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Published: 2023-05-08

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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, 2023

☐

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 ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 47,427,584

shares outstanding as of May 8, 2023.

MCEWEN MINING INC.

FORM 10-Q

Index

PART I FINANCIAL INFORMATION

Item 1.

Financial Statements

Consolidated Statements of Operations and Comprehensive Loss for the three months ended March

31, 2023 and 2022 (unaudited)

Consolidated Balance Sheets at March 31, 2023 and December 31, 2022 (unaudited)

Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31,

2023 and 2022 (unaudited)

Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022

(unaudited)

Notes to Consolidated Financial Statements (unaudited)

SIGNATURES

	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,
					2023	2022
		Revenue from gold and silver sales		$			34,752 $	25,542
		Production costs applicable to sales					(23,413)	(27,824)
		Depreciation and depletion					(6,896)	(3,712)
		Gross profit (loss)					4,443	(5,994)

		OTHER OPERATING EXPENSES:
		Advanced projects - Los Azules					(31,880)	(9,756)
		Advanced projects - Other					(1,680)	(1,379)
		Exploration					(5,900)	(3,210)
		General and administrative					(3,441)	(1,981)
		Loss from investment in Minera Santa Cruz S.A. (Note 9)					(3,461)	(1,120)
		Depreciation					(282)	(142)
		Reclamation and remediation (Note 11)					(630)	(527)
							(47,274)	(18,115)
		Operating loss					(42,831)	(24,109)

		OTHER INCOME (EXPENSE):
		Interest and other finance income (expenses), net					8,464	(1,640)
		Other (expense) income (Note 3)					(2,579)	3,871
		Total other income					5,885	2,231
		Loss before income and mining taxes					(36,946)	(21,878)
		Income and mining tax recovery			536	814
		Net loss after income and mining taxes					(36,410)	(21,064)
		Net (income) loss attributable to non-controlling interests (Note 17)					(6,666)	334
		Net loss and comprehensive loss attributable to McEwen shareholders		$			(43,076) $	(20,730)

		Net loss per share (Note 13):
		Basic and diluted		$			(0.91) $	(0.45)
		Weighted average common shares outstanding (thousands) (Note 13):
		Basic and diluted					47,428	46,402


		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,
						2023				2022
			ASSETS
			Current assets:
			Cash and cash equivalents (Note 4)	$			190,776 $		39,782
			Investments (Note 5)							1,591	1,295
			Receivables, prepaids and other assets (Note 6)							7,543	8,840
			Inventories (Note 7)				23,560		31,735
			Total current assets				223,470		81,652
			Mineral property interests and plant and equipment, net (Note 8)				342,516		346,281
			Investment in Minera Santa Cruz S.A. (Note 9)				89,990		93,451
			Inventories (Note 7)				16,773		2,432
			Restricted cash (Note 16)							4,227	3,797
			Other assets		703				1,106
			TOTAL ASSETS	$			677,679 $		528,719

			LIABILITIES & SHAREHOLDERS’ EQUITY
			Current liabilities:
			Accounts payable and accrued liabilities	$			46,155 $		42,521
			Contract liability (Note 16)							2,335	6,155
			Flow-through share premium (Note 12)							2,703	4,056
			Debt, current portion (Note 10)				16,000		10,000
			Lease liabilities							1,167	1,215
			Reclamation and remediation liabilities (Note 11)				12,797		12,576
			Tax liabilities							8,231	7,663
			Total current liabilities				89,388		84,186
			Lease liabilities		968				1,191
			Debt (Note 10)				48,124		53,979
			Reclamation and remediation liabilities (Note 11)				29,410		29,270
			Other liabilities							4,507	3,819
			Total liabilities	$			172,397 $		172,445

			Shareholders’ equity:
			Common shares: 47,428							as of March 31, 2023 issued and outstanding (in thousands)
			(Note 12)	$			1,754,086 $	1,644,145
			Non-controlling interests (Note 17)				115,608		33,465
			Accumulated deficit				(1,364,412)	(1,321,336)
			Total shareholders’ equity				505,282		356,274
			TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY	$			677,679 $		528,719

