10-Q 1 mux-20240331x10q.htm 10-Q
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from               to

Commission File Number: 001-33190

MCEWEN MINING INC.

(Exact name of registrant as specified in its charter)

Colorado

84-0796160

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

150 King Street West, Suite 2800, Toronto, Ontario Canada M5H 1J9

(Address of principal executive offices) (ZIP code)

(866) 441-0690

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, no par value

MUX

New York Stock Exchange (“NYSE”)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No  

As of May 8, 2024, there were 49,440,096 shares of common stock outstanding.

MCEWEN MINING INC.

FORM 10-Q

Index

PART I FINANCIAL INFORMATION

Item 1.

Financial Statements

3

Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2024, and 2023 (unaudited)

3

Consolidated Balance Sheets at March 31, 2024 (unaudited) and December 31, 2023 (audited)

4

Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2024, and 2023 (unaudited)

5

Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (unaudited)

6

Notes to Consolidated Financial Statements (unaudited)

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

Item 3.

Quantitative and Qualitative Disclosure about Market Risk

36

Item 4.

Controls and Procedures

38

PART II OTHER INFORMATION

Item 1.

Legal Proceedings

39

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

39

Item 3.

Defaults upon Senior Securities

39

Item 4.

Mine Safety Disclosures

39

Item 5.

Other Information

39

Item 6.

Exhibits

40

SIGNATURES

41

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 March 31,

2024

    

2023

Revenue from gold and silver sales

$

41,228

$

34,752

Production costs applicable to sales

 

(25,110)

 

(23,413)

Depreciation and depletion

(10,107)

(6,896)

Gross profit

6,011

4,443

OTHER OPERATING EXPENSES:

Advanced projects - Los Azules

 

(31,880)

Advanced projects - Other

(2,454)

(1,680)

Exploration

 

(3,871)

 

(5,900)

General and administrative

 

(4,073)

 

(3,441)

Loss from investment in McEwen Copper Inc. (Note 9)

(18,012)

Income (loss) from investment in Minera Santa Cruz S.A. (Note 9)

 

1,278

 

(3,461)

Depreciation

 

(171)

 

(282)

Reclamation and remediation (Note 11)

 

(690)

(630)

 

(27,993)

(47,274)

Operating loss

 

(21,982)

(42,831)

OTHER INCOME (EXPENSE):

Interest and other finance income (expense), net

 

(870)

 

8,464

Other expense (Note 3)

(88)

 

(2,579)

Total other income (expense)

 

(958)

 

5,885

Loss before income and mining taxes

(22,940)

(36,946)

Income and mining tax recovery

2,557

536

Net loss after income and mining taxes

(20,383)

(36,410)

Net income attributable to non-controlling interests

(6,666)

Net loss and comprehensive loss attributable to McEwen shareholders

$

(20,383)

$

(43,076)

Net loss per share (Note 12):

Basic and diluted

$

(0.41)

$

(0.91)

Weighted average common shares outstanding (thousands) (Note 12):

Basic and diluted

 

49,440

 

47,428

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)

March 31,

December 31,

    

2024

    

2023

ASSETS

Current assets:

Cash and cash equivalents (Note 4)

$

21,989

$

23,020

Investments (Note 5)

 

1,569

 

1,743

Receivables, prepaids and other current assets (Note 6)

 

5,838

 

5,578

Due from McEwen Copper Inc. (Note 13)

2,754

2,376

Inventories (Note 7)

 

19,871

 

19,944

Total current assets

 

52,021

 

52,661

Mineral property interests and plant and equipment, net (Note 8)

 

167,149

 

169,950

Investment in McEwen Copper Inc. (Note 9)

308,135

326,147

Investment in Minera Santa Cruz S.A. (Note 9)

 

94,496

 

93,218

Inventories (Note 7)

11,814

10,100

Restricted cash (Note 4)

4,429

4,490

Other assets

 

672

 

673

TOTAL ASSETS

$

638,716

$

657,239

LIABILITIES & SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued liabilities

$

24,732

$

22,656

Reclamation and remediation liabilities (Note 11)

 

4,235

 

3,105

Current portion of long-term debt (Note 10)

3,000

Contract liability (Note 15)

1,966

Flow-through share premium

1,103

1,661

Tax liabilities

1,979

1,603

Lease liabilities

894

978

Total current liabilities

 

