Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 01, 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 | Jun. 30, 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 | 312,276,861 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017USD ($)$ / sharesshares | Jun. 30, 2016USD ($)$ / sharesshares | Jun. 30, 2017USD ($)$ / sharesshares | Jun. 30, 2016USD ($)$ / sharesshares | |
REVENUE: | ||||
Gold and silver sales | $ 15,110 | $ 14,613 | $ 29,943 | $ 35,803 |
Total Revenue | 15,110 | 14,613 | 29,943 | 35,803 |
COSTS AND EXPENSES: | ||||
Production costs applicable to sales | 8,560 | 5,763 | 15,544 | 14,830 |
Mine development costs | 720 | 1,316 | 1,835 | 2,014 |
Exploration costs | 3,086 | 1,689 | 11,530 | 3,429 |
Property holding costs | 423 | 258 | 1,611 | 1,405 |
General and administrative | 4,078 | 2,600 | 8,371 | 5,368 |
Depreciation | 482 | 258 | 809 | 497 |
Revision of estimates and accretion of asset reclamation obligations (note 6) | 116 | 133 | 221 | 257 |
Loss (income) from investment in Minera Santa Cruz S.A., net of amortization (note 5) | 263 | (4,133) | 73 | (9,096) |
Total costs and expenses | 17,728 | 7,884 | 39,994 | 18,704 |
Operating (loss) income | (2,618) | 6,729 | (10,051) | 17,099 |
OTHER INCOME (EXPENSE): | ||||
Interest and other (expense) income: | (109) | (73) | (175) | 155 |
Gain on sale of assets | 11 | |||
Gain on sale of marketable equity securities (note 2) | 840 | 840 | 22 | |
Other-than-temporary impairment on marketable equity securities (note 2) | (597) | 0 | (882) | |
Unrealized (loss) gain on derivatives (note 2) | (722) | 1,719 | 1,069 | 1,719 |
Foreign currency gain (loss) | 1,050 | (281) | 1,075 | 502 |
Total other income | 1,059 | 768 | 2,820 | 1,516 |
(Loss) Income before income taxes | (1,559) | 7,497 | (7,231) | 18,615 |
Income tax (expense) recovery (note 7) | 153 | (856) | (2,503) | (2,723) |
Net (loss) income | (1,712) | 8,353 | (4,728) | 21,338 |
OTHER COMPREHENSIVE (LOSS) INCOME: | ||||
Reclassification of unrealized gain on marketable securities disposed of during the period, net of taxes | (840) | (840) | ||
Other-than-temporary impairment on marketable equity securities (note 2) | 597 | 882 | ||
Unrealized (loss) gain on available-for-sale securities, net of taxes | (236) | 1,624 | 3,639 | 1,500 |
Comprehensive (loss) income | $ (2,788) | $ 10,574 | $ (1,929) | $ 23,720 |
Net (loss) income per share (note 10): | ||||
Basic (in dollars per share) | $ / shares | $ (0.01) | $ 0.03 | $ (0.02) | $ 0.07 |
Diluted (in dollars per share) | $ / shares | $ (0.01) | $ 0.03 | $ (0.02) | $ 0.07 |
Weighted average common shares outstanding (thousands) (note 10): | ||||
Basic (in shares) | shares | 308,523 | 298,237 | 304,074 | 298,239 |
Diluted (in shares) | shares | 308,523 | 299,791 | 304,074 | 299,231 |
Return of capital distribution declared per common share (note 8) | $ / shares | 0.005 | 0.005 | 0.005 | 0.005 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 24,781 | $ 37,440 |
Investments (note 2) | 11,096 | 8,543 |
Value added taxes receivable | 8,283 | 4,304 |
Inventories (note 3) | 20,018 | 26,620 |
Other current assets (note 14) | 1,896 | 1,667 |
Total current assets | 66,074 | 78,574 |
Mineral property interests (note 4) | 283,170 | 242,640 |
Investment in Minera Santa Cruz S.A. (note 5) | 157,320 | 162,320 |
Property and equipment, net | 14,360 | 14,252 |
Other assets (note 3, 14) | 10,348 | 532 |
TOTAL ASSETS | 531,272 | 498,318 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 18,388 | 20,044 |
Current portion of asset retirement obligation (note 6) | 689 | 537 |
Total current liabilities | 19,077 | 20,581 |
Asset retirement obligation, less current portion (note 6) | 9,663 | 9,306 |
Deferred income tax liability (note 7) | 23,301 | 23,665 |
Other liabilities | 686 | 1,727 |
Total liabilities | 52,727 | 55,279 |
Shareholders' equity: | ||
Common stock, no par value, 500,000 shares authorized (in thousands); 312,277 as of June 30, 2017 and 299,570 as of December 31, 2016 issued and outstanding (in thousands) | 1,397,780 | 1,360,345 |
Accumulated deficit | (923,700) | (918,972) |
Accumulated other comprehensive income | 4,465 | 1,666 |
Total shareholders' equity | 478,545 | 443,039 |
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | $ 531,272 | $ 498,318 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value | $ 0 | $ 0 |
Common stock, shares authorized | 500,000 | 500,000 |
Common, shares issued | 312,277 | 299,570 |
Common, shares outstanding | 312,277 | 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 (note 9) | $ 491 | 491 | ||
Return of capital distribution (note 8) | (1,491) | (1,491) | ||
Exercise of stock options (note 8) | $ 1,873 | 1,873 | ||
Exercise of stock options (note 8) (in shares) | 812 | |||
Share repurchase | $ (582) | (582) | ||
Share repurchase (in shares) | (558) | |||
Other comprehensive income (note 2) | 2,382 | 2,382 | ||
Net income | 21,338 | 21,338 | ||
Balance at Jun. 30, 2016 | $ 1,359,435 | 1,557 | (918,689) | 442,303 |
Balance (in shares) at Jun. 30, 2016 | 298,888 | |||
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 (note 9) | $ 745 | 745 | ||
Return of capital distribution (note 8) | (1,498) | (1,498) | ||
Shares issued in connection with the acquisition of Lexam VG Gold (note 15) | $ 38,141 | 38,141 | ||
Shares issued in connection with the acquisition of Lexam VG Gold (note 15) (in shares) | 12,687 | |||
Exercise of stock options (note 8) | $ 47 | 47 | ||
Exercise of stock options (note 8) (in shares) | 20 | |||
Other comprehensive income (note 2) | 2,799 | 2,799 | ||
Net income | (4,728) | (4,728) | ||
Balance at Jun. 30, 2017 | $ 1,397,780 | $ 4,465 | $ (923,700) | $ 478,545 |
Balance (in shares) at Jun. 30, 2017 | 312,277 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows from operating activities: | ||
Cash paid to suppliers and employees | $ (46,640) | $ (20,996) |
Cash received from gold and silver sales | 29,943 | 34,932 |
Dividends received from Miners Santa Cruz S.A. (note 5) | 4,927 | 5,396 |
Interest received | 118 | 221 |
Cash (used in) provided by operating activities | (11,652) | 19,553 |
Cash flows from investing activities: | ||
Acquisition of mineral property interests | (5,950) | |
Additions to property and equipment | (938) | (252) |
Proceeds from reimbursement of equipment deposit | 961 | |
Proceeds from sale of investments (note 2) | 2,155 | 470 |
Acquisition costs of Lexam VG Gold, net of cash and cash equivalents acquired (note 15) | (840) | |
Proceeds from disposal of property and equipment | 33 | |
Acquisition of investments | (398) | |
Cash provided by (used in) investing activities | 410 | (5,169) |
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 the exercise of stock options | 47 | 1,873 |
Cash used in financing activities | (1,451) | (3,593) |
Effect of exchange rate change on cash and cash equivalents | 34 | 84 |
(Decrease) increase in cash and cash equivalents | (12,659) | 10,875 |
Cash and cash equivalents, beginning of period | 37,440 | 25,874 |
Cash and cash equivalents, end of period | 24,781 | 36,749 |
Reconciliation of net (loss) income to cash provided by (used in) operating activities: | ||
Net (loss) income | (4,728) | 21,338 |
Adjustments to reconcile net (loss) income from operating activities: | ||
Loss (income) from investment in Minera Santa Cruz S.A., net of amortization (note 5) | 73 | (9,096) |
Loss on reimbursement of equipment deposit | 541 | |
Other-than-temporary impairment on marketable equity securities (note 2) | 0 | 882 |
Gain on disposal of fixed assets | (11) | |
Recovery of deferred income taxes (note 7) | (2,503) | (2,723) |
Gain on sale of marketable securities (note 2) | (840) | (22) |
Stock-based compensation (note 9) | 745 | 491 |
Depreciation | 809 | 497 |
Accretion of asset retirement obligation | 221 | 257 |
Amortization of mineral property interests and asset retirement obligations | 1,065 | 1,144 |
Foreign exchange gain | (34) | (84) |
Unrealized gain on derivative instrument (note 2) | (1,069) | (1,719) |
Change in non-cash working capital items: | ||
(Increase) decrease in VAT taxes receivable, net of collection of $448 (2016 - $9,523) | (3,979) | 7,577 |
Increase in other assets related to operations | (3,044) | (3,304) |
Decrease in liabilities related to operations | (3,284) | (1,622) |
Dividends received from Minera Santa Cruz S.A. (note 5) | 4,927 | 5,396 |
Cash (used in) provided by operating activities | $ (11,652) | $ 19,553 |
CONSOLIDATED STATEMENTS OF CAS7
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
Collection of VAT taxes receivable | $ 448 | $ 9,523 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 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, silver and copper. 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, Canada 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 joint venture majority owner, 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, portfolio of exploration projects around Timmins, Ontario in Canada 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 (Loss) Income for the three and six months ended June 30, 2017 and 2016, the Consolidated Balance Sheets as at June 30, 2017 (unaudited) and December 31, 2016, the unaudited Consolidated Statement of Changes in Shareholders’ Equity for the six months ended June 30, 2017 and 2016, and the unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 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 in 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. 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 for fiscal years beginning after December 5, 2016, with early adoption permitted. Adoption of this guidance by the Company, effective January 1, 2017, had no impact on the consolidated financial statements or disclosures. Recently Issued Accounting Pronouncements Compensation – Stock Compensation – Scope of Modification Accounting : In May 2017, the FASB issued ASU No. 2017-09 which provides clarity and reduces diversity in practice with respect to the modification of terms or conditions of a share-based payment award. The update to the standard is effective for the Company for fiscal years beginning after December 15, 2017, with early application permitted. The Company is currently evaluating the effect of this amendment and the impact it may have on the Company’s consolidated financial statements. 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 may 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 after December 5, 2016, 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 may 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 Company 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. As of June 30, 2017, the Company performed a comprehensive analysis of all sales contracts, including those contracts of MSC, to determine the effect of this amendment and the impact it will have on the Company’s consolidated financial statements. In the case of revenue recognized by the Company in its consolidated financial statements, some of the items subject to the evaluation included timing of revenue recognition, insurance and shipping services arranged by the Company on behalf of its customers, and refining and treatment costs classification. In the case of revenue recognized by MSC, additional items included variable consideration on concentrate sales and take-or-pay contract considerations. The Company is still in the process of completing the assessment of the impact; however, based on the analysis completed thus far, the Company does not expect that the adoption of the standard will materially affect the timing of recognition of revenue in the Company’s consolidated financial statements at the transition date or prospectively, and the overall impact will be limited to increased disclosure requirements. The Company will continue monitoring industry developments and assessing the new revenue recognition policy and any related impact on its internal controls with an expectation of having an update to the impact of the standard in the third 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 may 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 may have on the Company’s consolidated financial statements. |
INVESTMENTS
INVESTMENTS | 6 Months Ended |
Jun. 30, 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 marketable equity securities as available-for-sale securities and warrants on equity interest in publicly traded securities as held for trading securities. Marketable equity securities are recorded at fair value based upon quoted market prices, and warrants are recorded at fair value using the Black-Scholes option pricing model. The following is a summary of the balances of investments as of June 30, 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 June 30, 2017 (January 1) period period (pre-tax) Income period Marketable equity securities $ 6,749 $ — $ (2,155) $ 2,799 $ 840 $ 8,233 Warrants 1,794 — — — 1,069 2,863 Investments $ 8,543 $ — $ (2,155) $ 2,799 $ 1,909 $ 11,096 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 June 30, 2017, the cost of the marketable equity securities and warrants was approximately $3.6 million (December 31, 2016 - $4.9 million). The Company maintains a portfolio of warrants on equity interests 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 (Loss) Income. During the three and six months ended June 30, 2017, the Company recorded an unrealized loss of $0.7 million and an unrealized gain of $1.1 million, respectively compared to an unrealized gain of $1.7 million for the three and six months ended June 30, 2016. In addition, during the three and six months ended June 30, 2017, the Company sold marketable equity securities for proceeds of $2.2 million. The Company realized a gain of $0.8 million, which is included in the Consolidated Statement of Operations and Comprehensive (Loss) Income. In the comparative three and six months ended June 30, 2016, the Company realized a gain of $0.1 million on marketable equity securities sold. Gains and losses for available-for-sale securities are included in other comprehensive income and not reported in Net (Loss) Income unless the securities are sold or if there is an other-than- temporary decline in fair value below cost. The Company recorded other comprehensive loss, net of tax, of $1.1 million and other comprehensive income, net of tax, of $2.8 million for the three and six months ended June 30, 2017, respectively. During the three and six months ended June 30, 2016, the Company recognized other comprehensive income of $2.2 million and $2.4 million, respectively, net of taxes. During the period ended June 30, 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. As of June 30, 2017, the Company concluded that none of its marketable equity securities were considered OTTI. By comparison, the Company recognized an OTTI impairment loss of $0.6 million and $0.9 million for the three and six months ended June 30, 2016. |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jun. 30, 2017 | |
INVENTORIES | |
INVENTORIES | NOTE 3 INVENTORIES June 30, 2017 December 31, 2016 Material on leach pads $ 9,568 $ 14,267 In-process inventory 2,117 4,953 Stockpiles 2,068 1,102 Precious metals 4,652 5,035 Materials and supplies 1,613 1,263 Current Inventories $ 20,018 $ 26,620 A portion of leach pad inventories in the amount of $10.0 million (December 31, 2016 – $nil) expected to be recovered after twelve months is included in the Other assets. |
MINERAL PROPERTY INTEREST
MINERAL PROPERTY INTEREST | 6 Months Ended |
Jun. 30, 2017 | |
MINERAL PROPERTY INTEREST | |
MINERAL PROPERTY INTEREST | NOTE 4 MINERAL PROPERTY INTERESTS The Company’s Mineral Property Interests include the El Gallo 1 mine in Mexico, the Gold Bar project in Nevada, the Los Azules project in Argentina and other properties located in Mexico and Nevada. On April 26, 2017, the Company also acquired Lexam VG Gold Inc. (“Lexam”) which included mineral property interests of $41.6 million relating to the Timmins properties in Canada. Refer to Note 15 Acquisition of Lexam for further discussion. The Company conducts a review of potential triggering events for impairment for all its mineral property interests 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. During the six months ended June 30, 2017, the Company did not identify events or changes in circumstances affecting the carrying values of its long-lived assets. 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 most appropriate amortization method which includes straight-line method or units-of-production method over the estimated useful life of the mine. For the three and six months ended June 30, 2017, the Company recorded $0.6 million and $1.1 million, respectively (June 30, 2016, $0.8 million and $1.1 million, respectively), 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 (Loss) Income. |
INVESTMENT IN MINERA SANTA CRUZ
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | 6 Months Ended |
Jun. 30, 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 a loss of $0.3 million and $0.1 million for the three and six months ended June 30, 2017, respectively (June 30, 2016 – income of $4.1 million and $9.1 million, respectively). These amounts include the amortization of the fair value increments arising from the purchase price allocation and related income tax recovery associated with the investment in MSC recorded as part of the acquisition of Minera Andes. During the three and six months ended June 30, 2017, the Company received $2.4 million and $4.9 million in dividends from MSC, respectively. This compares to $2.8 million and $5.4 million received during the three and six months ended June 30, 2016, respectively. Changes in the Company’s investment in MSC for the six months ended June 30, 2017 and year ended December 31, 2016 are as follows: June 30, 2017 December 31, 2016 Investment in MSC, beginning of the period $ 162,320 $ 167,107 Attributable net income from MSC 1,594 15,961 Amortization of fair value increments (4,497) (12,274) Income tax recovery 2,830 9,264 Dividend distribution received (4,927) (17,738) Investment in MSC, end of the period $ 157,320 $ 162,320 A summary of the operating results from MSC for the three and six months ended June 30, 2017 and 2016 is as follows: Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Minera Santa Cruz S.A. (100%) Net Sales $ 60,835 $ 58,581 $ 109,178 $ 110,653 Production costs applicable to sales (52,415) (38,832) (89,114) (76,559) Net (loss) income (1,126) 10,973 3,255 19,221 Portion attributable to McEwen Mining Inc. (49%) Net (loss) income $ (553) $ 5,377 $ 1,594 $ 9,418 Amortization of fair value increments (2,428) (2,774) (4,497) (6,456) Income tax recovery 2,718 1,530 2,830 6,134 (Loss) income from investment in MSC, net of amortization $ (263) $ 4,133 $ (73) $ 9,096 As of June 30, 2017, MSC had current assets of $101.4 million, total assets of $430.1 million, current liabilities of $37.1 million and total liabilities of $109.1 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 and other adjustments, MSC had current assets of $100.7 million, total assets of $261.3 million, current liabilities of $47.1 million, and total liabilities of $72.5 million as at June 30, 2017. |
RECLAMATION OBLIGATIONS
RECLAMATION OBLIGATIONS | 6 Months Ended |
Jun. 30, 2017 | |
RECLAMATION OBLIGATIONS | |
RECLAMATION OBLIGATIONS | NOTE 6 RECLAMATION OBLIGATIONS The Company is responsible for the reclamation of certain past and future disturbances at its properties. The most significant properties subject to these obligations are the Tonkin property in the state of Nevada, the El Gallo 1 mine in Mexico, and the Timmins properties in the province of Ontario which were acquired through the transaction with Lexam in April 2017. Refer to Note 15 Acquisition of Lexam. A reconciliation of the Company’s asset retirement obligations for the six months ended June 30, 2017 and for the year ended December 31, 2016 are as follows: June 30, 2017 December 31, 2016 Asset retirement obligation liability, beginning of the period $ 9,843 $ 7,784 Settlements (61) (66) Accretion of liability 221 506 Adjustment reflecting updated estimates 349 1,619 Asset retirement obligation liability, ending balance $ 10,352 $ 9,843 Current portion (689) (537) Non-current portion $ 9,663 $ 9,306 |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 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 liabilities associated with mineral property interests acquired in the Minera Andes and Lexam acquisitions. The deferred tax liability is primarily impacted by fluctuations in the foreign exchange rate between the Argentine peso and the U.S. dollar. For the three and six months ended June 30, 2017, the Company recorded a deferred income tax expense of $0.2 million and a deferred income tax recovery of $2.5 million. The deferred income tax expense and recovery are the result of changes in the recognition of tax benefits related to exploration spending at Los Azules, the Argentine peso devaluation and the unrealized gains (losses) in the value of our investments recorded through Other Comprehensive (Loss) Income. In comparison, for the three and six months ended June 30, 2016, the Company recorded an income tax recovery of $0.9 million, and $2.7 million respectively, primarily resulting from the Argentine peso devaluation. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2017 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' EQUITY | NOTE 8 SHAREHOLDERS’ EQUITY During the six months ended June 30, 2017, 20,000 shares of common stock were issued upon the exercise of stock options under the Company’s Equity Incentive Plan, at the weighted average exercise price of $2.34 per share for proceeds of $0.1 million. This compares to 811,334 shares of common stock issued upon exercise of stock options during the same period of 2016, at a weighted average exercise price of $2.33 per share for proceeds of $1.9 million. During the six months ended June 30, 2017, the Company paid a semi-annual return of capital distribution of $0.005 (June 30, 2016 - $0.005), per share of common stock, for a total of $1.5 million (June 30, 2016 - $1.5 million). During the three months ended June 30, 2017, the Company issued 12,687,035 shares of common stock as part of the Lexam acquisition completed on April 26, 2017. Refer to Note 15 Acquisition of Lexam. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2017 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | NOTE 9 STOCK-BASED COMPENSATION During the six months ended June 30, 2017, 0.2 million stock options were granted to certain employees at a weighted average exercise price of $3.11 per share. In comparison, during the six months ended June 30, 2016, the Company granted no stock options to employees or directors. The options vest equally over a three-year period (subject to acceleration of vesting in certain events) if the individual remains affiliated with the Company and are exercisable for a period of 5 years from the date of issue. The principal assumptions used in applying the Black-Scholes option pricing model for these awards were as follows: Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Risk-free interest rate % — % % — % Dividend yield % — % % — % Volatility factor of the expected market price of common stock % — % % — % Weighted-average expected life of option 3.5 years — 3.5 years — Weighted-average grant date fair value 1.59 — 1.60 — During the three and six months ended June 30, 2017, the Company recorded stock option expense of $0.4 million and $0.7 million respectively. This compares to $0.1 million and $0.5 million for the three and six months ended June 30, 2016. |
INCOME (LOSS) PER SHARE
INCOME (LOSS) PER SHARE | 6 Months Ended |
Jun. 30, 2017 | |
INCOME (LOSS) PER SHARE | |
INCOME (LOSS) PER SHARE | NOTE 10 INCOME (LOSS) PER SHARE Basic net income (loss) 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 (loss) 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 and exchangeable shares outstanding and the computations for basic and diluted net (loss) income per share for the three and six months ended June 30, 2017 and 2016: Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 (amounts in thousands, except net income per share) Net (loss) income $ (1,712) $ 8,353 $ (4,728) $ 21,338 Weighted average common shares outstanding: 308,523 298,237 304,074 298,239 Effect of employee stock-based awards — 1,554 — 992 Diluted shares outstanding: 308,523 299,791 304,074 299,231 Net (loss) income per share: Basic $ (0.01) $ 0.03 $ (0.02) $ 0.07 Diluted $ (0.01) $ 0.03 $ (0.02) $ 0.07 For the three and six months ended June 30, 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 June 30, 2016, options to purchase 2.3 million shares of common stock outstanding at an average exercise price of $4.20 per share 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. For the six months ended June 30, 2016, options to purchase 3.0 million shares of common stock outstanding at an average exercise price of $3.73 per share 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 the six months ended June 30, 2017. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2017 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 11 RELATED PARTY TRANSACTIONS The Company recorded the following expense (income) in respect to the related parties outlined below: Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Lexam L.P. $ 27 $ 51 $ $ Lexam VG Gold — 18 (33) REVlaw 33 27 The Company has the following outstanding accounts payable balance in respect to the related parties outlined below: June 30, December 31, 2017 2016 Lexam VG Gold — 27 REVlaw 55 148 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. On April 26, 2017, the Company completed the acquisition of 100% of the issued and outstanding securities of Lexam and Lexam became a wholly-owned subsidiary of the Company. Refer to Note 15 Acquisition of Lexam . Prior to the acquisition, Robert R. McEwen was the Non-Executive Chairman of Lexam and held a 27% ownership in Lexam and the Company shared services with Lexam including rent, personnel, office expenses and other administrative services. Historically, these transactions were in the normal course of business. REVlaw is a company owned by Ms. Carmen Diges, General Counsel of the Company. The legal services of Ms. Diges as General Counsel and one other member of the legal department are provided by REVlaw in the normal course of business and have been recorded at their exchange amount. |
OPERATING SEGMENT REPORTING
OPERATING SEGMENT REPORTING | 6 Months Ended |
Jun. 30, 2017 | |
OPERATING SEGMENT REPORTING | |
OPERATING SEGMENT REPORTING | NOTE 12 OPERATING SEGMENT REPORTING McEwen Mining is a mining and minerals exploration company focused on precious metals in Argentina, Mexico, Canada 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 (loss) income, 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 or loss. Gold and silver sales and production costs applicable to sales for the reportable segments are reported net of intercompany transactions. In the second quarter of 2017, the Company completed the acquisition of Lexam. which included a portfolio of exploration projects located in Timmins, Ontario. The performance and allocation of resources to these assets is done separately by the CODM. As a result, for the three and six months ended June 2017, the Company separately reported segment (loss) income attributable to Timmins. The updated composition of segments reflects the distinct economic characteristic of each mine/project. Significant information relating to the Company’s reportable operating segments is summarized in the tables below: Total Segment Three months ended June 30, 2017 Mexico MSC Los Azules Nevada Timmins Income (loss) Gold and silver sales $ 15,110 $ — $ — $ — $ — $ 15,110 Production costs applicable to sales (8,560) — — — — (8,560) Mine development costs (177) — — (543) — (720) Exploration costs (1,513) — (841) (447) (130) (2,931) Property holding costs (63) — (47) (313) — (423) General and administrative expenses (1,040) — (421) (359) (26) (1,846) Loss from investment in Minera Santa Cruz S.A. (net of amortization) — (263) — — — (263) Segment income (loss) $ 3,757 $ (263) $ (1,309) $ (1,662) $ (156) $ 367 Corporate and other Other exploration (155) General and administrative expenses (2,232) Depreciation (482) Revision of estimates and accretion of reclamation obligations (116) Interest and other expense (109) Gain on sale of marketable equity securities 840 Unrealized gain on derivatives (722) Foreign currency gain 1,050 Net loss before income taxes $ (1,559) Total Segment Six months ended June 30, 2017 Mexico MSC Los Azules Nevada Timmins Income (loss) Gold and silver sales $ 29,943 $ — $ — $ — $ — $ 29,943 Production costs applicable to sales (15,544) — — — — (15,544) Mine development costs (332) — — (1,503) — (1,835) Exploration costs (3,052) — (7,142) (931) (130) (11,255) Property holding costs (1,045) — (48) (518) — (1,611) General and administrative expenses (1,879) — (629) (785) (26) (3,319) Loss from investment in Minera Santa Cruz S.A. (net of amortization) — (73) — — — (73) Segment income (loss) $ 8,091 $ (73) $ (7,819) $ (3,737) $ (156) $ (3,694) Corporate and other Other exploration (275) General and administrative expenses (5,052) Depreciation (809) Revision of estimates and accretion of reclamation obligations (221) Interest and other expense (175) Gain on sale of assets 11 Gain on sale of marketable equity securities 840 Unrealized gain on derivatives 1,069 Foreign currency gain 1,075 Net loss before income taxes $ (7,231) Total Segment Three months ended June 30, 2016 Mexico MSC Los Azules Nevada Timmins Income (loss) Gold and silver sales $ 14,613 $ — $ — $ — $ — $ 14,613 Production costs applicable to sales (5,763) — — — — (5,763) Mine development costs (619) — — (697) — (1,316) Exploration costs (860) — (193) (599) — (1,652) Property holding costs — — (82) (176) (258) General and administrative expenses (770) — (146) (52) — (968) Income from investment in Minera Santa Cruz S.A. (net of amortization) — 4,133 — — — 4,133 Segment income (loss) $ 6,601 $ 4,133 $ (421) $ (1,524) $ — $ 8,789 Corporate and other Other exploration (37) General and administrative expenses (1,632) Depreciation (258) Revision of estimates and accretion of reclamation obligations (133) Interest and other expense (73) Other-than-temporary impairment on marketable equity securities (597) Unrealized gain on derivatives 1,719 Foreign currency gain (281) Net income before income taxes $ 7,497 Total Segment Six months ended June 30, 2016 Mexico MSC Los Azules Nevada Timmins Income (loss) Gold and silver sales $ 35,803 $ — $ — $ — $ — $ 35,803 Production costs applicable to sales (14,830) — — — — (14,830) Mine development costs (697) — — (1,317) — (2,014) Exploration costs (1,645) — (503) (1,187) — (3,335) Property holding costs (831) — (174) (400) — (1,405) General and administrative expenses (1,489) — (185) (107) — (1,781) Income from investment in Minera Santa Cruz S.A. (net of amortization) — 9,096 — — — 9,096 Segment income (loss) $ 16,311 $ 9,096 $ (862) $ (3,011) $ — $ 21,534 Corporate and other Other exploration (94) General and administrative expenses (3,587) Depreciation (497) Revision of estimates and accretion of reclamation obligations (257) Interest and other income 155 Other-than-temporary impairment on marketable equity securities (882) Gain on sale of marketable securities 22 Unrealized gain on derivatives 1,719 Foreign currency gain 502 Net income before income taxes $ 18,615 Geographic information Revenue (1) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Mexico 15,110 14,613 29,943 Total consolidated $ 15,110 $ 14,613 $ 29,943 $ 35,803 Long-lived Assets as at June 30, December 31 2017 2016 Canada $ 42,587 $ 663 Mexico 36,684 27,582 USA 37,114 37,620 Argentina (2) 348,813 353,879 Total consolidated $ 465,198 $ 419,744 (1) Presented based on the location from which the product originated. (2) Includes Investment in MSC of $157.3 million as of June 30, 2017 (December 31, 2016 - $162.3 million). |
FAIR VALUE ACCOUNTING
FAIR VALUE ACCOUNTING | 6 Months Ended |
Jun. 30, 2017 | |
FAIR VALUE ACCOUNTING | |
FAIR VALUE ACCOUNTING | NOTE 13 FAIR VALUE ACCOUNTING Fair value accounting establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value of certain assets and liabilities. 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 June 30, 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 June 30, 2017 Total Level 1 Level 2 Level 3 Assets: Investments $ 11,096 $ 8,233 $ 2,863 $ — Total $ 11,096 $ 8,233 $ 2,863 $ — 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 mainly consist of 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. Further, as noted in Note 2, Investments, the Company’s investments also include warrants on equity interest in publicly traded securities. 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 fair value of other financial assets and liabilities approximate their carrying values due to their short-term nature and historically negligible credit losses. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2017 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 14 COMMITMENTS AND CONTINGENCIES Reclamation 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. Pursuant to the requirements imposed by Bureau of Land Management (“BLM”), the Company has Nevada bonding obligations of $4.9 million which primarily pertains to the Tonkin property reclamation requirements. Under current Mexican regulations, bonding of projected reclamation costs is not required. Under Canadian regulations, the Company was required to deposit approximately $0.1 million with respect to its properties in Timmins. The $0.1 million is recorded as restricted cash in Other assets. Surety Bonds The Company satisfies its Nevada bonding obligations through the use of surety bonds. 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 BLM will cancel and/or return the instrument to the issuing entity. The Company believes 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. On June 23, 2017, the Company replaced its previous surety facility by entering into a new $20.0 million surety facility, carrying an annual financing fee of 2%, with no requirement for an initial deposit and interest payable only on draw down amounts. The $0.5 million deposit associated with the previous facility was recorded in Other current assets and was received subsequent to June 30, 2017. As of June 30, 2017, the Company had $4.9 million of surety bonds outstanding which primarily pertains to the Tonkin property reclamation requirements. The remaining balance of the facility is available for draw down to satisfy bonding requirements to advance the Gold Bar project. |
ACQUISITION OF LEXAM
ACQUISITION OF LEXAM | 6 Months Ended |
Jun. 30, 2017 | |
ACQUISITION OF LEXAM | |
ACQUISITION OF LEXAM | NOTE 15 ACQUISITION OF 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. The Company’s total purchase price of $39.2 million was comprised of 12,687,035 common shares issued from Treasury at $3.00 per share, share replacement awards of $0.1 million and transaction costs totaling $1.0 million. The Lexam acquisition was accounted for as an asset acquisition and transaction costs associated with the acquisition were capitalized to the Mineral Property Interests acquired consistent with the Company’s Mineral Property Interests accounting policy. The following table sets out the allocation of the purchase price to assets acquired and liabilities assumed, based on management’s estimates of relative fair value: Total purchase price: Common shares issued for acquisition $ 38,141 Transaction fees incurred 1,017 $ 39,158 Fair value of assets acquired and liabilities assumed: Mineral property interests $ 41,595 Cash and cash equivalents 177 Other current assets 86 Other assets 312 Accounts payable and accrued liabilities (288) Reclamation obligations (570) Deferred income tax liabilities (2,154) $ 39,158 The Mineral property interests acquired include the 100% interest of the Buffalo Ankerite, Fuller and Davidson Tisdale deposits and 61% interest in the Paymaster deposit located in Timmins, Ontario. The remaining 39% interest in the Paymaster property is held by Goldcorp Inc., a joint venture partner. Certain properties are also subject to a net profit interest (“NPI”) in the 10-20% range, payable to an unrelated third party. |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 6 Months Ended |
Jun. 30, 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 June 30, 2017 (January 1) period period (pre-tax) Income period Marketable equity securities $ 6,749 $ — $ (2,155) $ 2,799 $ 840 $ 8,233 Warrants 1,794 — — — 1,069 2,863 Investments $ 8,543 $ — $ (2,155) $ 2,799 $ 1,909 $ 11,096 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) | 6 Months Ended |
Jun. 30, 2017 | |
INVENTORIES | |
Schedule of inventories | June 30, 2017 December 31, 2016 Material on leach pads $ 9,568 $ 14,267 In-process inventory 2,117 4,953 Stockpiles 2,068 1,102 Precious metals 4,652 5,035 Materials and supplies 1,613 1,263 Current Inventories $ 20,018 $ 26,620 |
INVESTMENT IN MINERA SANTA CR25
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
INVESTMENT IN MINERA SANTA CRUZ S.A. (“MSC”) - SAN JOSE MINE | |
Schedule of change in the entity's investment in MSC | June 30, 2017 December 31, 2016 Investment in MSC, beginning of the period $ 162,320 $ 167,107 Attributable net income from MSC 1,594 15,961 Amortization of fair value increments (4,497) (12,274) Income tax recovery 2,830 9,264 Dividend distribution received (4,927) (17,738) Investment in MSC, end of the period $ 157,320 $ 162,320 |
Summary of MSC's financial information from operations | Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Minera Santa Cruz S.A. (100%) Net Sales $ 60,835 $ 58,581 $ 109,178 $ 110,653 Production costs applicable to sales (52,415) (38,832) (89,114) (76,559) Net (loss) income (1,126) 10,973 3,255 19,221 Portion attributable to McEwen Mining Inc. (49%) Net (loss) income $ (553) $ 5,377 $ 1,594 $ 9,418 Amortization of fair value increments (2,428) (2,774) (4,497) (6,456) Income tax recovery 2,718 1,530 2,830 6,134 (Loss) income from investment in MSC, net of amortization $ (263) $ 4,133 $ (73) $ 9,096 |
RECLAMATION OBLIGATIONS (Tables
RECLAMATION OBLIGATIONS (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
RECLAMATION OBLIGATIONS | |
Schedule of reconciliation of asset retirement obligations | June 30, 2017 December 31, 2016 Asset retirement obligation liability, beginning of the period $ 9,843 $ 7,784 Settlements (61) (66) Accretion of liability 221 506 Adjustment reflecting updated estimates 349 1,619 Asset retirement obligation liability, ending balance $ 10,352 $ 9,843 Current portion (689) (537) Non-current portion $ 9,663 $ 9,306 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
STOCK-BASED COMPENSATION | |
Schedule of weighted-average assumptions used for estimation of the fair value of the options granted under the Plan at the date of grant, using the Black-Scholes Option Valuation Model | Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Risk-free interest rate % — % % — % Dividend yield % — % % — % Volatility factor of the expected market price of common stock % — % % — % Weighted-average expected life of option 3.5 years — 3.5 years — Weighted-average grant date fair value 1.59 — 1.60 — |
INCOME (LOSS) PER SHARE (Tables
INCOME (LOSS) PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
INCOME (LOSS) 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 June 30, Six months ended June 30, 2017 2016 2017 2016 (amounts in thousands, except net income per share) Net (loss) income $ (1,712) $ 8,353 $ (4,728) $ 21,338 Weighted average common shares outstanding: 308,523 298,237 304,074 298,239 Effect of employee stock-based awards — 1,554 — 992 Diluted shares outstanding: 308,523 299,791 304,074 299,231 Net (loss) income per share: Basic $ (0.01) $ 0.03 $ (0.02) $ 0.07 Diluted $ (0.01) $ 0.03 $ (0.02) $ 0.07 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
RELATED PARTY TRANSACTIONS | |
Schedule of related party expense (income) and outstanding accounts payable (receivable) | Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Lexam L.P. $ 27 $ 51 $ $ Lexam VG Gold — 18 (33) REVlaw 33 27 The Company has the following outstanding accounts payable balance in respect to the related parties outlined below: June 30, December 31, 2017 2016 Lexam VG Gold — 27 REVlaw 55 148 |
OPERATING SEGMENT REPORTING (Ta
OPERATING SEGMENT REPORTING (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
OPERATING SEGMENT REPORTING | |
Schedule of the financial information relating to the Company's segments | Total Segment Three months ended June 30, 2017 Mexico MSC Los Azules Nevada Timmins Income (loss) Gold and silver sales $ 15,110 $ — $ — $ — $ — $ 15,110 Production costs applicable to sales (8,560) — — — — (8,560) Mine development costs (177) — — (543) — (720) Exploration costs (1,513) — (841) (447) (130) (2,931) Property holding costs (63) — (47) (313) — (423) General and administrative expenses (1,040) — (421) (359) (26) (1,846) Loss from investment in Minera Santa Cruz S.A. (net of amortization) — (263) — — — (263) Segment income (loss) $ 3,757 $ (263) $ (1,309) $ (1,662) $ (156) $ 367 Corporate and other Other exploration (155) General and administrative expenses (2,232) Depreciation (482) Revision of estimates and accretion of reclamation obligations (116) Interest and other expense (109) Gain on sale of marketable equity securities 840 Unrealized gain on derivatives (722) Foreign currency gain 1,050 Net loss before income taxes $ (1,559) Total Segment Six months ended June 30, 2017 Mexico MSC Los Azules Nevada Timmins Income (loss) Gold and silver sales $ 29,943 $ — $ — $ — $ — $ 29,943 Production costs applicable to sales (15,544) — — — — (15,544) Mine development costs (332) — — (1,503) — (1,835) Exploration costs (3,052) — (7,142) (931) (130) (11,255) Property holding costs (1,045) — (48) (518) — (1,611) General and administrative expenses (1,879) — (629) (785) (26) (3,319) Loss from investment in Minera Santa Cruz S.A. (net of amortization) — (73) — — — (73) Segment income (loss) $ 8,091 $ (73) $ (7,819) $ (3,737) $ (156) $ (3,694) Corporate and other Other exploration (275) General and administrative expenses (5,052) Depreciation (809) Revision of estimates and accretion of reclamation obligations (221) Interest and other expense (175) Gain on sale of assets 11 Gain on sale of marketable equity securities 840 Unrealized gain on derivatives 1,069 Foreign currency gain 1,075 Net loss before income taxes $ (7,231) Total Segment Three months ended June 30, 2016 Mexico MSC Los Azules Nevada Timmins Income (loss) Gold and silver sales $ 14,613 $ — $ — $ — $ — $ 14,613 Production costs applicable to sales (5,763) — — — — (5,763) Mine development costs (619) — — (697) — (1,316) Exploration costs (860) — (193) (599) — (1,652) Property holding costs — — (82) (176) (258) General and administrative expenses (770) — (146) (52) — (968) Income from investment in Minera Santa Cruz S.A. (net of amortization) — 4,133 — — — 4,133 Segment income (loss) $ 6,601 $ 4,133 $ (421) $ (1,524) $ — $ 8,789 Corporate and other Other exploration (37) General and administrative expenses (1,632) Depreciation (258) Revision of estimates and accretion of reclamation obligations (133) Interest and other expense (73) Other-than-temporary impairment on marketable equity securities (597) Unrealized gain on derivatives 1,719 Foreign currency gain (281) Net income before income taxes $ 7,497 Total Segment Six months ended June 30, 2016 Mexico MSC Los Azules Nevada Timmins Income (loss) Gold and silver sales $ 35,803 $ — $ — $ — $ — $ 35,803 Production costs applicable to sales (14,830) — — — — (14,830) Mine development costs (697) — — (1,317) — (2,014) Exploration costs (1,645) — (503) (1,187) — (3,335) Property holding costs (831) — (174) (400) — (1,405) General and administrative expenses (1,489) — (185) (107) — (1,781) Income from investment in Minera Santa Cruz S.A. (net of amortization) — 9,096 — — — 9,096 Segment income (loss) $ 16,311 $ 9,096 $ (862) $ (3,011) $ — $ 21,534 Corporate and other Other exploration (94) General and administrative expenses (3,587) Depreciation (497) Revision of estimates and accretion of reclamation obligations (257) Interest and other income 155 Other-than-temporary impairment on marketable equity securities (882) Gain on sale of marketable securities 22 Unrealized gain on derivatives 1,719 Foreign currency gain 502 Net income before income taxes $ 18,615 |
Schedule Of Geographic Information | Geographic information Revenue (1) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Mexico 15,110 14,613 29,943 Total consolidated $ 15,110 $ 14,613 $ 29,943 $ 35,803 Long-lived Assets as at June 30, December 31 2017 2016 Canada $ 42,587 $ 663 Mexico 36,684 27,582 USA 37,114 37,620 Argentina (2) 348,813 353,879 Total consolidated $ 465,198 $ 419,744 (1) Presented based on the location from which the product originated. (2) |
FAIR VALUE ACCOUNTING (Tables)
FAIR VALUE ACCOUNTING (Tables) | 6 Months Ended |
Jun. 30, 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 June 30, 2017 Total Level 1 Level 2 Level 3 Assets: Investments $ 11,096 $ 8,233 $ 2,863 $ — Total $ 11,096 $ 8,233 $ 2,863 $ — 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 $ — |
ACQUISITION OF LEXAM (Tables)
ACQUISITION OF LEXAM (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
ACQUISITION OF LEXAM | |
Schedule of purchase price allocation | Total purchase price: Common shares issued for acquisition $ 38,141 Transaction fees incurred 1,017 $ 39,158 Fair value of assets acquired and liabilities assumed: Mineral property interests $ 41,595 Cash and cash equivalents 177 Other current assets 86 Other assets 312 Accounts payable and accrued liabilities (288) Reclamation obligations (570) Deferred income tax liabilities (2,154) $ 39,158 |
NATURE OF OPERATIONS AND SUMM33
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | Jun. 30, 2017 | Jun. 30, 2016 |
MSC | ||
Ownership interest (as a percent) | 49.00% | 49.00% |
INVESTMENTS (Details)
INVESTMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Fair value Available for Sale | |||||
Opening balance | $ 8,543 | $ 1,032 | $ 1,032 | ||
Additions during the period | 398 | 4,419 | |||
Disposals during the period | (2,155) | (470) | (470) | ||
Other Comprehensive Income (Loss) (pre -tax) | 2,799 | 3,043 | |||
Statement of Operations (Loss) Income | 1,909 | 519 | |||
Fair Value end of the period | $ 11,096 | 11,096 | 8,543 | ||
Cost of purchase of marketable equity securities | 3,600 | 4,900 | |||
Unrealized (loss) gain on derivatives (note 2) | (722) | $ 1,719 | 1,069 | 1,719 | |
Gain on available-for-sale securities, pre-tax | 800 | 100 | 800 | 100 | |
Sale of marketable securities | 2,200 | 2,200 | |||
Other-than-temporary impairment on marketable equity securities | 597 | 0 | 882 | ||
Other comprehensive loss, net of tax | (1,100) | $ 2,200 | 2,799 | 2,382 | |
Marketable equity securities | |||||
Fair value Available for Sale | |||||
Opening balance | 6,749 | $ 1,032 | 1,032 | ||
Additions during the period | 4,004 | ||||
Disposals during the period | (2,155) | (470) | |||
Other Comprehensive Income (Loss) (pre -tax) | 2,799 | 3,043 | |||
Statement of Operations (Loss) Income | 840 | (860) | |||
Fair Value end of the period | 8,233 | 8,233 | 6,749 | ||
Warrants | |||||
Fair value Available for Sale | |||||
Opening balance | 1,794 | ||||
Additions during the period | 415 | ||||
Statement of Operations (Loss) Income | 1,069 | 1,379 | |||
Fair Value end of the period | $ 2,863 | $ 2,863 | $ 1,794 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Dec. 31, 2016 | |
Inventories | ||
Material on leach pads | $ 9,568 | $ 14,267 |
In-process inventory | 2,117 | 4,953 |
Stockpiles | 2,068 | 1,102 |
Precious metals | 4,652 | 5,035 |
Materials and supplies | 1,613 | 1,263 |
Inventories | 20,018 | 26,620 |
Other assets | ||
Inventories | ||
Non-current portion of ore on leach pads | $ 10,000 | $ 0 |
MINERAL PROPERTY INTEREST - Min
MINERAL PROPERTY INTEREST - Mineral Property Interests (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Apr. 26, 2017 | Dec. 31, 2016 | |
Mineral Property Interests | ||||||
Purchase price | $ 5,950 | |||||
Mineral property interests | $ 283,170 | $ 283,170 | $ 242,640 | |||
