable ounce of gold sold at Marigold, a reduction from $1,103 in the second quarter of 2014, demonstrating efficiencies in the mining operation.


▪	Reported cash costs of $12.22 per payable ounce of silver sold at Pirquitas, in line with our lowered 2014 cost guidance.


▪	Cash balance of $135.2 million, an increase of $33.0 million, due to positive operating cash flow, sale of marketable securities and VAT recoveries.


▪	Completed Marigold mine life of mine plan subsequent to quarter end. The plan has robust economics with an after tax net present value ("NPV") of $419 million assuming a gold price of $1,300 per ounce and a 5% discount rate.


▪	Completed the first 14,408 meters of an expanded 23,900 meter exploration program at Marigold with 56 of 83 holes intercepting gold mineralization exceeding Mineral Resources cut-off grade and width criteria.


2.	OUTLOOK

This section of the news release provides management's production and cost estimates. Major capital and exploration expenditures are also discussed. See "Cautionary Note Regarding Forward-Looking Statements", in section 16 of this MD&A.

Due to better than expected third quarter production performance and forecast stronger fourth quarter production of between 45,000 and 55,000 gold ounces, Marigold's production guidance is increased to between 110,000 and 120,000 ounces of gold. Cash cost and capital guidance remain unchanged.

Guidance for Pirquitas and exploration and development activities is unchanged from that provided in our second quarter 2014 MD&A Outlook. Production guidance at Pirquitas is between 8.2 and 8.6 million ounces of silver and between 25 and 30 million pounds of zinc, with 6.5 million ounces of silver and 25.2 million pounds of zinc produced to the end of the third quarter.


3.	BUSINESS OVERVIEW

We are a resource company focused on the acquisition, exploration, development and operation of precious metal projects in the Americas. With the acquisition of the Marigold mine, on April 4, 2014, we have two producing mines and a portfolio of silver resource dominant projects located throughout the Americas. Our focus is on profitable silver production from the Pirquitas mine, in Argentina, and gold production from the Marigold mine in Nevada, U.S. During the third quarter of 2014, the Pirquitas mine continued to operate to plan, and we completed the integration of the Marigold mine into our operations, advanced performance optimization initiatives and completed the first life of mine plan, highlights of which we released on October 6, 2014. We also completed selective works to enhance value in our large portfolio of mineral projects and properties, which are at various stages of exploration and development.

Following the acquisition of the Marigold mine, our financial performance is impacted by both silver and gold prices. Precious metals prices have generally been consistent through 2014 with silver falling within a range of $19.00 and $21.00 per ounce and gold, being between $1,250 and $1,300 per ounce since the acquisition of the Marigold mine. There has been a general trend of silver underperforming gold, with gold to silver ratios widening from 60:1 to almost 70:1. Towards the end of the third quarter of 2014, however, we have seen precious metals prices under pressure, with silver prices closing at $17.11 per ounce and gold prices closing at $1,213 per ounce on September 30, 2014, and the the trend continuing subsequent to the period end. This recent downward trend has resulted from the increased strength of the U.S. dollar driven by renewed optimism of U.S. economic performance relative to the global economy and expectations of higher U.S. interest rates. The continued backdrop of global geographical tensions in the Middle East and Ukraine, and fears about the Ebola virus, however, continues to make the commodity price environment volatile.

The Pirquitas mine operates within a tightly-controlled regulatory environment in Argentina. Importation of goods and services into Argentina requires pre-approval, which may cause delays in obtaining certain parts and supplies. The Central Bank of Argentina regulates U.S. dollar flows into and out of the country with Central Bank approval required for all foreign exchange transactions. Argentina is experiencing high inflation with a currency that, generally, depreciates against our reporting currency, the U.S. dollar. During January 2014, the Argentine peso underwent a devaluation of approximately 25% as a result of a government policy change, although subsequently reversed to a more gradual devaluation trajectory, which accelerated slightly after the announcement of the country's default position on July 30, 2014, and closed on September 30, 2014, at an exchange rate of 8.44 Argentine pesos for 1 U.S. dollar. Even though we have experienced some success with the recovery of VAT receivables in the second and third quarters of 2014, VAT recovery remains a highly regulated, complex and, at times, lengthy collection process. All of these factors directly impact our business in Argentina.

On April 4, 2014, we completed the purchase of the Marigold mine in Nevada, U.S. for total cash consideration of $268 million, after closing adjustments.

The Marigold mine is an open-pit gold mine located in Humboldt County, Nevada, U.S. at the northern end of the Battle Mountain-Eureka trend. The mine has been in continuous production since 1988. Ore is mined by conventional truck and shovel equipment and processed via a large run-of-mine heap leach operation averaging 40,000 tonnes per day. Production at the Marigold mine is subject to various net smelter returns royalties. In 2012 and 2013, significant investments were made to purchase new, larger mining equipment which are expected to improve the efficiency of future mining operations.

The mine currently employs approximately 360 people including contractors, who manage and maintain the mine and plant to world-class safety and environmental standards. The entire Marigold mine management team joined us upon closing of the acquisition. Nevada is among the world’s most favorable exploration and mining jurisdictions with a stable tax regime, streamlined permitting process and access to highly qualified labor.

On October 6, 2014, we released the life of mine plan for Marigold. The life of mine plan increases our Mineral Reserves by 2.1 million ounces of gold contained in 129.7 million tonnes at a grade of 0.51 grams per tonne mined

over a 13-year operating life. Annual gold production will average 171,500 ounces of gold per year over the next six years, followed by two higher grade years averaging 217,000 ounces of gold per year, for an overall average of 186,700 ounces produced the nine years of active mining to 2023.

Our forward focus is on further refining the mine plan to optimize activities for the prevailing metal price environment and improving the performance of the new mine fleet and shovel investments to reduce unit mining costs.


4.	RESULTS OF OPERATIONS

Consolidated results of operations

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



	Three months ended
Operating data	September 30 2014	June 30 2014	March 31 2014	December 31 2013	September 30 2013

Consolidated production and sales:
Silver produced ('000 oz)	2,551	2,042	1,918	2,281	2,028
Zinc produced ('000 lbs) ⁽¹⁾	7,030	9,319	8,844	10,307	7,818
Silver sold ('000 oz)	1,859	1,926	1,596	2,499	1,969
Zinc sold ('000 lbs) ⁽¹⁾	8,062	5,307	10,227	14,208	4,952

Gold produced (oz)	40,442	22,060	—	—	—
Gold sold (oz)	38,245	21,990	—	—	—

Silver equivalent production ('000 oz) ⁽²⁾	5,114	3,467	1,918	2,281	2,028

Realized gold price ($/oz) ⁽³⁾	1,267	1,285	—	—	—
Realized silver price ($/oz) ⁽³⁾	19.99	19.89	20.38	20.79	21.38

Cash costs ($/oz) - payable silver from Pirquitas mine ⁽³⁾	12.22	12.18	12.36	11.75	13.32
Cash costs ($/oz) - payable gold from Marigold mine ⁽³⁾	997	1,103	—	—	—

Financial data ($000s)
Revenue	79,269	64,287	33,736	49,026	43,944
Income from mine operations	6,258	11,022	5,924	3,985	5,732


⁽¹⁾	Data for zinc production and sales relate only to zinc in zinc concentrate as any zinc metal within our silver concentrate does not generate revenue.


⁽²⁾	Silver equivalent ounces have been established using the realized silver and gold prices in the quarter and applied to the recovered metal content of the gold bullion produced by the Marigold mine.


⁽³⁾	We report non-GAAP cost per payable ounce of precious metal sold and realized metal prices to manage and evaluate operating performance at our mines. For a better understanding and a reconciliation of these measures to cost of sales, as shown in our consolidated statements of comprehensive income, please refer to “Non-GAAP Financial Measures” in section 12 of this MD&A.

