Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 03, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | McEwen Mining Inc. | |
Entity Central Index Key | 314,203 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 311,871,121 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017USD ($)$ / sharesshares | Mar. 31, 2016USD ($)$ / sharesshares | |
REVENUE: | ||
Gold and silver sales | $ 14,833 | $ 21,190 |
Total Revenue | 14,833 | 21,190 |
COSTS AND EXPENSES: | ||
Production costs applicable to sales | 6,984 | 9,067 |
Mine development costs | 1,115 | 698 |
Exploration costs | 8,444 | 1,740 |
Property holding costs | 1,188 | 1,147 |
General and administrative | 4,293 | 2,768 |
Depreciation | 327 | 239 |
Revision of estimates and accretion of as reclamation obligations (note 6) | 105 | 124 |
Income from investment in Minera Santa Cruz S.A., net of amortization (note 5) | (190) | (4,963) |
Total costs and expenses | 22,266 | 10,820 |
Operating (loss) income | (7,433) | 10,370 |
OTHER INCOME (EXPENSE): | ||
Interest income (expense) and other income (expense) | (68) | 228 |
Gain on sale of assets | 11 | |
Gain on sale of marketable equity securities (note 2) | 22 | |
Other-than-temporary impairment on marketable equity securities (note 2) | (285) | |
Unrealized gain on derivatives (note 2) | 1,791 | |
Foreign currency gain | 25 | 783 |
Total other income | 1,759 | 748 |
(Loss) Income before income taxes | (5,674) | 11,118 |
Income taxes recovery (note 7) | (2,656) | (1,867) |
Net (loss) income | (3,018) | 12,985 |
OTHER COMPREHENSIVE INCOME: | ||
Unrealized gain (loss) on available-for-sale securities, net of taxes | 3,875 | (124) |
Comprehensive income | $ 857 | $ 12,861 |
Net (loss) income per share (note 9): | ||
Basic (in dollars per share) | $ / shares | $ (0.01) | $ 0.04 |
Diluted (in dollars per share) | $ / shares | $ (0.01) | $ 0.04 |
Weighted average common shares outstanding (thousands) (note 9): | ||
Basic (in shares) | shares | 299,575 | 298,242 |
Diluted (in shares) | shares | 299,575 | 298,554 |
Return of capital distribution declared per common share (note 8) | $ / shares | 0.005 | 0.005 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 28,890 | $ 37,440 |
Investments (note 2) | 15,329 | 8,543 |
Value added taxes receivable | 6,340 | 4,304 |
Inventories (note 3) | 29,453 | 26,620 |
Other current assets | 1,703 | 1,667 |
Total current assets | 81,715 | 78,574 |
Mineral property interests (note 4) | 242,107 | 242,640 |
Investment in Minera Santa Cruz S.A. (note 5) | 159,985 | 162,320 |
Property and equipment, net | 14,255 | 14,252 |
Other assets (note 13) | 1,316 | 532 |
TOTAL ASSETS | 499,378 | 498,318 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 22,836 | 20,044 |
Current portion of asset retirement obligation (note 6) | 530 | 537 |
Total current liabilities | 23,366 | 20,581 |
Asset retirement obligation, less current portion (note 6) | 9,411 | 9,306 |
Deferred income tax liability (note 7) | 22,121 | 23,665 |
Other liabilities | 1,705 | 1,727 |
Total liabilities | 56,603 | 55,279 |
Shareholders' equity: | ||
Common stock, no par value, 500,000 shares authorized (in thousands); Common: 299,590 as of March 31, 2017 and 299,570 as of December 31, 2016 issued and outstanding (in thousands) | 1,359,224 | 1,360,345 |
Accumulated deficit | (921,990) | (918,972) |
Accumulated other comprehensive income | 5,541 | 1,666 |
Total shareholders' equity | 442,775 | 443,039 |
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | $ 499,378 | $ 498,318 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value | $ 0 | $ 0 |
Common stock, shares authorized | 500,000 | 500,000 |
Common, shares issued | 299,590 | 299,570 |
Common, shares outstanding | 299,590 | 299,570 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Accumulated Other Comprehensive (Loss) Income | Accumulated Deficit | Total |
Balance at Dec. 31, 2015 | $ 1,359,144 | $ (825) | $ (940,027) | $ 418,292 |
Balance (in shares) at Dec. 31, 2015 | 298,634 | |||
Increase (Decrease) in Shareholders' Equity | ||||
Stock-based compensation | $ 353 | 353 | ||
Return of capital distribution (note 8) | (1,489) | (1,489) | ||
Share repurchase | $ (582) | (582) | ||
Share repurchase (in shares) | (558) | |||
Other-than-temporary impairment on marketable equity securities (note 2) | 285 | 285 | ||
Unrealized gain (loss) on available-for-sale securities, net of taxes (note 2) | (124) | (124) | ||
Net income | 12,985 | 12,985 | ||
Balance at Mar. 31, 2016 | $ 1,357,426 | (664) | (927,042) | 429,720 |
Balance (in shares) at Mar. 31, 2016 | 298,076 | |||
Balance at Dec. 31, 2016 | $ 1,360,345 | 1,666 | (918,972) | 443,039 |
Balance (in shares) at Dec. 31, 2016 | 299,570 | |||
Increase (Decrease) in Shareholders' Equity | ||||
Stock-based compensation | $ 330 | 330 | ||
Return of capital distribution (note 8) | (1,498) | (1,498) | ||
Exercise of stock options (note 8) | $ 47 | 47 | ||
Exercise of stock options (note 8) (in shares) | 20 | |||
Unrealized gain (loss) on available-for-sale securities, net of taxes (note 2) | 3,875 | 3,875 | ||
Net income | (3,018) | (3,018) | ||
Balance at Mar. 31, 2017 | $ 1,359,224 | $ 5,541 | $ (921,990) | $ 442,775 |
Balance (in shares) at Mar. 31, 2017 | 299,590 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash flows from operating activities: | ||
Cash paid to suppliers and employees | $ (24,242) | $ (8,457) |
Cash received from gold and silver sales | 14,833 | 20,319 |
Dividends received from Miners Santa Cruz S.A (note 5) | 2,525 | 2,626 |
Interest received | 34 | 220 |
Cash (used in) provided by operating activities | (6,850) | 14,708 |
Cash flows from investing activities: | ||
Acquisition of mineral property interests | (450) | |
Additions to property and equipment | (350) | (145) |
Proceeds from disposal of property and equipment | 36 | |
Cash used in investing activities | (314) | (595) |
Cash flows from financing activities: | ||
Repayment of short-term bank indebtedness | (3,395) | |
Return of capital distribution (note 8) | (1,498) | (1,489) |
Share repurchase | (582) | |
Proceeds from exercise of stock options | 47 | |
Cash used in financing activities | (1,451) | (5,466) |
Effect of exchange rate change on cash and cash equivalents | 65 | 102 |
(Decrease) increase in cash and cash equivalents | (8,550) | 8,749 |
Cash and cash equivalents, beginning of period | 37,440 | 25,874 |
Cash and cash equivalents, end of period | 28,890 | 34,623 |
Reconciliation of net income (loss) to cash provided by operating activities: | ||
Net income (loss) | (3,018) | 12,985 |
Adjustments to reconcile net income (loss) from operating activities: | ||
Income from investment in Minera Santa Cruz S.A., net of amortization (note 5) | (190) | (4,963) |
Other-than-temporary impairment on marketable equity securities (note 2) | 285 | |
Gain on disposal of fixed assets | (11) | |
Recovery of deferred income taxes (note 7) | (2,656) | (1,867) |
Gain on sale of marketable securities | (22) | |
Stock-based compensation | 330 | 353 |
Depreciation | 327 | 239 |
Accretion of asset retirement obligation | 105 | 124 |
Amortization of mineral property interests and asset retirement obligations | 533 | 322 |
Foreign exchange gain | (65) | (102) |
Unrealized gain on derivative instruments (note 2) | (1,791) | |
Change in non-cash working capital items: | ||
(Increase) decrease in VAT taxes receivable, net of collection of $448 (2016 - $6,771) | (2,040) | 5,905 |
Increase (decrease) in other assets related to operations | (3,655) | 206 |
Increase (decrease) in liabilities related to operations | 2,756 | (1,383) |
Dividends received from Minera Santa Cruz S.A | 2,525 | 2,626 |
Cash (used in) provided by operating activities | $ (6,850) | $ 14,708 |
CONSOLIDATED STATEMENTS OF CAS7
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
Collection of VAT taxes receivable | $ 448 | $ 6,771 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2017 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 NATURE OF OPERATIONS Nature of Operations and Basis of Presentation McEwen Mining Inc. (the “Company”) was organized under the laws of the State of Colorado on July 24, 1979. The Company is engaged in the exploration, development, production and sale of gold and silver. On January 24, 2012, the Company changed its name from U.S. Gold Corporation to McEwen Mining Inc. after the completion of the acquisition of Minera Andes Inc. by way of a statutory plan of arrangement under the laws of the Province of Alberta, Canada. The Company operates in Argentina, Mexico, and the United States. It owns a 49% interest in Minera Santa Cruz S.A. (“MSC”), owner of the producing San José silver-gold mine in Santa Cruz, Argentina, which is operated by the majority owner of the joint venture, Hochschild Mining plc. It also owns and operates the El Gallo 1 mine in Sinaloa, Mexico. Finally, the Company owns the Los Azules copper deposit in San Juan, Argentina, the El Gallo 2 project in Sinaloa, Mexico, the Gold Bar project in Nevada in the United States, and a portfolio of exploration properties in Argentina, Mexico and Nevada. The interim consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures included are adequate to make the information presented not misleading. In management’s opinion, the unaudited Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2017 and 2016, the Consolidated Balance Sheets as at March 31, 2017 (unaudited) and December 31, 2016, the unaudited Consolidated Statement of Changes in Shareholders’ Equity for the three months ended March 31, 2017 and 2016, and the unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016, contained herein, reflect all adjustments, consisting solely of normal recurring items, which are necessary for the fair presentation of the Company’s financial position, results of operations and cash flows on a basis consistent with that of the Company’s prior audited consolidated financial statements. However, the results of operations for the interim periods may not be indicative of results to be expected for the full fiscal year. Therefore, these financial statements should be read in conjunction with the audited financial statements and notes thereto and summary of significant accounting policies included in the Company’s annual report on Form 10-K for the year ended December 31, 2016. Except as noted below, there have been no material changes to the footnotes from those accompanying the audited consolidated financial statements contained in the Company’s Form 10-K for the year ended December 31, 2016. The Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated. Recently Adopted Accounting Pronouncements Compensation – Stock Compensation – Improvements to Employee Share-Based Payment Accounting: In March 2016, the FASB issued ASU No. 2016-09, which changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The update to the standard is effective for the Company beginning after December 5, 2016, with early adoption permitted. Adoption of this guidance by the Company, effective March 31, 2017 had no impact on the Consolidated Financial Statements or disclosures. Recently Issued Accounting Pronouncements Business Combinations: Definition of a business: In January 2017, the FASB issued ASU No. 2017-01 which changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The update to the standard is effective for the Company beginning after December 15, 2017, with early application permitted. The Company is currently evaluating the effect of this amendment and the impact it will have on the Company’s Consolidated Financial Statements. Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory: In October 2016, the FASB issued ASU No. 2016-16, to modify the current exception to income tax accounting that required companies to defer the income tax effect of certain intercompany transactions. ASU No. 2016-16 only allows companies to defer the income tax effect of intercompany inventory transactions under an exception to the guidance on income taxes that currently applies to intercompany sales and transfers of all assets. The update to the standard is effective for the Company beginning January 1, 2018, with early application permitted as of the beginning of an annual period. The Company is currently evaluating the effect of this amendment and the impact it will have on the Company’s Consolidated Financial Statements. Revenue from Contracts with Customers: In 2016, the FASB issued three separate accounting standard updates regarding Topic 606: ASU 2016-08, ASU 2016-10 and ASU 2016-12. These ASUs outline amendments to Topic 606 which is not yet effective, including reporting revenue gross versus net, identifying performance obligations and licensing and narrow-scope improvements and practical expedients. The effective date and transition requirements for the amendments listed in these updates are the same as the effective date and transition requirements for Topic 606 (and any other Topic amended by Update 2014-09) which is January 1, 2018, with earlier application permitted. The Company will not be early adopting Topic 606. The new guidance permits two methods of adoption: (i) the full retrospective method, under which comparative periods would be restated, and the cumulative impact of applying the standard would be recognized as at January 1, 2017, the earliest period presented; and (ii) the modified retrospective method, under which comparative periods would not be restated and the cumulative impact of applying the standard would be recognized at the date of initial adoption, January 1, 2018. The Corporation expects to use the modified retrospective approach; however, it continues to monitor industry developments. Any significant industry developments could change the Company’s expected method of adoption. The Company is currently evaluating the effect of this amendment and the impact it will have on the Company’s consolidated financial statements. We have identified two potential areas of impact including bullion and doré sales from our Mexico Operations and doré and concentrate sales from the San Jose mine which has an effect on the income (loss) from the investment in MSC under the equity method of accounting. To date, the Company has reviewed a sample of sale agreements, and management is still in the process of completing the assessment. Based on the analysis completed thus far, the standard may have an impact on the timing of revenue recognition due to a potential change in timing of control being transferred to the customer. The Company also continues to assess the impact of the new standard on other aspects of revenue recognition, such as potential impact on insurance and shipping services arranged by the Company on behalf of its customers. We will continue to assess and implement the new revenue recognition policy and any related impact on our internal controls with an expectation of having an update to the impact of the standard in the second quarter of 2017. Leases – Amendments: In February 2016, the FASB issued ASU 2016-02 “leases (Topic 842)” which core principle is that a lessee should recognize the assets and the liabilities that arise from leases, including operating leases. Under the new requirements, a lessee will recognize in the statement of financial position a liability to make lease payments (the lease liability) and the right-of-use asset representing the right to the underlying asset for the lease term. For leases with a term of twelve months or less, the lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from the previous GAAP. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within such fiscal year, with early adoption permitted. The ASU requires a modified retrospective transition method with the option to elect a package of practical expedients. The Company is evaluating the effect of this amendment and the impact it will have on the Company’s Consolidated Financial Statements. Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities: In January 2016, the FASB issued ASU No. 2016-01, which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 is effective for the Company beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the effect of this amendment and the impact it will have on the Company’s Consolidated Financial Statements. |
INVESTMENTS
INVESTMENTS | 3 Months Ended |
Mar. 31, 2017 | |
INVESTMENTS | |
INVESTMENTS | NOTE 2 INVESTMENTS The Company’s investment portfolio consists of marketable equity securities and warrants of certain publicly-traded companies. The Company classifies the marketable equity securities as available-for-sale securities, which are recorded at fair value based upon quoted market prices. The warrants are recorded at fair value using the Black-Scholes option pricing model. The following is a summary of the balances as of March 31, 2017 and December 31, 2016: Other Statement of Opening Additions Disposals Comprehensive Operations Fair Value balance during during Income (Loss) (Loss) end of the As of March 31, 2017 (January 1) period period (pre-tax) Income period Marketable equity securities $ 6,749 $ — $ — $ 4,995 $ — $ 11,744 Warrants 1,794 — — — 1,791 3,585 Investments $ 8,543 $ — $ — $ 4,995 $ 1,791 $ 15,329 Other Statement of Opening Additions Disposals Comprehensive Operations Fair Value balance during during Income (Loss) (Loss) end of the As of December 31, 2016 (January 1) year year (pre-tax) Income year Marketable equity securities $ 1,032 $ 4,004 $ (470) $ 3,043 $ (860) $ 6,749 Warrants — 415 — — 1,379 1,794 Investments $ 1,032 $ 4,419 $ (470) $ 3,043 $ 519 $ 8,543 As of March 31, 2017, the cost of the marketable equity securities and warrants was approximately $4.9 million (December 31, 2016 - $4.9 million). The Company maintains a portfolio of warrants on equity interest in publicly traded securities for investment purposes. As the warrants meet the definition of derivative instruments, unrealized gains or losses arising from their revaluation are recorded in the Consolidated Statement of Operations and Comprehensive Income (Loss). During the three months ended March 31, 2017, the Company recorded an unrealized gain of $1.8 million (March 31, 2016 - $nil). The gains and losses for available-for-sale securities are included in other comprehensive income and not reported in Net Income (Loss) unless the securities are sold or if there is an other-than- temporary decline in fair value below cost. During the three months ended March 31, 2017, the Company reviewed its investment portfolio to determine if any security was other-than-temporarily impaired (“OTTI”). An OTTI security would require the Company to record an impairment charge in the statement of operations in the period any such determination is made. In making this determination, the Company evaluated, among other things, the duration and extent to which the fair value of a security was less than its cost; the financial condition of the issuer and any changes thereto; and the Company’s intent to sell, or whether it will more likely than not be required to sell, the security before recovery of its amortized cost basis. From this assessment, the Company concluded that none of its marketable equity securities were considered OTTI (March 31, 2016 - $0.3 million). The Company recorded a gain, net of tax, in other comprehensive income, of $3.9 million ($5.0 million pre-tax) for the three months ended March 31, 2017. The gain was recorded in accumulated other comprehensive income and is reported as a separate line item in the shareholders' equity section of the balance sheet. During the three months ended March 31, 2016, the Company recognized a loss, net of tax, in other comprehensive loss of $0.1 million. |
INVENTORIES
INVENTORIES | 3 Months Ended |
Mar. 31, 2017 | |
INVENTORIES | |
INVENTORIES | NOTE 3 INVENTORIES Inventories at March 31, 2017 and December 31, 2016 consist of the following: March 31, 2017 December 31, 2016 Material on leach pads $ 16,611 $ 14,267 In-process inventory 3,572 4,953 Stockpiles 2,723 1,102 Precious metals 5,059 5,035 Materials and supplies 1,488 1,263 Inventories $ 29,453 $ 26,620 |
MINERAL PROPERTY INTEREST
MINERAL PROPERTY INTEREST | 3 Months Ended |
Mar. 31, 2017 | |
MINERAL PROPERTY INTEREST | |
MINERAL PROPERTY INTEREST | NOTE 4 MINERAL PROPERTY INTEREST 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 for impairment, in accordance with its accounting policy. The definition of proven and probable reserves is set forth in the SEC Industry Guide 7. If proven and probable reserves exist at the Company’s properties, the relevant capitalized mineral property interests and asset retirement costs are charged to expense based on the units of production method upon commencement of production. Since the Company has not completed feasibility or other studies sufficient to characterize the mineralized material at the El Gallo 1 Mine as proven or probable reserves, the amortization of the capitalized mineral property interests and asset retirement costs are charged to expense based on the straight-line method over the estimated useful life of the mine. For the three months ended March 31, 2017, the Company recorded $0.5 million (March 31, 2016, $0.3 million), of amortization expense related to the El Gallo 1 Mine, which is included in Production Costs Applicable to Sales in the Consolidated Statement of Operations and Comprehensive Income (Loss). |
INVESTMENT IN MINERA SANTA CRUZ
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | 3 Months Ended |
Mar. 31, 2017 | |
INVESTMENT IN MINERA SANTA CRUZ S.A. (“MSC”) - SAN JOSE MINE | |
INVESTMENT IN MINERA SANTA CRUZ S.A. (“MSC”) - SAN JOSE MINE | NOTE 5 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, are translated into U.S. GAAP by MSC’s management. As such, the summarized financial data presented under this heading is in accordance with U.S. GAAP. The Company’s 49% attributable share of results of operations from its investment in MSC was income of $0.2 million for the three months ended March 31, 2017 (March 31, 2016 - $5.0 million). These amounts include 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 mineral property interest fair value increment and deferred tax liability associated with the investment in MSC recorded as part of the acquisition of Minera Andes. For the three months ended March 31, 2017, income tax recovery from the depreciation of the fair value increment was almost completely offset by the impact of the appreciation of the Argentina peso relative to the U.S. dollar on the deferred tax liability. In the comparative period in 2016, the impact of the devaluation of the Argentina peso relative to the U.S. dollar resulted in higher recovery of deferred income taxes. During the period ended March 31, 2017, the Company did not identify any potential triggering events for impairment in relation to its investment in MSC, and consequently the Company did not record any impairment during the period. During the three months ended March 31, 2017, the Company received $2.5 million in dividends from MSC, compared to $2.6 million during the same period in 2016. Changes in the Company’s investment in MSC for the three months ended March 31, 2017 and year ended December 31, 2016 are as follows: March 31, 2017 December 31, 2016 Investment in MSC, beginning of the period $ 162,320 $ 167,107 Attributable net income (loss) from MSC 2,147 15,961 Amortization of fair value increments (2,069) (12,274) Income tax recovery 112 9,264 Dividend distribution received (2,525) (17,738) Investment in MSC, end of the period $ 159,985 $ 162,320 A summary of the operating results from MSC for the three months ended March 31, 2017 and 2016 is as follows: Three months ended March 31, 2017 2016 Minera Santa Cruz S.A. (100%) Net Sales $ 48,343 $ 52,072 Production costs applicable to sales (36,699) (37,727) Net income 4,381 8,728 Portion attributable to McEwen Mining Inc. (49%) Net income $ 2,147 $ 4,042 Amortization of fair value increments (2,069) (3,682) Income tax recovery 112 4,603 Income from investment in MSC, net of amortization $ 190 $ 4,963 As of March 31, 2017, MSC had current assets of $104.1 million, total assets of $461.9 million, current liabilities of $58.3 million and total liabilities of $135.3 million on an unaudited basis. These balances include the adjustments to fair value and amortization of the fair value increments arising from the purchase price allocation, net of impairment charges. Excluding the fair value increments from the purchase price allocation, net of impairment charges, MSC had current assets of $103.3 million, total assets of $286.6 million, current liabilities of $62.4 million, and total liabilities of $87.2 million as at March 31, 2017. |