37,909

 

30,003

Reclamation and remediation liabilities (Note 11)

 

39,024

 

39,916

Long-term debt (Note 10)

37,000

40,000

Deferred tax liabilities

37,907

40,572

Other liabilities

3,562

3,840

Lease liabilities

806

488

Total liabilities

$

156,208

$

154,819

Shareholders’ equity:

Common shares: 49,440 as at March 31, 2024 (in thousands)

$

1,768,927

$

1,768,456

Accumulated deficit

 

(1,286,419)

 

(1,266,036)

Total shareholders’ equity

 

482,508

 

502,420

TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY

$

638,716

$

657,239

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 March 31, 2023

    

Shares

    

Amount

Deficit

Interests

Total

Balance, December 31, 2022

47,428

$

1,644,145

$

(1,321,336)

$

33,465

$

356,274

Stock-based compensation

28

28

Proceeds from McEwen Copper Inc. financing

109,913

75,477

185,390

Net income (loss)

(43,076)

6,666

(36,410)

Balance, March 31, 2023

 

47,428

$

1,754,086

$

(1,364,412)

$

115,608

$

505,282

Three months ended March 31, 2024

Balance, December 31, 2023

49,440

$

1,768,456

$

(1,266,036)

$

$

502,420

Stock-based compensation

 

464

464

Exercise of warrants

7

7

Net loss

 

(20,383)

(20,383)

Balance, March 31, 2024

 

49,440

$

1,768,927

$

(1,286,419)

$

$

482,508

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)

Three months ended March 31,

2024

    

2023

Cash flows from operating activities:

Net loss

$

(20,383)

$

(36,410)

Adjustments to reconcile net loss from operating activities:

Loss from investment in McEwen Copper Inc. (Note 9)

 

18,012

 

Loss (income) from investment in Minera Santa Cruz S.A. (Note 9)

 

(1,278)

 

3,461

Depreciation, amortization and depletion

 

7,436

 

7,263

Unrealized loss (gain) on investments (Note 5)

227

(296)

Foreign exchange loss

256

9,113

Reclamation accretion and adjustments to estimate

 

361

 

631

Gain on disposal of property and equipment

(113)

Income and mining tax recovery

 

(3,128)

 

(536)

Stock-based compensation

 

464

 

28

Change in non-cash working capital items:

Change in other assets related to operations

 

(2,277)

 

(2,732)

Change in liabilities related to operations

4,304

(17)

Cash provided by (used in) operating activities

$

3,881

$

(19,495)

Cash flows from investing activities:

Additions to mineral property interests and plant and equipment

$

(4,522)

$

(4,950)

Investment in marketable equity securities (Note 5)

 

(53)

 

Cash used in investing activities

$

(4,575)

$

(4,950)

Cash flows from financing activities:

Proceeds from McEwen Copper Inc. financing

$

$

185,390

Proceeds from exercise of warrants

7

Payment of finance lease obligations

(149)

(408)

Cash provided by (used in) financing activities

$

(142)

$

184,982

Effect of exchange rate change on cash and cash equivalents

(256)

 

(9,113)

(Decrease) increase in cash, cash equivalents and restricted cash

 

(1,092)

 

151,424

Cash, cash equivalents and restricted cash, beginning of period

 

27,510

 

43,579

Cash, cash equivalents and restricted cash, end of period

$

26,418

$

195,003

Supplemental disclosure of cash flow information:

Cash received (paid) during the period for:

Interest paid

$

(972)

$

(1,253)

Interest received

119

9,044

Taxes paid

The accompanying notes are an integral part of these consolidated financial statements.

6

Table of Contents

MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 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 produces and sells gold and silver from its operations in Canada, the United States and Argentina, and has a number of exploration and development assets in Canada, the United States, Mexico and Argentina.

The Company owns a 100% interest in the Gold Bar mine in Nevada, United States, the Fox Complex in Ontario, Canada, the Fenix Project in Sinaloa, Mexico and a portfolio of exploration properties in Nevada, Canada, Mexico and Argentina. The Company also owns a 47.7% interest in McEwen Copper Inc. (“McEwen Copper”), owner of the Los Azules copper project in San Juan, Argentina and a 49.0% 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. The Company reports its investments in McEwen Copper and MSC as equity investments.