Pirquitas mine, Argentina



	Three months ended
Operating data	September 30 2014		June 30 2014	March 31 2014	December 31 2013	September 30 2013
Total material mined (kt)	4,315		4,052	4,208	4,277	4,465
Waste removed (kt)	3,831		3,550	3,840	3,753	4,087
Strip ratio	7.9		7.1	10.4	7.2	10.8
Silver mined grade (g/t)	160		167	163	178	128
Zinc mined grade (%)	1.36		2.07	1.94	2.67	2.41
Mining cost ($/t mined)	2.93		2.80	2.40	2.90	2.77
Ore milled (kt)	407		402	406	420	394
Silver mill feed grade (g/t)	248		213	204	228	215
Zinc mill feed grade (%)	1.79		2.19	2.02	2.12	1.91
Processing cost ($/t milled)	23.30		21.13	20.09	20.74	22.51
Silver recovery (%)	78.7		74.3	72.1	73.9	74.6
Zinc recovery (%) (1)	43.8		48.0	48.9	53.0	47.0

Silver produced ('000 oz)	2,551		2,042	1,918	2,281	2,028
Zinc produced ('000 lbs) (1)	7,030		9,319	8,844	10,307	7,818
Silver sold ('000 oz)	1,859		1,926	1,596	2,499	1,969
Zinc sold ('000 lbs) (1)	8,062		5,307	10,227	14,208	4,952

Realized silver price ($/oz) ₍₂₎	19.99		19.89	20.38	20.79	21.38

Cash costs ($/oz) ₍₂₎	12.22		12.18	12.36	11.75	13.32
Total costs ($/oz) ₍₂₎	17.11		16.34	17.42	17.75	21.24

Financial data ($000s)
Revenue	30,874		36,261	33,736	49,026	43,944
Income (loss) from mine operations	(308	)	7,758	5,924	3,985	5,732
Capital investments (excluding deferred stripping)	2,376		3,200	2,514	6,950	7,184
Exploration expenditures	173		1,125	140	143	748


⁽¹⁾	Data for zinc production and sales relate only to zinc in zinc concentrate as any zinc metal within our silver concentrate does not generate revenue.


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

Mine production

The Pirquitas mine produced 2.6 million ounces of silver during the third quarter of 2014, which is a 25% quarter-on-quarter increase, and is on track to meet full year guidance. The quarter-on-quarter increase in silver production was due to the increase in mill feed grade and better silver recoveries. The Pirquitas mine produced 7.0 million pounds of zinc in zinc concentrate in the third quarter of 2014, a 25% quarter-on-quarter decrease reflecting a lower average mine grade and lower recovery as expected.

Approximately 407,000 tonnes of ore were milled during the third quarter of 2014, compared to 402,000 tonnes in the second quarter of 2014. Ore was milled at an average rate of 4,420 tonnes per day during the third quarter of 2014, 11% above the mill’s nominal design, consistent with the average milling rate of 4,423 tonnes per day in the second quarter of 2014.

Ore milled during the third quarter of 2014 contained an average silver grade of 248 g/t, higher than the 213 g/t reported in the second quarter of 2014. The increase in milled grade was due to blending mine feed with previously mined

stockpiled material. The average silver recovery rate of 78.7% was higher than the second quarter recovery rate of 74.3% due to a greater proportion of fresh sulphide ore being milled.

Mine operating costs

We further advanced our continuous improvement initiatives at the Pirquitas mine after completing a cost restructuring at the operation through late 2013.

Cash costs, which include cost of inventory (excluding adjustments for write downs and one-off restructuring costs), treatment and refining costs, and by-product credits, were $12.22 per payable ounce of silver sold in the third quarter of 2014 compared to $12.18 per payable ounce of silver sold in the second quarter of 2014. Cash costs in the third quarter of 2014 remain in line with our previously lowered 2014 cost guidance.

Unit costs remained similar to Q2 due to higher total spend required to achieve the higher production levels, in part caused by longer hauls, higher fuel burns and higher mobile maintenance costs. Additional contractor use was also required to conduct some plant maintenance activities.

Total costs, which add silver export duties, depreciation, depletion and amortization to cash costs, were $17.11 per payable ounce of silver sold in the third quarter of 2014 slightly above $16.34 per payable ounce of silver sold in the second quarter of 2014. Depletion, depreciation and amortization was comparable on a per unit sold basis in the third quarter of 2014 compared to the second quarter of 2014, whereas the silver export duties were slightly higher than in the previous quarter due to timing of shipments.

The mine remains focused on costs and driving further operational efficiencies that will sustain cash flows in a lower silver price environment.

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

Mine sales

In the third quarter of 2014, we sold 1.9 million ounces of silver, equal to our sales in the second quarter of 2014, and 8.1 million pounds of zinc in the third quarter of 2014, compared to 5.3 million pounds sold in the second quarter of 2014. We expect shipments of concentrate to approximate production in 2014, however, due to timing in certain contract terms, sales recognized are expected to be below production.

Exploration

At Pirquitas we are focused on brownfields exploration to replace Mineral Reserves and Mineral Resources and to extend the life of current operations. In support of these activities we have secured access to explore an extensive adjacent property, which increases our land position by 4,417 hectares. We have commenced a field exploration program, which has to date defined five prospective areas with drill targets, located within a 3 kilometer radius of the active open pit. These targets hold potential for silver-zinc mineralization in open pit configurations. Initial drill testing on these areas is planned for the fourth quarter of 2014.

Fiscal stability agreement and regulatory environment

We entered into a fiscal stability agreement (the “Fiscal Agreement”) with the Federal Government of Argentina in 1998 for production from the Pirquitas mine. In December 2007, the National Customs Authority of Argentina (Dirección Nacional de Aduanas) levied an export duty of approximately 10% from concentrates for projects with fiscal stability agreements pre-dating 2002 and the Federal Government has asserted that the Pirquitas mine is subject to this duty. We have challenged the legality of the export duty applied to silver concentrates and the matter is currently under review by the Federal Court (Jujuy) in Argentina.

The Federal Court (Jujuy) granted an injunction in our favor effective September 29, 2010 that prohibited the Federal Government from withholding the 10% export duty on silver concentrates (the “Injunction”), pending the decision of the courts with respect to our challenge of the legality of the application of the export duty. The Injunction was appealed by the Federal Government but upheld by each of the Federal Court of Appeal (Salta) on December 5, 2012 and the Federal Supreme Court of Argentina on September 17, 2013. The Federal Government also appealed the refund we claimed for the export duties paid before the Injunction, as well as matters of procedure related to the uncertainty of the amount reclaimed; however, on May 3, 2013, such appeal was dismissed by the Federal Court of Appeal (Salta). In September 2014, the Federal Tax Authority in Argentina filed an application with the Federal Court (Jujuy) to lift the Injunction and requiring payment of the export duty and payment of applied interest charges. We filed a response to such application on October 14, 2014 and expect a decision before the end of the year.

As of September 30, 2014, we have paid $6.6 million in export duties, for which we have filed for recovery. In accordance with the Injunction, we have not been paying export duties on silver concentrates but continue to accrue export duties. At September 30, 2014, we have accrued a liability totaling $54.2 million (December 31, 2013 - $48.2 million), for export duties with no accrual for interest charges, and have recorded a corresponding increase in cost of sales in the relevant period. The final amount of export duties and interest, if any, to be paid or refunded depends on a number of factors including the outcome of litigation. Changes in our assessment of this matter could result in material adjustments to our consolidated statement of loss.

Marigold mine, U.S.



	Three months ended
Operating data	September 30 2014	June 30 2014 ⁽¹⁾
Total material mined (kt)	18,832	18,338
Waste removed (kt)	13,821	15,986
Strip ratio	2.8	6.8
Mining cost ($/t mined)	1.61	1.70
Total ore stacked (kt)	5,011	2,352
Gold stacked grade (g/t)	0.53	0.34
Processing cost ($/t processed)	0.86	1.59
Gold recovery (%)	73.0	73.0

Gold produced (oz)	40,442	22,060
Gold sold (oz)	38,245	21,990

Realized gold price ($/oz) ₍₂₎	1,267	1,285

Cash costs ($/oz) ₍₂₎	997	1,103
Total costs ($/oz) ₍₂₎	1,095	1,135

Financial data ($000s)
Revenue	48,395	28,026
Income from mine operations	6,566	3,264
Capital investments (excluding deferred stripping)	4,486	2,296
Exploration expenditures	796	458

⁽¹⁾Data presented in this table is for the period April 1 to September 30, 2014, the period for which we were entitled to all economic benefits of the Marigold mine under the purchase and sale agreement dated February 3, 2014 entered into with subsidiaries of Goldcorp Inc. and Barrick Gold Corporation (the “Purchase and Sale Agreement").

