Silver Standard Resources, Inc.
SILVER STANDARD RESOURCES INC (Form: 6-K, Received: 11/06/2013 12:59:27)


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

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For November 5, 2013
Commission File Number: 000-26424
SILVER STANDARD RESOURCES INC.
(Translation of registrant's name into English)

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

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

[ ] Form 20-F   [x] Form 40-F

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

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

SIGNATURES

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

 
Silver Standard Resources Inc.
 
(Registrant)
 
 
 
Date: November 5, 2013
By:
Signed: “Gregory Martin”
 
 
Gregory Martin
 
Title:
Chief Financial Officer






SUBMITTED HEREWITH

Exhibits

 
 
 
 
 
 
 
 






Silver Standard Resources Inc.
Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2013
(unaudited)






Silver Standard Resources Inc.
Condensed Consolidated Interim Financial Statements for the three and nine months ended
September 30, 2013

CONTENTS
 
Financial Statements
 
 
 
 
 
 
 
 
 
 
Notes to the Condensed Consolidated Interim Financial Statements
 
 
 
 
 
 
 
Statements of Financial Position
 
 
 
Note 5 – Investment in associate  and Marketable Securities
 
 
 
 
 
 
Statements of Shareholders’ Equity
 
 
 
 
Statements of (Loss) Income
 
Note 10 – Cost of sales  and restructuring costs
 
 
 
 
Additional Disclosures
 
 
 
 



2 | Page


Silver Standard Resources Inc.
Condensed Consolidated Interim Statements of Financial Position
(expressed in thousands of United States dollars - unaudited)

 
Note
September 30

December 31

 
 
2013

2012

 
 
 
(restated note 2b)

 
 

$

Current assets
 
 
 
Cash and cash equivalents
 
401,384

366,947

Trade and other receivables
6
81,361

83,454

Marketable securities
5
142,774

34,733

Other current assets
3
3,801

6,344

Inventory
4
53,964

74,246

 
 
683,284

565,724

Non-current assets
 
 
 
Property, plant and equipment
7
408,764

580,649

Investment in associate
5

119,632

Deferred income tax assets
 

13,912

Value added tax receivable
6
67,621

37,363

Other non-current assets
3
10,298

7,405

Total assets
 
1,169,967

1,324,685

 
 
 
 
Current liabilities
 
 
 
Trade and other payables
 
75,119

79,007

Convertible notes
8

135,805

 
 
75,119

214,812

Non-current liabilities
 
 
 
Deferred income tax liabilities
 
23,877

17,007

Close down and restoration provision
 
33,256

31,222

Convertible notes
8
184,791


Total liabilities
 
317,043

263,041

 
 
 
 
Shareholders' equity
 
 
 
Share capital
 
707,034

706,901

Other reserves
 
1,626

24,016

Equity component of convertible notes
8
68,347


Retained earnings
 
75,917

330,727

Total shareholders' equity attributable to shareholders of the Company
 
852,924

1,061,644

Total liabilities and equity
 
1,169,967

1,324,685

 
 
 
 
Events after the reporting date (notes 5 and 15)
The accompanying notes are an integral part of the condensed consolidated interim financial statements
Approved by the Board of Directors and authorized for issue on November 5, 2013
"Richard D. Paterson"
 
"John Smith"
Richard D. Paterson, Director
 
John Smith, Director


3 | Page


Silver Standard Resources Inc.
Condensed Consolidated Interim Statements of (Loss) Income
(expressed in thousands of United States dollars, except per share amounts - unaudited)

 
 
Three months ended September 30
 
 
Nine months ended September 30
 
 
Note
2013

2012

 
2013

2012

 
 
 
(restated note 2b)

 
 
(restated note 2b)

 
 
$

$

 
$

$

 
 
 
 
 
 
 
Revenue
 
43,944

73,524

 
125,660

154,342

Cost of sales
10
(38,212
)
(54,113
)
 
(124,461
)
(120,339
)
Income from mine operations
 
5,732

19,411

 
1,199

34,003

 
 
 
 
 
 
 
General and administrative expenses
10
(7,262
)
(4,522
)
 
(18,020
)
(17,778
)
Exploration, evaluation and reclamation expenses
 
(106
)
(4,806
)
 
(2,852
)
(7,972
)
Impairment charges
7


 
(202,440
)

Operating (loss) income
 
(1,636
)
10,083

 
(222,113
)
8,253

 
 
 
 
 
 
 
Gain on partial disposal of associate
 


 

49,082

Gain on derecognition of investment in associate
5


 
21,959


Interest earned and other finance income
 
1,936

827

 
4,209

1,411

Interest expense and other finance costs
 
(5,174
)
(6,563
)
 
(17,854
)
(18,858
)
Other (loss) income
11
(1,067
)
1,787

 
(18,236
)
15,814

Foreign exchange loss
 
(7,852
)
(994
)
 
(20,891
)
(3,884
)
(Loss) income before tax
 
(13,793
)
5,140

 
(252,926
)
51,818

 
 
 
 
 
 
 
Income tax expense
 
(513
)
(6,737
)
 
(1,884
)
(19,434
)
 
 
 
 
 
 
 
Net (loss) income and net (loss) income attributable to shareholders
 
(14,306
)
(1,597
)
 
(254,810
)
32,384

 
 
 
 
 
 
 
Weighted average shares outstanding (thousands)
 
 
 
 
Basic
 
80,755

80,748

 
80,754

80,743

Diluted
 
80,755

80,748

 
80,754

80,757

 
 
 
 
 
 
 
(Loss) earnings per share
 
 
 
 
 
 
Basic
 
$
(0.18
)
$
(0.02
)
 
$
(3.16
)
$
0.40

Diluted
 
$
(0.18
)
$
(0.02
)
 
$
(3.16
)
$
0.40

The accompanying notes are an integral part of the condensed consolidated interim financial statements


4 | Page


Silver Standard Resources Inc.
Condensed Consolidated Interim Statements of Comprehensive (Loss) Income
(expressed in thousands of United States dollars - unaudited)

 
 
Three months ended September 30
 
 
Nine months ended September 30
 
 
Note
2013

2012

 
2013

2012

 
 
 
(restated note 2b)

 
 
(restated note 2b)

 
 
$

$

 
$

$

 
 
 
 
 
 
 
Net (loss) income for the period attributable to shareholders
 
(14,306
)
(1,597
)
 
(254,810
)
32,384

Other comprehensive income (loss)
 
 
 
 
 

 

Items that may be reclassified subsequently to profit or loss:
 
 
 
 
 
 
Unrealized income (loss) on marketable securities, net of tax
 
6,771

10,602

 
(22,209
)
10,548

Realized loss (gain) recycled to net income
 
93


 
(38
)

Share of other comprehensive income (loss) of associate
5

5,477

 
(641
)
5,664

    Cumulative translation adjustment
 
(3
)
376

 
(26
)
727

Total other comprehensive income (loss)
 
6,861

16,455

 
(22,914
)
16,939

Total comprehensive (loss) income attributable to shareholders
 
(7,445
)
14,858

 
(277,724
)
49,323

Total comprehensive (loss) income
 
(7,445
)
14,858

 
(277,724
)
49,323

The accompanying notes are an integral part of the condensed consolidated interim financial statements


