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INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | 12 Months Ended
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Dec. 31, 2012
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE |
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | NOTE 8 INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC")—SAN JOSÉ MINE As discussed above in Note 3, in 2012 the Company acquired a 49% interest in MSC, owner and operator of the San José Silver-Gold Mine in Santa Cruz, Argentina. The Company's share of earnings and losses from its investment in MSC is included in the consolidated statement of operations and comprehensive loss and includes 49% of MSC's net income of $25.3 million for the period ended December 31, 2012. Since the acquisition closed on January 24, 2012, MSC reported to the Company only its net income from January 25, 2012 to December 31, 2012. Based on the purchase price allocation, the investment in MSC was originally allocated an estimated fair value of $225.0 million during the first half of 2012 and $261.2 million during the third quarter of 2012. During the fourth quarter of 2012, the purchase price allocation was finalized and the estimated fair value of the investment in MSC was increased to $262.9 million. The adjustment affected the composition of the fair value allocation to MSC's assets, resulting in a reduction in the amortization reported for the first two quarters of 2012 and an increase for the third quarter of 2012. Below is a reconciliation of the adjustment for the first three quarters of 2012.
|  | For three months ended March 31, 2012 |  | For three months ended June 30, 2012 |  | For the three months ended September 30, 2012 |
--- | --- | --- | --- | --- | --- | --- | ---
|  | (in thousands) |
Amortization of fair value increments, as reported |  | $ | 2,804 |  | $ | 1,803 |  | $ | 1,597 |
Adjustment |  |  | (1,851 | ) |  | (887 | ) |  | 71 |
Amortization of fair value increments, as adjusted |  | $ | 953 |  | $ | 916 |  | $ | 1,668 |
Net loss, as reported |  | $ | (19,202 | ) | $ | (21,251 | ) | $ | (2,583 | )
Adjustment |  |  | 1,851 |  |  | 887 |  |  | (71 | )
Net loss, as adjusted |  | $ | (17,351 | ) | $ | (20,364 | ) | $ | (2,654 | )
The change in the Company's investment in MSC is summarized as follows:
|  | As at December 31, 2012 |
--- | --- | --- | ---
|  | (in thousands) |
Investment in MSC, beginning of period |  | $ | — |
Fair value of investment in MSC from acquisition of Minera Andes |  |  | 262,883 |
Income from equity investment |  |  | 25,301 |
Amortization of fair value increments |  |  | (4,466 | )
Dividend distribution |  |  | (9,770 | )
Investment in MSC, end of period |  | $ | 273,948 |
|  | Period Ended December 31, 2012 |
--- | --- | --- | ---
|  | (in thousands) |
Summary of MSC's financial information from operations |  |  |  |
Sales—MSC 100% |  | $ | 290,848 |
Net income—MSC 100% |  |  | 51,634 |
McEwen Mining's portion—49% |  |  | 25,301 |
Net income on investment in MSC |  | $ | 25,301 |
Amortization of fair value increments |  |  | (4,466 | )
Income on investment in MSC, net of amortization |  | $ | 20,835 |
As at December 31, 2012, MSC had current assets of $136.9 million, total assets of $814.4 million, current liabilities of $66.4 million and total liabilities of $261.7 million. These balances include the increase in fair value and amortization of the fair value increments arising from the purchase price allocation. During 2012, the Company received dividends from MSC totaling $19.2 million, consisting of $9.4 million dividend receivable acquired from Minera Andes and $9.8 million declared and received in 2012.

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=7658923&loc=d3e32787-111569 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 18 -Paragraph 20 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.12) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6382943&loc=d3e33918-111571 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=7658923&loc=d3e32847-111569 + Details
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