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

Mine production

We produced 40,442 gold ounces in the third quarter of 2014, exceeding our quarterly guidance by approximately 23% and the second quarter production of 22,060 ounces by 83%.

During the third quarter of 2014 the mine moved 18.8 million tonnes of material, of which 5.0 million tonnes of ore were delivered to the heap leach pad at a gold grade of 0.53 g/t. This compares to the 18.3 million tonnes of material moved in the second quarter, of which 2.4 million tonnes of ore containing a gold grade of 0.34 g/t was stacked. As a result, the strip ratio declined significantly to 2.8 from 6.8 in the previous quarter.

Mining activities centered on using the mining fleet for the stripping of overburden and the mining of ore in the Mackay Phase 1 Pit and Terry Phase 2 Pit. In the third quarter of 2014, approximately 86,000 gold ounces were stacked on the pads, 229% more than in the second quarter of 2014, which represents approximately 62,500 recoverable gold ounces.

Mine operating costs

Cash costs in the period remain impacted by the fair value attributed to the acquired leach pad inventory as part of the preliminary purchase price allocation required under IFRS. The entire value attributed to leach pad inventory was considered as a cash component with no allocation to previously incurred depreciation.

Cash costs, which include all costs of inventory, refining costs and royalties, were $997 per payable ounce of gold sold in the third quarter of 2014, compared to $1,103 per payable ounce of gold sold in the second quarter of 2014.

Total costs, which include depreciation, depletion and amortization, were $1,095 per payable ounce of gold sold in the third quarter of 2014, compared to $1,135 per payable ounce of gold sold in the second quarter of 2014. Depreciation, depletion and amortization was higher in the third quarter as the initial inventory acquired did not include any depreciation. As a result, this non-cash component increased over the prior quarter, however, we expect it will trend to normalized levels over the next quarter as depreciation is charged to inventory.

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

Mine sales

A total of 38,245 ounces of gold was sold at an average price of $1,267 per ounce during the third quarter of 2014, an increase of 74% from the 21,990 ounces of gold sold during the second quarter of 2014 at an average price of $1,285 per ounce. The increase in sales is a function of increased production.

Life of mine plan

The life of mine highlights for Marigold, as disclosed in our news release dated October 6, 2014, are as follows:


▪	Mineral Reserves of 2.1 million ounces of gold contained in 129.7 million tonnes at a grade of 0.51 grams per tonne mined over a 13-year operating life.


▪	Indicated Mineral Resources of 4.0 million ounces of gold contained in 243.7 million tonnes at a grade of 0.51 grams per tonne providing strong potential to extend mine life.


▪	Gold production average of 186,700 ounces per year over the nine years of active mining to 2023.


▪	Average annual cash costs of $762 per payable ounce of gold sold and all-in sustaining costs of $986 per payable ounce of gold sold.


▪	Total sustaining capital expenditures of $123 million or $74 per payable ounce of gold sold.


▪	After tax NPV of $419 million, assuming a gold price of $1,300 per ounce and a 5% discount rate.

The technical report required under National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”) will be filed on or before November 20, 2014.

Exploration

The previously announced exploration program at Marigold was initiated in June 2014 and targets the discovery of near-surface higher grade gold mineralization proximal to the open pits and the upgrading of Inferred Mineral Resources to Indicated Mineral Resources. In the third quarter of 2014, a total of 83 reverse circulation drill holes, for a total of 14,408 meters, have been drilled and assayed. Of these, 56 drill holes intercepted gold mineralization exceeding Mineral Resources cut-off grade and width criteria. Selected results from the first 76 holes of this program were released to market on October 15, 2014. As a result of the encouraging intercepts, the exploration drill program for 2014 has been extended to a total of 23,900 meters, with a focus on the 5N and 8S areas.


5.	REVIEW OF PROJECTS

Pitarrilla, Mexico

Capitalized expenditures at the Pitarrilla project during the third quarter of 2014 amounted to $0.8 million compared to $2.1 million in the same period of 2013.

Project activities during the first nine months of 2014 have been limited to surface rights acquisition, review of alternative development options and meeting commitments to local communities in the project area.

We have commenced exploration activities on our land holding adjacent to the Pitarrilla deposit, with the view to evaluate the potential for satellite mineralization. This work has defined a number of drill targets which are being evaluated for further work.

The Pitarrilla project remains an important development asset in our portfolio with significant Mineral Resources and Mineral Reserves of silver, lead and zinc and we will continue to evaluate alternative options going forward.

San Luis, Peru

Capitalized expenditures at our wholly-owned San Luis project located in the Ancash Department, Peru, during the three months ended September 30, 2014, amounted to $2.0 million compared to $1.2 million in the comparative period of 2013.

Phase 1 of the initial drill evaluation program in the Bonita Zone comprises 10 diamond drill holes, of which two holes were completed in the third quarter of 2014. These two holes confirm the extension of the mineralized structures to greater than 80 meters below their surface exposures. In the period leading up to the municipal elections, drilling was suspended as issues were raised regarding the application of our exploration agreement to the area required for exploration of the Bonita zone. Elections have now been held and we are in discussions with the community leaders to confirm our agreement and re-commence drilling.


6.	SUMMARIZED FINANCIAL RESULTS

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



	2014						2013							2012
	30-Sep		30-Jun		31-Mar		31-Dec	30-Sep		30-Jun		31-Mar		31-Dec
														(restated)*
	$000s		$000s		$000s		$000s	$000s		$000s		$000s		$000s
Revenue	79,269		64,287		33,736		49,026	43,944		32,654		49,062		86,778
Income (loss) from mine operations	6,258		11,022		5,924		3,985	5,732		(18,971	)	14,438		24,102
Net (loss) income before tax	(14,755	)	(7,225	)	(15,853	)	43,362	(13,793	)	(234,685	)	(4,448	)	(4,788	)
Net (loss) income after tax	(14,665	)	(7,262	)	(16,858	)	29,813	(14,306	)	(235,945	)	(4,559	)	22,948

Basic (loss) earnings per share	(0.18	)	(0.09	)	(0.21	)	0.37	(0.18	)	(2.92	)	(0.06	)	0.28
Diluted (loss) earnings per share	(0.18	)	(0.09	)	(0.21	)	0.37	(0.18	)	(2.92	)	(0.06	)	0.28

Cash and cash equivalents	135,174		102,162		396,413		415,657	401,384		435,805		461,846		366,947
Total assets	1,192,994		1,252,568		1,170,768		1,191,241	1,169,967		1,176,363		1,426,245		1,317,847
Working capital	363,420		427,544		586,979		584,079	608,165		630,414		588,178		350,911
Non-current financial liabilities	194,570		192,050		189,580		187,130	184,791		182,486		180,224		—

* Restated for adoption of IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine.

The volatility in revenue over the past eight quarters has resulted from fluctuations in commodity prices, sales volumes, and certain operational and regulatory circumstances. Except for the effect of the rainy season at the Pirquitas mine on production in the first quarter of each year, there are no significant seasonal fluctuations in the results for the presented periods. In the second and third quarters of 2014, revenue includes $28.0 million and $48.4 million, respectively, of gold revenue generated by the acquired Marigold mine. The average realized silver price per ounce was fairly consistent for the last three quarters following a significant decrease in the second quarter of 2013. Income (loss) from mine operations in the second quarter of 2013 was affected by the write-down of inventory to its net realizable value ("NRV"). Excluding the effect of this inventory write-down, income from mine operations followed a similar trend to revenue over the past eight quarters.