5 | Page


Silver Standard Resources Inc.
Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity
(expressed in thousands of United States dollars - unaudited)

 
Note
Common Shares
Other

Equity component of

Retained

Total

 
 
Shares

Amount

reserves

convertible notes

earnings

equity

 
 
 

 

 
 
(restated note 2b)

(restated note 2b)

 
 
000's

$

$

$

$

$

Balance, January 1, 2012
 
80,693

705,876

6,515


271,584

983,975

   Exercise of stock options
9
55

1,025

(407
)


618

   Equity-settled share-based compensation
9


3,269



3,269

Total comprehensive income for the period
 


16,940


32,383

49,323

Balance, September 30, 2012
 
80,748

706,901

26,317


303,967

1,037,185

 
 
 
 
 
 
 
 
Balance, January 1, 2013
 
80,748

706,901

24,016


330,727

1,061,644

   Exercise of stock options
9
7

133

(56
)


77

   Equity-settled share-based compensation
9


580



580

   Equity component of convertible notes
8



68,347


68,347

Total comprehensive loss for the period
 


(22,914
)

(254,810
)
(277,724
)
Balance, September 30, 2013
 
80,755

707,034

1,626

68,347

75,917

852,924

The accompanying notes are an integral part of the condensed consolidated interim financial statements


6 | Page


Silver Standard Resources Inc.
Condensed Consolidated Interim Statements of Cash Flows
(expressed in thousands of United States dollars - unaudited)

 
 
Three months ended September 30
 
 
Nine months ended September 30
 
 
Note
2013

2012

 
2013

2012

 
 
 
(restated note 2b)

 
 
(restated note 2b)

 
 
$

$

 
$

$

Cash flows from operating activities
 
 
 
 
 

 

Net (loss) income for the period
 
(14,306
)
(1,597
)
 
(254,810
)
32,384

Adjustments for:
 
 
 
 
 

 

Depreciation, depletion and amortization
 
9,630

12,538

 
30,141

29,051

Share-based payments
 
138

796

 
432

3,062

Accretion of close down and restoration provision
 
947

1,515

 
2,866

4,683

Impairment charges and inventory write-downs
 


 
214,633


Accretion expense on convertible notes
 
2,306

2,663

 
8,628

7,760

Other loss (income)
 
712

(2,041
)
 
19,454

(15,637
)
Net (gains) on investment in associate
 


 
(24,071
)
(49,082
)
Deferred income tax
 
(217
)
5,919

 
13,732

16,418

Non-cash foreign exchange loss
 
4,913

724

 
9,299

2,930

Net changes in non-cash working capital items
14
(8,816
)
(13,650
)
 
(15,348
)
(12,905
)
 
 
 
 
 
 
 
Cash (used) generated by operating activities
 
(4,693
)
6,867

 
4,956

18,664

 
 
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
 

 

Net proceeds from partial disposal of associate
 


 

71,040

Purchase of property, plant and equipment
 
(10,521
)
(2,174
)
 
(26,619
)
(14,639
)
Mineral property expenditures
 
(7,005
)
(11,520
)
 
(19,090
)
(30,372
)
Net value added tax payments and receipts
 
(5,978
)
14,096

 
(16,192
)
17,098

(Increase) in restricted cash
 
(137
)

 
(137
)
(16,319
)
Proceeds from sale of other investments
 


 

4,853

Production stripping capitalized costs
 
(6,087
)
(5,620
)
 
(26,641
)
(26,558
)
 
 
 
 
 
 
 
Cash (used) generated by investing activities
 
(29,728
)
(5,218
)
 
(88,679
)
5,103

 
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
 

 

Proceeds from issuance of convertible notes
 


 
256,083


Repayment of convertible notes
 


 
(138,000
)

Proceeds from exercise of stock options
 

11

 
77

618

 
 
 
 
 
 
 
Cash generated by financing activities
 

11

 
118,160

618

 
 
 
 
 
 
 
(Decrease) increase in cash and cash equivalents
 
(34,421
)
1,660

 
34,437

24,385

Cash and cash equivalents, beginning of period
 
435,805

351,780

 
366,947

329,055

Cash and cash equivalents, end of period
 
401,384

353,440

 
401,384

353,440


Supplemental cash flow information (note 14)
The accompanying notes are an integral part of the condensed consolidated interim financial statements


7 | Page

Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2013
(tabular amounts expressed in thousands of United States dollars unless otherwise stated - unaudited)


1.
NATURE OF OPERATIONS

Silver Standard Resources Inc. ("we", "us" or "our") is a company incorporated under the laws of the Province of British Columbia, Canada and our shares are publicly listed on the Toronto Stock Exchange in Canada and the NASDAQ Global Markets in the United States. Together with our subsidiaries, we (the “Group”) are principally engaged in the acquisition, exploration, development and operation of silver-dominant resource properties located in the Americas. Silver Standard Resources Inc. is the ultimate parent of the Group.

Our address is Suite 800, 1055 Dunsmuir Street, PO Box 49088, Vancouver, British Columbia, V7X 1G4.

Our strategic focus is to optimize the production of silver from our Pirquitas Mine in Argentina and to advance other principal development projects including Pitarrilla in Mexico and San Luis in Peru. In addition to our principal projects, we hold a geologically-diverse portfolio of other predominantly silver projects in various stages of exploration or technical evaluation.


2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these condensed consolidated interim financial statements are set out below.

a)
Basis of preparation

These condensed consolidated interim financial statements should be read in conjunction with our audited consolidated annual financial statements for the year ended December 31, 2012 .
These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting ("IAS 34") as issued by the International Accounting Standards Board ("IASB") and interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC"). 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 these condensed consolidated interim financial statements are based on International Financial Reporting Standards ("IFRS") interpretations issued and outstanding as of September 30, 2013 , and were approved as of November 5, 2013 , the date the Audit Committee of the Board of Directors approved the statements.

b)
Changes in accounting policies

Pronouncements Affecting Our Financial Results

Effective January 1, 2013, we adopted IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine ("IFRIC 20"). This interpretation applies to waste removal ("stripping") costs during the production phase of a surface mine. The following accounting policy for stripping costs in the production phase of a surface mine has been adopted:

"In surface mining operations, waste material ("overburden") is removed to gain access to mineral ore deposits, which is known as stripping. During the production phase of a mine, where stripping activities result in improved access to ore, we recognize a non-current 'stripping activity asset' ("SAA") when it is probable that the future economic benefit of the improved access will flow to us, the ore to which access has been improved is identifiable, and costs can be reliably measured. Typically identifiable components of an ore body correspond to the phases of a mine plan. Within each identifiable component, the average stripping ratio is determined; the cost of waste removal in excess of the stripping ratio is capitalized as a SAA, and the cost of waste and ore removal in line with the average stripping ratio is recorded to inventory. The SAA is amortized using a unit of production method over the period in which the improved access to the component of the ore body is achieved."



