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Item 1.01
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Entry Into a Material Definitive Agreement.
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On November 20, 2019,
McEwen Mining Inc. (the “Company”) entered into an Underwriting Agreement (the “Underwriting Agreement”)
with Roth Capital Partners, LLC (“Roth”) and Cantor Fitzgerald Canada Corporation, as representatives of the
underwriters listed therein (the “Underwriters”), relating to an underwritten public offering of 37,750,000
units (the “Units”), each consisting of one share of common stock, no par value (the “Common Stock”),
and one half of a warrant to purchase one share of Common Stock (the “Warrants”), at a price of $1.325 per Unit,
for aggregate gross proceeds of approximately $50 million (the “Offering”). Each Warrant has an exercise price
of $1.7225 per whole share of Common Stock, is immediately exercisable and is exercisable for five years from the date of the closing
of the Offering.
Under the terms of
the Underwriting Agreement, the Company granted the Underwriters a 30-day option to purchase up to an additional 5,662,500 shares
of Common Stock and/or additional Warrants to purchase up to 2,831,250 shares of Common Stock. On November 21, 2019,
the Underwriters exercised their option to purchase the additional Warrants in full, which were issued at the closing.
The Warrants contain
provisions that prohibit exercise if the holder, together with its affiliates, would beneficially own in excess of 4.99% (or, upon
election of the holder, 9.99%) of the number of shares of Common Stock outstanding immediately after giving effect to such exercise.
The holder of the Warrants may increase or decrease this percentage by providing notice to the Company, but in no event may the
percentage exceed 9.99%, provided that any increase in the beneficial ownership limitation will not be effective until 61 days
following notice to the Company. In the event of certain corporate transactions, the holders of the Warrants will be entitled to
receive, upon exercise of the Warrants, the kind and amount of securities, cash or other property that the holders would have received
had they exercised the Warrants immediately prior to such transaction, and the holders of the Warrants will have the right to require
the Company or the successor entity to purchase the Warrants for an amount of cash equal to, or, if the transaction is not within
the Company’s control, the same type and form of consideration offered and paid to the holders of Common Stock in the transaction
with a value equal to, the Black-Scholes value of the remaining unexercised portion of the Warrants. The Warrants do not contain
voting rights or any of the other rights or privileges as a holder of Common Stock, except as set forth in the Warrants.
The Underwriting Agreement
contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification
obligations of the Company and the Underwriters, including for liabilities arising under the Securities Act of 1933, as amended,
other obligations of the parties and termination provisions. The Underwriting Agreement has been filed with this Current Report
on Form 8-K to provide investors and security holders with information regarding its terms. It is not intended to provide
any other factual information about the Company. The representations, warranties and covenants contained in the Underwriting Agreement
were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such agreement,
and may be subject to limitations agreed upon by the contracting parties
The Offering closed
on November 22, 2019. Gross proceeds to the Company from the Offering are expected to be approximately $50 million, before deducting
underwriting discounts and commissions and other estimated offering expenses payable by the Company and assuming that none of the
Warrants issued in the Offering are exercised. All of the securities in the Offering are being sold by the Company.
The securities were
offered and sold pursuant to the Company’s existing shelf registration statement on Form S-3 (File No. 333-224476), which
was initially filed with the Securities and Exchange Commission (the “SEC”) on April 27, 2018 and declared effective
by the SEC on July 6, 2018. The Company has filed a prospectus supplement, dated November 20, 2019, with the SEC in connection
with the sale of the securities in the Offering.
The preceding summary
of the Underwriting Agreement and Warrants is qualified in its entirety by reference to the full text of the Underwriting
Agreement and the Form of Warrant, copies of which are attached as Exhibit 1.1 and Exhibit 4.1 hereto and incorporated
herein by reference. A copy of the legal opinion of Hogan Lovells US LLP relating to the validity of the securities being offered
by the Company is attached as Exhibit 5.1 hereto and is filed with reference to, and is hereby incorporated by reference into,
the Registration Statement.