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 months ended March 31, 2024 and 2023, the unaudited Consolidated Balance Sheet as at March 31, 2024 and the audited Consolidated Balance Sheet as at December 31, 2023, the unaudited Consolidated Statement of Changes in Shareholders’ Equity for the three months ended March 31, 2024 and 2023, and the unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 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.

NOTE 2 OPERATING SEGMENT REPORTING

The Company is a mining and minerals production 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.

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.

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MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2024

(tabular amounts are in thousands of U.S. dollars, unless otherwise noted)

Significant information relating to the Company’s reportable operating segments for the periods presented is summarized in the tables below:

Three months ended March 31, 2024

    

USA

    

Canada

    

Mexico

    

MSC

    

McEwen Copper

Total

Revenue from gold and silver sales

$

25,278

$

14,750

$

1,200

$

$

$

41,228

Production costs applicable to sales

(13,268)

(11,842)

 

(25,110)

Depreciation and depletion

(6,037)

(4,070)

(10,107)

Gross profit (loss)

5,973

(1,162)

1,200

6,011

Advanced projects

(2,454)

 

(2,454)

Exploration

(1,082)

(2,789)

(3,871)

Income (loss) from equity investments

1,278

(18,012)

 

(16,734)

Segment income (loss)

$

4,891

$

(3,951)

$

(1,254)

$

1,278

$

(18,012)

$

(17,048)

General and administrative and other

(5,892)

Loss before income and mining taxes

$

(22,940)

Capital expenditures

$

929

$

2,780

$

813

$

$

$

4,522

Three months ended March 31, 2023

    

USA

    

Canada

    

Mexico

    

MSC

    

McEwen Copper

Total

Revenue from gold and silver sales

$

11,587

$

23,165

$

$

$

$

34,752

Production costs applicable to sales

(9,341)

(14,072)

 

(23,413)

Depreciation and depletion

(1,260)

(5,636)

(6,896)

Gross profit

986

3,457

4,443

Advanced projects

(289)

(1,391)

(31,880)

(33,560)

Exploration

(773)

(4,740)

(387)

(5,900)

Loss from equity investments

(3,461)

(3,461)

Segment loss

$

(76)

$

(1,283)

$

(1,391)

$

(3,461)

$

(32,267)

$

(38,478)

General and administrative and other

1,532

Loss before income and mining taxes

$

(36,946)

Capital expenditures

$

2,991

$

2,773

$

$

$

954

$

6,718

Geographic information

Geographic information includes the long-lived asset balances and revenues presented for the Company’s operating segments, as follows:

Non-current Assets

Revenue (1)

March 31,

December 31,

Three months ended March 31,

    

2024

    

2023

  

2024

2023

USA

$

73,028

$

71,234

$

25,278

$

11,587

Canada

61,908

83,674

14,750

23,165

Mexico

31,116

30,304

1,200

Argentina (2)

420,643

419,366

Total Consolidated

$

586,695

$

604,578

$

41,228

$

34,752

(1)Presented based on the location from which the precious metals originated.
(2)Includes Investment in MSC of $94.5 million (December 31, 2023 – $93.2 million) and Investment in McEwen Copper of $308.1 million (December 31, 2023 – $326.1 million).

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MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2024

(tabular amounts are in thousands of U.S. dollars, unless otherwise noted)

NOTE 3 OTHER EXPENSE

The following is a summary of other expense for the three months ended March 31, 2024 and 2023:

Three months ended March 31,

    

2024

    

2023

Unrealized and realized gain (loss) on investments (Note 5)

$

(202)

$

296

Foreign currency gain on Blue Chip Swap

7,993

Foreign currency gain (loss)

91

(10,641)

Other income (loss), net

23

(227)

Total other expense

$

(88)

$

(2,579)

During the three months ended March 31, 2023, the Company completed two Blue Chip Swap transactions to transfer funds from Canadian to Argentina within McEwen Copper Inc. These funds were used for the continued development of the Los Azules Copper project. The Company realized a net gain of $7.5 million comprised of a foreign currency gain of $7.9 million and a realized loss on investments of $0.4 million, including the impact of fees and commissions on these Blue Chip Swap transactions.

