XML 36 R13.htm IDEA: XBRL DOCUMENT
v3.3.1.900

INVESTMENT IN MINERA SANTA CRUZ S.A. (“MSC”) - SAN JOSÉ MINE | 12 Months Ended
--- | ---
Dec. 31, 2015
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE |
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | NOTE 6 INVESTMENT IN MINERA SANTA CRUZ S.A. (“MSC”) - SAN JOSÉ MINE As noted in Note 2, Summary of Significant Accounting Policies - Investments, the Company accounts for investments over which it exerts significant influence but does not control through majority ownership using the equity method of accounting. In applying the equity method of accounting to the Company’s i nvestment in MSC, MSC’s financial statements, which are originally prepared by MSC in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, have been adjusted to conform with U.S. GAAP. As such, the summarized financial data presented under this heading is in accordance with U.S. GAAP. The Company’s 49% attributable share of operations f rom its investment in MSC was income of $2.4 million for the year ended December 31, 2015, compared to a loss of $5.3 million for the year ended December 31, 201 4 and income of $0.8 million for the year ended December 31, 201 3. These amounts are net of the amortization of the fair value increments arising from the purchase price allocation and related income tax recovery. Included in the income tax recovery is the impact of fluctuations in the exchange rate between the Argentine peso and the U.S. dollar on the peso-denominated deferred tax liability associated with the investment in MSC recorded as part of the acquisition of Minera Andes. As a devaluation of the Argentine peso relative to the U.S. dollar results in a recovery of deferred income taxes, the impact has been a decrease to the Company’s loss, or an increase to the Company’s income, from its investment in MSC. On October 22, 2015 the Company and Hochschild, both entered into vend-in agreement s with MSC pursuant to which the Company agreed to vend-in its remaining Santa Cruz exploration properties, which did not have any assigned carrying value. The properties transferred, total approximately 100,600 hectares, and are located in the province of Santa Cruz. The agreement also provides for 2% net smelter return royalty payable to the Company or Hochschild based on any of MSC’s production from the respective mineral properties contributed by each party. During the year ended December 31, 2015, the Company recorded an impairment charge of $11.8 million on its investment in MSC (2014 - $21.2 million), primarily as a result of the significant decline in long-term estimated silver market prices, as well as in the observed market value of comparable transactions in South America, which indicated a likely significant decrease in the value of the exploration properties owned by MSC. These factors caused the Company to assess that there was a decline in fair value of its investment in MSC that was other than temporary. To estimate the fair value of the Company’s investment i n MSC and measure the impairment, the Company used a combined approach, which uses a discounted cash flow model for the operating mine and a market approach for the fair value assessment of exploration properties, and determined that the carrying value of the investment in MSC exceeded its estimated fair value. As the loss in value of the investment was considered other than temporary, an impairment of $11.8 million was recorded in the Company’s Consolidated Statement of Operations and Comprehensive Loss for the year ended December 31, 2015 (2014 - $21.2 million). Refer to Note 17, Fair Value Accounting, for further detail of the valuation of MSC. During the fourth quarter of 201 3, the Company entered into a vend-in agreement with MSC and subsidiaries of Hochschild pursuant to which both parties agreed to contribute to MSC the mining rights of certain exploration properties located in Santa Cruz Province. The carrying value of the Company’s properties at the time of the transfer of $35.9 million, net of the related deferred tax liability of $17.3 million, was recorded as an increase in the Company’s investment in MSC, with no gain o r loss recognized upon transfer. During the year ended December 31, 201 5, the Company received $0.5 million in dividends from MSC, compared to $9.5 million in 201 4. Changes in the Company’s investment in MSC for the year ended December 31, 201 5 and 201 4 are as follows:
|  | Year ended December 31, 2015 |  | Year ended December 31, 2014 |
Investment in MSC, beginning of the year |  | $ | 177,018 |  | $ | 212,947 |
Attributable net loss from MSC |  |  | (2,859) |  |  | (2,597) |
Amortization of fair value increments |  |  | (10,669) |  |  | (13,190) |
Income tax recovery |  |  | 15,942 |  |  | 10,503 |
Dividend distribution received |  |  | (548) |  |  | (9,483) |
Impairment of investment in MSC |  |  | (11,777) |  |  | (21,162) |
Investment in MSC, end of the year |  | $ | 167,107 |  | $ | 177,018 |
A summary of the operating results from MSC for the year ended December 31, 201 5, 201 4, and 2013 is as follows:
|  | Year ended December 31, |
|  | 2015 |  | 2014 |  | 2013 |
Minera Santa Cruz S.A. (100%) |  |  |  |  |  |  |  |  |  |
Net Sales |  | $ | 186,095 |  | $ | 213,013 |  | $ | 240,723 |
Production costs applicable to sales |  |  | (158,615) |  |  | (173,274) |  |  | (190,281) |
Net (loss) income |  |  | (5,835) |  |  | (5,300) |  |  | 4,338 |
Portion attributable to McEwen Mining Inc. (49%) |  |  |  |  |  |  |  |  |  |
Net (loss) income |  | $ | (2,859) |  | $ | (2,597) |  | $ | 2,126 |
Amortization of fair value increments |  |  | (10,669) |  |  | (13,190) |  |  | (18,425) |
Income tax recovery |  |  | 15,942 |  |  | 10,503 |  |  | 17,145 |
Income (loss) from investment in MSC, net of amortization |  | $ | 2,414 |  | $ | (5,284) |  | $ | 846 |
As at December 31, 201 5, MSC had current assets of $95.3 million, total assets of $486.3 million, current liabilities of $38.8 million and total liabilities of $145.3 million. These balances include the increase in fair value and amortization of the fair value increments arising from the purchase price allocation and are net of the impairment charges. Excluding the fair value increments from the purchase price allocation and impairment charges, MSC had current assets of $91.1 million, total assets of $282.5 million, current liabilities of $44.4 million, and total liabilities of $79.5 million as at December 31, 2015.

X
- References No definition available. + Details
Name: | us-gaap_EquityMethodInvestmentsAndJointVenturesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6382943&loc=d3e33918-111571 Reference 2: 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=35687916&loc=d3e32847-111569 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 35 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=35687916&loc=d3e32787-111569 + Details
Name: | us-gaap_EquityMethodInvestmentsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration