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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 June 30, 2022

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: 47,427,325 shares outstanding as of August 10, 2022.

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 and six months ended June 30, 2022 and 2021 (unaudited)

3

Consolidated Balance Sheets at June 30, 2022 (unaudited) and December 31, 2021 (audited)

4

Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended June 30, 2022 and 2021 (unaudited)

5

Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021 (unaudited)

6

Notes to Consolidated Financial Statements (unaudited)

7

Item 1A.

Risk Factors

22

Item 2.

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

22

Item 3.

Quantitative and Qualitative Disclosure about Market Risk

45

Item 4.

Controls and Procedures

47

Part II        OTHER INFORMATION

Item 4.

Mine Safety Disclosures

48

Item 6.

Exhibits

49

SIGNATURES

50

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,

2022

    

2021

    

2022

    

2021

 

Revenue from gold and silver sales

$

30,647

$

40,706

$

56,189

$

64,446

Production costs applicable to sales

 

(22,943)

 

(31,132)

 

(50,767)

 

(54,721)

Depreciation and depletion

(3,469)

(5,515)

(7,181)

(10,652)

Gross profit (loss)

4,235

4,059

(1,759)

(927)

OTHER OPERATING EXPENSES:

Advanced projects - Los Azules

 

(14,081)

(23,837)

Advanced projects - Other

(841)

 

(823)

 

(2,220)

 

(2,622)

Exploration

 

(4,293)

 

(6,916)

 

(7,503)

 

(11,872)

General and administrative

 

(2,456)

 

(2,834)

 

(4,437)

 

(4,917)

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

 

2,511

 

(1,853)

 

1,391

 

(2,427)

Depreciation

 

(138)

 

(75)

 

(280)

 

(150)

Reclamation and Remediation (Note 11)

 

(1,506)

(505)

 

(2,033)

(1,416)

 

(20,804)

(13,006)

(38,919)

 

(23,404)

Operating loss

 

(16,569)

(8,947)

 

(40,678)

 

(24,331)

OTHER INCOME (EXPENSE):

Interest and other finance expenses, net

 

(1,639)

 

(1,859)

 

(3,279)

 

(2,368)

Other income (Note 4)

5,802

 

3,795

 

9,672

 

5,207

Total other income

 

4,163

 

1,936

 

6,393

 

2,839

Loss before income and mining taxes

(12,406)

(7,011)

(34,285)

(21,492)

Income and mining tax recovery

1,022

815

3,037

Net loss after income and mining taxes

(12,406)

(5,989)

(33,470)

(18,455)

Net loss (gain) attributable to non-controlling interests (Note 18)

(46)

288

Net loss and comprehensive loss attributable to McEwen shareholders

$

(12,452)

$

(5,989)

$

(33,182)

$

(18,455)

Net loss per share (Note 13):

Basic and Diluted

$

(0.26)

$

(0.13)

$

(0.71)

$

(0.41)

Weighted average common shares outstanding (thousands) (Note 1, Note 13):

Basic and Diluted

 

47,428

 

45,919

 

46,917

 

45,054

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,

    

2022

    

2021

 

ASSETS

Current assets:

Cash and cash equivalents (Note 17)

$

44,021

$

54,287

Restricted cash (Note 17)

2,550

Investments (Note 5)

 

2,395

 

1,806

Receivables, prepaids and other assets (Note 6)

 

7,136

 

10,591

Inventories (Note 7)

 

18,761

 

15,792

Total current assets

 

72,313

 

85,026

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

 

343,141

 

342,303

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

 

92,066

 

90,961

Inventories (Note 7)

8,339

2,543

Restricted cash (Note 17)

3,797

3,797

Other assets

 

983

 

711

TOTAL ASSETS

$

520,639

$

525,341

LIABILITIES & SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued liabilities

$

25,822

$

39,615

Flow-through share premium (Note 12)

4,966

1,572

Lease liabilities

2,171

2,901

Reclamation and remediation liabilities (Note 11)

 

11,239

 

