UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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As of August 7, 2024, there were
MCEWEN MINING INC.
FORM 10-Q
Index
2
PART I – FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
MCEWEN MINING INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)
(in thousands of U.S. dollars, except per share)
Three months ended June 30, | Six months ended June 30, | ||||||||||
2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Revenue from gold and silver sales | $ | | $ | | $ | | $ | | |||
Production costs applicable to sales |
| ( |
| ( |
| ( |
| ( | |||
Depreciation and depletion | ( | ( | ( | ( | |||||||
Gross profit (loss) | | ( | | | |||||||
OTHER OPERATING EXPENSES: | |||||||||||
Advanced projects - Los Azules |
| — | ( | — | ( | ||||||
Advanced projects - Other | ( | ( | ( | ( | |||||||
Exploration | ( | ( | ( | ( | |||||||
General and administrative |
| ( |
| ( |
| ( |
| ( | |||
Loss from investment in McEwen Copper Inc. (Note 9) | ( | — | ( | — | |||||||
Income (loss) from investment in Minera Santa Cruz S.A. (Note 9) |
| |
| ( |
| |
| ( | |||
Depreciation |
| ( |
| ( |
| ( |
| ( | |||
Reclamation and remediation (Note 11) |
| | ( |
| ( | ( | |||||
| ( | ( | ( |
| ( | ||||||
Operating loss |
| ( | ( |
| ( |
| ( | ||||
OTHER INCOME (EXPENSE): | |||||||||||
Interest and other finance income (expense), net |
| ( |
| |
| ( |
| | |||
Other income (expense) (Note 3) | |
| ( |
| |
| ( | ||||
Total other income (expense) |
| ( |
| ( |
| ( |
| | |||
Loss before income and mining taxes | ( | ( | ( | ( | |||||||
Income and mining tax recovery | | | | | |||||||
Net loss after income and mining taxes | ( | ( | ( | ( | |||||||
Net loss attributable to non-controlling interests | — | | — | | |||||||
Net loss and comprehensive loss attributable to McEwen shareholders | $ | ( | $ | ( | $ | ( | $ | ( | |||
Net loss per share (Note 13): | |||||||||||
Basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||
Weighted average common shares outstanding (thousands) (Note 13): | |||||||||||
Basic and diluted | | | | | |||||||
The accompanying notes are an integral part of these consolidated financial statements.
3
MCEWEN MINING INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands of U.S. dollars)
June 30, | December 31, | |||||
| 2024 |
| 2023 | |||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents (Note 4) | $ | | $ | | ||
Marketable securities (Note 5) |
| |
| | ||
Receivables, prepaids and other current assets (Note 6) |
| |
| | ||
| | |||||
Inventories (Note 7) |
| |
| | ||
Total current assets |
| |
| | ||
Mineral property interests and plant and equipment, net (Note 8) |
| |
| | ||
Investment in McEwen Copper Inc. (Note 9) | | | ||||
Investment in Minera Santa Cruz S.A. (Note 9) |
| |
| | ||
Inventories (Note 7) | | | ||||
Restricted cash (Note 4) | | | ||||
Other assets |
| |
| | ||
TOTAL ASSETS | $ | | $ | | ||
LIABILITIES & SHAREHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable and accrued liabilities | $ | | $ | | ||
Reclamation and remediation liabilities (Note 11) |
| |
| | ||
Current portion of long-term debt (Note 10) | | — | ||||
Flow-through share premium (Note 12) | | | ||||
Tax liabilities | | | ||||
Lease liabilities | | | ||||
Total current liabilities |
| |
| | ||
Reclamation and remediation liabilities (Note 11) |
| |
| | ||
Long-term debt (Note 10) | | | ||||
Deferred tax liabilities | | | ||||
Lease liabilities | | | ||||
Other liabilities | | | ||||
Total liabilities | $ | | $ | | ||
Shareholders’ equity: | ||||||
Common shares: | $ | | $ | | ||
Accumulated deficit |
| ( |
| ( | ||
Total shareholders’ equity |
| |
| | ||
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY | $ | | $ | | ||
The accompanying notes are an integral part of these consolidated financial statements.