Net income (loss) before tax has fluctuated significantly over the past eight quarters, heavily influenced by significant transactions and commodity prices. In the second and third quarters of 2014, net income includes $2.6 million and $5.3 million, respectively, from the Marigold mine operations. In the first quarter of 2014, we sold the Challacollo project in Chile, generating a gain before tax of $9.2 million. This gain was offset by a significant foreign exchange loss of $15.9 million from the devaluation of the Argentine peso. In the fourth quarter of 2013, we sold the San Agustin project in Mexico, which generated a gain before tax of $64.6 million, and in the second quarter of 2013, impairment charges of $222.3 million were recorded against the carrying value of the Pirquitas mine, assets held for sale and exploration and evaluation assets. In the fourth quarter of 2012, we recorded a $10.8 million impairment on our marketable securities, which was a significant component of the loss recorded.

Three months ended September 30, 2014 compared to the three months ended September 30, 2013

Net loss for the three months ended September 30, 2014, was $14.7 million ($0.18 per share), compared to a net loss of $14.3 million ($0.18 per share) in the same period of 2013. The result in the current period is comparable to the loss in the comparative period of 2013 even though the current loss includes the contribution from the Marigold mine. The following is a summary and discussion of the significant components of income and expenses recorded during the current quarter compared to the same period in the prior year.

In the three months ended September 30, 2014, we recognized revenues from the Pirquitas mine of $30.9 million and from the Marigold mine of $48.4 million. At Pirquitas, we sold 1.9 million ounces of silver and 8.1 million pounds of zinc. Sales recognized in the period realized an average silver price of $19.99 per ounce, excluding the impact of period-end price adjustments. This is compared with the third quarter of 2013, in which we recognized revenues of $43.9 million from the sale of 2.0 million ounces of silver and 5.0 million pounds of zinc. Sales recognized in that period realized an average silver price of $21.38 per ounce. At September 30, 2014, sales contracts for 1.0 million ounces of silver are subject to final price settlement over the next four months. Zinc shipments for the third quarter of 2014 realized an average price of $1.05 per pound, which is 25% higher than in the third quarter of 2013, while the zinc sales volumes were 63% higher than those in the same period in 2013. In addition, price adjustments in the current and the comparative quarter impacted sales at Pirquitas. In the third quarter of 2014, revenue and mine operating earnings were negatively impacted by price adjustments on provisional invoices of $4.3 million, whereas in the third quarter of 2013 revenue and mine operating earnings were positively impacted by such adjustments of $9.3 million.

In the third quarter of 2014, we recognized sales of $48.4 million from the Marigold mine from the sale of 38,245 ounces of gold. Sales recognized in the period realized an average gold price of $1,267 per ounce. We had no results from Marigold in the comparative period.

Cost of sales for the third quarter of 2014 was $73.0 million, which includes $41.8 million from the Marigold mine, compared to $38.2 million in the third quarter of 2013. The resulting income from mine operations was $6.3 million in the third quarter of 2014, compared to income from mine operations of $5.7 million in the third quarter of 2013, resulting in a positive gross margin of 8.4% and 15.0% in the third quarter of 2014 and 2013, respectively. A positive gross margin in the third quarter of 2014 was achieved at Marigold, offsetting the negative gross margin generated at the Pirquitas mine due, in part, to negative price adjustments. On a per unit basis, the cash costs per payable ounce of silver sold from the Pirquitas mine decreased by 8% in the third quarter of 2014 compared to the third quarter of 2013 due to cost savings initiatives implemented over the past year. Additionally, the total costs per payable ounce of silver sold also decreased due to lower depreciation and depletion on a per payable ounce sold basis following the impairment of assets recorded in June 2013.

General and administrative expenses for the three months ended September 30, 2014, of $4.4 million were lower than the $7.3 million recorded in the three months ended September 30, 2013. This decrease is principally due to termination costs that were recorded in the comparative period and lower share-based compensation as a result of share price declines in the current period.

During the third quarter of 2014, we recognized an unrealized loss of $1.2 million on previously impaired marketable securities, no loss was recognized in 2013. During the third quarter of 2014, we also recognized an unrealized loss of $48.0 million on marketable securities in other comprehensive income, resulting from the decrease in market value of available-for-sale securities. In the third quarter of 2013, we recognized a gain of $6.8 million due to an increase in market value of available-for-sale securities.

During the third quarter of 2014, we recorded interest expense and other financing costs of $7.6 million which is mostly attributable to our $265 million of 2.875% convertible senior notes issued in 2013 (the "2013 Notes"). This compares with the $5.2 million recorded in the third quarter of 2013.

We recorded a foreign exchange loss for the three months ended September 30, 2014, of $4.5 million compared to a loss of $7.9 million in the three months ended September 30, 2013. Our main foreign exchange exposures are related to net monetary assets denominated in Argentine pesos, and Canadian and Australian dollars. During the three months ended September 30, 2014, the Argentine peso was relatively stable, devaluing slightly against the U.S. dollar after the announcement of Argentina's credit default. Both the Canadian and Australian dollar also weakened slightly against the U.S. dollar in the current period. In the same period of 2013, the Argentine peso devalued at a higher rate and both the Canadian and Australian dollar significantly weakened against the U.S. dollar.

For the three months ended September 30, 2014, we recorded an income tax recovery of $0.1 million compared to an income tax expense of $0.5 million in the three months ended September 30, 2013. The total tax expense in the quarter consists of a current tax expense of $1.7 million and a deferred tax recovery of $1.8 million. Income tax expense is the result of tax liability from the Nevada Net Proceeds of Mine Tax, gains on the sale of the marketable securities, and payments of interest withholding tax in Argentina. Offsets to the income tax expense items include tax impacts on losses generated through operations and corporate general and administrative expenses a reclassification of the current interest withholding tax expense to a deferred income tax asset on the basis it is scheduled to be utilized against future income taxes as a foreign tax credit.

Nine months ended September 30, 2014, compared to the nine months ended September 30, 2013

The financial results for the nine months ended September 30, 2014, include the results of operations of the Marigold mine for the period from April 1 to September 30, 2014, the period for which we were entitled to all economic benefits of the Marigold mine under the Purchase and Sale Agreement.

Net loss for the nine months ended September 30, 2014, was $38.8 million ($0.48 per share) compared to net loss of $254.8 million ($3.16 per share) in the same period of 2013. This loss in the comparative period of 2013 was primarily due to asset impairment charges and write-downs of $222.3 million. There were no such charges in the nine months ended September 30, 2014. The following is a summary and discussion of the other significant components of income and expenses recorded during the nine months ended September 30, 2014, compared to the same period in the prior year.

In the nine months ended September 30, 2014, we recognized revenues of $100.9 million at Pirquitas and $76.4 million at Marigold, totaling $177.3 million. At Pirquitas, we sold 5.4 million ounces of silver and 23.6 million pounds of zinc. At Marigold, we sold 60,235 ounces of gold. Sales recognized in the period realized an average silver price of $20.05 per payable ounce, excluding the impact of period-end price adjustments, and zinc shipments realized an average price of $0.96 per pound. This compares with the nine months ended September 30, 2013, which recognized revenues from the Pirquitas mine of $125.7 million from the sale of 6.2 million ounces of silver and 9.3 million pounds of zinc. Sales recognized in the comparative period realized an average silver price of $24.71 per ounce, excluding the impact of period-end price adjustments, and zinc shipments realized an average price of $0.86 per pound. The decrease in revenue from the Pirquitas mine in the nine months ended September 30, 2014, compared to the nine months ended September 30, 2013, is primarily driven by the lower volume of silver sold and lower realized silver price in the period. This was partly offset by the high zinc sales in the nine months ended September 30, 2014, and negative period-end price adjustments in the same period of 2013.