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

			Commitments and contingencies: Note 16



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
					Shares Amount				Deficit						Interests	Total
				Balance, December 31, 2021								459,188 $ 1,615,596 $ (1,240,432) $	14,777 $ 389,941
				Stock-based compensation		—	183	—	—	183
				Sale of flow-through common stock								14,500	10,320	—	—			10,320
				Net loss		—	—				(20,730)					(334)	(21,064)
				Balance, March 31, 2022								473,688 $ 1,626,099 $ (1,261,162) $	14,443 $ 379,380

				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 financing (Note
				17)		—									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

				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,
						2023				2022
			Cash flows from operating activities:
			Net loss	$					(36,410)	$			(21,064)
			Adjustments to reconcile net loss from operating activities:
			Loss from investment in Minera Santa Cruz S.A. (Note 9)						3,461							1,120
			Depreciation and amortization						7,263							3,606
			Unrealized gain on investments (Note 5)						(296)							(618)
			Reclamation accretion and adjustments to estimate (Note 11)		631						722
			Income and mining tax recovery						(536)							(814)
			Stock-based compensation		28						183
			Change in other assets related to operations						(2,732)							(763)
			Change in liabilities related to operations		(17)							2,008
			Cash used in operating activities	$					(28,608)	$			(15,620)

			Cash flows from investing activities:
			Net additions to mineral property interests and plant and equipment	$					(4,950)	$			(4,045)
			Cash used in investing activities	$					(4,950)	$			(4,045)

			Cash flows from financing activities:
			Proceeds from McEwen Copper financing (Note 17)	$			185,390	$					—
			Issuance of flow-through common shares, net of issuance costs (Note 12)		—				14,376
			Proceeds from promissory note (Note 10 and Note 14)		—				15,000
			Subscription proceeds received in advance		—						300
			Payment of finance lease obligations						(408)							(215)
			Cash provided by financing activities	$			184,982	$			29,461
			Increase in cash, cash equivalents and restricted cash				151,424							9,796
			Cash, cash equivalents and restricted cash, beginning of period						43,579				60,634
			Cash, cash equivalents and restricted cash, end of period	$			195,003	$			70,430

			Supplemental disclosure of cash flow information:
			Cash received (paid) during period for:
			Interest paid	$					(1,253)	$			(1,202)
			Interest received						9,044						6

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

6

MCEWEN MINING INC.
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
		March 31, 2023
	(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
				pipeline of exploration 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.
				As of March 31, 2023, the Company also owns a 51.9% interest in McEwen Copper Inc. (“McEwen Copper”), which holds
				the Los Azules copper project in San Juan, Argentina and the Elder Creek exploration project in Nevada, United States. It
				also 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. The Company reports its
				investment in McEwen Copper as a controlling interest and its investment in MSC as an equity investment. 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, 2022. 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, 2022.
				In management’s opinion, the unaudited Consolidated Statements of Operations and Comprehensive Loss (“Statement of
				Operations”) for the three months ended March 31, 2023 and 2022, the unaudited Consolidated Balance Sheet as at March
				31, 2023 and the audited Consolidated Balance Sheet as at December 31, 2022, the unaudited Consolidated Statement of
				Changes in Shareholders’ Equity for the three months ended March 31, 2023 and 2022, and the unaudited Consolidated
				Statements of Cash Flows for the three months ended March 31, 2023 and 2022, 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 and majority-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. One-For-Ten Share Consolidation and Articles of Amendment

				Effective after the close of trading on July 27, 2022, the Company filed Articles of Amendment to its Second Amended
				and Restated Articles of Incorporation with the Colorado Secretary of State to, among other items, effect a one-for-ten
				reverse split of its outstanding common stock. This reverse split, or consolidation, resulted in every 10 shares of common
				stock outstanding immediately prior to the effective date being converted into one share of common stock after the effective
				date. The consolidation was effected following approval by the shareholders in order for the Company to regain compliance
				with the NYSE listing requirements, specifically those requiring a minimum share trading price of $1 per share.
				The consolidation was effective for trading purposes on July 28, 2022. Following the consolidation, the Company
				purchased fractional shares resulting from the split. All share and per share amounts in the consolidated financial statements
				have been retroactively restated to reflect the consolidation. The Articles of Amendment also served to reduce the Company’s authorized capital from 675,000,002 shares to
				200,000,002 shares, with 200,000,000 shares being common stock and 2 shares being a special preferred stock.
			7