RECLAMATION OBLIGATIONS
RECLAMATION OBLIGATIONS | 3 Months Ended |
Mar. 31, 2017 | |
RECLAMATION OBLIGATIONS | |
RECLAMATION OBLIGATIONS | NOTE 6 RECLAMATION OBLIGATIONS The Company is responsible for reclamation of certain past and future disturbances at its properties. The two most significant properties subject to these obligations are the Tonkin property in Nevada and the El Gallo 1 mine in Mexico. The Final Plan for Permanent Closure (“FPPC”) and the Amended Plan of Operations for the Tonkin property was approved by the Nevada Division of Environmental Protection (“NDEP”) and by the Bureau of Land Management (“BLM”) pursuant to the Finding of No Significant Impact in March 2012 and September 2015, respectively. Subsequently, on October 3, 2015 the BLM requested an updated bonding requirement in the amount of $3.6 million, which is covered within the surety bonds obtained by the Company as of March 31, 2017. Under current Mexican regulations, surety bonding of projected reclamation costs is not required. A reconciliation of the Company’s asset retirement obligations for the three months ended March 31, 2017 and for the year ended December 31, 2016 are as follows: March 31, 2017 December 31, 2016 Asset retirement obligation liability, beginning of the period $ 9,843 $ 7,784 Settlements (7) (66) Accretion of liability 105 506 Adjustment reflecting updated estimates — 1,619 Asset retirement obligation liability, ending balance $ 9,941 $ 9,843 Current portion (530) (537) Non-current portion $ 9,411 $ 9,306 |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2017 | |
INCOME TAXES. | |
INCOME TAXES | NOTE 7 INCOME TAXES The Company’s income tax expense differs from the amount computed by applying the U.S. federal and state statutory corporate income tax rate of 35% to income before taxes primarily as a result of valuation allowances being applied to losses, changes in the deferred tax asset associated with marketable securities and changes in the deferred tax liability associated with mineral property interests acquired in the Minera Andes acquisition. The deferred tax liability is impacted by fluctuations in the foreign exchange rate between the Argentina peso and U.S. dollar. For the three months ended March 31, 2017, the Company reduced the deferred income tax recovery by $1.6 million (March 31, 2016 - $1.9 million) as a result of the increased exploration spending in Los Azules, giving rise to a deferred tax benefit partially offset by the appreciation of the Argentina Peso. The Company also recorded an income tax recovery of $1.1 million (March 31, 2016 - $nil) due to the increase in value of its publicly traded securities classified as available for sale instruments, with the deferred tax benefit recognized in accumulated other comprehensive income. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2017 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' EQUITY | NOTE 8 SHAREHOLDERS’ EQUITY During the three months ended March 31, 2017, 20,000 shares of common stock were issued upon exercise of stock options under the Equity Incentive Plan, at the weighted average exercise price of $2.34 per share for proceeds of $0.1 million. This compares to nil shares of common stock issued upon exercise of stock options during the same period of 2016 under the Equity Incentive Plan. During the three months ended March 31, 2017, the Company paid a semi-annual return of capital distribution of $0.005 (March 31, 2016 - $0.005), per share of common stock, for a total of $1.5 million (March 31, 2016 - $1.5 million). |
NET (LOSS) INCOME PER SHARE
NET (LOSS) INCOME PER SHARE | 3 Months Ended |
Mar. 31, 2017 | |
NET (LOSS) INCOME PER SHARE | |
NET (LOSS) INCOME PER SHARE | NOTE 9 NET (LOSS) INCOME PER SHARE Basic net (loss) income per share is computed by dividing the net (loss) income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed similarly except that the weighted average number of common shares is increased to reflect all dilutive instruments. Below is a reconciliation of the basic and diluted weighted average number of common shares outstanding and the computations for basic and diluted net income per share for the three months ended March 31, 2017 and 2016: Three months ended March 31, 2017 2016 (amounts in thousands, except net income per share) Net (loss) income $ (3,018) $ 12,985 Weighted average common shares outstanding: 299,575 298,242 Effect of employee stock-based awards — 312 Diluted shares outstanding: 299,575 298,554 Net (loss) income per share: Basic $ (0.01) $ 0.04 Diluted $ (0.01) $ 0.04 For the three months ended March 31, 2017, as the Company was in a loss position, all potentially dilutive instruments were anti-dilutive and therefore not included in the calculation of diluted net loss per share. For the three months ended March 31, 2016, options to purchase 4.6 million shares of common stock outstanding, at an average exercise price of $3.26 per share, which were not included in the computation of diluted weighted average shares because the exercise price exceeded the average price of the Company’s common stock during that period. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2017 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 10 RELATED PARTY TRANSACTIONS The Company recorded the following expense (income) in respect to the related parties outlined below: Three months ended March 31, 2017 2016 Lexam L.P. $ 62 $ 20 Lexam VG Gold (33) 23 REVlaw 49 23 The Company has the following outstanding accounts payable balance in respect to the related parties outlined below: March 31, December 31, 2017 2016 Lexam L.P. $ — $ — Lexam VG Gold — 27 REVlaw 21 148 An aircraft owned by Lexam L.P. (which is controlled by Robert R. McEwen, limited partner and beneficiary of Lexam L.P. and the Company’s Chairman and Chief Executive Officer) has been made available to the Company in order to expedite business travel. In his role as Chairman and Chief Executive Officer of the Company, Mr. McEwen must travel extensively and frequently on short notice. Mr. McEwen is able to charter the aircraft from Lexam L.P. at a preferential rate approved by the Company’s independent board members under a policy whereby only the variable expenses of operating this aircraft for business related travel are eligible for reimbursement by the Company. Robert R. McEwen was the Non-Executive Chairman of Lexam VG Gold (“Lexam”) and held 27% ownership in Lexam. The Company agreed to share services with Lexam VG Gold Inc. including rent, personnel, office expenses and other administrative services. These transactions were in the normal course of business. Subsequent to the period-end, on April 26, 2017, the Company completed the acquisition of 100% of the issued and outstanding securities of Lexam. Refer to Note 14 Subsequent Events for further details . REVlaw is a company owned by Ms. Carmen Diges, General Counsel of the Company. The legal services of Ms. Diges as General Counsel are provided by REVlaw in the normal course of business. These legal fees have been recorded at their exchange amount and these transactions are in the normal course of business. |