Cost of sales for the nine months ended September 30, 2014, was $154.1 million, comprising $66.6 million from the Marigold mine and $87.5 million from the Pirquitas mine, compared to $124.5 million in the nine months ended September 30, 2013, which was all attributable to Pirquitas. The resulting income from mine operations was $23.2 million in the nine months ended September 30, 2014, compared to an income from mine operations of $1.2 million in the nine months ended September 30, 2013, resulting in a positive gross margin of 15% in the nine months ended September 30, 2014, compared to a positive gross margin of 1.0% in the comparative period of 2013. Pirquitas has a higher positive margin in the nine months ended September 30, 2014, mainly due to the $12.2 million write-down of inventory recorded in the nine months ended September 30, 2013. Excluding this write-down, the cost of inventory on a unit basis was consistent.

General and administrative expenses for the nine months ended September 30, 2014, of $15.9 million were lower than the $18.0 million recorded in the nine months ended September 30, 2013. This decrease is principally due to lower termination costs, corporate office costs and share-based payment expenses, which are lower in the nine months ended September 30, 2014, due to a decline in our share price in the period compared to the comparative period.

We incurred business acquisition and integration costs of $5.3 million in the nine months ended September 30, 2014, relating to the acquisition of the Marigold mine. No costs of this nature were incurred in the comparative period in 2013.

During the nine months ended September 30, 2013, we recorded a gain on the derecognition of our investment in associate, Pretium Resources Inc. ("Pretium"), of $22.0 million. This gain arose as a result of the change in accounting treatment for this investment from equity accounting to an available-for-sale financial asset, which occurred during the second quarter of 2013. We also recorded a dilution gain totaling $2.1 million from our investment in Pretium in the nine months ended September 30, 2013. These non-cash gains resulted from Pretium completing several private placements in respect of which we did not participate. There were no such transactions in the nine months ended September 30, 2014.

During the nine months ended September 30, 2014, we recognized a realized loss of $5.2 million and unrealized loss of $3.0 million on marketable securities, compared to $11.0 million of realized loss in the comparative period in 2013. During the nine months ended September 30, 2014, we also recognized an unrealized gain of $3.2 million on marketable securities in other comprehensive income, resulting from an increase in the market value of available-for-sale investments. In the same period of 2013, we recognized a loss of $22.2 million due to a decline in market value of available-for-sale investments.

As partial consideration of the sale of the San Agustin project in December 2013, we received 5.1 million common shares of Argonaut Gold Inc. ("Argonaut"). We hedged 3.6 million shares of our position in Argonaut by entering into equity collars at a floor price of $5.00 per share and a ceiling price of $6.41 per share. All of the hedges matured in the nine month period ended September 30, 2014, and were delivered into upon maturity realizing pre-tax proceeds of $16.8 million. During the period, the value of our Argonaut shares fell by $5.8 million which was recorded as a loss in the condensed consolidated interim statement of loss, but we recognized a partially offsetting derivative gain of $2.8 million as we delivered the Argonaut shares.

For the nine months ended September 30, 2014, we recorded interest expense and other financing costs of $18.1 million compared to $17.9 million for the same period of 2013. The interest was mostly incurred on the 2013 Notes.

We recorded a foreign exchange loss for the nine months ended September 30, 2014, of $22.3 million compared to a loss of $20.9 million in the nine months ended September 30, 2013. Our main foreign exchange exposures are related to net monetary assets denominated in Argentine pesos and Canadian and Australian dollars. During the nine months ended September 30, 2014, this loss largely resulted from the Argentine peso weakening against the U.S. dollar, notably with a single devaluation event of approximately 25% in January 2014. Also, the Canadian dollar weakened against the U.S. dollar in the period. In the nine months ended September 30, 2013, the Argentine peso devalued, however at a slower rate, and both the Canadian and Australian dollar weakened against the U.S. dollar.

For the nine months ended September 30, 2014, we recorded an income tax expense of $1.0 million compared to $1.9 million in the nine months ended September 30, 2013. In the nine months ended September 30, 2014, the tax expense was primarily the result of the taxable sale of the Challacollo project in Chile, the taxable sale of marketable securities, payment of interest withholding tax in Argentina, and Nevada Net Proceeds Tax on Marigold mine income. The income tax expenses are offset by the losses generated through operations and corporate general and administrative expenses. Additionally, unused foreign tax credits result in a reduction of the income tax expense. In the nine months ended September 30, 2013, as a result of the impairment at the Pirquitas mine, there was a reversal of our previously recognised deferred income tax assets, resulting in a reduction of the income tax expense.


7.	LIQUIDITY

At September 30, 2014, we had $135.2 million of cash and cash equivalents, a decrease of $280.5 million from December 31, 2013. The decrease in cash primarily resulted from the cash payment of $267.7 million for the Marigold mine, as well as pledging $17.0 million as cash collateral to support certain reclamation obligations and a loan facility in Argentina.

We manage our liquidity position with the objectives of ensuring sufficient funds available to meet planned operating requirements and providing support to fund strategic growth initiatives. During 2014, our cash position was materially reduced by the cash acquisition of the Marigold mine. In addition to cash flows from operations, we have supplemented our liquidity position by the strategic divestiture of certain mineral property assets, and sales of certain marketable securities. We also arranged a $7.5 million Argentine pesos denominated loan facility in Argentina, although none was drawn as at September 30, 2014.

In the nine months ended September 30, 2014, we generated $5.1 million of cash flows from operating activities and used $279.9 million in investing activities, including $267.7 million relating to the Marigold mine acquisition. Cash flows from investing activities comprised outflows of $59.5 million on capital expenditures, exploration and development projects, deferred stripping and VAT payments and $16.8 million of taxes paid in relation to the sale of the San Agustin and Challacollo projects. Cash inflows comprised $7.5 million of proceeds from the sale of the Challacollo project, $10.0 million of deferred consideration from the sale of the San Agustin project, $39.3 million in proceeds from the disposal of marketable securities, $23.2 million of VAT recoveries in Argentina and $1.6 million of interest income. We also incurred foreign exchange losses of $5.7 million, before impacts of interest earned, on our foreign cash balances, primarily in Argentina.

Of the cash and cash equivalents balance, $145.1 million was held in Canada, the United States, Europe and Australia. Approximately $48.0 million is invested in short term investments under our investment policy with maturities of 90 days or less providing us with sufficient liquidity to meet corporate needs. At September 30, 2014, we held $6.2 million cash in Argentina.The government of Argentina's regulation of U.S. dollar inflows and outflows restricts our ability to repatriate cash generated by the Pirquitas mine, but we continue to repatriate cash from Argentina under a fixed schedule of debt repayments.

At September 30, 2014, compared to December 31, 2013, our working capital position decreased from $584.1 million to $363.4 million, principally, as a result of the acquisition of the Marigold mine for cash.

Our cash balance at September 30, 2014, along with projected operating cash flows are expected to be sufficient to fund planned exploration, development and corporate activities over the next twelve months from the date of this MD&A. We are continuing our cost reduction strategy to preserve capital throughout the organization and to discharge liabilities as they become due, while implementing various optimization activities at Marigold to improve cash generating capacity of that mine.


8.	CAPITAL RESOURCES

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



	September 30		December 31
	2014		2013
	$000s		$000s
Shareholders' equity	707,034		707,034
Convertible notes	194,570		187,130
	901,604		894,164

Less: cash and cash equivalents	(135,174	)	(415,657	)
	766,430		478,507

At September 30, 2014, there was no externally imposed capital requirement to which we are subject and with which we had not complied.

As at September 30, 2014, we had 80,754,434 common shares outstanding and 2,407,311 stock options outstanding which are exercisable into common shares at exercise prices ranging between C$7.26 and C$28.78.

Outstanding share data

The authorized capital consists of an unlimited number of common shares without par value. As at November 5, 2014, the following common shares and options were outstanding:



	Number of shares	Exercise price	Remaining life
		C$	(years)
Capital stock	80,754,434
Stock options	2,407,311	7.26 - 28.78	3.3 - 6.6
Fully diluted	83,161,745


9.	FINANCIAL INSTRUMENTS AND RELATED RISKS

We are exposed to a variety of financial risks as a result of our operations, including market risk (which includes price risk, currency risk and interest rate risk), credit risk and liquidity risk. Our overall risk management strategy seeks to reduce potential adverse effects on our financial performance. Risk management is carried out under policies approved by our Board of Directors.

