By Otto Rock
Ladies and gentlemen, boys and girls, sit back, relax and get ready for a super magic trick.
This is from the McEwen Mining (MUX) 2017 annual financials, as posted on SEDAR on February 22nd this year. It explains the financial performance of the San José Mine, which is owned by the Argentina registered mining company Minera Santa Cruz (MSC). As you may be aware, MSC is a company owned 51% by Hochschild (HOC.L) and 49% by MUX, a JV operated by HOC:
Above the red line is the 100% entity that is MSC, which as you can see booked a $4.75m loss for the year in 2017. Below the line is the 49% of the company attributable to MUX, which means MSC returned a loss for Rob McEwen’s precious metals mining company of $2.328m. That, along with benefits on amortization from MSC, meant that MUX could claim a U$11.916m tax credit from MSC for its final tax payments. In fact MUX claimed over $15.3m in tax credits last year, that U$11.9m being the lion’s share.
And now this, the books of MSC itself for the same 2017 year, as filed on SEDAR a few days ago:
Oh look! MSC didn’t make a loss in 2017 after all! It made a U$23.592m profit, which means the 49% owned by MUX brought the company U$11.56m in profits. It’s magic!
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