5,761

Other liabilities (Note 18)

2,550

Total current liabilities

 

44,198

 

52,399

Lease liabilities

835

1,515

Debt (Note 10)

63,693

48,866

Reclamation and remediation liabilities (Note 11)

 

27,029

 

29,691

Other liabilities

2,903

2,929

Total liabilities

$

138,658

$

135,400

Shareholders’ equity:

Common shares: 47,428 as of June 30, 2022 and 45,919 as of December 31, 2021 issued and outstanding (in thousands) (Note 1, Note 12)

$

1,633,513

$

1,615,596

Non-controlling interests (Note 18)

22,082

14,777

Accumulated deficit

 

(1,273,614)

 

(1,240,432)

Total shareholders’ equity

 

381,981

 

389,941

TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY

$

520,639

$

525,341

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

Three months ended June 30, 2021 and 2022:

    

Shares

    

Amount

Deficit

Interests

Total

Balance, March 31, 2021

 

45,919

$

1,589,763

$

(1,196,014)

$

$

393,749

Stock-based compensation

 

212

212

Net loss

(5,989)

(5,989)

Balance, June 30, 2021

 

45,919

$

1,589,975

$

(1,202,003)

$

$

387,972

Balance, March 31, 2022¹

47,369

$

1,626,099

$

(1,261,162)

$

14,443

$

379,380

Stock-based compensation

 

7

7

Shares issued for debt refinancing

59

500

500

Issuance of equity by subsidiary (Note 18)

6,907

7,593

14,500

Net loss

 

(12,452)

46

(12,406)

Balance, June 30, 2022

 

47,428

$

1,633,513

$

(1,273,614)

$

22,082

$

381,981

Common Stock

 

and Additional

 

Paid-in Capital

Accumulated

Non-controlling

 

Six months ended June 30, 2021 and 2022:

    

Shares

    

Amount

Deficit

Interests

Total

 

Balance, December 31, 2020

 

41,659

$

1,548,876

$

(1,183,548)

$

$

365,328

Stock-based compensation

 

439

 

 

439

Sale of flow-through common stock

1,260

10,785

10,785

Sale of shares for cash

3,000

29,875

29,875

Net loss

(18,455)

(18,455)

Balance, June 30, 2021

 

45,919

$

1,589,975

$

(1,202,003)

$

$

387,972

Balance, December 31, 2021

45,919

$

1,615,596

$

(1,240,432)

$

14,777

$

389,941

Stock-based compensation

 

190

190

Sale of flow-through common shares

1,450

10,320

10,320

Shares issued for debt refinancing

59

500

500

Issuance of equity by subsidiary (Note 18)

6,907

7,593

14,500

Net loss

 

(33,182)

(288)

(33,470)

Balance, June 30, 2022

 

47,428

$

1,633,513

$

(1,273,614)

$

22,082

$

381,981

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

(1) March 31, 2022 opening balance includes the reclassification adjustment of $1,403 from Accumulated Deficit to Non-controlling Interests.

5

MCEWEN MINING INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands of U.S. dollars)

Six months ended June 30,

2022

    

2021

Cash flows from operating activities:

Net loss

$

(33,470)

$

(18,455)

Adjustments to reconcile net loss from operating activities:

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

 

(1,391)

 

2,427

Depreciation and amortization

 

7,492

 

10,006

Gain on investments (Note 5)

(589)

Gain on sale of mineral property interests

(2,270)

Unrealized foreign exchange loss (gain) and adjustment to estimate (Note 11)

 

(215)

 

334

Income and mining tax recovery

 

(815)

 

(3,037)

Stock-based compensation

 

190

 

439

Reclamation and remediation (Note 11)

3,287

1,416

Change in non-cash working capital items:

Decrease (increase) in other assets related to operations

 

(5,250)

 

3,647

Decrease in liabilities related to operations

(13,594)

(2,580)

Cash used in operating activities

$

(44,355)

$

(8,073)

Cash flows from investing activities:

Net additions to mineral property interests and plant and equipment

$

(8,252)