We may, from time to time, use foreign exchange contracts, equity contracts, commodity price contracts and interest rate swaps to manage our exposure to fluctuations in foreign currency, securities held, metal prices and interest rates. We do not have a practice of trading derivatives. Our use of derivatives is limited to specific programs to manage these risks, which are subject to the oversight of our Board of Directors.

The risks associated with our financial instruments, and the policies on how we mitigate those risks are set out below. This is not intended to be a comprehensive discussion of all risks.


a)	Market Risk

This is the risk that the fair values of financial instruments will fluctuate owing to changes in market prices. The significant market risks to which we are exposed are price risk, currency risk and interest rate risk.

(i) Price Risk

This is the risk that the fair values or future cash flows of our financial instruments will fluctuate because of changes in market prices. Income from mine operations in the next year depends on the metal prices for silver and gold, and to a lesser extent, zinc. These prices are affected by numerous factors that are outside of our control such as:

▪global or regional consumption patterns;

▪the supply of, and demand for, these metals;

▪speculative activities;

▪the availability and costs of metal substitutes;

▪inflation; and

▪political and economic conditions, including interest rates and currency values.

The principal financial instrument that we hold which is impacted by commodity prices is the embedded derivative within trade receivables. The majority of our metal concentrate sales agreements are subject to pricing terms that settle within one to three months after delivery of concentrate, and this adjustment period represents our trade receivable exposure to variations in commodity prices.

We have not hedged the price of silver or gold as part of our overall corporate strategy though we may time the sale of products based on our outlook for near term metal price performance.

We hold certain investments in marketable securities which are measured at fair value, being the closing price of each equity investment at the balance sheet date. We are exposed to changes in share prices which would result in gains and losses being recognized in income or other comprehensive income. During the first quarter of 2014, we entered into certain equity collars to reduce our exposure to share price changes in certain marketable securities. In the nine months ended September 30, 2014, we recognized an unrealized gain of $2.8 million on those equity collars and as of September 30, 2014, there were no collars outstanding.

(ii) Currency Risk

Currency risk is the risk that the fair values or future cash flows of our financial instruments will fluctuate because of changes in foreign currency rates. Our financial instruments are exposed to currency risk where those instruments are denominated in currencies that are not the same as their functional currency; exchange gains and losses in these situations impact earnings.

We monitor and manage this risk with the objective of ensuring our group-wide exposure to negative fluctuations in currencies against the U.S. dollar is managed. As at September 30, 2014, we have not entered into any derivatives to mitigate this risk.

The Argentine government requires the repatriation of export revenues into Argentina and immediate conversion into Argentine pesos and, therefore, when cash flows exceed our current cash repatriation schedule, the result is an increase to our Argentine peso cash balance. In Argentina, the official published Argentine peso exchange rate is significantly lower than the parallel market rate (also referred to as the blue rate). We use the official Argentine peso exchange rate for all re-measurement purposes which is consistent with the economic reality that foreign currency transactions entered into or paid out of Argentina are required to be converted at the official exchange rate. A devaluation of the Argentine peso to a rate closer to the parallel market rate would materially impact the value of our Argentine peso denominated cash funds and VAT receivables when reported in U.S. dollars, but would improve our operating costs in U.S. dollars, all else being equal. We are repatriating cash from Argentina under a fixed schedule of debt repayments and are actively seeking ways to mitigate the risk on our remaining inventory and cash balance of a devaluation of the Argentine peso.

During the first quarter of 2014, the Argentine peso saw a significant devaluation, well above the pace of devaluation through 2013, as the Argentine government reduced intervention and relaxed capital controls in January 2014. The devaluation has reduced the value of our Argentine peso-denominated assets, principally cash and VAT receivables, and decreased our Argentine peso-denominated liabilities, principally accounts payable, when expressed in U.S. dollars, our reporting currency. This resulted in a material foreign exchange loss recorded in the three months ended March 31, 2014, mainly from our VAT receivable asset. Since the January devaluation, the Argentine peso exchange rate had a gradual weakening trend with foreign exchange loss recorded in the third quarter of 2014 of $4.5 million. While actions have been taken to curb inflation, recent estimates indicate inflation remains in the range of 1.5-3% per month.

(iii) Interest Rate Risk

Interest rate risk is the risk that the fair values or future cash flows of our financial instruments will fluctuate because of changes in market interest rates. Interest rate risk mainly arises from the interest rate impact on our cash and cash equivalents and the Argentine pesos denominated loan facility in Argentina, because they are the only financial instruments we hold that are impacted by interest based on variable market interest rates. Our 2013 Notes have fixed interest rates and are not exposed to fluctuations in interest rates; a change in interest rates would impact the fair value of the instruments, but because we record our 2013 Notes at amortized cost, there would be no impact on our financial results. We monitor our exposure to interest rates closely and have not entered into any derivative contracts to manage our risk.

There has been no significant change in our objectives and policies for managing this risk and no significant change in our exposure to this risk during the nine months ended September 30, 2014.


b)	Credit Risk

Credit risk is the risk that a third party might fail to discharge its obligations under the terms of a financial contract. Our credit risk is limited to the collectibility of trade receivables in the ordinary course of business and the quality of our financial investments.

Credit risk related to financial institutions and cash deposits: Under our investment policy, investments are made only in highly rated financial institutions, corporate and government securities. We consider the risk of loss associated with investments to be low.

Credit risk related to trade receivables: We are exposed to credit risk through our trade receivables on concentrate sales, which are principally with internationally-recognized counterparties. Payments of receivables are scheduled, routine and received within a contractually agreed time frame. We manage risk on concentrate sales by requiring provisional payments of at least 70 percent of the value of the concentrate shipped and through utilizing multiple counterparties.

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

We also have credit risk through our significant VAT receivable balance that is collectible from the government of Argentina. The balance is expected to be recoverable in full, however due to legislative rules and the complex collection process, a significant portion of the asset is classified as non-current until government approval of the recovery claim is provided. During 2013, we experienced significant delays in the approval and recovery processes, but have experienced improved response to applications in 2014 and have collected $23.2 million year to date. We continue to engage actively with the Argentina tax authorities to expedite VAT approvals and recoveries.


c)	Liquidity Risk

Liquidity risk is the risk that we will not be able to meet our financial obligations as they fall due. We manage our liquidity risk through a rigorous planning and budgeting process, which is reviewed and updated on a regular basis, to help determine the funding requirements to support our current operations, expansion and development plans, and by managing our capital structure. Our objective is to ensure that there are sufficient committed financial resources to meet our business requirements for a minimum of twelve months.

Argentine government regulation of U.S. dollar inflows and outflows restricts the ability to repatriate cash generated by the Pirquitas mine, although we are repatriating cash from Argentina under a fixed schedule of debt repayments, which has an impact on overall corporate liquidity.

A detailed discussion of our liquidity position as at September 30, 2014, is included in section 7 of this MD&A.

In our opinion, working capital at September 30, 2014, together with future cash flows from operations is sufficient to support our commitments through the next twelve months from the date of this MD&A.

We have no off balance sheet arrangements.


10.	OTHER RISKS AND UNCERTAINTIES

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

For a comprehensive list of the risks and uncertainties affecting our business, please refer to the section entitled "Risk Factors" in our Annual Information Form for the year ended December 31, 2013, which is available at www.sedar.com,

and our Form 40-F for the year ended December 31, 2013, which is available on the EDGAR section of the SEC website at www.sec.gov.


11.	RELATED PARTY TRANSACTIONS

We did not enter into any related party transactions during the nine months ended September 30, 2014.