MCEWEN MINING INC.
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
		March 31, 2023
	(tabular amounts are in thousands of U.S. dollars, unless otherwise noted)

				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 or major mine/project 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 General and Administrative and Other Income or Expense 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 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.
				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 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 investment in Minera Santa Cruz S.A.			—			—	— (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


			8

MCEWEN MINING INC.
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
		March 31, 2023
	(tabular amounts are in thousands of U.S. dollars, unless otherwise noted)
																						Three months ended March 31, 2022	USA	Canada Mexico	MSC McEwen Copper	Total
				Revenue from gold and silver sales	$ 11,742 $ 12,896 $ 904 $							— $	— $ 25,542
				Production costs applicable to sales	(14,172)			(8,647) (5,005)				—	— (27,824)
				Depreciation and depletion		(818)			(2,894)			—	—	— (3,712)
				Gross profit (loss)	(3,248)			1,355 (4,101)				—	—	(5,994)

				Advanced projects			(45)			(91) (1,243)		— $				(9,756) (11,135)
				Exploration	(1,449)			(1,700)			(1)	— $	(60) (3,210)
				Loss from investment in Minera Santa Cruz S.A.	—			—	— (1,120) $		— (1,120)
				Segment loss	$ (4,742) $			(436) $ (5,345) $ (1,120) $								(9,816) $ (21,459)
				General and administrative and other											(419)
				Loss before income and mining taxes									$ (21,878)

				Capital expenditures	$		277 $	3,546 $			— $	— $	234 $ 4,057

				Geographic Information Geographic information includes the long-lived asset balances and revenues presented for the Company’s operating
				segments, as follows:
																											Long-lived Assets	Revenue (1)
														March 31,			December 31,		Three months ended March 31,
														2023		2022	2023			2022
				USA (2)										$	75,957 $			70,577	$	11,587 $	11,742
				Canada										95,326			91,552		23,165	12,896
				Mexico											29,218			29,219		—		904
				Argentina (3)											253,707			255,718		—		—
				Total consolidated										$	454,208 $			447,066	$	34,752 $	25,542

				(1) Presented based on the location from which the precious metals originated.
				(2) Includes Elder Creek exploration property of $0.8 million as of March 31, 2023 (December 31, 2022 - $0.8 million).
				(3) Includes Investment in MSC of $90.0 million as of March 31, 2023 (December 31, 2022 – $93.5 million) NOTE 3 OTHER INCOME
				The following is a summary of other income for the three months ended March 31, 2023 and 2022:
																			Three months ended March 31,
							2023			2022
				Unrealized and realized gain on investments (Note 5)		$	296 $			445
				Foreign currency gain on Blue Chip Swap			7,993	2,189
				Foreign currency (loss) gain, other			(10,641)			798
				Other (expense) income, net			(227)			439
				Total other (expense) income		$	(2,579) $	3,871

				During the three months ended March 31, 2023, the Company completed two Blue Chip Swap transactions to transfer
				funds from its Canadian USD bank account to Argentina. 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. For the three
				months ended March 31, 2022, the Company completed three Blue Chip Swap transactions and realized a net gain of $2.1
				million comprised of a foreign currency gain of $2.2 million and a realized loss on investments of $0.1 million.

			9

MCEWEN MINING INC.
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
		March 31, 2023
	(tabular amounts are in thousands of U.S. dollars, unless otherwise noted)
				NOTE 4 CASH AND CASH EQUIVALENTS
				The following table provides a reconciliation of cash and cash equivalents reported in the Consolidated Balance Sheets:
												March 31, 2023	December 31, 2022
				Cash and cash equivalents held in USD	$		45,697 $	36,305
				Cash and cash equivalents held in ARS¹			143,796	2,144
				Cash and cash equivalents held in other currencies			1,283	1,333
				Total cash and cash equivalents	$		190,776 $	39,782

				(1) Argentine Peso (“ARS”)
				As of March 31, 2023, the cash balance of ARS $29.5 billion was converted to the USD using the official exchange rate
				of 209.0:1. As of December 31, 2022, the cash balance of ARS $0.4 billion was converted to the USD using the official
				exchange rate of 177.2:1.
				As of March 31, 2023, of $190.8 million of cash and cash equivalents, $149.1 million in cash and $9.7 million in bankers’
				acceptance notes with maturity dates between 34 to 81 days were held by McEwen Copper.
				NOTE 5 INVESTMENTS