8 | Page

Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2013
(tabular amounts expressed in thousands of United States dollars unless otherwise stated - unaudited)

2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

For the nine months ended September 30, 2013 , deferred stripping costs before depreciation and amortization of $24,196,000 at the Pirquitas Mine met the criteria of IFRIC 20 and were capitalized into property, plant and equipment. The adoption of this standard also requires application on or after the beginning of the earliest period presented. For the year ended December 31, 2012, deferred stripping costs of $40,572,000 at the Pirquitas Mine were capitalized. The prior year comparatives have been restated accordingly.

Adjustments to the consolidated balance sheets:
 
 
Adjustments for changes in accounting policy

 
 
As at
December 31, 2012

IFRIC 20

As at
December 31, 2012

 
(previously stated)

 
(restated)

Inventory (note 4)
108,383

(28,579
)
79,804

Property, plant and equipment
540,077

40,572

580,649

Deferred income tax assets
18,132

(4,220
)
13,912

Deferred income tax liabilities
(13,551
)
(3,456
)
(17,007
)
Net increase in retained earnings
 
4,317

 

Adjustments to the consolidated statements of (loss) income:

 
 
Adjustments for changes in accounting policy

 
For the three months ended September 30
2012

IFRIC 20

2012

 
(previously stated)

 
(restated)

Cost of sales
57,055

(2,942
)
54,113

Income tax expense
4,692

2,045

6,737

Increase in net income
 
(897
)
 
 
 
Adjustments for changes in accounting policy

 
For the nine months ended September 30
2012

IFRIC 20

2012

 
(previously stated)

 
(restated)

Cost of sales
124,870

(4,531
)
120,339

Income tax expense
16,310

3,124

19,434

Increase in net income
 
(1,407
)
 

Pronouncements Affecting Our Financial Statements Presentation or Disclosures

The adoption of the following new and amended IFRS pronouncements has resulted in enhanced financial statement disclosures in our interim or annual consolidated financial statements or a change in financial statement presentation. These pronouncements did not affect our interim financial results and any additional disclosures required by the new pronouncements will be included in our consolidated annual financial statements for the year ended December 31, 2013.



9 | Page

Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2013
(tabular amounts expressed in thousands of United States dollars unless otherwise stated - unaudited)

2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

Disclosure of interest in other entities
IFRS 12, Disclosure of Interests in Other Entities ("IFRS 12") outlines the disclosure requirements for interests in subsidiaries and other entities to enable users to evaluate the risks associated with interests in other entities and the effects of those interests on an entity's financial position, financial performance and cash flows. The requirements of IFRS 12 relate to disclosures only and are applicable for the first annual period after adoption. This will include a non-controlling interest's financial statement note and include summarized financial information for significant associates and joint arrangements.

Fair value measurement
IFRS 13, Fair Value Measurement ("IFRS 13") defines fair value, sets out a single IFRS framework for measuring fair value and outlines disclosure requirements for fair value measurements. IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is a market-based measurement, not an entity-specific measurement, so assumptions that market participants would use should be applied in measuring fair value. The disclosure requirements of IFRS 13 include disclosures about fair values of financial assets and liabilities measured on a recurring basis and a non-financial assets and liabilities measure on a non-recurring basis.

Interim financial reporting
IAS 34 was amended to establish criteria for disclosing total segmented assets and require certain fair value disclosures. We have incorporated the required fair value disclosures in note 13 of our condensed consolidated interim financial statements for the period ending September 30, 2013 . The disclosures included are based on the requirements of IFRS 13 discussed above.

Levies imposed by governments
In May 2013, the IASB issued 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. 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. IFRIC 21 is effective for annual periods commencing on or after January 1, 2014. We are currently evaluating the impact the final interpretation is expected to have on our consolidated financial statements.
c)
Significant accounting judgments and estimates

The preparation of financial statements in conformity with IFRS requires the use of judgments and/or estimates that affect the amounts reported and disclosed in the 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 annual financial statements for the year ended December 31, 2012, except for certain new estimates and judgments that have been applied as a result of the adoption of IFRIC 20 on January 1, 2013 and the change in accounting treatment for our investment in Pretium Resources Inc. ("Pretium").

As a result of the adoption of IFRIC 20, we are required to determine whether stripping costs incurred during the production phase of a surface mining operation provide improved access to a component of an ore body that will be mined in a future period, and whether the costs can be reliably measured. We have to apply judgment when identifying components of the mine over which stripping costs are capitalized, estimate the average stripping ratio for each component, and use judgment determining the period over which the SAA is amortized.

During the second quarter of 2013, we determined that we no longer exert significant influence over our investment in Pretium. As a result, effective May 10, 2013 we changed our accounting treatment from equity accounting to accounting for this investment as an available-for-sale financial asset. The determination of the accounting treatment for this investment requires us to exercise significant judgment.




10 | Page

Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2013
(tabular amounts expressed in thousands of United States dollars unless otherwise stated - unaudited)

3.
OTHER ASSETS

 
September 30, 2013
 
December 31, 2012
 
 
Current

Non-current

Current

Non-current

 
$

$

$

$

 
 
 
 
(restated note 2b)

Financial assets:
 
 
 
 
Restricted cash  (a)

1,984


1,847

Assets held for sale (b)
3,801


6,344


 
3,801

1,984

6,344

1,847

Other assets:
 
 
 
 
Non-current inventory (note 4)

8,314


5,558

 
3,801

10,298

6,344

7,405


(a)
We have restricted cash deposits in relation to close down and restoration provisions.

(b)
We classify two ball mills as assets held for sale. Following the decline in realizable value during the nine months ended September 30, 2013 , we recognized an impairment loss of $3,875,000 (note 11).


4.
INVENTORY

 
September 30, 2013

December 31, 2012

 

$

 
 
(restated note 2b)

Current:
 
 
Finished goods
24,599

28,748

Stockpiled ore
14,116

26,318

Materials and supplies
15,249

19,180

 
53,964

74,246

Non-current inventory (1)
8,314

5,558

 
62,278

79,804


(1)  
We hold low grade stockpiled ore that is expected to be processed at the end of the life of the mine and also supplies expected to be used after one year, both are therefore classified as non-current assets. As of September 30, 2013 , non-current inventory consisted of stockpiled ore of $4,200,000 ( December 31, 2012 - $5,558,000) and materials and supplies of $4,114,000 ( December 31, 2012 - nil).

At each reporting date we assess whether the carrying value of our inventory exceeds its Net Realizable Value ("NRV"), and at June 30, 2013 we recorded a NRV write-down of stockpiled ore of $12,193,000 (2012 - nil). There were no further NRV write-downs of stockpiled ore during the three months ended September 30, 2013 . Inventory held at NRV at September 30, 2013 was $17,831,000 ( December 31, 2012 - $4,810,000).
  