12.	NON-GAAP FINANCIAL MEASURES

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

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

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

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



	Q3		Q2		Q1		Q4		Q3
	2014		2014		2014		2013		2013
	$000s		$000s		$000s		$000s		$000s
Pirquitas mine
Cost of sales (A)	31,182		28,503		27,812		45,041		38,212
Add: Treatment and refining costs	3,734		4,296		3,148		4,938		3,190
Less: By-product revenue	(6,166	)	(3,540	)	(6,314	)	(9,430	)	(2,146	)
Less: Restructuring costs	—		—		—		(815	)	(653	)
Total Costs	28,750		29,259		24,646		39,734		38,603

Less: Depreciation, depletion and amortization	(5,640	)	(6,037	)	(5,080	)	(10,703	)	(10,748	)
Less: Export duties on silver concentrate	(2,581	)	(1,418	)	(2,080	)	(2,726	)	(3,638	)
Cash Costs	20,529		21,804		17,486		26,305		24,217


Marigold mine
Cost of sales (B)	41,829		24,762		—		—		—
Add: Treatment and refining costs	34		37		—		—		—
Less: By-product revenue	(11	)	(13	)	—		—		—
Total Costs	41,852		24,786		—		—		—

Less: Depreciation, depletion and amortization	(3,741	)	(704	)	—		—		—
Cash Cost	38,111		24,082		—		—		—

Cost of sales, per consolidated statement of (loss) income (A+B)	73,011		53,265		27,812		45,041		38,212


Pirquitas mine
Payable ounces of silver sold (oz)	1,680,502		1,790,117		1,415,114		2,237,943		1,817,769
Total Costs per silver ounce ($/oz)	17.11		16.34		17.42		17.75		21.24
Cash Costs per silver ounce ($/oz)	12.22		12.18		12.36		11.75		13.32

Marigold mine
Payable ounces of gold sold (oz)	38,218		21,836		—		—		—
Total Costs per gold ounce ($/oz)	1,095		1,135		—		—		—
Cash Costs per gold ounce ($/oz)	997		1,103		—		—		—

Precious metals equivalency
Total cash cost (for all metals produced)	58,640		45,886		17,486		26,305		24,217
Equivalent payable silver ounces sold ⁽¹⁾	4,102,646		3,200,587		1,415,114		2,237,943		1,817,769
Cash Cost per equivalent silver ounces sold	14.29		14.34		12.36		11.75		13.32

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

Non-GAAP financial measures - realized metal prices

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

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

We have included the non-GAAP financial performance measures of adjusted net income (loss) and adjusted basic earnings (loss) per share. We believe that, in addition to conventional measures prepared in accordance with GAAP, certain investors may want to use this information to evaluate our performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

The following table provides a reconciliation of adjusted net loss to the condensed consolidated interim financial statements for the three and nine months ended September 30:



	Three month ended September 30				Nine months ended September 30
	2014		2013		2014		2013
	$000s		$000s		$000s		$000s

Net (loss) attributable to shareholders	(14,665	)	(14,306	)	(38,785	)	(254,810	)

Adjusted for:
Gain on sale and write down of mineral properties, net of tax	—		—		(7,100	)	—
Business acquisition costs	263		—		5,299		—
Associate accounting	—		—		—		(23,038	)
Write-down of inventory to NRV, net of tax	—		—		—		7,926
Asset impairment, net of tax	—		619		—		206,956
(Gain) loss on marketable securities	(1,202	)	—		3,038		11,022
Other	37		448		—		784

Adjusted net (loss)	(15,567	)	(13,239	)	(37,548	)	(51,160	)

Weighted average shares outstanding (000s)	80,754		80,755		80,754		80,753

Adjusted basic (loss) per share ($)	(0.19	)	(0.16	)	(0.46)		(0.63)


13.	CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Basis of preparation and accounting policies

Our condensed consolidated interim financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting as issued by the International Accounting Standards Board ("IASB"). The comparative information has also been prepared on this basis, with the exception of certain items, details of which are given below, for which comparative information has been restated. The policies applied in our condensed consolidated interim financial statements are based on IFRS interpretations and the condensed consolidated interim financial statements were approved on November 5, 2014, by our Board of Directors. Note 2 of the audited consolidated financial statements for the year ended December 31, 2013 provides details of significant accounting policies and accounting policy decisions for significant or potentially significant areas that have had an impact on our financial statements or may have an impact in future periods.

Following the completion of the acquisition of the Marigold mine on April 4, 2014, we have applied the following new accounting policies that were not previously applicable to our business. All other accounting policies applicable

to the Marigold mine are consistent with those disclosed in our audited consolidated financial statements for the year ended December 31, 2013.

Business combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred. The results of businesses acquired during the period are included in the consolidated financial statements from the effective date of acquisition. The identifiable assets, liabilities and contingent liabilities of the businesses which can be measured reliably are recorded at provisional fair values at the date of acquisition. Provisional fair values are finalized within 12 months of the acquisition date. Acquisition-related costs are expensed as incurred. Measurement period adjustments are adjustments that arise from additional information obtained during the “measurement period” (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

Revenue recognition for gold doré and bullion sales

Revenue from the sale of gold doré and bullion is recognized when the significant risks and rewards of ownership have passed to the buyer; it is probable that economic benefits associated with the transaction will flow to us; the sale price can be measured reliably; we have no significant continuing involvement; and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Typically, this is on the trade settlement date when funds are received.

Leach pad inventory

The recovery of gold and by-products from oxide ore is achieved through a heap leaching process. Under this method, ore is stacked on leach pads and treated with a chemical solution that dissolves the gold contained within the ore. The resulting pregnant solution is further processed in a plant where the gold is recovered in doré. Costs are included in heap leach ore inventory based on current mining and leaching costs, including applicable depreciation and depletion of mineral properties, and removed from heap leach ore inventory as ounces of gold are recovered at the average cost per recoverable ounce of gold on the leach pads. Estimates of recoverable gold on the leach pads are calculated based on the quantities of ore placed on the leach pads (measured tonnes added to the leach pads), the grade of ore placed on the leach pads (based on assay data), and a recovery percentage.

Property, plant and equipment

The following significant classes of depreciable plant and equipment were acquired with Marigold mine and their estimated useful lives are as follows:



Buildings	life of mine
Mobile equipment components	3 to 15 years

Pronouncements affecting our financial statements presentation or disclosure

The following new and amended IFRS pronouncements were adopted during the nine months ended September 30, 2014:

Levies imposed by governments

IFRIC 21, Levies (“IFRIC 21”), an interpretation of IAS 37, Provisions, Contingent Liabilities and Contingent Assets (“IAS 37”), on the accounting for levies imposed by governments, was effective for annual periods beginning on January 1, 2014. IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for the entity to have a present obligation as a result of a past event (“obligating event”). IFRIC 21 clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. This did not have any significant impact on our current accounting for levies imposed by governments.

Impairment of assets

IAS 36, Impairment of assets, was amended to clarify disclosure requirements when recoverable amount is determined based on fair value less costs of disposal. The amendment was effective for annual periods beginning on January 1, 2014 and does not have a material impact on our consolidated financial statements.

Critical Accounting Estimates and Judgments

The preparation of financial statements in conformity with IFRS requires the use of judgments and/or estimates that affect the amounts reported and disclosed in the condensed consolidated interim financial statements and related notes. There have been no significant changes to our significant accounting judgments and estimates from those disclosed in note 2 of the audited consolidated financial statements for the year ended December 31, 2013 other than those which related to the sale of the Challacollo project and the acquisition of the Marigold mine, as discussed below.

Deferred consideration

During the nine months ended September 30, 2014, we completed the sale of our 100% interest in the Challacollo project of which a portion of sale consideration is deferred. The deferred consideration is dependent on various uncertain events and assumptions, including estimation of the year in which commercial production may be reached, the share price of Mandalay Resources Corporation for the deferred shares, and the price of silver for the deferred silver bullion. The fair value of the deferred consideration is determined by considering various scenarios of discounting the expected cash flows using a risk-adjusted discount rate and applying probability aspects to the cash flows.

Acquisition of the Marigold mine

Judgment is required to determine whether we acquired a business under the definition of IFRS 3, Business combinations, and also the acquisition date when we obtained control over the Marigold, which was the date that consideration is transferred and when we assumed the assets and liabilities.