OPERATING SEGMENT REPORTING
OPERATING SEGMENT REPORTING | 3 Months Ended |
Mar. 31, 2017 | |
OPERATING SEGMENT REPORTING | |
OPERATING SEGMENT REPORTING | NOTE 11 OPERATING SEGMENT REPORTING McEwen Mining is a mining and minerals exploration company focused on precious metals in Argentina, Mexico and the United States. The Company’s chief operating decision maker (“CODM”) reviews the operating results, assesses performance and makes decisions about allocation of resources to these segments at the geographic region level or major mine/project where the economic characteristics of the individual mines or projects are not alike. As a result, these operating segments also represent the Company’s reportable segments. The Company’s business activities that are not considered operating segments and not provided to the CODM for review are included in Corporate and other and are provided in this note for reconciliation purposes. The CODM reviews segment income (loss), defined as gold and silver sales less production costs applicable to sales, mine development costs, exploration costs, property holding costs and general and administrative expenses for all segments except for the MSC segment which is evaluated based on the attributable equity income. Gold and silver sales and production costs applicable to sales for the reportable segments are reported net of intercompany transactions. Significant information relating to the Company’s reportable operating segments is summarized in the tables below: Total Segment Three months ended March 31, 2017 Mexico MSC Los Azules Nevada Income (loss) Gold and silver sales $ 14,833 $ — $ — $ — $ 14,833 Production costs applicable to sales (6,984) — — — (6,984) Mine development costs (155) — — (960) (1,115) Exploration costs (1,539) — (6,301) (484) (8,324) Property holding costs (982) — (1) (205) (1,188) General and administrative expenses (839) — (208) (426) (1,473) Income from investment in Minera Santa Cruz S.A. (net of amortization) — 190 — — 190 Segment income (loss) $ 4,334 $ 190 $ (6,510) $ (2,075) $ (4,061) Corporate and other Other exploration (120) General and administrative expenses (2,820) Depreciation (327) Revision of estimates and accretion of reclamation obligations (105) Interest and other expense (68) Gain on sale of assets 11 Unrealized gain on derivatives 1,791 Foreign currency gain 25 Net loss before income taxes $ (5,674) Total Segment Three months ended March 31, 2016 Mexico MSC Los Azules Nevada Income (loss) Gold and silver sales $ 21,190 $ — $ — $ — $ 21,190 Production costs applicable to sales (9,067) — — — (9,067) Mine development costs (78) — — (620) (698) Exploration costs (785) — (310) (588) (1,683) Property holding costs (830) — (93) (224) (1,147) General and administrative expenses (719) — (39) (55) (813) Income from investment in Minera Santa Cruz S.A. (net of amortization) — 4,963 — — 4,963 Segment income (loss) $ 9,711 4,963 $ (442) $ (1,487) $ 12,745 Corporate and other Other exploration (57) General and administrative expenses (1,955) Depreciation (239) Revision of estimates and accretion of reclamation obligations (124) Interest and other income 228 Other-than-temporary impairment on marketable equity securities (285) Gain on sale of marketable securities 22 Foreign currency gain 783 Net income before income taxes $ 11,118 Geographic information Long-lived Assets as at Revenue (1) March 31, December 31 Three months ended March 31, 2017 2016 2017 2016 Canada $ 1,409 $ 663 $ — $ — Mexico 27,098 27,582 14,833 21,190 USA 37,646 37,620 — — Argentina (2) 351,510 353,879 — — Total consolidated $ 417,663 $ 419,744 $ 14,833 $ 21,190 (1) Presented based on the location from which the product originated. (2) Includes Investment in MSC of $160.0 million as of March 31, 2017 (December 31, 2016 - $162.3 million). |
FAIR VALUE ACCOUNTING
FAIR VALUE ACCOUNTING | 3 Months Ended |
Mar. 31, 2017 | |
FAIR VALUE ACCOUNTING | |
FAIR VALUE ACCOUNTING | NOTE 12 FAIR VALUE ACCOUNTING Fair value accounting establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below: Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3 Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). Assets and liabilities measured at fair value on a recurring basis The following table identifies the fair value of the Company’s financial assets and liabilities as reported in the Consolidated Balance Sheets at March 31, 2017 and December 31, 2016 by level within the fair value hierarchy. As required by accounting guidance, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Fair Value as at March 31, 2017 Total Level 1 Level 2 Level 3 Assets: Investments $ 15,329 $ 11,744 $ 3,585 $ — Total $ 15,329 $ 11,744 $ 3,585 $ — Fair Value as at December 31 2016 Total Level 1 Level 2 Level 3 Assets: Investments $ 8,543 $ 6,749 $ 1,794 $ — Total $ 8,543 $ 6,749 $ 1,794 $ — The Company's investments include marketable equity securities which are exchange traded, and which are valued using quoted market prices in active markets and are classified within Level 1 of the fair value hierarchy. The fair value of the investments is calculated as the quoted market price of the marketable equity security multiplied by the number of shares held by the Company. Furthermore, as noted in Note 2, Investments, the Company’s investments also include warrants to purchase common stock of certain extractive industry companies. Since these warrants are not traded on an active market, they are valued using the Black-Scholes option pricing model, and classified within Level 2 of the fair value hierarchy. The main inputs used in the valuation of the warrants are volatility, interest rate, dividend yield and exercise price of the instruments. The fair value of other financial assets and liabilities were assumed to approximate their carrying values due to their short-term nature and historically negligible credit losses. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2017 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 13 COMMITMENTS AND CONTINGENCIES Surety Bonds As part of its ongoing business and operations, the Company is required to provide bonding for its environmental reclamation obligations in the United States. These surety bonds are available for draw down by the BLM in the event the Company does not perform its reclamation obligations. When the specific reclamation requirements are met, the beneficiary of the surety bonds will cancel and/or return the instrument to the issuing entity. The Company believes that it is in compliance with all applicable bonding obligations and will be able to satisfy future bonding requirements, through existing or alternative means, as they arise. As at March 31, 2017, there were $4.8 million of surety bonds outstanding (December 31, 2016 - $4.8 million). The annual financing fees are 1.5% of the value of the surety bonds, with a required initial deposit of 10% ($0.5 million), which is included in Other Assets in the Consolidated Balance Sheet. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2017 | |
SUBSEQUENT EVENTS. | |
SUBSEQUENT EVENTS | NOTE 14 SUBSEQUENT EVENTS Acquisition of Lexam VG Gold Inc. (“Lexam”) On April 26, 2017, the Company completed the acquisition of 100% of the issued and outstanding common shares of Lexam by the way of the Arrangement Agreement dated February 13, 2017 and related Plan of Arrangement (the “Arrangement”). Pursuant to the Arrangement, each common share of Lexam was exchanged for 0.056 of a common share of the Company and each option to purchase a common share of Lexam was exchanged for a replacement option entitling the holder to acquire 0.056 share of the Company’s common stock. A total 12,281,295 shares of the Company’s common stock and 405,740 subscription receipts was issued at closing and Lexam became a wholly-owned subsidiary of the Company. The Company’s Chairman and Chief Executive Officer, Robert R. McEwen, was also the non-executive Chairman of Lexam and he or his affiliates were principal shareholders of Lexam. In order to comply with NYSE rules, Mr. McEwen was not entitled to receive shares of the Company’s common stock in exchange for his Lexam Shares in an amount representing more than 1% of the issued and outstanding shares of the Company without obtaining the prior approval of the Company’s shareholders. As a result, an affiliate of Mr. McEwen was issued subscription receipts at the closing of the Arrangement and the Company’s shareholders are expected to vote on whether to approve the issuance of additional shares upon conversion of the subscription receipts at the 2017 annual meeting. Each subscription receipt issued at the closing will automatically convert into one additional share of the Company’s common stock upon receipt of approval from the Company’s shareholders at the annual meeting scheduled for May 25, 2017. If the shareholders do not approve the issuance of the additional shares, the subscription receipts will convert into the right to receive a sum of cash based on the closing price of the Company’s common stock on the date immediately preceding the annual meeting. If the subscription receipts are converted into common stock, the amount of the Company’s common stock issued in connection with the Arrangement would be approximately 4% of the outstanding shares of the Company’s common stock immediately preceding the effective date of the Arrangement. The Company concluded that the acquired assets and assumed liabilities do not constitute a “business” under U.S. GAAP and accordingly, the acquisition will be accounted for as an asset acquisition rather than a business combination. Transaction costs associated with the acquisition totaling $0.8 million were capitalized to Other Non-Current Assets for the Consolidated Balance Sheet at March 31, 2017. |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
INVESTMENTS | |
Summary of investment portfolio | Other Statement of Opening Additions Disposals Comprehensive Operations Fair Value balance during during Income (Loss) (Loss) end of the As of March 31, 2017 (January 1) period period (pre-tax) Income period Marketable equity securities $ 6,749 $ — $ — $ 4,995 $ — $ 11,744 Warrants 1,794 — — — 1,791 3,585 Investments $ 8,543 $ — $ — $ 4,995 $ 1,791 $ 15,329 Other Statement of Opening Additions Disposals Comprehensive Operations Fair Value balance during during Income (Loss) (Loss) end of the As of December 31, 2016 (January 1) year year (pre-tax) Income year Marketable equity securities $ 1,032 $ 4,004 $ (470) $ 3,043 $ (860) $ 6,749 Warrants — 415 — — 1,379 1,794 Investments $ 1,032 $ 4,419 $ (470) $ 3,043 $ 519 $ 8,543 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
INVENTORIES | |
Schedule of inventories | March 31, 2017 December 31, 2016 Material on leach pads $ 16,611 $ 14,267 In-process inventory 3,572 4,953 Stockpiles 2,723 1,102 Precious metals 5,059 5,035 Materials and supplies 1,488 1,263 Inventories $ 29,453 $ 26,620 |
INVESTMENT IN MINERA SANTA CR24
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
INVESTMENT IN MINERA SANTA CRUZ S.A. (“MSC”) - SAN JOSE MINE | |
Schedule of change in the entity's investment in MSC | March 31, 2017 December 31, 2016 Investment in MSC, beginning of the period $ 162,320 $ 167,107 Attributable net income (loss) from MSC 2,147 15,961 Amortization of fair value increments (2,069) (12,274) Income tax recovery 112 9,264 Dividend distribution received (2,525) (17,738) Investment in MSC, end of the period $ 159,985 $ 162,320 |
Summary of MSC's financial information from operations | Three months ended March 31, 2017 2016 Minera Santa Cruz S.A. (100%) Net Sales $ 48,343 $ 52,072 Production costs applicable to sales (36,699) (37,727) Net income 4,381 8,728 Portion attributable to McEwen Mining Inc. (49%) Net income $ 2,147 $ 4,042 Amortization of fair value increments (2,069) (3,682) Income tax recovery 112 4,603 Income from investment in MSC, net of amortization $ 190 $ 4,963 |
RECLAMATION OBLIGATIONS (Tables
RECLAMATION OBLIGATIONS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
RECLAMATION OBLIGATIONS | |
Schedule of reconciliation of asset retirement obligations | March 31, 2017 December 31, 2016 Asset retirement obligation liability, beginning of the period $ 9,843 $ 7,784 Settlements (7) (66) Accretion of liability 105 506 Adjustment reflecting updated estimates — 1,619 Asset retirement obligation liability, ending balance $ 9,941 $ 9,843 Current portion (530) (537) Non-current portion $ 9,411 $ 9,306 |
NET (LOSS) INCOME PER SHARE (Ta
NET (LOSS) INCOME PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
NET (LOSS) INCOME PER SHARE | |
Schedule of reconciliation of the basic weighted average number of common shares and the computations for basic loss per share | Three months ended March 31, 2017 2016 (amounts in thousands, except net income per share) Net (loss) income $ (3,018) $ 12,985 Weighted average common shares outstanding: 299,575 298,242 Effect of employee stock-based awards — 312 Diluted shares outstanding: 299,575 298,554 Net (loss) income per share: Basic $ (0.01) $ 0.04 Diluted $ (0.01) $ 0.04 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
RELATED PARTY TRANSACTIONS | |
Schedule of related party expense (income) and outstanding accounts payable (receivable) | The Company recorded the following expense (income) in respect to the related parties outlined below: Three months ended March 31, 2017 2016 Lexam L.P. $ 62 $ 20 Lexam VG Gold (33) 23 REVlaw 49 23 The Company has the following outstanding accounts payable balance in respect to the related parties outlined below: March 31, December 31, 2017 2016 Lexam L.P. $ — $ — Lexam VG Gold — 27 REVlaw 21 148 |
OPERATING SEGMENT REPORTING (Ta
OPERATING SEGMENT REPORTING (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
OPERATING SEGMENT REPORTING | |
Schedule of the financial information relating to the Company's segments | Total Segment Three months ended March 31, 2017 Mexico MSC Los Azules Nevada Income (loss) Gold and silver sales $ 14,833 $ — $ — $ — $ 14,833 Production costs applicable to sales (6,984) — — — (6,984) Mine development costs (155) — — (960) (1,115) Exploration costs (1,539) — (6,301) (484) (8,324) Property holding costs (982) — (1) (205) (1,188) General and administrative expenses (839) — (208) (426) (1,473) Income from investment in Minera Santa Cruz S.A. (net of amortization) — 190 — — 190 Segment income (loss) $ 4,334 $ 190 $ (6,510) $ (2,075) $ (4,061) Corporate and other Other exploration (120) General and administrative expenses (2,820) Depreciation (327) Revision of estimates and accretion of reclamation obligations (105) Interest and other expense (68) Gain on sale of assets 11 Unrealized gain on derivatives 1,791 Foreign currency gain 25 Net loss before income taxes $ (5,674) Total Segment Three months ended March 31, 2016 Mexico MSC Los Azules Nevada Income (loss) Gold and silver sales $ 21,190 $ — $ — $ — $ 21,190 Production costs applicable to sales (9,067) — — — (9,067) Mine development costs (78) — — (620) (698) Exploration costs (785) — (310) (588) (1,683) Property holding costs (830) — (93) (224) (1,147) General and administrative expenses (719) — (39) (55) (813) Income from investment in Minera Santa Cruz S.A. (net of amortization) — 4,963 — — 4,963 Segment income (loss) $ 9,711 4,963 $ (442) $ (1,487) $ 12,745 Corporate and other Other exploration (57) General and administrative expenses (1,955) Depreciation (239) Revision of estimates and accretion of reclamation obligations (124) Interest and other income 228 Other-than-temporary impairment on marketable equity securities (285) Gain on sale of marketable securities 22 Foreign currency gain 783 Net income before income taxes $ 11,118 |