11 | Page

Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2013
(tabular amounts expressed in thousands of United States dollars unless otherwise stated - unaudited)

5.
INVESTMENT IN ASSOCIATE AND MARKETABLE SECURITIES

Our investment in Pretium comprises the following:
 
September 30, 2013

December 31, 2012

 
No. of shares

No. of shares

Common shares of Pretium Resources Inc.
18,985,807

18,985,807


For the nine months ended September 30, 2013 and the year ended December 31, 2012 , the movement in our investment in Pretium Resources Inc. was as follows:
 
September 30, 2013

December 31, 2012

 
$

$

Carrying amount, beginning of period
119,632

136,342

Partial disposition

(33,052
)
Dilution gain
2,112

15,839

Share of net loss
(1,033
)
(3,409
)
Share of other comprehensive (loss) income
(641
)
3,912

Derecognition of investment in associate
(120,070
)

Carrying amount, end of period

119,632

 
On February 15, 2013 and April 26, 2013, Pretium completed private placements of 1,648,550 flow-through common shares and 5,780,346 common shares respectively, in respect of which we elected not to participate. These share issuances by Pretium resulted in dilutions of our interest to 19.68% and 18.57% respectively, with dilution gains of $1,858,000 and $254,000 respectively, recognized in other (loss) income (note 11). Subsequent to the derecognition of the investment in associate discussed below, our interest has decreased to 18.26%.

On May 10, 2013, we determined that we no longer held significant influence over Pretium following changes in the composition of the Board of Directors of Pretium and our shareholding percentage, and therefore, equity accounting for our investment in Pretium was no longer applicable. This resulted in the derecognition of the carrying value of our investment in associate and the recognition of our shareholding at fair value as an available-for-sale financial asset. The fair value of the shares upon initial recognition was $144,777,000. The difference between the carrying value of the investment and the fair value of the shares was recorded in the consolidated statement of (loss) income, resulting in a gain of $21,959,000 and a corresponding foreign exchange gain of $2,497,000. Subsequent changes in fair value after May 10, 2013 are recognized in other comprehensive income.

Subsequent to the end of the quarter, our investment in Pretium experienced a material decline in value. As at November 1, 2013 the fair value was approximately $61.5 million, $69.3 million lower than the fair value at September 30, 2013 and $83.3 million lower than the fair value recorded upon initial recognition. The decline in fair value will be recognized in other comprehensive income, unless the decline remains significant or prolonged which would require an impairment to be recognized in the consolidated statements of income (loss).



12 | Page

Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2013
(tabular amounts expressed in thousands of United States dollars unless otherwise stated - unaudited)

6.
VALUE ADDED TAX ("VAT") RECEIVABLE

 
September 30, 2013

December 31, 2012

 

$

Current
7,454

32,796

Non-current
67,621

37,363

 
75,075

70,159


VAT paid in Argentina in relation to the Pirquitas Mine is recoverable under Argentine law once the mine reached the production stage, which occurred on December 1, 2009. We commenced the process of collecting VAT in 2010 and continue to apply to the Argentine government to recover the applicable VAT. We believe that the remaining balance is fully recoverable and have not provided an allowance. As a result of delays in collection, at June 2013 we reclassified $21,544,000 in VAT from current to non-current.

7.
IMPAIRMENT OF NON-CURRENT ASSETS

At June 30, 2013, the book value of our net assets exceeded our market capitalization, which was an indicator of potential impairment of the carrying value of our long-lived assets. In addition, prior to the close of the quarter ended June 30, 2013, metal prices declined significantly and have subsequently remained at these lower levels. As a result, we assessed the recoverable amount of the Pirquitas Mine, which has been identified as a cash generating unit (“CGU”).

Impairment testing

When there is an indicator of impairment of our long-lived assets, we test them for impairment and recognize any impairment loss if the carrying value exceeds its recoverable amount. The recoverable amount of each CGU is determined based on its fair-market value less estimated costs to sell (“FVLCTS”), which has been determined to be greater than the value in use.

The recoverable amount of the Pirquitas Mine and its plant and equipment is the FVLCTS, which is based upon the CGU's estimated future after-tax cash flows. The after-tax cash flows were determined based on life-of-mine (“LOM”) after-tax cash flow projections, which incorporate our estimates of future metal prices, production based on current estimates of recoverable mineral reserves and mineral resources, exploration potential, future operating costs and capital expenditures, inflation, and long-term foreign exchange rates. Metal prices included in the cash flow projections were based on market forecasts. Projected cash flows are discounted using an estimated weighted average cost of capital of a market participant of 10%. Management's estimate of the FVLCTS is classified as level 3 in the fair value hierarchy (note 13).

Significant assumptions and impact

Pricing
The projected cash flows are significantly affected by changes in assumptions for metal prices, future capital expenditures, production cost estimates, discount rates and exchange rates. For the 2012 year end (“YE 2012”) and June 30, 2013 ("Q2 2013") impairment assessments, the real silver metal price assumptions were as follows:
Silver price assumptions
2013 (i)
2014
2015
2016
2017
Long-term price
YE 2012
$35.37
$34.03
$30.00
$28.15
$23.11
$23.11
Q2 2013
$22.99
$21.92
$22.58
$22.68
$21.95
$20.70
(i)  
Price estimate for second half of 2013.



13 | Page

Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2013
(tabular amounts expressed in thousands of United States dollars unless otherwise stated - unaudited)

7.
IMPAIRMENT OF NON-CURRENT ASSETS (Cont'd)

Inflation
Argentina's current inflationary and foreign exchange environment continues to be evaluated. A key assumption in the Pirquitas Mine's current LOM after-tax cash flow projections is that total operating costs increased by inflation would be offset by a devaluation of the Argentine peso after 2014. Should this assumption regarding the future macroeconomic situation in Argentina change, and sustained inflation continue, without a commensurate change in the foreign exchange rate, the estimated recoverable amount could be adversely impacted.
At June 30, 2013, the recoverable amount was lower than the carrying value of the CGU and therefore we recorded an impairment charge of $202,440,000 before tax, ($199,269,000 net of tax) against the carrying value of the Pirquitas Mine and its plant and equipment. No impairment indicators were observed during the three months ended September 30, 2013 .

8.
CONVERTIBLE NOTES

During the nine months ended September 30, 2013 , the 2008 senior convertible unsecured notes (the "2008 Notes") of $138,000,000 were fully repurchased with cash.

In the nine months ended September 30, 2013 , we sold $265,000,000 in senior convertible unsecured notes (the "2013 Notes") for net proceeds of $256,083,000 after payment of commissions and expenses related to the offering. The 2013 Notes mature on February 1, 2033 and bear an interest rate of 2.875% per annum, payable semi-annually in arrears on February 1 and August 1 of each year. The 2013 Notes are convertible into our common shares at a fixed conversion rate, subject to certain anti-dilution adjustments. In addition, if certain fundamental changes occur to us, holders of the 2013 Notes may be entitled to an increased conversion rate. The 2013 Notes are convertible into our common shares at an initial conversion rate of 50 common shares per $1,000 principal amount of 2013 Notes converted, representing an initial conversion price of $20.00 per common share.

We may not redeem the 2013 Notes before February 1, 2018, except in the event of certain changes in Canadian tax law. At any time on or after February 1, 2018, but before February 1, 2020, we may redeem all or part of the 2013 Notes for cash, but only if the last reported sale price of our common shares for 20 or more trading days in a period of 30 consecutive trading days exceeds 130% of the conversion price. On or after February 1, 2020, we may redeem the 2013 Notes in full or in part, for cash.
 
Holders of the 2013 Notes have the right to require us to repurchase all or part of their 2013 Notes on February 1 of each of 2020, 2023 and 2028, or upon certain fundamental corporate changes. The repurchase price will be equal to 100% of the principal amount of the 2013 Notes being converted, plus accrued and unpaid interest to the repurchase date.