NOTE 4 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported in the Consolidated Balance Sheets:

March 31, 2024

December 31, 2023

Cash and cash equivalents and restricted cash held in USD

$

12,887

$

10,578

Cash and cash equivalents and restricted cash held in CAD

13,468

16,288

Cash and cash equivalents held in other currencies

63

644

Total cash and cash equivalents and restricted cash

$

26,418

$

27,510

As at March 31, 2024, of $26.4 million of cash and cash equivalents and restricted cash, $13.4 million was committed to the Company’s Canadian Exploration Expenditures (“CEE”) and Canadian Development Expenditures (“CDE”) (December 31, 2023 – of $27.5 million of cash and cash equivalents and restricted cash, $16.1 million committed to CEE and CDE expenditures.

NOTE 5 INVESTMENTS

The following is a summary of the activity in investments for the three months ended March 31, 2024, and for the year ended December 31, 2023:

As at

Additions/

Disposals/

Unrealized

As at

December 31,

transfers during

transfers during

loss on

March 31,

2023

period

period

securities held

2024

Marketable equity securities

$

1,743

$

53

$

$

(227)

$

1,569

As at

Additions/

Disposals/

Unrealized

As at

December 31,

transfers during

transfers during

gain on

March 31,

2022

period

period

securities held

2023

Marketable equity securities

$

1,133

$

$

$

296

$

1,429

Warrants

 

162

162

Total investments

$

1,295

$

$

$

296

$

1,591

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MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2024

(tabular amounts are in thousands of U.S. dollars, unless otherwise noted)

On January 3, 2024, the Company entered into a private placement subscription agreement to acquire an additional 210,000 common shares of Nevgold Corp. (“Nevgold”), priced at $0.23 per share, bringing the total number of shares owned to 5,173,455.

NOTE 6 RECEIVABLES, PREPAIDS AND OTHER CURRENT ASSETS

The following is a breakdown of balances in receivables, prepaids and other current assets as at March 31, 2024 and December 31, 2023:

    

March 31, 2024

    

December 31, 2023

Government sales tax receivable

$

2,681

$

2,511

Prepaids and other assets

3,157

3,067

Receivables, prepaids and other current assets

$

5,838

$

5,578

NOTE 7 INVENTORIES

Inventories as at March 31, 2024 and December 31, 2023 consisted of the following:

    

March 31, 2024

    

December 31, 2023

Material on leach pads

$

15,844

$

11,963

In-process inventory

 

4,963

 

4,067

Stockpiles

 

2,805

 

5,939

Precious metals

 

1,465

 

1,955

Materials and supplies

 

6,608

 

6,120

$

31,685

$

30,044

Less: long-term portion

(11,814)

(10,100)

Current portion

$

19,871

$

19,944

During the three months ended March 31, 2024, inventories at the Fox Complex operations were written down to their estimated net realizable values by $0.8 million (three months ended March 31, 2023 – $nil). Of these write-downs, a total of $0.6 million was included in production costs applicable to sales and $0.2 million was included in depreciation and depletion in the Statement of Operations.

NOTE 8 MINERAL PROPERTY INTERESTS AND PLANT AND EQUIPMENT

The applicable definition of proven and probable reserves is set forth in the Regulation S-K 1300 requirements of the SEC. 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. The Company’s Gold Bar Mine and San José properties have proven and probable reserves estimated in accordance with S-K 1300. The Fox Complex is depleted and depreciated using the units-of-production method over estimated mineral resources, as the project does not have proven and probable reserves that conform to the guidance under S-K 1300.

The Company reviews and evaluates its long-lived assets for impairment on a quarterly basis or when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Once it is determined that impairment exists, an impairment loss is measured as the amount by which the asset carrying value exceeds its estimated fair value.

During the three months ended March 31, 2024, no indicators of impairment have been noted for any of the Company’s mineral property interests.

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MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2024

(tabular amounts are in thousands of U.S. dollars, unless otherwise noted)

NOTE 9 EQUITY INVESTMENTS

The Company accounts for investments over which it exerts significant influence but does not control through majority ownership using the equity method of accounting. In applying the equity method of accounting to the Company’s investment in MSC, MSC’s financial statements, which are originally prepared by MSC in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, have been adjusted to conform with US GAAP.