Schedule Of Geographic Information | Long-lived Assets as at Revenue (1) March 31, December 31 Three months ended March 31, 2017 2016 2017 2016 Canada $ 1,409 $ 663 $ — $ — Mexico 27,098 27,582 14,833 21,190 USA 37,646 37,620 — — Argentina (2) 351,510 353,879 — — Total consolidated $ 417,663 $ 419,744 $ 14,833 $ 21,190 (1) Presented based on the location from which the product originated. (2) Includes Investment in MSC of $160.0 million as of March 31, 2017 (December 31, 2016 - $162.3 million). |
FAIR VALUE ACCOUNTING (Tables)
FAIR VALUE ACCOUNTING (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
FAIR VALUE ACCOUNTING | |
Schedule of assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy | Fair Value as at March 31, 2017 Total Level 1 Level 2 Level 3 Assets: Investments $ 15,329 $ 11,744 $ 3,585 $ — Total $ 15,329 $ 11,744 $ 3,585 $ — Fair Value as at December 31 2016 Total Level 1 Level 2 Level 3 Assets: Investments $ 8,543 $ 6,749 $ 1,794 $ — Total $ 8,543 $ 6,749 $ 1,794 $ — |
NATURE OF OPERATIONS AND SUMM30
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | Mar. 31, 2017 | Mar. 31, 2016 |
MSC | ||
Ownership interest (as a percent) | 49.00% | 49.00% |
INVESTMENTS (Details)
INVESTMENTS (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 |
Investments rollforward | |||||
Opening balance | $ 8,543 | $ 1,032 | $ 1,032 | ||
Additions during the year | 4,419 | ||||
Disposals during the period | (470) | ||||
Other Comprehensive Income (Loss) (pre -tax) | 4,995 | 3,043 | |||
Statement of Operations (Loss) Income | 1,791 | 519 | |||
Fair Value end of the year | $ 15,329 | $ 8,543 | 15,329 | 8,543 | |
Fair value Available for Sale | |||||
Opening balance | 8,543 | ||||
Fair Value end of the period | 15,329 | 8,543 | 15,329 | 8,543 | |
Cost of purchase of marketable equity securities | 4,900 | 4,900 | |||
Unrealized gain on derivative instrument | 1,791 | ||||
Derivative, Gain on Derivative | 1,791 | ||||
Unrealized gain on available-for-sale securities | 3,900 | ||||
Gain on available-for-sale securities, pre-tax | 5,000 | ||||
Unrealized loss on available-for-sale securities | 100 | ||||
Other-than-temporary impairment on marketable equity securities | 285 | ||||
Marketable equity securities | |||||
Investments rollforward | |||||
Opening balance | 6,749 | 1,032 | 1,032 | ||
Additions during the year | 4,004 | ||||
Disposals during the period | (470) | ||||
Other Comprehensive Income (Loss) (pre -tax) | 4,995 | 3,043 | |||
Statement of Operations (Loss) Income | (860) | ||||
Fair Value end of the year | 11,744 | 6,749 | 11,744 | 6,749 | |
Fair value Available for Sale | |||||
Other-than-temporary impairment on marketable equity securities | 0 | $ 300 | |||
Warrants | |||||
Investments rollforward | |||||
Opening balance | 1,794 | ||||
Additions during the year | 415 | ||||
Statement of Operations (Loss) Income | 1,791 | 1,379 | |||
Fair Value end of the year | $ 3,585 | $ 1,794 | $ 3,585 | $ 1,794 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
INVENTORIES | ||
Ore on leach pads | $ 16,611 | $ 14,267 |
In-process inventory | 3,572 | 4,953 |
Stockpiles | 2,723 | 1,102 |
Precious metals | 5,059 | 5,035 |
Materials and supplies | 1,488 | 1,263 |
Inventories | $ 29,453 | $ 26,620 |
MINERAL PROPERTY INTEREST - Min
MINERAL PROPERTY INTEREST - Mineral Property Interests (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Mineral Property Interests | |||
Purchase price | $ 450 | ||
Mineral property interests | $ 242,107 | $ 242,640 | |
Amortization of mineral property interests and asset retirement obligations | 533 | 322 | |
El Gallo 1 mine | |||
Mineral Property Interests | |||
Amortization of mineral property interests and asset retirement obligations | $ 500 | $ 300 |
INVESTMENT IN MINERA SANTA CR34
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE - Equity Method Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | ||
Dividends received from Minera Santa Cruz S.A | $ 2,525 | $ 2,626 |
Corporate Venture | ||
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | ||
Ownership interest (as a percent) | 100.00% | 100.00% |
MSC | ||
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | ||
Ownership interest (as a percent) | 49.00% | 49.00% |
Results of operations | $ 200 | $ 5,000 |
Dividends received from Minera Santa Cruz S.A | $ 2,500 | $ 2,600 |
INVESTMENT IN MINERA SANTA CR35
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE - Changes in Company's Investment in MSC (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Change in the investment in MSC | |||
Investment in MSC, beginning balance | $ 162,320 | ||
Income tax recovery (note 10) | (2,656) | $ (1,867) | |
Investment in MSC, ending balance | 159,985 | $ 162,320 | |
MSC | |||
Change in the investment in MSC | |||
Investment in MSC, beginning balance | 162,320 | 167,107 | 167,107 |
Attributable net (loss) income from MSC | 2,147 | 4,042 | 15,961 |
Amortization of fair value increments | (2,069) | (3,682) | (12,274) |
Income tax recovery (note 10) | 112 | $ 4,603 | 9,264 |
Dividends received | (2,525) | (17,738) | |
Investment in MSC, ending balance | $ 159,985 | $ 162,320 |
INVESTMENT IN MINERA SANTA CR36
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE - Summary of Operating Results from MSC (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | |||
Income taxes recovery | $ 2,656 | $ 1,867 | |
Income (loss) from investment in MSC, net of amortization | $ 190 | $ 4,963 | |
Corporate Venture | |||
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | |||
Ownership interest (as a percent) | 100.00% | 100.00% | |
MSC | |||
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | |||
Net sales | $ 48,343 | $ 52,072 | |
Production costs applicable to sales | (36,699) | (37,727) | |
Net income (loss) | $ 4,381 | $ 8,728 | |
Ownership interest (as a percent) | 49.00% | 49.00% | |
Net income (loss) | $ 2,147 | $ 4,042 | $ 15,961 |
Amortization of fair value increments | 2,069 | 3,682 | 12,274 |
Income taxes recovery | (112) | (4,603) | $ (9,264) |
Income (loss) from investment in MSC, net of amortization | $ 190 | $ 4,963 |
INVESTMENT IN MINERA SANTA CR37
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE - Assets and Liabilities Associated with MSC (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | ||
Current assets | $ 81,715 | $ 78,574 |
Total assets | 499,378 | 498,318 |
Current liabilities | 23,366 | 20,581 |
Total liabilities | 56,603 | $ 55,279 |
MSC | ||
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | ||
Current assets | 104,100 | |
Total assets | 461,900 | |
Current liabilities | 58,300 | |
Total liabilities | 135,300 | |
MSC | Current Period Values Excluding Fair Value Increments And Impairment Charge | ||
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | ||
Current assets | 103,300 | |
Total assets | 286,600 | |
Current liabilities | 62,400 | |
Total liabilities | $ 87,200 |
RECLAMATION OBLIGATIONS (Detail
RECLAMATION OBLIGATIONS (Details) $ in Thousands | Oct. 03, 2015USD ($) | Mar. 31, 2017USD ($)property | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($) |
Mineral Property Interests | ||||
Number of most significant properties subject to reclamation obligations | property | 2 | |||
Surety bonds upfront deposit amount | $ 500 | |||
Changes in the asset retirement obligations | ||||
Asset retirement obligation liability, beginning balance | 9,843 | $ 7,784 | $ 7,784 | |
Settlements | (7) | (66) | ||
Accretion of liability | 105 | $ 124 | 506 | |
Adjustment reflecting updated estimates | 1,619 | |||
Asset retirement obligation liability, ending balance | 9,941 | 9,843 | ||
Current portion | (530) | (537) | ||
Non-current portion | $ 9,411 | $ 9,306 | ||
Tonkin Complex | ||||
Mineral Property Interests | ||||
Surety bonds upfront deposit amount | $ 3,600 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
INCOME TAXES. | ||
Statutory tax rate (as a percent) | 35.00% | |
Fluctuation in foreign exchange rate | $ 1,900 | |
Deferred income tax recovery due to increased explorations | $ 1,600 | |
Recovery of deferred income tax | $ 1,100 | $ 0 |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017USD ($)$ / sharesshares | Mar. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2016shares | |