Amortization of mineral property interests and asset retirement obligations | 1,065 | 1,144 | ||||
El Gallo 1 mine | ||||||
Mineral Property Interests | ||||||
Amortization of mineral property interests | $ 600 | $ 800 | $ 1,100 | $ 1,100 | ||
Lexam VG Gold | ||||||
Mineral Property Interests | ||||||
Mineral property interests | $ 41,600 |
INVESTMENT IN MINERA SANTA CR37
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE - Equity Method Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | ||||
Dividends received from Minera Santa Cruz S.A. (note 5) | $ 4,927 | $ 5,396 | ||
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% | 49.00% | 49.00% |
Results of operations | $ 300 | $ 4,100 | $ 100 | $ 9,100 |
Dividends received from Minera Santa Cruz S.A. (note 5) | $ 2,400 | $ 2,800 | $ 4,900 | $ 5,400 |
INVESTMENT IN MINERA SANTA CR38
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 | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Change in the investment in MSC | |||||
Investment in MSC, beginning balance | $ 162,320 | ||||
Income tax recovery (note 10) | $ 153 | $ (856) | (2,503) | $ (2,723) | |
Investment in MSC, ending balance | 157,320 | 157,320 | $ 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 | (553) | 5,377 | 1,594 | 9,418 | 15,961 |
Amortization of fair value increments | 2,428 | 2,774 | 4,497 | 6,456 | 12,274 |
Income tax recovery (note 10) | (2,718) | $ (1,530) | (2,830) | $ (6,134) | (9,264) |
Dividends received | (4,927) | (17,738) | |||
Investment in MSC, ending balance | $ 157,320 | $ 157,320 | $ 162,320 |
INVESTMENT IN MINERA SANTA CR39
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE - Summary of Operating Results from MSC (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | |||||
Income taxes recovery | $ (153) | $ 856 | $ 2,503 | $ 2,723 | |
Income (loss) from investment in MSC, net of amortization | (263) | 4,133 | (73) | 9,096 | |
MSC | |||||
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | |||||
Net sales | 60,835 | 58,581 | 109,178 | 110,653 | |
Production costs applicable to sales | (52,415) | (38,832) | (89,114) | (76,559) | |
Net income (loss) | $ (1,126) | $ 10,973 | $ 3,255 | $ 19,221 | |
Ownership interest (as a percent) | 49.00% | 49.00% | 49.00% | 49.00% | |
Net income (loss) | $ (553) | $ 5,377 | $ 1,594 | $ 9,418 | $ 15,961 |
Amortization of fair value increments | (2,428) | (2,774) | (4,497) | (6,456) | (12,274) |
Income taxes recovery | 2,718 | 1,530 | 2,830 | 6,134 | $ 9,264 |
Income (loss) from investment in MSC, net of amortization | $ (263) | $ 4,133 | $ (73) | $ 9,096 |
INVESTMENT IN MINERA SANTA CR40
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE - Assets and Liabilities Associated with MSC (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | ||
Current assets | $ 66,074 | $ 78,574 |
Total assets | 531,272 | 498,318 |
Current liabilities | 19,077 | 20,581 |
Total liabilities | 52,727 | $ 55,279 |
MSC | ||
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | ||
Current assets | 101,400 | |
Total assets | 430,100 | |
Current liabilities | 37,100 | |
Total liabilities | 109,100 | |
MSC | Current Period Values Excluding Fair Value Increments And Impairment Charge | ||
INVESTMENT IN MINERA SANTA CRUZ S.A. ("MSC") - SAN JOSE MINE | ||
Current assets | 100,700 | |
Total assets | 261,300 | |
Current liabilities | 47,100 | |
Total liabilities | $ 72,500 |
RECLAMATION OBLIGATIONS (Detail
RECLAMATION OBLIGATIONS (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Mineral Property Interests | |||
Surety bonds upfront deposit amount | $ 500 | ||
other assets | $ 10,348 | 10,348 | $ 532 |
Changes in the asset retirement obligations | |||
Asset retirement obligation liability, beginning balance | 9,843 | 7,784 | |
Settlements | (61) | (66) | |
Accretion of liability | 221 | 506 | |
Adjustment reflecting updated estimates | 349 | 1,619 | |
Asset retirement obligation liability, ending balance | 10,352 | 10,352 | 9,843 |
Current portion | (689) | (689) | (537) |
Non-current portion | 9,663 | 9,663 | $ 9,306 |
Timmins | |||
Mineral Property Interests | |||
Surety bonds upfront deposit amount | 100 | ||
Timmins | Other assets | |||
Mineral Property Interests | |||
other assets | $ 100 | $ 100 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
INCOME TAXES. | ||||
Statutory tax rate (as a percent) | 35.00% | |||
Deferred income tax expense due to increased explorations and deferred income tax recovery due to currency devaluation | $ (0.2) | $ 2.5 | ||
Deferred income tax recovery due to currency devaluation | $ 0.9 | $ 2.7 |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017$ / sharesshares | Jun. 30, 2016$ / shares | Jun. 30, 2017USD ($)$ / sharesshares | Jun. 30, 2016USD ($)$ / sharesshares | Dec. 31, 2016shares | |
Common stock issued | shares | 312,277,000 | 312,277,000 | 299,570,000 | ||
Exercise of stock options | $ | $ 47 | $ 1,873 | |||
Return of capital distribution | $ | $ 1,498 | $ 1,491 | |||
Semi-annual return of capital payable (in dollars per share) | $ / shares | 0.005 | 0.005 | 0.005 | 0.005 | |
Common Stock | |||||
Shares of common stock issued upon exercise of stock options | shares | 20,000 | 812,000 | |||
Weighted average exercise price of stock options (in dollars per share) | $ / shares | $ 2.34 | $ 2.33 | |||
Exercise of stock options | $ | $ 47 | $ 1,873 | |||
Return of capital distribution | $ | $ 1,498 | $ 1,491 | |||
Share repurchase program (in shares) | shares | 558,000 | ||||
Lexam | Common Stock | |||||
Common stock issued | shares | 12,687,035 | 12,687,035 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
STOCK BASED COMPENSATION | ||||
Stock option expense | $ 0.4 | $ 0.1 | $ 0.7 | $ 0.5 |
Certain employees and directors | ||||
STOCK BASED COMPENSATION | ||||
Stock options granted (in shares) | 0.2 | 0 | ||
Weighted average exercise price | $ 3.11 | |||
Vesting period of options | 3 years | 3 years | ||
Exercisable period of options | 5 years | 5 years |
STOCK-BASED COMPENSATION - Summ
STOCK-BASED COMPENSATION - Summary of Assumptions (Details) - $ / shares | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | |
Principal assumptions used in applying the Black-Scholes option pricing model for the awards | ||
Risk-free interest rate (as a percent) | 1.51% | 1.51% |
Dividend yield (as a percent) | 0.32% | 0.32% |
Volatility factor of the expected market price of common stock (as a percent) | 73.00% | 73.00% |
Weighted-average expected life of option | 3 years 6 months | 3 years 6 months |
Weighted-average grant date fair value (in dollars per share) | $ 1.59 | $ 1.60 |
INCOME (LOSS) PER SHARE (Detail
INCOME (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Net (loss) income | $ (1,712) | $ 8,353 | $ (4,728) | $ 21,338 |
Weighted average number of common shares | 308,523 | 298,237 | 304,074 | 298,239 |
Effect of employee stock-based awards | 1,554 | 992 | ||
Diluted shares outstanding | 308,523 | 299,791 | 304,074 | 299,231 |
Net income (loss) per share: | ||||
Net income (loss) per share | $ (0.01) | $ 0.03 | $ (0.02) | $ 0.07 |
Diluted (in dollars per share) | $ (0.01) | $ 0.03 | $ (0.02) | $ 0.07 |
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) | 2,300 | 3,000 | ||
Average exercise price of options outstanding (in dollars per share) | $ 4.20 | $ 3.73 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Apr. 26, 2017 | Dec. 31, 2016 | |
RELATED PARTY TRANSACTIONS | ||||||
Accounts payable | $ 18,388 | $ 18,388 | $ 20,044 | |||
Entity Affiliated With Related Party | Lexam L.P. | ||||||
RELATED PARTY TRANSACTIONS | ||||||
Expense (income) | 27 | $ 51 | 90 | $ 71 | ||
Ownership percentage of individual | 27.00% | |||||
Entity Affiliated With Related Party | Lexam VG Gold | ||||||
RELATED PARTY TRANSACTIONS | ||||||
Expense (income) | 18 | (33) | 41 | |||
Accounts payable | 27 | |||||
Entity Affiliated With Related Party | REVlaw | ||||||
RELATED PARTY TRANSACTIONS | ||||||
Expense (income) | 33 | $ 27 | 83 | $ 50 | ||
Accounts payable | $ 55 | $ 55 | $ 148 | |||
Lexam | ||||||
RELATED PARTY TRANSACTIONS | ||||||
Accounts payable | $ 288 | |||||
Interest acquired (as a percent) | 100.00% |