At initial recognition, the net proceeds of the 2013 Notes were bifurcated into its debt and equity components. The fair value of the debt portion of $178,358,000 was estimated using a discounted cash flow model method based on an expected life of seven years and a discount rate of 8.5%. The residual of $77,723,000 ($68,347,000 net of deferred tax) was allocated to equity.

The debt portion has been designated as an 'other financial liability' and is recorded at amortized cost, net of transaction costs, and is accreted over the expected life using the effective interest method.

As at September 30, 2013 , the accrued interest related to the 2013 Notes was $1,237,000 and is included within trade and other payables. During the three and nine months ended September 30, 2013 , accretion expense related to the 2008 Notes and the 2013 Notes was $2,306,000 and $8,628,000, respectively. The 2013 Notes had a fair value of $195,286,000 as at September 30, 2013 .



14 | Page

Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2013
(tabular amounts expressed in thousands of United States dollars unless otherwise stated - unaudited)

9.
SHARE CAPITAL AND SHARE-BASED PAYMENTS
a) Stock options
The changes in stock options outstanding during the nine months ended September 30, 2013 and the year ended December 31, 2012 is as follows :
 
September 30, 2013
December 31, 2012
 
Number of stock options

Weighted average exercise price (C$/option)

Number of stock options

Weighted average exercise price (C$/option)

 
 
 
 
 
Outstanding, beginning of period
2,023,563

20.49

1,878,372

23.86

     Granted
680,150

11.87

597,125

15.22

     Exercised
(6,667
)
(11.50
)
(54,335
)
(11.50
)
     Expired
(225,498
)
(30.32
)
(115,000
)
(35.74
)
     Forfeited
(694,104
)
(20.46
)
(282,599
)
(27.24
)
Outstanding, end of period
1,777,444

15.99

2,023,563

20.49


For options granted during the nine months ended September 30, 2013 , the option valuations were based on an average expected option life of 4.2 years, a risk free interest rate of 1.3%, a dividend yield of nil, and volatility of 55.4%.

During the nine months ended September 30, 2013 , we granted 680,150 options to officers, employees, and executive directors at exercise prices ranging from C$9.50 to C$12.99, with an average fair value of C$5.17 per option.
b) Deferred Share Units (“DSUs”)
During the nine months ended September 30, 2013 and the year ended December 31, 2012 , the following DSUs were outstanding to non-executive directors:
 
September 30, 2013

December 31, 2012

 
Number of DSUs

Number of DSUs

Outstanding, beginning of period
150,117

98,289

     Granted
69,081

51,828

Outstanding, end of period
219,198

150,117


The DSUs granted during the nine months ended September 30, 2013 had a weighted average fair value of C$9.32 per unit. The DSUs are cash-settled instruments and therefore the fair value of the outstanding DSUs at the end of each reporting period is recognized as an accrued liability with the associated compensation cost recorded in general and administrative expenses. As at September 30, 2013 , the fair value was C$6.35 per unit.


15 | Page

Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2013
(tabular amounts expressed in thousands of United States dollars unless otherwise stated - unaudited)

9.
SHARE CAPITAL AND SHARE-BASED PAYMENTS (Cont'd)
c) Restricted Share Units (“RSUs”)

During the nine months ended September 30, 2013 and the year ended December 31, 2012 , the following RSUs were outstanding to employees:

 
September 30, 2013

December 31, 2012

 
Number of RSUs

Number of RSUs

Outstanding, beginning of period
141,810

76,801

     Granted
115,300

104,900

     Settled
(50,786
)
(21,089
)
     Forfeited
(62,826
)
(18,802
)
Outstanding, end of period
143,498

141,810


The RSUs granted during the nine months ended September 30, 2013 had a weighted average fair value of C$10.37 per unit. RSUs settled in the nine months ended September 30, 2013 were settled at a weighted average fair value of C$10.09 per unit. As at September 30, 2013 , the fair value was C$6.35 per unit.

d) Performance Share Units (“PSUs”)

During the nine months ended September 30, 2013 and the year ended December 31, 2012 , the following PSUs were outstanding to senior executives:
 
September 30, 2013

December 31, 2012

 
Number of PSUs

Number of PSUs

Outstanding, beginning of period
201,220

109,700

     Granted
137,500

110,058

     Settled
(28,250
)

     Forfeited
(95,841
)
(18,538
)
Outstanding, end of period
214,629

201,220


The PSUs granted during the nine months ended September 30, 2013 had a weighted average fair value of C$12.99 per unit. PSUs settled in the nine months ended September 30, 2013 were settled at a fair value of C$12.62 per unit. As at September 30, 2013 , the weighted average fair value was C$4.45 per unit.



16 | Page

Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2013
(tabular amounts expressed in thousands of United States dollars unless otherwise stated - unaudited)

9.
SHARE CAPITAL AND SHARE-BASED PAYMENTS (Cont'd)

e) Share-based compensation

Total share-based compensation, including all equity and cash-settled arrangements, for the three and nine months ended September 30, 2013 and 2012 has been recognized in the condensed consolidated interim financial statements as follows:
 
Three months ended September 30
 
 
Nine months ended September 30
 
 
2013

2012

 
2013

2012

 

$

 

$

Equity-settled
 
 
 
 
 
General and administrative expenses
138

796

 
432

3,062

Property, plant and equipment
48

84

 
148

205

Cash-settled
 
 
 
 
 
General and administrative expenses (recovery)
191

1,001

 
(1,775
)
1,593

Property, plant and equipment
30

106

 
201

181

Total share-based compensation cost (recovery)
407

1,987

 
(994
)
5,041

10.
COST OF SALES AND RESTRUCTURING COSTS
a) Cost of sales
 
Three months ended September 30
 
 
Nine months ended September 30
 
 
2013

2012

 
2013

2012

 
 
(restated note 2b)

 
 
(restated note 2b)

 

$

 

$

Cost of inventory
23,573

35,928

 
69,879

77,839

Depreciation, depletion and amortization
10,748

12,462

 
31,105

28,955

Export duties (1)
3,891

5,723

 
11,284

13,545

Write-down of stockpiles to NRV (note 4)


 
12,193


 
38,212

54,113

 
124,461

120,339


(1)  
We entered into a fiscal stability agreement (the “Fiscal Agreement”) with the Federal Government of Argentina in 1998 for production from the Pirquitas Mine. In December 2007, the National Customs Authority of Argentina (Dirección Nacional de Aduanas) levied an export duty of approximately 10% from concentrates for projects with fiscal stability agreements pre-dating 2002. The Federal Government asserts that the Pirquitas Mine is subject to this export duty despite contrary rights detailed under the Fiscal Agreement. 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).