Common stock issued | shares | 299,590,000 | 299,570,000 | |
Weighted average exercise price of stock options (in dollars per share) | $ / shares | $ 2.34 | ||
Exercise of stock options | $ | $ 47 | ||
Return of capital distribution | $ | $ 1,498 | $ 1,489 | |
Semi-annual return of capital payable (in dollars per share) | $ / shares | 0.005 | 0.005 | |
Equity Incentive Plan | |||
Shares of common stock issued upon exercise of stock options | shares | 0 | ||
Common Stock | |||
Shares of common stock issued upon exercise of stock options | shares | 20,000 | ||
Exercise of stock options | $ | $ 47 | ||
Return of capital distribution | $ | $ 1,498 | $ 1,489 | |
Share repurchase program (in shares) | shares | 558,000 |
NET (LOSS) INCOME PER SHARE (De
NET (LOSS) INCOME PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Net income (loss) | $ (3,018) | $ 12,985 |
Weighted average number of common shares | 299,575 | 298,242 |
Effect of employee stock-based awards | 312 | |
Diluted shares outstanding | 299,575 | 298,554 |
Net income (loss) per share: | ||
Net income (loss) per share | $ (0.01) | $ 0.04 |
Diluted (in dollars per share) | (0.01) | $ 0.04 |
Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Options outstanding not included in the computation of diluted weighted average shares because their effect would have been anti-dilutive (in shares) | 4,600 | |
Average exercise price of options outstanding (in dollars per share) | $ 3.26 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Apr. 26, 2017 | Dec. 31, 2016 | |
RELATED PARTY TRANSACTIONS | ||||
Accounts payable | $ 22,836 | $ 20,044 | ||
Lexam VG Gold | ||||
RELATED PARTY TRANSACTIONS | ||||
Interest acquired (as a percent) | 100.00% | |||
Entity Affiliated With Related Party | Lexam L.P. | ||||
RELATED PARTY TRANSACTIONS | ||||
Expense (income) | $ 62 | $ 20 | ||
Ownership percentage of individual | 27.00% | |||
Entity Affiliated With Related Party | Lexam VG Gold | ||||
RELATED PARTY TRANSACTIONS | ||||
Expense (income) | $ (33) | 23 | ||
Entity Affiliated With Related Party | Lexam VG Gold | Accounts payable | ||||
RELATED PARTY TRANSACTIONS | ||||
Accounts payable | 27 | |||
Entity Affiliated With Related Party | REVlaw | ||||
RELATED PARTY TRANSACTIONS | ||||
Expense (income) | 49 | $ 23 | ||
Entity Affiliated With Related Party | REVlaw | Accounts payable | ||||
RELATED PARTY TRANSACTIONS | ||||
Accounts payable | $ 21 | $ 148 |
OPERATING SEGMENT REPORTING (De
OPERATING SEGMENT REPORTING (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating Segment Reporting | ||||
Gold and silver sales | $ 14,833 | $ 21,190 | ||
Production costs applicable to sales | (6,984) | (9,067) | ||
Mine development costs | (1,115) | (698) | ||
Exploration costs | (8,444) | (1,740) | ||
Property holding costs | (1,188) | (1,147) | ||
General and administrative expenses | (4,293) | (2,768) | ||
Income (loss) on investment in Minera Santa Cruz S.A. (net of amortization) | 190 | 4,963 | ||
Depreciation | 327 | 239 | ||
Reclamation and Remediation | 105 | 124 | $ 506 | |
Revision of estimates and accretion of reclamation obligations | (105) | (124) | ||
Gain on sale of assets | 11 | |||
Gain on sale of marketable securities | (22) | |||
Other-than-temporary impairment on marketable equity securities | 285 | |||
Foreign currency gain | 25 | 783 | ||
Net Income before income taxes | (5,674) | 11,118 | ||
Revenues | 14,833 | 21,190 | ||
Long-Lived Assets | 417,663 | 419,744 | ||
Investment in MSC | 159,985 | 162,320 | ||
Mexico | ||||
Operating Segment Reporting | ||||
Gold and silver sales | 14,833 | 21,190 | ||
Production costs applicable to sales | (6,984) | (9,067) | ||
Mine development costs | (155) | (78) | ||
Exploration costs | (1,539) | (785) | ||
Property holding costs | (982) | (830) | ||
General and administrative expenses | (839) | (719) | ||
Segment income (loss) | 4,334 | 9,711 | ||
MSC | ||||
Operating Segment Reporting | ||||
Income (loss) on investment in Minera Santa Cruz S.A. (net of amortization) | 190 | 4,963 | ||
Segment income (loss) | 190 | 4,963 | ||
Los Azules | ||||
Operating Segment Reporting | ||||
Exploration costs | (6,301) | (310) | ||
Property holding costs | (1) | (93) | ||
General and administrative expenses | (208) | (39) | ||
Segment income (loss) | (6,510) | (442) | ||
Nevada | ||||
Operating Segment Reporting | ||||
Mine development costs | (960) | (620) | ||
Exploration costs | (484) | (588) | ||
Property holding costs | (205) | (224) | ||
General and administrative expenses | (426) | (55) | ||
Segment income (loss) | (2,075) | (1,487) | ||
Total Segment | ||||
Operating Segment Reporting | ||||
Gold and silver sales | 14,833 | 21,190 | ||
Production costs applicable to sales | (6,984) | (9,067) | ||
Mine development costs | (1,115) | (698) | ||
Exploration costs | (8,324) | (1,683) | ||
Property holding costs | (1,188) | (1,147) | ||
General and administrative expenses | (1,473) | (813) | ||
Income (loss) on investment in Minera Santa Cruz S.A. (net of amortization) | 190 | 4,963 | ||
Segment income (loss) | (4,061) | 12,745 | ||
Corporate & Other | ||||
Operating Segment Reporting | ||||
Exploration costs | (120) | (57) | ||
General and administrative expenses | (2,820) | (1,955) | ||
Depreciation | (327) | (239) | ||
Revision of estimates and accretion of reclamation obligations | (105) | (124) | ||
Interest income and other income | (68) | 228 | ||
Gain on sale of assets | 11 | |||
Gain on sale of marketable securities | 22 | |||
Other-than-temporary impairment on marketable equity securities | (285) | |||
Unrealized gain on derivative instrument (note 2) | 1,791 | |||
Foreign currency gain | 25 | 783 | ||
Net Income before income taxes | (5,674) | 11,118 | ||
MSC | ||||
Operating Segment Reporting | ||||
Income (loss) on investment in Minera Santa Cruz S.A. (net of amortization) | 190 | 4,963 | ||
Investment in MSC | 159,985 | 162,320 | $ 167,107 | |
Canada | ||||
Operating Segment Reporting | ||||
Long-Lived Assets | 1,409 | 663 | ||
Mexico | ||||
Operating Segment Reporting | ||||
Revenues | 14,833 | $ 21,190 | ||
Long-Lived Assets | 27,098 | 27,582 | ||
United States | ||||
Operating Segment Reporting | ||||
Long-Lived Assets | 37,646 | 37,620 | ||
Argentina | ||||
Operating Segment Reporting | ||||
Long-Lived Assets | $ 351,510 | $ 353,879 |
FAIR VALUE ACCOUNTING (Details)
FAIR VALUE ACCOUNTING (Details) - Recurring - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Assets: | ||
Investments | $ 15,329 | $ 8,543 |
Assets | 15,329 | 8,543 |
Level 1 | ||
Assets: | ||
Investments | 11,744 | 6,749 |
Assets | 11,744 | 6,749 |
Level 2 | ||
Assets: | ||
Investments | 3,585 | 1,794 |
Assets | $ 3,585 | $ 1,794 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Surety Bonds (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES | ||
Outstanding surety bonds | $ 4.8 | $ 4.8 |
Percentage of annual fees on surety bonds | 1.50% | |
Percentage of upfront deposit on surety bonds | 10.00% | |
Surety bonds upfront deposit amount | $ 0.5 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) $ in Thousands | Apr. 26, 2017USD ($)itemshares | Mar. 31, 2017USD ($)shares | Dec. 31, 2016USD ($)shares |
Subsequent Event | |||
Common stock issued | 299,590,000 | 299,570,000 | |
Other non-current assets | $ | $ 1,316 | $ 532 | |
Subsequent Event | Lexam VG Gold | |||
Subsequent Event | |||
Interest acquired (as a percent) | 100.00% | ||
Ratio of Company's share for acquired company's share | 0.056% | ||
Common stock issued | 12,281,295 | ||
Subscription receipts | 405,740 | ||
Number of shares of Company's common stock received for each subscription receipt issued at closing of acquisition | item | 1 | ||
Shares owned (as a percent) | 4.00% | ||
Other non-current assets | $ | $ 800 | ||
Percentage of currently issued and outstanding shares exchangeable for acquiree's shares in order to comply with NYSE rules | 1.00% |