Business combinations are accounted for using the acquisition method whereby identifiable assets acquired and liabilities assumed, including contingent liabilities, are recorded at their fair values at the date of acquisition. The valuation of certain assets and liabilities requires significant management estimates and judgment. The value of the leach pad inventory requires an estimation of recoverable ounces, production profile, future metal prices and estimation of costs to complete the production process. Property, plant and equipment requires judgment over the appropriate fair value methodology to appraise the assets and various assumptions around estimated useful lives and current replacement costs. The mineral property valuation is based upon estimates of Mineral Reserves and Mineral Resources used in the life of mine plan, as well as estimates of future metal prices, production, costs, and economic assumptions around inflation rates and discount rates.

Cost of sales and valuation of leach pad inventory

In determining cost of sales recognized in the consolidated statements of loss, we make estimates of quantities of ore stacked on leach pads and in process, and the recoverable gold in this material to determine the average costs of inventory sold during the period. Changes in these estimates can result in a change in cost of sales of future periods and carrying amounts of inventory.

Estimated recoverable ounces

The carrying amounts of our mineral properties are depleted based on recoverable ounces contained in proven and probable Mineral Reserves. Changes to estimates of recoverable ounces and depletable costs including changes resulting from revisions to our mine plans and changes in metal price forecasts can result in a change to future depletion rates. During the third quarter of 2014, Marigold completed a new life of mine plan and updated Mineral

Reserves estimates. This new life of mine plan was used as the basis for the units of production depletion and depreciation, as well as deferred stripping calculation, all with prospective application.


14.	FUTURE ACCOUNTING CHANGES

A number of new standards and amendments to standards and interpretations have been issued but are net yet effective. None of these is expected to have a significant effect on our consolidated financial statements, except the following:

IFRS 8, Operating segments

IFRS 8, Operating segments, was amended to require disclosure of the judgments made by management in aggregating operating segments, including a description of the segments which have been aggregated and the economic indicators which have been assessed in determining that the aggregated segments share similar economic characteristics. The amendment was effective for annual periods commencing on or after July 1, 2014.

IFRS 15, Revenue from contracts with customers

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

IFRS 9, Financial Instruments: Classification and Measurement

IFRS 9, Financial Instruments: Classification and Measurement ("IFRS 9") as issued, reflects the first phase of the IASB’s work on the replacement of IAS 39 Financial Instruments: Recognition and Measurement ("IAS 39") and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. The standard was initially effective for annual periods beginning on or after January 1, 2013, but IFRS 9 Financial Instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39), issued in November 2013, moved the mandatory effective date to January 1, 2018.

In subsequent phases, the IASB will address hedge accounting and impairment of financial assets. We will quantify the effect in conjunction with the other phases, when the final standard, including all phases, is issued.

Amendments

Amendments to standards and interpretations include the following:

IFRS 7, Financial instruments: Disclosure: Amended to require additional disclosures on transition from IAS 39 to IFRS 9. Effective on adoption of IFRS 9, which is effective for annual periods commencing on or after January 1, 2018.

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


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

Management is responsible for establishing and maintaining adequate internal control over financial reporting ("ICFR") and disclosure controls and procedures ("DC&P"). Any system of internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. There have been no changes in our ICFR or DC&P during the nine months ended September 30, 2014, other than the acquisition of

the Marigold mine, that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.

The scope of our design of DC&P and ICFR for the period covered by this report excludes the Marigold mine. We completed the acquisition of the Marigold mine on April 4, 2014, and proceeded to integrate the operations and administration of the acquired operation immediately thereafter. Although the Marigold mine is currently subject to similar controls as our other operations for the consolidation and financial reporting of period-end results, we will formally expand our DC&P and ICFR to include the Marigold mine in the first quarter of 2015. The Marigold mine's operations represent $308.7 million of net assets (38.1%), $48.4 million and $76.4 million of consolidated revenues for the three and nine months ended September 30, 2014, respectively (61% and 59% for the three and nine months ended September 30, 2014, respectively), and $5.0 million and $7.6 of net earnings as at and for the three and nine months ended September 30, 2014, respectively.


16.	CAUTIONARY NOTES REGARDING FORWARD-LOOKING STATEMENTS AND MINERAL RESERVE AND MINERAL RESOURCE ESTIMATES

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

Generally, forward-looking statements can be identified by the use of words or phrases such as “expects,” “anticipates,” “plans,” “projects,” “estimates,” “assumes,” “intends,” “strategy,” “goals,” “objectives,” “potential,”

or variations thereof, or stating that certain actions, events or results “may,” “could,” “would,” “might” or “will” be taken, occur or be achieved, or the negative of any of these terms or similar expressions. The forward-looking statements in this MD&A relate to, among other things: our ability to successfully integrate announced acquisitions, including the Marigold mine acquisition; future production of silver, gold and other metals; future costs of inventory and cash costs per payable ounce of silver, gold and other metals; the prices of silver, gold and other metals; the effects of laws, regulations and government policies affecting our operations or potential future operations; future successful development of our projects; the sufficiency of our current working capital, anticipated operating cash flow or our ability to raise necessary funds; estimated production rates for silver, gold and other metals produced by us; timing of production and the cash and total costs of production at the Pirquitas mine and the Marigold mine; the estimated cost of sustaining capital; ongoing or future development plans and capital replacement, improvement or remediation programs; the estimates of expected or anticipated economic returns from our mining projects including future sales of metals, concentrates or other products produced by us; and our plans and expectations for our properties and operations.

These forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those expressed or implied, including, without limitation, the following: uncertainty of production, development plans and cost estimates for the Pirquitas mine, the Marigold mine, the Pitarrilla project and the San Luis project; future development risks, including start-up delays and operational issues; our ability to replace Mineral Reserves; our ability to complete and successfully integrate an announced acquisition, including the Marigold mine acquisition; our ability to obtain adequate financing for further exploration and development programs; commodity price fluctuations; political or economic instability and unexpected regulatory changes; currency fluctuations, particularly the value of the Argentine peso against the U.S. dollar; the possibility of future losses; general economic conditions; the recoverability of our interest in Pretium and our other marketable securities, including the price of and market for Pretium’s common shares and such other marketable securities; potential export duty on current and past production of silver concentrate from the Pirquitas mine; recoverability and tightened controls over the VAT collection process in Argentina; counterparty and market risks related to the sale of our concentrates and metals; differences in U.S. and Canadian practices for reporting Mineral Reserves and Mineral Resources; uncertainty in the accuracy of Mineral Reserves and Mineral Resources estimates and in our ability to extract mineralization profitably; uncertainty in acquiring additional commercially mineable mineral rights; lack of suitable infrastructure or damage to existing infrastructure; delays in obtaining or failure to

obtain governmental permits, or non-compliance with permits we have obtained; governmental regulations, including health, safety and environmental regulations, increased costs and restrictions on operations due to compliance with such regulations; reclamation requirements for our exploration properties; unpredictable risks and hazards related to the development and operation of a mine or mine property that are beyond our control; compliance with anti-corruption laws and increased regulatory compliance costs; complying with emerging climate change regulations and the impact of climate change; uncertainties related to title to our mineral properties and the ability to obtain surface rights; recoverability of deferred consideration to be received in connection with recent divestitures; our insurance coverage; civil disobedience in the countries where our properties are located; operational safety and security risks; actions required to be taken by us under human rights law; our ability to access, when required, mining equipment and services; competition in the mining industry for properties; our ability to attract and retain qualified personnel and management and potential labour unrest, including labour actions by our unionized employees at the Pirquitas mine; shortage or poor quality of equipment or supplies; conflicts of interest that could arise from some of our directors' and officers' involvement with other natural resource companies; claims and legal proceedings, including adverse rulings in current or future litigation against us and/or our directors or officers, and assessments; potential difficulty in enforcing judgments or bringing actions against us or our directors or officers outside Canada and the United States; certain terms of our convertible notes; and those other various risks and uncertainties identified under the heading “Risk Factors” in our most recent Form 40-F filed with the SEC and Annual Information Form filed with the Canadian securities regulatory authorities.

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

Cautionary Note Regarding Mineral Reserves and Mineral Resources Estimates

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

SSR Mining (SSRM) 6-KCondensed Consolidated Interim Financial Statements