17 | Page

Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2013
(tabular amounts expressed in thousands of United States dollars unless otherwise stated - unaudited)

10.
COST OF SALES AND RESTRUCTURING COSTS (Cont'd)

As of September 30, 2013 , the Pirquitas Mine has paid $6,646,000 in export duties, against which it has filed for recovery. In accordance with the Injunction, we have not been paying export duties on silver concentrates but continue to accrue duties in full until the outcome of our challenge of the legality of the application of the export duty is known with certainty. However, the Federal Government has enacted legislation limiting the term of effectiveness of injunctions ordered against it, and we are assessing the potential impact of such legislation on the Injunction, including as it relates to the payment of any accrued export duties. As at September 30, 2013 , we have accrued a liability totaling $45,443,000 ( December 31, 2012 - $35,009,000), with a corresponding increase in cost of sales in the relevant period. If this export duty is successfully overturned, the benefit will be recognized in the consolidated statement of (loss) income for the full amount of paid and unpaid duty in the period that recovery becomes virtually certain. The accrued export duty also has a significant impact on our total costs. If resolved in our favour, the impact would be to reduce total costs by approximately 10% of the net sales price on a per ounce basis.
b) Restructuring costs
During the nine months ended September 30, 2013 , we incurred restructuring costs of $2,494,000 ( nine months ended September 30, 2012 - nil) which are recorded in general and administrative expenses and $653,000 ( nine months ended September 30, 2012 - nil) in cost of inventory.

 
11.
OTHER (LOSS) INCOME
 
Three months ended September 30
 
 
Nine months ended September 30
 
 
2013

2012

 
2013

2012

 
$

$

 
$

$

Impairment reversal on investments


 
183

4,853

Gain on dilution of associate (note 5)

2,580

 
2,112

15,839

Share of net loss of associate

(674
)
 
(1,033
)
(2,603
)
Unrealized gain (loss) on financial instruments at FVTPL   (1)

113

 

(2,575
)
Impairment of marketable securities


 
(11,022
)

Write-down of mineral properties (2)
(619
)

 
(3,812
)

Write-down of assets held for sale (note 3)


 
(3,875
)

Dividend income


 
178

356

Other expense
(448
)
(232
)
 
(967
)
(56
)
 
(1,067
)
1,787

 
(18,236
)
15,814


(1)  
Financial instruments held at fair value through profit and loss ("FVTPL") included the conversion option embedded in the 2008 Notes.
(2)
Following appraisals of our exploration and development property portfolio, we concluded that certain exploration properties had no future value and were written off.



18 | Page

Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2013
(tabular amounts expressed in thousands of United States dollars unless otherwise stated - unaudited)

12.
OPERATING SEGMENTS

We are a resource company focused on the acquisition, exploration, development and operation of silver-dominant projects in the Americas.

An operating segment is defined as a component:
that engages in business activities from which it may earn revenues and incur expenses;
whose operating results are reviewed regularly by the entity’s chief operating decision maker; and
for which discrete financial information is available.

We have identified operating segments based on the information used by our President and Chief Executive Officer (who is considered to be the chief operating decision maker) to manage the business. We primarily manage our business by looking at individual resource projects and typically segregate these projects between production, development and exploration.

For reporting purposes, all exploration and development projects have been aggregated into a single reportable segment ‘exploration and development properties’ because they all have similar characteristics and none exceed the quantitative thresholds for individual disclosure, except for the Pitarrilla Project which, as of September 30, 2013 , exceeds 10% of our total assets. The Pitarrilla Project has therefore been disclosed separately as a component. The comparative periods have been restated accordingly.

The only production property, the Pirquitas Mine, is considered a single operating segment which derives its revenues from the sale of silver and zinc concentrates. The corporate division earns income that is considered incidental to our activities and therefore does not meet the definition of an operating segment. Consequently, the following reporting segments have been identified:
Pirquitas Mine;
Pitarrilla Project; and
Other exploration and development properties.
The following is a summary of the reported amounts of income or loss, and the carrying amounts of assets and liabilities by operating segment:
Three months ended September 30, 2013
Pirquitas Mine

Pitarrilla Project

Other exploration and development properties

Other reconciling items (i)

Total

 


$

$

$

Revenue
43,944




43,944

Cost of inventory and export duties
(27,464
)



(27,464
)
Depreciation, depletion and amortization
(10,748
)



(10,748
)
Cost of sales
(38,212
)



(38,212
)
Income from mine operations
5,732




5,732

 
 
 
 
 
 
Operating income (loss)
3,738

(12
)
(162
)
(5,200
)
(1,636
)
Write-down of assets


(619
)

(619
)
(Loss) before tax
(4,298
)
(13
)
(764
)
(8,718
)
(13,793
)
 
 
 
 
 
 
Interest earned and other finance income
1,651



285

1,936

Interest expense and other finance costs
(886
)
(2
)
(32
)
(4,254
)
(5,174
)
Income tax (expense) recovery
(665
)

551

(399
)
(513
)
 
 
 
 
 
 
As at September 30, 2013
 
 
 
 
 
Total assets
388,437

126,706

145,765

509,059

1,169,967

Non-current assets
234,021

119,983

130,713

1,966

486,683

Total liabilities
(96,512
)
(386
)
(2,994
)
(217,151
)
(317,043
)


19 | Page

Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2013
(tabular amounts expressed in thousands of United States dollars unless otherwise stated - unaudited)

12.
OPERATING SEGMENTS (Cont'd)

Three months ended September 30, 2012
Pirquitas Mine

Pitarrilla
Project

Other exploration and development properties

Other reconciling items (i, ii)

Total

 
$

$

$

$

$

 
(restated note 2b)

 
 
 
 
Revenue
73,524




73,524

Cost of inventory and export duties
(41,651
)



(41,651
)
Depreciation, depletion and amortization
(12,462
)



(12,462
)
Cost of sales
(54,113
)



(54,113
)
Income from mine operations
19,411




19,411

 
 
 
 
 
 
Operating income (loss)
13,976


(408
)
(3,485
)
10,083

Income (loss) before tax
9,910

(13
)
(46
)
(4,711
)
5,140

 
 
 
 
 
 
Interest earned and other finance income
328


281

218

827

Interest expense and other finance costs
(2,257
)

(19
)
(4,287
)
(6,563
)
Income tax (expense) recovery
(8,143
)
1,332

(83
)
157

(6,737
)
 
 
 
 
 
 
As at December 31, 2012
 
 
 
 
 
Total assets
621,082

123,246

149,572

430,785

1,324,685

Non-current assets
400,858

113,708

123,331

121,064

758,961

Total liabilities
(97,629
)
(1,461
)
(2,483
)
(161,468
)
(263,041
)

Nine months ended September 30, 2013
Pirquitas Mine

Pitarrilla Project

Other exploration and development properties

Other reconciling items (i, ii)

Total

 

$

$

$

$

Revenue
125,660




125,660

Cost of inventory and export duties
(93,356
)



(93,356
)
Depreciation, depletion and amortization
(31,105
)



(31,105
)
Cost of sales
(124,461
)



(124,461
)
Income from mine operations
1,199




1,199

 
 
 
 
 
 
Impairment charges
(202,440
)



(202,440
)
Operating (loss)
(204,792
)
(9
)
(629
)
(16,683
)
(222,113
)
Write-down of assets

(3,875
)
(3,812
)

(7,687
)
(Loss) before tax
(226,385
)
(3,887
)
(4,573
)
(18,081
)
(252,926
)
 
 
 
 
 
