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MINERAL PROPERTY INTERESTS | 12 Months Ended
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Dec. 31, 2017
MINERAL PROPERTY INTERESTS |
MINERAL PROPERTY INTERESTS | NOTE 5 MINERAL PROPERTY INTERESTS During the year ended December 31, 2017, the Company acquired additional mineral property interests in connection with acquisitions of Lexam VG Gold Inc. (“Lexam”) and the Black Fox Complex, refer to Note 19 Acquisitions. During the year ended December 31, 2017, the Company capitalized $3.3 million (2016 – $nil) of expenditures relating to mine development and delineation. On April 19, 2016, the Company completed the acquisition of the sliding scale net smelter return royalty (the “Royalty”) on the El Gallo 1 mine and El Gallo 2 project, previously requiring payment of 3.5% of gross revenue less allowable deductions, eventually reducing to 1%. The total purchase price was $6.3 million and consisted of a $5.3 million payment at closing and a deferred payment of $1.0 million due on June 30, 2018, conditional that the El Gallo 1 mine and El Gallo 2 project are in operation at that time. The total cost of the Royalty was accounted for as an addition to mineral property interests. The cost was allocated to El Gallo 1 mine and El Gallo 2 project based on the relative fair value of the estimated future royalty payments for each project. The allocation resulted in approximately $5.1 million allocated to the El Gallo 1 mine and $1.2 million allocated to the El Gallo 2 project. The $1.0 million conditional deferred payment has been included under current other liabilities as of December 31, 2017. The Royalty ceased accruing at the end of March 2016. The carrying values for all of the mineral properties held by the Company as at December 31, 2017 and 2016 are noted below:
Name of Property/Complex |  | State/Province |  | Country |  | 2017 |  | 2016 |
Black Fox Complex |  | Ontario |  | Canada |  | $ | 11,364 |  | $ | — |
Lexam |  | Ontario |  | Canada |  |  | 41,595 |  |  | — |
Los Azules Copper Project |  | San Juan |  | Argentina |  |  | 191,490 |  |  | 191,490 |
Tonkin Properties |  | Nevada |  | United States |  |  | 4,833 |  |  | 4,833 |
Gold Bar Project |  | Nevada |  | United States |  |  | 31,317 |  |  | 31,180 |
North Battle Mountain Properties |  | Nevada |  | United States |  |  | 785 |  |  | 785 |
El Gallo 1 Mine |  | Sinaloa |  | Mexico |  |  | 6,246 |  |  | 8,545 |
El Gallo 2 Properties |  | Sinaloa |  | Mexico |  |  | 5,807 |  |  | 5,807 |
Total Mineral Property Interests |  |  |  |  |  | $ | 293,437 |  | $ | 242,640 |
For the year ended December 31, 2017, the Company recorded $2.3 million (2016 - $2.4 million and 2015 - $1.3 million) of amortization expense related to the El Gallo 1 mine, which is included in Production Costs Applicable to Sales in the Statement of Operations and Comprehensive (Loss) Income. For the year ended December 31, 2017, the Company recorded $0.9 million (2016 and 2015 – $nil) of amortization expenses related to the Black Fox mine, which is included in Production Costs Applicable to Sales in the Statement of Operations and Comprehensive (Loss) Income. The Company conducts a review of potential triggering events for impairment for all its mineral projects on a quarterly basis. When events or changes in circumstances indicate that the related carrying amounts may not be recoverable, the Company carries out a review and evaluation of its long-lived assets. In the years ended December 31, 2017 and 2016, no such triggering events were identified with respect to the Company’s Nevada, Argentina, Mexico, or Timmins properties. For the year ended December 31, 2015, the Company recognized impairments on its Argentina and Nevada properties and portion of Mexico construction-in-progress, for an aggregate of $50.6 million. For the Nevada properties, an initial $29.7 million impairment was recorded in the second quarter of 2015 when the Company performed a strategic review of its mineral property interests from which a decision was made to allow certain non-essential claims and portions of claims, included within the Gold Bar project and Tonkin property, to lapse on the September 1, 2015 renewal date. Subsequently, during the fourth quarter of 2015 an additional $7.5 million was recorded given the continuous decline in the observed market value of the Nevada properties. The deferred income tax recoveries resulting from the Nevada impairments made in the second quarter and fourth quarter of 2015 were $10.4 million and $2.2 million, respectively. The Company used the market approach to estimate the fair value of the impaired properties. Further, when performing the recoverability test for the Los Azules project and El Gallo 2 project asset groups in the fourth quarter of 2015, the Company noted that the carrying value of each of the asset groups exceeded their estimated fair value, resulting in a total impairment charge for Los Azules project and El Gallo 2 project asset groups of $11.4 million and $2.0 million, respectively, along with a resulting deferred income tax recovery of $1.3 million and $nil, respectively, being recorded in the Statement of Operations and Comprehensive Loss for the year ended December 31, 2015. The Company used the market approach to estimate the fair value of the impaired properties. Based on the above, impairment charges were recorded on the following mineral property interests for the years ended December 31, 2017, 2016, and 2015:
Name of Property/Complex |  | Segment |  | 2017 |  | 2016 |  | 2015 |
Los Azules Project |  | Argentina |  |  | — |  |  | — |  |  | 11,399 |
Gold Bar Project |  | Nevada |  |  | — |  |  | — |  |  | 20,847 |
Tonkin Properties |  | Nevada |  |  | — |  |  | — |  |  | 14,939 |
North Battle Mountain Properties |  | Nevada |  |  | — |  |  | — |  |  | 1,443 |
Property, plant and equipment |  | Mexico |  |  | — |  |  | — |  |  | 1,972 |
Total impairment |  |  |  | $ | — |  | $ | — |  | $ | 50,600 |

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- Definition The entire disclosure for mineral industries. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 930 -URI http://asc.fasb.org/topic&trid=2155974 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 932 -URI http://asc.fasb.org/topic&trid=2145477 + Details
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