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INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | 12 Months Ended
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Dec. 31, 2021
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE |
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | NOTE 9 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 of MSC for the year ended December 31, 2021, 2020, and 2019, is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year ended December 31, | ​
​ | ​ | 2021 | ​ | 2020 | ​ | ​ | 2019 |
Minera Santa Cruz S.A. (100%) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Revenue from gold and silver sales | ​ | $ | 271,863 | ​ | $ | 219,020 | ​ | $ | 263,887 | ​
Production costs applicable to sales | ​ | ​ | (196,033) | ​ | ​ | (138,182) | ​ | ​ | (159,915) | ​
Depreciation and depletion | ​ | ​ | (39,948) | ​ | ​ | (29,809) | ​ | ​ | (69,995) | ​
Gross profit | ​ | ​ | 35,882 | ​ | ​ | 51,029 | ​ | ​ | 33,977 | ​
Exploration | ​ | ​ | (10,602) | ​ | ​ | (10,446) | ​ | ​ | (10,635) | ​
Other expenses(1) | ​ | ​ | (17,077) | ​ | ​ | (30,515) | ​ | ​ | (13,065) | ​
Net income before tax | ​ | $ | 8,203 | ​ | $ | 10,068 | ​ | $ | 10,277 | ​
Current and deferred tax expense | ​ | ​ | (7,934) | ​ | ​ | (4,466) | ​ | ​ | (14,556) | ​
Net income (loss) | ​ | $ | 269 | ​ | $ | 5,602 | ​ | $ | (4,279) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Portion attributable to McEwen Mining Inc. (49%) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net income (loss) | ​ | $ | 132 | ​ | $ | 2,745 | ​ | $ | (2,097) | ​
Amortization of fair value increments | ​ |  | (8,331) | ​ |  | (5,390) | ​ |  | (9,448) | ​
Income tax recovery | ​ | ​ | 666 | ​ | ​ | 1,128 | ​ | ​ | 2,791 | ​
(Loss) income from investment in MSC, net of amortization | ​ | $ | (7,533) | ​ | $ | (1,517) | ​ | $ | (8,754) | ​
(1) | Other expenses include foreign exchange, accretion of asset retirement obligations and other finance related expenses.
Costs related to the COVID-19 pandemic for MSC were recognized in cost of sales and totaled $19.3 million for the year ended December 31, 2021. During the year ended December 31, 2020, shutdown costs related to COVID-19 totaled $11.4 million and were recognized in other expenses. The loss from investment in MSC attributable to the Company includes amortization of the fair value increments arising from the initial purchase price allocation and related income tax recovery. The income tax recovery reflects the impact of devaluation of the Argentine peso against the U.S. dollar on the peso-denominated deferred tax liability recognized at the time of acquisition, as well as income tax rate changes over the periods. Changes in the Company’s investment in MSC for the year ended December 31, 2021 and 2020 are as follows: ​
​ | ​ | ​ | ​ | ​ | ​
​ | December 31, 2021 |  | December 31, 2020
Investment in MSC, beginning of period | $ | 108,326 | ​ | $ | 110,183
Attributable net income from MSC | ​ | 132 | ​ | ​ | 2,745
Amortization of fair value increments |  | (8,331) | ​ |  | (5,390)
Income tax recovery | ​ | 666 | ​ | ​ | 1,128
Dividend distribution received |  | (9,832) | ​ |  | (340)
Investment in MSC, end of period | $ | 90,961 | ​ | $ | 108,326
​ A summary of the key assets and liabilities of MSC as at December 31, 2021 and 2020, before and after adjustments for fair value increments arising from the purchase price allocation, are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
As at December 31, 2021 | ​ | Balance excluding FV increments | ​ | Adjustments | ​ | Balance including FV increments
Current assets | ​ | $ | 89,876 | ​ | $ | 469 | ​ | $ | 90,345
Total assets | ​ | $ | 180,302 | ​ | $ | 89,975 | ​ | $ | 270,277
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Current liabilities | ​ | $ | (51,244) | ​ | $ | — | ​ | $ | (51,244)
Total liabilities | ​ | $ | (82,075) | ​ | $ | (2,577) | ​ | $ | (84,652)
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
As at December 31, 2020 | ​ | Balance excluding FV increments | ​ | Adjustments | ​ | Balance including FV increments
Current assets | ​ | $ | 94,965 | ​ | $ | 362 | ​ | $ | 95,327
Total assets | ​ | $ | 186,438 | ​ | $ | 107,821 | ​ | $ | 294,259
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Current liabilities | ​ | $ | (40,396) | ​ | $ | — | ​ | $ | (40,396)
Total liabilities | ​ | $ | (69,255) | ​ | $ | (3,936) | ​ | $ | (73,191)
​

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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 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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