 
Interest earned and other finance income
3,177



1,032

4,209

Interest expense and other finance costs
(2,696
)
(4
)
(83
)
(15,071
)
(17,854
)
Income tax (expense) recovery
(6,587
)

1,576

3,127

(1,884
)


20 | Page

Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2013
(tabular amounts expressed in thousands of United States dollars unless otherwise stated - unaudited)

12.
OPERATING SEGMENTS (Cont'd)

Nine months ended September 30, 2012
Pirquitas Mine

Pitarrilla
Project

Other exploration and development properties

Other reconciling items (i, ii)

Total

 
$

$

$

$

$

 
(restated note 2b)

 
 
 
 
Revenue
154,342




154,342

Cost of inventory and export duties
(91,384
)



(91,384
)
Depreciation, depletion and amortization
(28,955
)



(28,955
)
Cost of sales
(120,339
)



(120,339
)
Income from mine operations
34,003




34,003

 
 
 
 
 
 
Operating income (loss)
25,921


(953
)
(16,715
)
8,253

Income (loss) before tax
14,488

(15
)
(662
)
38,007

51,818

 
 
 
 
 
 
Interest earned and other finance income
328


281

802

1,411

Interest expense and other finance costs
(6,205
)

(56
)
(12,597
)
(18,858
)
Income tax (expense) recovery
(17,668
)
1,771

(632
)
(2,905
)
(19,434
)
(i)
Other reconciling items refer to items that are not reported as part of segment performance as they are managed on a group basis.
(ii)
Includes the equity-accounted investment in Pretium.

Segment revenue by product
Nine months ended September 30
2013

2012

 
%

%

Silver
95

98

Zinc
5

2


Segment revenue by location of customer
100% of revenues are attributable to the Pirquitas Mine segment. During the nine months ended September 30, 2013 , revenue from four of our customers each individually represented over 10% of the total revenue. The combined revenue from these four customers during the nine months ended September 30, 2013 represented 90% of the total revenue. During the nine months ended September 30, 2012 , revenue from three of our customers each individually represented over 10% of the total revenue.

Non-current assets by location
 
September 30, 2013

December 31, 2012

 
 
(restated note 2b)

 
$

$

Argentina
263,259

428,881

Mexico
136,824

130,277

Peru
64,431

59,150

Chile
10,029

10,132

United States
8,844

8,128

Canada
3,296

122,393

Total
486,683

758,961




21 | Page

Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2013
(tabular amounts expressed in thousands of United States dollars unless otherwise stated - unaudited)

13.
FAIR VALUE MEASUREMENTS

Financial instruments that are held at fair value are categorized based on a valuation hierarchy which is determined by the valuation methodology utilized:
 
Fair value at September 30, 2013
 
Level 1

Level 2

Level 3

Total

 

$

$

$

Trade and other receivables

39,571


39,571

Marketable securities
142,774



142,774

 
142,774

39,571


182,345


Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities

Marketable securities, consisting of available-for-sale investments with no trading restrictions are valued using a market approach based upon unadjusted quoted prices in an active market obtained from securities exchanges.

Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); trade receivables from provisional invoices for concentrate sales are included within Level 2, as the basis of valuation uses quoted commodity prices.

Level 3 – inputs for an asset or liability that are not based on observable market data (unobservable inputs)

There were no transfers between Level 1 and Level 2 or transfers into or out of Level 3 during the nine months ended September 30, 2013 or 2012 .

As at September 30, 2013 , there were no financial assets or liabilities measured and recognized in the condensed consolidated statements of financial position at fair value that would be categorized into Level 3 in the fair value hierarchy (December 31, 2012 - nil). However during the nine months ended September 30, 2013 , the Pirquitas Mine CGU was written down to its recoverable amount. The recoverable amount becomes the adjusted cost base of the Pirquitas Mine and will not be revalued, but certain assumptions used in the calculation of these recoverable amounts are categorized as Level 3 in the fair value hierarchy (note 7).


22 | Page

Silver Standard Resources Inc.
Notes to the Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2013
(tabular amounts expressed in thousands of United States dollars unless otherwise stated - unaudited)

14.
SUPPLEMENTAL CASH FLOW INFORMATION

Changes in non-cash working capital items during the three and nine months ended September 30, 2013 and 2012 are as follows:

 
Three months ended September 30
 
 
Nine months ended September 30
 
 
2013

2012

 
2013

2012

 
 
(restated note 2b)

 
 
(restated note 2b)

 

$

 

$

Trade and other receivables (excluding VAT)
(8,968
)
(20,781
)
 
982

(22,032
)
Inventory
2,628

10,911

 
3,987

6,847

Trade and other payables
(16
)
(1,788
)
 
3,851

11,267

Taxes payable
(2,460
)
(1,992
)
 
(24,168
)
(8,987
)
 
(8,816
)
(13,650
)
 
(15,348
)
(12,905
)
During the three and nine months ended September 30, 2013 and 2012 , we conducted the following non-cash financing transactions:
 
Three months ended September 30
 
 
Nine months ended September 30
 
 
2013

2012

 
2013

2012

 
$

$

 
$

$

Transfer of share-based payment reserve upon exercise of stock options

(8
)
 
(56
)
(407
)
During the three and nine months ended September 30, 2013 and 2012 , we made the following cash payments for interest and taxes:
 
Three months ended September 30
 
 
Nine months ended September 30
 
 
2013

2012

 
2013

2012

 
$

$

 
$

$

Interest paid
4,105

3,105

 
7,210

6,236

Taxes paid
3,524

2,822

 
11,892

11,828



15.
EVENTS AFTER THE REPORTING DATE

On November 5, 2013 we entered into a purchase agreement with Argonaut Gold Inc. ("Argonaut"), a TSX-listed company, to sell our San Agustin project in Mexico. Under the terms of the agreement we will receive total aggregate consideration of approximately $75 million, comprised of $15 million in cash and $30 million in Argonaut shares (based on the 5-day volume weighted average sale price for Argonaut shares trading on the TSX prior to signing the agreement) on closing, and deferred cash consideration of $30 million ($10 million payable on May 5, 2014 and $20 million payable on May 5, 2015). In addition, we will have a 2% NSR royalty on sulphide ores from the project. Completion of the transaction is subject to customary closing conditions, including receipt of required regulatory and TSX approvals. The impact of the transaction on the consolidated financial statements has yet to be determined.





23 | Page






SILVER STANDARD RESOURCES INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION AND RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2013



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




SILVER STANDARD RESOURCES INC.


MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION AND RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2013


This Management's Discussion and Analysis ("MD&A") supplements our condensed consolidated interim financial statements of Silver Standard Resources Inc. ("we", "us" or "our") for the three and nine months ended September 30, 2013 , and the related notes thereto, which have been prepared in accordance with IAS 34, Interim Financial Reporting ("IAS 34"), as issued by the International Accounting Standards Board ("IASB") and interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC").

All figures are expressed in U.S. dollars except where otherwise indicated. This MD&A has been prepared as of November 5, 2013 , and should be read in conjunction with the audited consolidated annual financial statements for the year ended December 31, 2012.