$

(20,372)

Investment in marketable equity securities (Note 5)

 

 

492

Dividends received from Minera Santa Cruz S.A. (Note 9)

 

286

 

7,561

Cash used in investing activities

$

(7,966)

$

(12,319)

Cash flows from financing activities:

Proceeds from sale of shares, net of issuance costs (Note 18)

$

14,500

$

29,875

Sale of flow-through common shares, net of issuance costs (Note 12)

14,376

11,966

Proceeds from promissory note (Note 10 and Note 14)

15,000

Subscription proceeds received in advance (Note 18)

(2,850)

Payment of finance lease obligations

(1,521)

(30)

Cash provided by financing activities

$

39,505

$

41,811

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

 

(12,816)

 

21,419

Cash, cash equivalents and restricted cash, beginning of period

 

60,634

 

24,438

Cash, cash equivalents and restricted cash, end of period (Note 17)

$

47,818

$

45,857

Supplemental disclosure of cash flow information:

Cash received (paid) during period for:

Interest paid

$

(2,829)

$

(2,449)

Interest received

21

13

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)

JUNE 30, 2022

(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 exploration, development, production and sale of gold and silver and exploration and development of copper.

The Company operates in the United States, Canada, Mexico and Argentina.  The Company owns a 100% interest in the Gold Bar gold mine in Nevada, the Black Fox gold mine in Ontario, Canada, the El Gallo gold project and the Fenix silver-gold project in Sinaloa, Mexico and a portfolio of exploration properties in Nevada, Canada, Mexico and Argentina. As of June 30, 2022, the Company owns a 76% interest in the Los Azules copper deposit in San Juan, Argentina through its 100% owned subsidiary, Minera Andes Inc. 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 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 financial statements which are 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 are adequate and not misleading.

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, 2022 and 2021, the unaudited Consolidated Balance Sheet as at June 30, 2022 and audited Consolidated Balance Sheet as at December 31, 2021, the unaudited Consolidated Statement of Changes in Shareholders’ Equity for the three and six months ended June 30, 2022 and 2021, and the unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021, 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. Therefore, these financial statements should be read in conjunction with the audited financial statements and notes thereto and the summary of significant accounting policies included in the Company’s annual report on Form 10-K/A for the year ended December 31, 2021. 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/A for the year ended December 31, 2021. 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.

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. 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

Table of Contents

MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30, 2022

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

NOTE 2 SIGNIFICANT ACCOUNTING ISSUES

Risks and Uncertainties

COVID-19

The Company continues to closely monitor and respond, as possible, to the ongoing COVID-19 pandemic. As the global situation continues to change rapidly, ensuring the health and safety of the Company’s employees and contractors is one of the Company’s top priorities. Many jurisdictions including the United States, Canada, Mexico, and Argentina have varied but continued restrictions to travel, public gatherings, and certain business operations. Unlike the year 2020, there were no mandated suspensions for the Company’s operations during 2021 or during the six months ended June 30, 2022 (although, as described in this report COVID-19 impacted the Company’s operations and results for the period). In addition, vaccination rates in countries where the Company operates continue to increase.

The Company’s results of operations, financial position, and cash flows were adversely affected during the six months ended June 30, 2022 and 2021 due to COVID-19. The continuing impact of the COVID-19 pandemic on the Company’s results of operations, financial position and cash flows will depend on future developments, including the duration and spread of the outbreak, variants of the COVID-19 virus, the availability, ongoing effectiveness, development and distribution and effectiveness of vaccinations and treatments and on government advisories, restrictions, and financial assistance offered. To ensure a safe working environment for the Company’s employees and contractors and to prevent the spread of COVID-19, the Company continues to reinforce safety measures at all sites and offices including contact tracing, restricting non-essential travel, and complying with public health orders. The impact of COVID-19 on the global financial markets, the greater labor market, supply chains, and the overall economy and the Company is highly uncertain and cannot be predicted. Maintaining normal operating capacity is also dependent on the continued availability of supplies and contractors, which are out of the Company’s control. If the financial markets and/or the overall economy continue to be impacted, the Company’s results of operations, financial position and cash flows may be further affected. As the situation continues to evolve, the Company will continue to monitor market conditions closely and respond accordingly.  