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

																								As at	Additions/	Net gain	Disposals/	Unrealized	As at
									December 31, transfers during	(loss) on transfers during	gain on				March 31,
											2022	period securities sold						period securities held		2023
				Marketable equity securities – fair

				value							1,133	—		—			—	296 1,429
				Warrants								162				—	—				—	—	162
				Total Investments						$		1,295 $	— $		— $			— $	296 $ 1,591

				On June 23, 2021, the Company closed the sale of two projects in Nevada, Limousine Butte and Cedar Wash, with Nevgold
				Corp. (“Nevgold”). In addition to $0.5 million cash received as part of the consideration, the Company received 4,963,455
				common shares and 2,481,727 warrants of Nevgold. Upon issuance, the common shares received by the Company
				represented 10% of the issued and outstanding shares of Nevgold. The warrants have an exercise price of C$0.60 per share
				and are exercisable until June 23, 2023. The common shares trade on the TSX Venture Exchange.
				NOTE 6 RECEIVABLES, PREPAIDS AND OTHER CURRENT ASSETS
				The following is a breakdown of balances in receivables, prepaids and other assets as at March 31, 2023 and December
				31, 2022:
												March 31, 2023 December 31, 2022
				Government sales tax receivable	$	2,467 $	2,868
				Prepaids and other assets		5,076	5,972
				Receivables, prepaid and other current assets	$	7,543 $	8,840


			10

MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2023

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

NOTE 7 INVENTORIES

Inventories at March 31, 2023 and December 31, 2022 consisted of the following:

March 31, 2023

December 31, 2022

Material on leach pads

16,564

7,571

In-process inventory

3,797

3,674

Stockpiles

11,275

15,392

Precious metals

1,896

2,119

Materials and supplies

6,801

5,411

40,333

34,167

Less long-term portion

(16,773)

(2,432)

23,560

31,735

During the three months ended March 31, 2022, inventory at the Fox Complex, El Gallo and Gold Bar operations were

written down to their estimated net realizable value by $0.8 million, $3.4 million and $nil respectively. Of these write-

downs, a total of $4.2 million was included in production costs applicable to sales and $nil 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 new 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 the

stated mine life, as the project does not have proven and probable reserves compliant with 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, 2023, no indicators of impairment have been noted for any of the Company’s

mineral property interests.

NOTE 9 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. MSC is operated by the Company’s joint venture partner, Hochschild

Mining PLC.

In applying the equity method of accounting, 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 U.S. GAAP. As such, the summarized financial data presented under this heading is

presented in accordance with U.S. GAAP.

MCEWEN MINING INC.
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
		March 31, 2023
	(tabular amounts are in thousands of U.S. dollars, unless otherwise noted)
				A summary of the operating results for MSC for the three months ended March 31, 2023 and 2022 is as follows:
														Three months ended March 31,
							2023		2022
				Minera Santa Cruz S.A. (100%)
				Revenue from gold and silver sales		$					45,740 $	39,207
				Production costs applicable to sales					(41,124)	(31,789)
				Depreciation and depletion							(8,230)	(6,896)
				Gross (loss) profit							(3,614)	522
				Exploration							(1,952)	(1,735)
				Other expenses(1)							(3,234)	(3,880)
				Net loss before tax		$					(8,800) $	(5,093)
				Current and deferred tax expense							3,315	3,807
				Net loss		$					(5,485) $	(1,286)

				Portion attributable to McEwen Mining Inc. (49%)
				Net loss		$					(2,687) $	(630)
				Amortization of fair value increments							(884)	(613)
				Income tax recovery				110		123
				Loss from investment in MSC, net of amortization		$					(3,461) $	(1,120)

				(1) Other expenses include foreign exchange, 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, 2023 and year ended December 31,
				2022 are as follows:
													Three months ended			Year ended
								March 31, 2023			December 31, 2022
				Investment in MSC, beginning of period		$				93,451 $	90,961
				Attributable net (loss) income from MSC						(2,687)	6,303
				Amortization of fair value increments			(884)		(4,155)
				Income tax recovery			110		628
				Dividend distribution received			—		(286)
				Investment in MSC, end of period		$				89,990 $	93,451
				A summary of the key assets and liabilities of MSC as at March 31, 2023, before and after adjustments for fair value
				increments arising from the purchase price allocation, are as follows:
															Balance excluding		Balance including
				As at March 31, 2023			FV increments					Adjustments	FV increments
				Current assets	$			81,676 $	705 $		82,381
				Total assets	$		188,078 $		79,484 $		267,562