Equity investment in McEwen Copper

A summary of the operating results for McEwen Copper for the three months ended March 31, 2024 and 2023 is as follows:

Three months ended March 31,

2024

2023

McEwen Copper (100%)

Advanced projects

$

(48,183)

$

Other expenses

(2,016)

Foreign exchange loss

(3,992)

Interest and other income(1)

16,454

Loss before tax

$

(37,737)

$

Current and deferred taxes

Net loss

$

(37,737)

$

Portion attributable to McEwen Mining (47.7%)

Net loss on investment in McEwen Copper

$

(18,012)

$

(1) Interest and other income include gains on marketable securities and other finance-related income.

Changes in the Company’s investment in McEwen Copper for the three months ended March 31, 2024, and for the year ended December 31, 2023, are as follows:

March 31, 2024

December 31, 2023

Investment, beginning of period

$

326,147

$

Deconsolidation of McEwen Copper

383,968

Attributable net loss from McEwen Copper

(18,012)

(57,821)

Investment, end of period

$

308,135

$

326,147

A summary of the key assets and liabilities of McEwen Copper as at March 31, 2024, before and after adjustments for fair value increments arising from the purchase price allocation, is as follows:

As at March 31, 2024

Balance excluding FV increments

Adjustments

Balance including FV increments

Current assets

$

65,374

$

$

65,374

Total assets

$

248,682

$

262,494

$

511,176

Current liabilities

$

(31,694)

$

$

(31,694)

Total liabilities

$

(31,969)

$

$

(31,969)

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MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2024

(tabular amounts are in thousands of U.S. dollars, unless otherwise noted)

Equity investment in MSC

A summary of the operating results for MSC for the three months ended March 31, 2024 and 2023 is as follows:

Three months ended March 31,

2024

2023

Minera Santa Cruz S.A. (100%)

Revenue from gold and silver sales

$

65,927

$

45,740

Production costs applicable to sales

(47,884)

(41,124)

Depreciation and depletion

(8,926)

(8,230)

Gross profit (loss)

9,117

(3,614)

Exploration

(2,104)

(1,952)

Other income (expense)(1)

1,501

(3,234)

Income (loss) before tax

$

8,514

$

(8,800)

Current and deferred tax recovery (expense)

(4,847)

3,315

Net income (loss)

$

3,667

$

(5,485)

Portion attributable to McEwen Mining Inc. (49%)

Net income (loss)

$

1,796

$

(2,687)

Amortization of fair value increments

 

(709)

 

(884)

Income tax recovery

191

110

Income (loss) from investment in MSC, net of amortization

$

1,278

$

(3,461)

(1) Other expenses include foreign exchange gains and losses, accretion of asset retirement obligations and other finance-related expenses.

The income or loss from the investment in MSC attributable to the Company includes amortization of the fair value increments arising from the initial purchase price allocation and related income tax recovery. The income tax recovery reflects the impact of the devaluation of the Argentine peso against the U.S. dollar on the peso-denominated deferred tax liability recognized at the time of acquisition, as well as income tax rate changes over the periods.

Changes in the Company’s investment in MSC for the three months ended March 31, 2024, and for the year ended December 31, 2023, are as follows:

March 31, 2024

    

December 31, 2023

Investment, beginning of period

$

93,218

$

93,451

Attributable net income from MSC

1,796

4,157

Amortization of fair value increments

 

(709)

 

(4,612)

Income tax recovery

191

517

Dividend distribution received

 

 

(295)

Investment, end of period

$

94,496

$

93,218

A summary of the key assets and liabilities of MSC as at March 31, 2024 before and after adjustments for fair value increments arising from the purchase price allocation, are as follows:

As at March 31, 2024

Balance excluding FV increments

Adjustments

Balance including FV increments

Current assets

$

107,710

$

732

$

108,442

Total assets

$

201,995

$

70,166

$

272,161

Current liabilities

$

(45,171)

$

$

(45,171)

Total liabilities

$

(79,538)

$

149

$

(79,389)

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MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2024

(tabular amounts are in thousands of U.S. dollars, unless otherwise noted)

NOTE 10 DEBT

A reconciliation of the Company’s debt for the three months ended March 31, 2024, and for the year ended December 31, 2023, is as follows:

    

Three months ended

    

Year ended

March 31, 2024

December 31, 2023

Balance, beginning of period

$

40,000

$

63,979

Principal repayment on debt

(25,000)

Interest expense

 

972

 

5,749

Interest payments

 

(972)

 

(4,728)

Balance, end of period

$

40,000

$

40,000

Less: current portion

3,000

Long-term portion

$

37,000

$