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INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | 9 Months Ended
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Sep. 30, 2019
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 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 investment 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. A summary of the operating results from MSC for the three and nine months ended September 30, 2019 and 2018 is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended September 30, | ​ | Nine months ended September 30,
​ |  | 2019 | ​ | 2018 | ​ | 2019 | ​ | 2018
Minera Santa Cruz S.A. (100%) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Revenue from gold and silver sales | ​ | $ | 70,908 | ​ | $ | 47,814 | ​ | $ | 179,708 | ​ | $ | 150,748
Production costs applicable to sales | ​ | ​ | (51,238) | ​ | ​ | (48,193) | ​ | ​ | (140,474) | ​ | ​ | (135,007)
Other operating expenses | ​ | ​ | (8,221) | ​ | ​ | (5,164) | ​ | ​ | (27,064) | ​ | ​ | (12,776)
Other expenses | ​ | ​ | (5,298) | ​ | ​ | (4,106) | ​ | ​ | (8,596) | ​ | ​ | (12,360)
Net income (loss) before tax | ​ | $ | 6,151 | ​ | $ | (9,649) | ​ | $ | 3,574 | ​ | $ | (9,395)
Current and deferred tax expense | ​ | ​ | (4,512) | ​ | ​ | (889) | ​ | ​ | (8,350) | ​ | ​ | (7,965)
Net income (loss) | ​ | $ | 1,639 | ​ | $ | (10,538) | ​ | $ | (4,776) | ​ | $ | (17,360)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Portion attributable to McEwen Mining Inc. (49%) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net income (loss) | ​ | $ | 803 | ​ | $ | (5,164) | ​ | $ | (2,339) | ​ | $ | (8,506)
Amortization of fair value increments | ​ |  | (2,551) | ​ |  | (2,537) | ​ |  | (6,923) | ​ |  | (7,135)
Income tax recovery | ​ | ​ | 1,420 | ​ | ​ | 2,728 | ​ | ​ | 2,487 | ​ | ​ | 8,191
Loss from investment in MSC, net of amortization | ​ | $ | (328) | ​ | $ | (4,973) | ​ | $ | (6,775) | ​ | $ | (7,450)
​ The loss from investment in MSC includes 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 Argentina peso and the U.S. dollar on the peso-denominated deferred tax liability recognized in the purchase price allocation. Changes in the Company’s investment in MSC for the nine months ended September 30, 2019 and year ended December 31, 2018 are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | September 30, 2019 |  | December 31, 2018
Investment in MSC, beginning of period | ​ | $ | 127,814 | ​ | $ | 150,064
Attributable net loss from MSC | ​ | ​ | (2,339) | ​ | ​ | (10,065)
Amortization of fair value increments | ​ |  | (6,923) | ​ |  | (9,730)
Income tax recovery | ​ | ​ | 2,487 | ​ | ​ | 7,930
Dividend distribution received | ​ |  | (4,045) | ​ |  | (10,385)
Investment in MSC, end of period | ​ | $ | 116,994 | ​ | $ | 127,814
​ During the three and nine months ended September 30, 2019, the Company received $2.0 and $4.0 million, respectively, in dividends from MSC (three and nine months ended September 30, 2018 – $2.1 million and $9.4 million, respectively). A summary of the key assets and liabilities of MSC as at September 30, 2019, before and after adjustments to fair value on acquisition and amortization of the fair value increments arising from the purchase price allocation, are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
As at September 30, 2019 | ​ | Balance excluding FV increments | ​ | Adjustments | ​ | Balance including FV increments
Current assets | ​ | $ | 72,664 | ​ | $ | 113 | ​ | $ | 72,777
Total assets | ​ | ​ | 185,522 | ​ | ​ | 124,112 | ​ | ​ | 309,634
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Current liabilities | ​ | $ | (45,881) | ​ | $ | 10,114 | ​ | $ | (35,767)
Total liabilities | ​ | ​ | (74,128) | ​ | ​ | 3,257 | ​ | ​ | (70,871)
​

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -SubTopic 10 -Section S99 -Paragraph 4 -Subparagraph (SX 210.3A-04) -URI http://asc.fasb.org/extlink&oid=116822174&loc=d3e355119-122828 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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