OPERATING SEGMENT REPORTING (De
OPERATING SEGMENT REPORTING (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating Segment Reporting | ||||||
Gold and silver sales | $ 15,110 | $ 14,613 | $ 29,943 | $ 35,803 | ||
Production costs applicable to sales | (8,560) | (5,763) | (15,544) | (14,830) | ||
Mine development costs | (720) | (1,316) | (1,835) | (2,014) | ||
Exploration costs | (3,086) | (1,689) | (11,530) | (3,429) | ||
Property holding costs | (423) | (258) | (1,611) | (1,405) | ||
General and administrative expenses | (4,078) | (2,600) | (8,371) | (5,368) | ||
Income (loss) on investment in Minera Santa Cruz S.A. (net of amortization) | (263) | 4,133 | (73) | 9,096 | ||
Depreciation | 482 | 258 | 809 | 497 | ||
Reclamation and Remediation | 221 | $ 506 | ||||
Revision of estimates and accretion of reclamation obligations | (116) | (133) | (221) | (257) | ||
Gain on sale of assets | 11 | |||||
Gain on sale of marketable securities | (840) | (840) | (22) | |||
Other-than-temporary impairment on marketable equity securities | 597 | 0 | 882 | |||
Unrealized gain on derivative instrument | (722) | 1,719 | 1,069 | 1,719 | ||
Foreign currency gain (loss) | 1,050 | (281) | 1,075 | 502 | ||
Net Income before income taxes | (1,559) | 7,497 | (7,231) | 18,615 | ||
Revenues | 15,110 | 14,613 | 29,943 | 35,803 | ||
Long-Lived Assets | 465,198 | 465,198 | 419,744 | |||
Investment in MSC | 157,320 | 157,320 | 162,320 | |||
Mexico | ||||||
Operating Segment Reporting | ||||||
Gold and silver sales | 15,110 | 14,613 | 29,943 | 35,803 | ||
Production costs applicable to sales | (8,560) | (5,763) | (15,544) | (14,830) | ||
Mine development costs | (177) | (619) | (332) | (697) | ||
Exploration costs | (1,513) | (860) | (3,052) | (1,645) | ||
Property holding costs | (63) | (1,045) | (831) | |||
General and administrative expenses | (1,040) | (770) | (1,879) | (1,489) | ||
Segment income (loss) | 3,757 | 6,601 | 8,091 | 16,311 | ||
MSC | ||||||
Operating Segment Reporting | ||||||
Income (loss) on investment in Minera Santa Cruz S.A. (net of amortization) | (263) | 4,133 | (73) | 9,096 | ||
Segment income (loss) | (263) | 4,133 | (73) | 9,096 | ||
Los Azules | ||||||
Operating Segment Reporting | ||||||
Exploration costs | (841) | (193) | (7,142) | (503) | ||
Property holding costs | (47) | (82) | (48) | (174) | ||
General and administrative expenses | (421) | (146) | (629) | (185) | ||
Segment income (loss) | (1,309) | (421) | (7,819) | (862) | ||
Nevada | ||||||
Operating Segment Reporting | ||||||
Mine development costs | (543) | (697) | (1,503) | (1,317) | ||
Exploration costs | (447) | (599) | (931) | (1,187) | ||
Property holding costs | (313) | (176) | (518) | (400) | ||
General and administrative expenses | (359) | (52) | (785) | (107) | ||
Segment income (loss) | (1,662) | (1,524) | (3,737) | (3,011) | ||
Timmins | ||||||
Operating Segment Reporting | ||||||
Exploration costs | (130) | (130) | ||||
General and administrative expenses | (26) | (26) | ||||
Segment income (loss) | (156) | (156) | ||||
Total Segment | ||||||
Operating Segment Reporting | ||||||
Gold and silver sales | 15,110 | 14,613 | 29,943 | 35,803 | ||
Production costs applicable to sales | (8,560) | (5,763) | (15,544) | (14,830) | ||
Mine development costs | (720) | (1,316) | (1,835) | (2,014) | ||
Exploration costs | (2,931) | (1,652) | (11,255) | (3,335) | ||
Property holding costs | (423) | (1,611) | ||||
General and administrative expenses | (1,846) | (968) | (3,319) | (1,781) | ||
Income (loss) on investment in Minera Santa Cruz S.A. (net of amortization) | (263) | 4,133 | (73) | 9,096 | ||
Segment income (loss) | 367 | 8,789 | (3,694) | 21,534 | ||
Corporate & Other | ||||||
Operating Segment Reporting | ||||||
Exploration costs | (155) | (37) | (275) | (94) | ||
General and administrative expenses | (2,232) | (1,632) | (5,052) | (3,587) | ||
Depreciation | (482) | (258) | (809) | (497) | ||
Revision of estimates and accretion of reclamation obligations | (116) | (133) | (221) | (257) | ||
Interest income and other income | (109) | (73) | (175) | 155 | ||
Gain on sale of assets | 11 | |||||
Gain on sale of marketable securities | 840 | 840 | 22 | |||
Other-than-temporary impairment on marketable equity securities | (597) | (882) | ||||
Unrealized gain on derivative instrument | (722) | 1,719 | 1,069 | 1,719 | ||
Foreign currency gain (loss) | 1,050 | (281) | 1,075 | 502 | ||
Net Income before income taxes | (1,559) | 7,497 | (7,231) | 18,615 | ||
MSC | ||||||
Operating Segment Reporting | ||||||
Income (loss) on investment in Minera Santa Cruz S.A. (net of amortization) | (263) | 4,133 | (73) | 9,096 | ||
Investment in MSC | 157,320 | 157,320 | 162,320 | $ 167,107 | ||
Canada | ||||||
Operating Segment Reporting | ||||||
Long-Lived Assets | 42,587 | 42,587 | 663 | |||
Mexico | ||||||
Operating Segment Reporting | ||||||
Revenues | 15,110 | $ 14,613 | 29,943 | $ 35,803 | ||
Long-Lived Assets | 36,684 | 36,684 | 27,582 | |||
United States | ||||||
Operating Segment Reporting | ||||||
Long-Lived Assets | 37,114 | 37,114 | 37,620 | |||
Argentina | ||||||
Operating Segment Reporting | ||||||
Long-Lived Assets | $ 348,813 | $ 348,813 | $ 353,879 |
FAIR VALUE ACCOUNTING (Details)
FAIR VALUE ACCOUNTING (Details) - Recurring - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Assets: | ||
Investments | $ 11,096 | $ 8,543 |
Assets | 11,096 | 8,543 |
Level 1 | ||
Assets: | ||
Investments | 8,233 | 6,749 |
Assets | 8,233 | 6,749 |
Level 2 | ||
Assets: | ||
Investments | 2,863 | 1,794 |
Assets | $ 2,863 | $ 1,794 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Reclamation Bonds (Details) - USD ($) $ in Millions | Jun. 23, 2017 | Jun. 30, 2017 |
Reclamation Bonds | ||
Surety bonds upfront deposit amount | $ 0.5 | |
Outstanding surety bonds | $ 4.9 | |
Reclamation Bonds | ||
Reclamation Bonds | ||
Face amount | $ 20 | |
Percentage of annual fees on surety bonds | 2.00% | |
Surety bonds upfront deposit amount | $ 0 |
ACQUISITION OF LEXAM (Details)
ACQUISITION OF LEXAM (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 26, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 |
ACQUISITION OF LEXAM | ||||
Common shares issued for acquisition | $ 38,141 | |||
Transaction fees incurred | $ 5,950 | |||
Fair value of assets acquired and liabilities assumed: | ||||
Mineral property interests | 283,170 | $ 242,640 | ||
Other current assets | 1,896 | 1,667 | ||
Other non-current assets | 10,348 | 532 | ||
Accounts payable and accrued liabilities | (18,388) | (20,044) | ||
Reclamation obligations | (689) | (537) | ||
Deferred income tax liabilities | $ (23,301) | $ (23,665) | ||
Lexam | ||||
ACQUISITION OF LEXAM | ||||
Common shares issued (in shares) | 12,687,035 | |||
Share price | $ 3 | |||
Share replacement awards | $ 100 | |||
Common shares issued for acquisition | 38,141 | |||
Transaction fees incurred | 1,017 | |||
Purchase price | 39,158 | |||
Fair value of assets acquired and liabilities assumed: | ||||
Mineral property interests | 41,595 | |||
Cash and cash equivalents | 177 | |||
Other current assets | 86 | |||
Other non-current assets | 312 | |||
Accounts payable and accrued liabilities | (288) | |||
Reclamation obligations | (570) | |||
Deferred income tax liabilities | (2,154) | |||
Total fair value of assets acquired and liabilities assumed | $ 39,158 | |||
Common Stock Exchange Ratio For Acquisition | 0.056% | |||
Lexam | Maximum | ||||
Fair value of assets acquired and liabilities assumed: | ||||
Net profit interest | 20.00% | |||
Lexam | Minimum | ||||
Fair value of assets acquired and liabilities assumed: | ||||
Net profit interest | 10.00% | |||
Buffalo Ankerite, Fuller and Davidson Tisdale | Lexam | ||||
Fair value of assets acquired and liabilities assumed: | ||||
Percentage of interest in the deposit | 100.00% | |||
Timmins Ontario | Lexam | ||||
Fair value of assets acquired and liabilities assumed: | ||||
Percentage of interest in the deposit | 61.00% | |||
Goldcorp Inc | Lexam | ||||
Fair value of assets acquired and liabilities assumed: | ||||
Percentage of interest in the deposit | 39.00% |