				Current liabilities	$		(52,936) $		— $		(52,936)
				Total liabilities	$		(82,855) $		(1,071) $		(83,926)


			12

MCEWEN MINING INC.
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
		March 31, 2023
	(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, 2023 and for the year ended December 31,
				2022 is as follows:
										Three months ended	Year ended
						March 31, 2023		December 31, 2022
				Balance, beginning of year	$					63,979 $	48,866
				Promissory notes - initial recognition		—		15,000
				Interest expense						1,347	5,488
				Interest payments						(1,202)	(4,875)
				Financing fee		-		(500)
				Balance, end of period	$					64,124 $	63,979
				Less: current portion						16,000	10,000
				Long-term portion	$					48,124	53,979

				NOTE 11 ASSET RETIREMENT 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 Gold Bar and Tonkin properties in Nevada, the Fox Complex
				properties in Canada and the El Gallo Project in Mexico.
				A reconciliation of the Company’s asset retirement obligations for the three months ended March 31, 2023 and for the year
				ended December 31, 2022 are as follows:
													Three months ended	Year ended
						March 31, 2023		December 31, 2022
				Asset retirement obligation liability, beginning balance		$			41,846	$		35,452
				Settlements			(270)		(774)
				Accretion of liability			610			2,354
				Revisions to estimates and discount rate			20			5,664
				Foreign exchange revaluation			1			(850)
				Asset retirement obligation liability, ending balance		$			42,207	$		41,846
				Less current portion					12,797			12,576
				Long-term portion		$			29,410	$		29,270

				Reclamation expense in the Statement of Operations includes adjustments for updates in the reclamation liability for
				properties that do not have reserves in compliance with S-K 1300. Reclamation accretion for all properties is as follows:

															Three months ended March 31,
					2023		2022
				Reclamation adjustment reflecting updated estimates		$	20 $					—
				Reclamation accretion			610		527
				Total		$	630		527

			13

MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2023

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

NOTE 12 SHAREHOLDERS’ EQUITY

Equity Issuances

Flow-Through Shares Issuance – Canadian Exploration Expenditures (“CEE”) The Company is required to spend the flow-through share proceeds from the 2022 issuance on flow-through eligible CEE

as defined by subsection 66.1(6) of the Income Tax Act (Canada). As of March 31, 2023, the Company had incurred a

total of $5.6 million in eligible CEE (as of December 31, 2022 – $1.0 million). The Company expects to fulfill its remaining

CEE commitments of $9.5 million by the end of 2023.

Shareholders’ Distributions

Pursuant to the Amended and Restated Credit Agreement, the Company is prevented from paying any dividends on its

common stock, so long as the loan is outstanding.

NOTE 13 NET LOSS PER SHARE

Basic net loss per share is computed by dividing the net loss attributable to the Company’s common shareholders by the

weighted average number of common shares outstanding during the period. Potentially dilutive instruments are not

included in the calculation of diluted net loss per share for the three months ended March 31, 2023 and 2022, as they would

be anti-dilutive.

For the three months ended March 31, 2023, all the outstanding stock options (409,470) and all of the outstanding warrants

(2,976,816) were excluded from the computation of diluted loss per share. Similarly, for the three months ended March

31, 2022, the outstanding stock options (599,110) and the outstanding warrants (2,977,077) were excluded.

NOTE 14 RELATED PARTY TRANSACTIONS

The Company recorded the following expense in respect to the related parties outlined below during the periods presented:

Three months ended March 31,

2023

2022

REVlaw

214

The Company has the following outstanding accounts payable balances in respect to the related parties outlined below:

March 31, 2023

December 31, 2022

REVlaw

160

112

REVlaw is a company owned by Carmen Diges, General Counsel & Secretary of the Company. The legal services of Ms.

Diges as General Counsel & Secretary and other support staff, as needed, are provided by REVlaw in the normal course

of business and have been recorded at their exchange amount.