Additional information, including our most recent Form 40-F and Annual Information Form, 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 the non-GAAP financial measures used in this MD&A, please see the discussion under "Non-GAAP Financial Measures" in section 13 of this MD&A. We use Mineral Reserves and Mineral Resources classifications in this MD&A, which differ significantly from the classifications required by the SEC as set out in a cautionary note contained in section 16 of this MD&A.


1.
THIRD QUARTER 2013 HIGHLIGHTS

Reported cash costs of $13.32 per payable ounce of silver sold. Continued cash cost reduction efforts, at the Pirquitas Mine, focused on headcount, third party contract services and operational controls at the plant and mine to sustainably reposition the mine on the industry cost curve.

Produced and sold 2.0 million ounces of silver.
 
Due to a higher zinc grade and recovery, produced a record 7.8 million pounds of zinc.

Obtained legal access to the surface rights for a critical land parcel at the Pitarrilla project.

Cash balance of $401.4 million as at September 30, 2013.

Announced the sale of the San Agustin exploration project in Mexico for approximately $75 million in cash and shares, subsequent to quarter end.


2



2.
OUTLOOK

This section of the MD&A provides management's production and cost estimates for the remainder of 2013 . Major capital, exploration and development expenditures are also discussed. These are “forward-looking statements” and subject to the cautionary note regarding the risks associated with forward-looking statements contained in section 16 herein.
Silver production through the fourth quarter of 2013 is expected to total approximately 2 million ounces, taking full year guidance to approximately 8 million ounces. Fourth quarter production is expected to be similar to the third quarter of 2013, as ore delivery from the early portions of the Phase 2 benches of the San Miguel open pit continues to be of a more oxidized nature containing higher zinc grade which reduces silver recoveries. Zinc production during the fourth quarter, however, is anticipated to be higher than expected, and similar to third quarter levels at approximately 8 million pounds. Higher zinc production is expected to offset lower silver production so that the value of metals produced will be largely in line with original guidance for the year.

Based on favourable cash cost performance through the first nine months of 2013 and continued cost improvements at the Pirquitas Mine, we expect annual cash costs to be at the lower end of our previously reduced guidance range of $14.00 to $15.00 per payable ounce of silver sold.

Capital expenditures at the Pirquitas Mine in the fourth quarter are expected to total approximately $7 million in order to complete the Phase 4 tailings lift and replace the third party mining fleet with our own equipment. Deferred stripping expenditures in the fourth quarter are anticipated to be approximately $3 million as the strip ratio continues to reduce as Phase 2 of the San Miguel open pit progresses. Annual exploration and development expenditure guidance remains unchanged.

In October 2013, the Mexican government enacted significant changes to the mining tax and royalty regime which have significant impacts on the mining industry. Given the significance of the taxation and royalty changes, we have initiated a thorough review of the mine and plant options at Pitarrilla and no longer anticipate making a construction decision by the end of the year.


3



3.
BUSINESS OVERVIEW

We are a primary silver resource and production company that has one producing mine and a portfolio of silver resource dominant projects. Our properties are located in six countries in the Americas. We are focused on optimizing the production of silver from the Pirquitas Mine, which is located in the Province of Jujuy, Argentina, advancing the Pitarrilla project in Durango State, Mexico, as well as the San Luis project in the Ancash Department, Peru. In addition, we continue to advance our large portfolio of mineral projects and properties, which are at various stages of exploration and development. A number of these properties have silver mineral resources identified on them. We believe we hold one of the largest silver mineral reserves and silver mineral resources positions of any publicly-traded silver company. We also hold an approximate 18% interest in Pretium Resources Inc. ("Pretium"), a TSX-listed gold exploration company.

The precious metals sector was dominated by the macro economic backdrop of the United States through the third quarter of 2013. Expectations of a reduction to quantitative easing drove metal prices lower at the start of the third quarter, only to see silver prices recover when it became clear those expectations were unfounded. Prices then eased through September and into October as the partial shutdown of the United States government and concerns around technical debt default drove general risk aversion in the market. In response to these factors, the price of silver initially increased through July and August, reaching a high of $24.21 on September 3, 2013, but subsequently declined to $21.68 on September 30, 2013. During the third quarter of 2013, the price of silver averaged $21.37 per ounce, compared to $23.11 per ounce in the second quarter of 2013 and $29.91 per ounce in the third quarter of 2012. The lower silver prices in the third quarter of 2013 significantly impacted our revenues and income for the quarter. The reduction in silver prices impacts our cash flows and has caused us to re-evaluate our current expenditures, in an effort to focus our resources and manage capital with respect to timing and amount spent on exploration projects, corporate overhead and development capital expenditures.

In addition to global economic issues, the Pirquitas Mine operates within a tightly-controlled regulatory environment in Argentina. Importation of goods and services into Argentina requires pre-approval, which causes delays in obtaining certain parts and supplies. The Central Bank of Argentina regulates U.S. dollar flows into and out of the country, the recovery of VAT is highly regulated with a complex collection process, and Argentina is experiencing high inflation. All of these factors have directly impacted our business in Argentina.

Through the first three quarters of 2013, we continue to have predictable operating performance at the Pirquitas Mine, producing 2.0 million ounces of silver in the third quarter of 2013. Given the regulatory environment in Argentina, production costs remain elevated though significant cost reductions have been achieved through the first nine months of 2013. We are continuing to implement our cost reduction initiatives, which remains particularly important given prevailing silver prices.

We also continued to advance our principal development project, the Pitarrilla project. A key objective for 2013 is to obtain surface use agreements over five parcels of land within the Pitarrilla project's boundaries which we currently do not control. During the third quarter of 2013 we completed agreements over two parcels, and subsequent to quarter end, received approval for a 30-year temporary occupation application over a third parcel, which may be subject to appeal. We advanced certain pre-construction activities including pilot plant studies and tendered the engineering, procurement, construction management ("EPCM") contract.

On November 5, 2013 we entered into a purchase agreement with Argonaut Gold Inc. ("Argonaut"), a TSX-listed company, to sell our San Agustin project in Mexico. Under the terms of the agreement we will receive total aggregate consideration of approximately $75 million, comprised of $15 million in cash and $30 million in Argonaut shares (based on the 5-day volume weighted average sale price for Argonaut shares trading on the TSX prior to signing the agreement) on closing, and deferred cash consideration of $30 million ($10 million payable on May 5, 2014 and $20 million payable on May 5, 2015). In addition, we will have a 2% NSR royalty on sulphide ores from the project. Completion of the transaction is subject to customary closing conditions, including receipt of required regulatory and TSX approvals.



4



4.
RESULTS OF OPERATIONS

Pirquitas Mine, Argentina

 
 
Three months ended
 
September 30

June 30

March 31

December 31

September 30

June 30

Operating data
2013

2013

2013

2012

2012

2012

Total material mined (kt)
4,465

4,471

4,210

4,415

4,333

4,483

Ore crushed (kt)
524

480

428

407

533

400

Ore milled (kt)
394

365

396

417

404

386

Silver mill feed grade (g/t)
215

216

207

212

214

219

Zinc mill feed grade (%)
1.91

1.53

0.92

0.67

0.65

0.66

Silver recovery (%)
74.6

74.8

76.3

79.9

77.7

74.5

Zinc recovery (%)
47.0

46.0

41.1