4
MCEWEN MINING INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)
(in thousands of U.S. dollars and shares)
Common Stock | ||||||||||||||
and Additional | ||||||||||||||
Paid-in Capital | Accumulated | Non-controlling | ||||||||||||
Three months ended June 30, 2023 and 2024 |
| Shares |
| Amount | Deficit | Interests | Total | |||||||
Balance, March 31, 2023 |
| $ | $ | ( | $ | $ | | |||||||
Stock-based compensation |
| — | | — | — | | ||||||||
Restricted shares issued | | — | — | — | — | |||||||||
Net loss | — | — | ( | ( | ( | |||||||||
Balance, June 30, 2023 |
| | $ | | $ | ( | $ | | $ | | ||||
Balance, March 31, 2024 |
| | $ | | $ | ( | $ | — | $ | | ||||
Stock-based compensation |
| | | — | — | | ||||||||
Exercise of warrants | — | | — | — | | |||||||||
Sale of flow-through shares (Note 12) | | | — | — | | |||||||||
Net loss | — | — | ( | — | ( | |||||||||
Balance, June 30, 2024 |
| | $ | | $ | ( | $ | — | $ | | ||||
Common Stock | ||||||||||||||
and Additional | ||||||||||||||
Paid-in Capital | Accumulated | Non-controlling | ||||||||||||
Six months ended June 30, 2023 and 2024 | Shares |
| Amount | Deficit | Interests | Total | ||||||||
Balance, December 31, 2022 | $ | $ | ( | $ | $ | | ||||||||
Stock-based compensation |
| — | | — | — | | ||||||||
Restricted shares issued | | — | — | — | — | |||||||||
Proceeds from McEwen Copper Inc. financing | — | | — | | | |||||||||
Net loss |
| — | — | ( | ( | ( | ||||||||
Balance, June 30, 2023 |
| | $ | | $ | ( | $ | | $ | | ||||
Balance, December 31, 2023 |
| | $ | | $ | ( | $ | — | $ | | ||||
Stock-based compensation |
| | | — | — | | ||||||||
Exercise of warrants | — | | — | — | | |||||||||
Sale of flow-through shares (Note 12) | | | — | — | | |||||||||
Net loss | — | — | ( | — | ( | |||||||||
Balance, June 30, 2024 |
| | $ | | $ | ( | $ | — | $ | | ||||
The accompanying notes are an integral part of these consolidated financial statements.
5
MCEWEN MINING INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands of U.S. dollars)
Six months ended June 30, | ||||||
2024 |
| 2023 | ||||
Cash flows from operating activities: | ||||||
Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss from operating activities: | ||||||
Loss from investment in McEwen Copper Inc. (Note 9) |
| |
| — | ||
Loss (income) from investment in Minera Santa Cruz S.A. (Note 9) |
| ( |
| | ||
Dividends received from Minera Santa Cruz S.A. (Note 9) |
| |
| | ||
Depreciation, amortization and depletion |
| |
| | ||
Unrealized gain on marketable securities (Note 5) | ( | ( | ||||
Foreign exchange loss on marketable securities (Note 5) | — | | ||||
Foreign exchange loss | | | ||||
Reclamation accretion and adjustments to estimate |
| |
| | ||
Gain on disposal of property and equipment | ( | — | ||||
Income and mining tax recovery |
| ( |
| ( | ||
Stock-based compensation |
| |
| | ||
Change in non-cash working capital items: | ||||||
Change in other assets related to operations |
| ( |
| ( | ||
Change in liabilities related to operations | | ( | ||||
Cash provided by (used in) operating activities | $ | | $ | ( | ||
Cash flows from investing activities: | ||||||
Additions to mineral property interests and plant and equipment | $ | ( | $ | ( | ||
Investment in marketable securities (Note 5) |
| — |
| ( | ||
Proceeds from sale of marketable securities (Note 5) | | — | ||||
Cash used in investing activities | $ | ( | $ | ( | ||
Cash flows from financing activities: | ||||||
Issuance of flow-through common shares, net of issuance costs (Note 12) | $ | | $ | — | ||
Proceeds from exercise of warrants | | — | ||||
Proceeds from McEwen Copper Inc. financing | — | | ||||
Principal repayment on long-term debt | — | ( | ||||
Payment of finance lease obligations | ( | ( | ||||
Cash provided by financing activities | $ | | $ | | ||
Effect of exchange rate change on cash and cash equivalents | ( |
| ( | |||
Increase in cash, cash equivalents and restricted cash |
| |
| | ||
Cash, cash equivalents and restricted cash, beginning of period |
| |
| | ||
Cash, cash equivalents and restricted cash, end of period | $ | | $ | | ||
Supplemental disclosure of cash flow information: | ||||||
Cash received (paid) during the period for: | ||||||
Interest paid | $ | ( | $ | ( | ||
Interest received | | | ||||
Taxes paid | ( | ( | ||||
The accompanying notes are an integral part of these consolidated financial statements.
6
MCEWEN MINING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2024
(tabular amounts are in thousands of U.S. dollars, unless otherwise noted)
NOTE 1 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 production and sale of gold and silver, as well as the development and exploration of copper, gold, and silver mineral properties across North and South America.
The Company owns a
The interim consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and are unaudited. While information and note disclosures normally included in annual financial statements and 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, the Company believes that the information and disclosures included in the interim consolidated financial statements are adequate and not misleading. Therefore, these interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto and the summary of significant accounting policies included in the Company’s annual report on Form 10-K for the year ended December 31, 2023. 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, 2023.
In management’s opinion, the unaudited Consolidated Statements of Operations and Comprehensive Loss (“Statement of Operations”) for the three and six months ended June 30, 2024 and 2023, the unaudited Consolidated Balance Sheet as at June 30, 2024 and the Consolidated Balance Sheet as at December 31, 2023, the unaudited Consolidated Statement of Changes in Shareholders’ Equity for the three and six months ended June 30, 2024 and 2023, and the unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023, 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. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated. Investments over which the Company exerts significant influence but does not control through majority ownership are accounted for using the equity method.