An affiliate of Robert R. McEwen, Chairman and Chief Executive Officer participated as a lender in the $50.0 million

term loan to which the Company is borrower by providing $25.0 million of the total $50.0 million funding and continued

as such under the ARCA. During the three months ended March 31, 2023, the Company paid $0.6 million, (three months

ended March 31, 2022 – $0.6 million) in interest to this affiliate. The payments to the affiliate of Mr. McEwen are on the

same terms as the non-affiliated lender. Interest is payable monthly at a rate of 9.75% per annum.

On March 31, 2022, the Company issued a $15.0 million unsecured subordinated promissory note to a company controlled

by Mr. McEwen. The Promissory Note is payable in full on or before September 25, 2025, interest is payable monthly at

MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2023

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

a rate of 8% per annum and is subordinated to the ARCA loan facility. The amount of interest paid for the period ended

March 31, 2023 was $0.3 million (March 31, 2022 – $nil).

NOTE 15 FAIR VALUE ACCOUNTING

As required by accounting guidance, certain assets and liabilities on the Consolidated Balance Sheets are classified in their

entirety based on the lowest level of input that is significant to the fair value measurement.

Warrants

Upon initial recognition, the warrants received as part of the asset sale to Nevgold (Note 5) were valued using the Black-

Scholes valuation model as they are not quoted in an active market. The warrants have been accounted for as equity

investment at cost. Average volatility of 94.6% was determined based on a selection of similar junior mining companies.

The warrants are exercisable upon receipt and have an exercise price of $0.60 per share and expire June 23, 2023. As of

March 31, 2023, no warrants related to the Nevgold transaction have been exercised.

Assets and liabilities measured at fair value on a recurring basis.

The following table identifies certain of the Company’s assets and liabilities measured at fair value on a recurring basis by

level within the fair value hierarchy as at March 31, 2023 and December 31, 2022, as reported in the Consolidated Balance

Sheets:

Fair value as at March 31, 2023 Fair value as at December 31, 2022

Level 1 Level 2

Total Level 1 Level 2

Total

Marketable equity securities

$ 1,429 $

— $ 1,429 $ 1,133 $

—

$ 1,133

Total investments

$ 1,429 $

— $ 1,429 $ 1,133 $

— $ 1,133

Marketable equity securities that the Company holds are exchange-traded and are valued using quoted market prices in

active markets and as such are classified within Level 1 of the fair value hierarchy. The fair value of the investment is

calculated as the quoted market price of the marketable equity security multiplied by the number of shares held by the

Company.

The fair value of financial assets and liabilities held at March 31, 2023 were assumed to approximate their carrying values

due to their historically negligible credit losses.

Debt is recorded at a carrying value of $64.1 million (December 31, 2022 – $64.0 million). The debt is not traded on

quoted markets and approximates its fair value based on recent refinancing.

NOTE 16 COMMITMENTS AND CONTINGENCIES

In addition to the commitments for payments on operating and finance leases and the repayment of long-term debt (Note

10), as at March 31, 2023, the Company has the following commitments and contingencies:

Reclamation Obligations

As part of its ongoing business and operations, the Company is required to provide bonding for its environmental

reclamation obligations. As at March 31, 2023, the Company had a surety facility in place to cover all its bonding

obligations, which include $27.8 million of bonding in Nevada and $11.5 million (C$15.6 million) of bonding in Canada.

MCEWEN MINING INC.
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
		March 31, 2023
	(tabular amounts are in thousands of U.S. dollars, unless otherwise noted)
				The terms of the facility carry an average annual financing fee of 2.3% and require a deposit of 10%. The surety bonds are
				available for draw-down by the beneficiary in the event the Company does not perform its reclamation obligations. If the
				specific reclamation requirements are met, the beneficiary of the surety bonds will release 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. As at March 31, 2023, the Company recorded
				$4.2 million in restricted cash in non-current assets as a deposit against the surety facility.
				Streaming Agreement
				As part of the acquisition of the Black Fox Complex in 2017, the Company assumed a gold purchase agreement (streaming
				contract) related to production from certain land claims. The Company is obligated to sell 8% of gold production from the
				Black Fox mine and 6.3% from the adjoining Pike River property (Black Fox extension) to Sandstorm Gold Ltd. at the
				lesser of market price or $561 per ounce (with inflation adjustments of up to 2% per year) until 2090.
				The Company records the revenue from these shipments based on the contract price at the time of delivery to the customer.
				During the three months ended March 31, 2023, the Company recorded revenue of $0.4 million (2022 - $0.4 million)
				related to the gold stream sales.

