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INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE
 12 Months Ended
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.