References to “CAD” refers to Canadian Dollar, “USD” refers to United States Dollar, and “MXN” refers to Mexican Peso.
NOTE 2 OPERATING SEGMENT REPORTING
The Company is a mining and minerals production, development, and exploration company focused on precious and base metals in the United States, Canada, Mexico, and Argentina. The Company’s Chief Operating Decision Maker (“CODM”) reviews the operating results, assesses performance, and makes decisions about the allocation of resources to these segments at the geographic region level, major mine/project level or investment level where the economic characteristics of the individual mines or projects within a geographic region are not alike. As a result, these operating segments also represent the Company’s reportable segments for accounting purposes. The Company’s business activities that are not considered operating segments are included in the General and Administrative and Other line item in the below table and are provided for reconciliation purposes.
7
MCEWEN MINING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2024
(tabular amounts are in thousands of U.S. dollars, unless otherwise noted)
The CODM reviews segment income or loss, defined as gold and silver sales less production costs applicable to sales, depreciation, and depletion, advanced projects, and exploration costs, for all segments except for the MSC and McEwen Copper segments, which are 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. Capital expenditures include costs capitalized in mineral property interests and plant and equipment in the respective periods.
Significant information relating to the Company’s reportable operating segments for the periods presented is summarized in the tables below:
Three months ended June 30, 2024 |
| USA |
| Canada | Mexico | MSC |
| McEwen Copper | Total | |||||||||
Revenue from gold and silver sales | $ | | $ | | $ | — | $ | — | $ | — | $ | | ||||||
Production costs applicable to sales | ( | ( | — | — | — |
| ( | |||||||||||
Depreciation and depletion | ( | ( | — | — | — | ( | ||||||||||||
Gross profit | | | — | — | — | | ||||||||||||
Advanced projects | — | — | ( | — | — | ( | ||||||||||||
Exploration | ( | ( | — | — | — |
| ( | |||||||||||
Income (loss) from equity method investments | — | — | — | | ( |
| ( | |||||||||||
Segment profit (loss) | $ | | $ | ( | $ | ( | $ | | $ | ( | $ | ( | ||||||
General and administrative | ( | |||||||||||||||||
Other expense | ( | |||||||||||||||||
Loss before income and mining taxes | $ | ( | ||||||||||||||||
Capital expenditures | $ | | $ | | $ | | $ | — | $ | — | $ | | ||||||
Six months ended June 30, 2024 |
| USA |
| Canada | Mexico | MSC |
| McEwen Copper | Total | |||||||||
Revenue from gold and silver sales | $ | | $ | | $ | | $ | — | $ | — | $ | | ||||||
Production costs applicable to sales | ( | ( | — | — | — |
| ( | |||||||||||
Depreciation and depletion | ( | ( | — | — | — | ( | ||||||||||||
Gross profit (loss) | | ( | | — | — | | ||||||||||||
Advanced projects | — | — | ( | — | — | ( | ||||||||||||
Exploration | ( | ( | — | — | — |
| ( | |||||||||||
Income (loss) from equity method investments | — | — | — | | ( |
| ( | |||||||||||
Segment profit (loss) | $ | | $ | ( | $ | ( | $ | | $ | ( | $ | ( | ||||||
General and administrative | ( | |||||||||||||||||
Other expense | ( | |||||||||||||||||
Loss before income and mining taxes | $ | ( | ||||||||||||||||
Capital expenditures | $ | | $ | | $ | | $ | — | $ | — | $ | | ||||||
8
MCEWEN MINING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2024
(tabular amounts are in thousands of U.S. dollars, unless otherwise noted)
Three months ended June 30, 2023 |
| USA |
| Canada |
| Mexico |
| MSC |
| McEwen Copper | Total | |||||||
Revenue from gold and silver sales | $ | | $ | | $ | — | $ | — | $ | — | $ | | ||||||
Production costs applicable to sales | ( | ( | — | — | — |
| ( | |||||||||||
Depreciation and depletion | ( | ( | — | — | — | ( | ||||||||||||
Gross (loss) profit | ( | | — | — | — | ( | ||||||||||||
Advanced projects | ( | — | ( | — | ( | ( | ||||||||||||
Exploration | ( | ( | — | — | — | ( | ||||||||||||
Loss from equity method investments | — | — | — | ( | — | ( | ||||||||||||
Segment loss | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | ||||||
General and administrative | ( | |||||||||||||||||
Other expense | ( | |||||||||||||||||
Loss before income and mining taxes | $ | ( | ||||||||||||||||
Capital expenditures | $ | | $ | | $ | — | $ | — | $ | | $ | | ||||||
Six months ended June 30, 2023 |
| USA |
| Canada |
| Mexico |
| MSC |
| McEwen Copper | Total | |||||||
Revenue from gold and silver sales | $ | | $ | | $ | — | $ | — | $ | — | $ | | ||||||
Production costs applicable to sales | ( | ( | — | — | — | ( | ||||||||||||
Depreciation and depletion | ( | ( | — | — | — | ( | ||||||||||||
Gross profit (loss) | ( | | — | — | — | | ||||||||||||
Advanced projects | ( | — | ( | — | ( | |||||||||||||