				Flow-through Eligible Expenses
				On March 2, 2022, the Company completed a flow-through share issuance for gross proceeds of $15.1 million. The
				proceeds of this offering are required to be used for the continued exploration of the Company’s properties in the Timmins
				region of Canada. As at March 31, 2023, the Company has incurred $5.6 million of the required CEE spend and expects
				to fulfill the remaining $9.5 million of the CEE commitments by the end of 2023.
				Prepayment Agreement
				On July 27, 2022, the Company entered into a precious metals purchase agreement with Auramet International LLC
				(“Auramet”). Under this agreement, the Company may sell the gold on a Spot Basis, on a Forward Basis and on a Supplier
				Advance basis, i.e. the gold is priced and paid for while the gold is:
					(i)	at a mine for a maximum of 15 business days before shipment; or
					(ii)	in-transit to a refinery; or
					(iii)	while being refined at a refinery.

				During the three months ended March 31, 2023, the Company received the combined net proceeds of $22.8 million from
				the sales on a Supplier Advance Basis. The Company recorded revenue of $26.7 million related to the gold sales, with the
				remaining $2.3 million representing 1,200 ounces pledged but not yet delivered to Auramet, recorded as a contract liability
				on the Consolidated Balance Sheets.
				Other potential contingencies
				The Company’s mining and exploration activities are subject to various laws and regulations governing the protection of
				the environment. These laws and regulations are continually changing and generally becoming more restrictive. The
				Company conducts its operations so as to protect public health and the environment, and believes its operations are
				materially in compliance with all applicable laws and regulations. The Company has made, and expects to make in the
				future, expenditures to comply with such laws and regulations.
				The Company and its predecessors have transferred their interest in several mining properties to third parties throughout
				its history. The Company could remain potentially liable for environmental enforcement actions related to its prior
			16

MCEWEN MINING INC.
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
		March 31, 2023
	(tabular amounts are in thousands of U.S. dollars, unless otherwise noted)
				ownership of such properties. However, the Company has no reasonable belief that any violation of relevant environmental
				laws or regulations has occurred regarding these transferred properties.

					NOTE 17 NON-CONTROLLING INTERESTS

				On February 23, 2023, the Company and its subsidiary, McEwen Copper, closed the equity financing with a single investor,
				FCA Argentina S.A., an Argentinian subsidiary of Stellantis N.V (“Stellantis”), which consisted of a private placement of
				2,850,000 additional common shares issued by McEwen Copper for gross proceeds of ARS $20.9 billion ($108.8 million)
				and a secondary sale of an additional 1,250,000 shares of McEwen Copper common stock indirectly owned by the
				Company for aggregate proceeds of ARS $9.1 billion ($46.6 million).
				On March 15, 2023, Nuton LLC, a current shareholder of McEwen Copper and subsidiary of Rio Tinto (“Nuton”),
				exercised its preemptive rights under an existing shareholder agreement to purchase 350,000 shares of McEwen Copper
				common stock directly from McEwen Copper for aggregate proceeds of $6.6 million. On the same date, the Company and
				Nuton closed a secondary sale of an additional 1,250,000 shares of McEwen Copper common stock indirectly owned by
				the Company for aggregate proceeds of $23.4 million.
				As a result of the transactions, the Company’s 68.1% ownership in McEwen Copper was reduced by 16.2% to 51.9%. The
				Company determined that it still controlled McEwen Copper and, consequently, the Company recorded $72.1 million as
				non-controlling interests and $113.3 million as additional paid-in-capital in 2023.

				As of March 31, 2023, the Company recorded $6.7 million net income attributed to non-controlling interests of 48.1%
				(March 31, 2022 - $0.3 million net loss attributed to non-controlling interests of 18.6%).

			17

	SIGNATURES

		Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
		on its behalf by the undersigned thereunto duly authorized.

			MCEWEN MINING INC.

			/s/ Robert R. McEwen
		Date: May 8, 2023	By: Robert R. McEwen,
			Chairman and Chief Executive Officer

			/s/ Perry Ing
		Date: May 8, 2023	By: Perry Ing,
			Interim Chief Financial Officer

18