Continuation of COVID-19 through 2022 and beyond could impact employee health, workforce availability and productivity, insurance premiums, ability to travel, suppliers, labor costs, the availability of industry experts, personnel and equipment, restrictions or delays to field work, studies, and assay results, impeding access to capital markets when needed on acceptable terms and other factors that will depend on future developments that may be beyond the Company’s control. The Company has completed various scenario planning analyses to consider the potential impacts of COVID-19 on its business, including volatility in commodity prices, temporary disruptions and/or curtailments of operating activities (voluntary or involuntary). However, there is no assurance that these measures will prevent adverse effects from COVID-19 in the future.

Flow-through Issuance and Equity Financing

During the six months ended June 30, 2022, the Company completed a Canadian Exploration Expenditures (“CEE”) flow-through common share financing for gross proceeds of $15.1 million. In March 2022, the Company entered into a $15.0 million unsecured subordinated promissory note and amended the terms of its $50.0 million senior secured term loan facility (Note 10). In June 2022, a subsidiary of the Company secured an additional $15.0 million of equity financing for its Los Azules project in Argentina (Note 18).

During 2021, the Company raised gross proceeds of $12.7 million through a Canadian Development Expenses (“CDE”) flow-through common share issuance and raised gross proceeds of $31.5 million through an equity financing (Note 12). In 2021 a subsidiary of the Company secured an additional $40.0 million of equity financing for its Los Azules project in Argentina (Note 18).

8

Table of Contents

MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30, 2022

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

NOTE 3 OPERATING SEGMENT REPORTING

The Company is a mining and minerals production and exploration company focused on precious 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 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 and are provided in this note 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 June 30, 2022

    

USA

    

Canada

    

Mexico

    

MSC

    

Los Azules

    

Total

Revenue from gold and silver sales

$

9,996

$

20,246

$

405

$

$

$

30,647

Production costs applicable to sales

(8,305)

(11,260)

(3,378)

 

(22,943)

Depreciation and depletion

(943)

(2,526)

(3,469)

Gross profit (loss)

748

6,460

(2,973)

4,235

Advanced projects

(3)

(105)

(733)

(14,081)

 

(14,922)

Exploration

(1,244)

(2,621)

(428)

(4,293)

Income from investment in Minera Santa Cruz S.A.

2,511

 

2,511

Segment income (loss)

$

(499)

$

3,734

$

(3,706)

$

2,511

$

(14,509)

$

(12,469)

General and administrative and other

63

Loss before income and mining taxes

$

(12,406)

Capital expenditures

$

219

$

4,008

$

$

$

150

$

4,377

9

Table of Contents

MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30, 2022

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

Six months ended June 30, 2022

    

USA

    

Canada

Mexico

MSC

    

Los Azules

    

Total

Revenue from gold and silver sales

$

21,739

$

33,141

$

1,309

$

$

$

56,189

Production costs applicable to sales

(22,477)

(19,907)

(8,383)

 

(50,767)

Depreciation and depletion

(1,760)

(5,421)

(7,181)

Gross profit (loss)

(2,498)

7,813

(7,074)

(1,759)

Advanced projects

(49)

(195)

(1,976)

(23,837)

 

(26,057)

Exploration

(2,695)

(4,321)

(487)

 

(7,503)

Impairment of mineral property interests and plant and equipment (Note 8)

Income from investment in Minera Santa Cruz S.A.

1,391

 

1,391

Segment income (loss)

$

(5,242)

$

3,297

$

(9,050)

$

1,391

$

(24,324)

$

(33,928)

General and Administrative and other

(357)

Loss before income and mining taxes

$

(34,285)

Capital expenditures

$

496

$

7,554

$

$

$

384

$

8,434

Three months ended June 30, 2021

    

USA

    

Canada

    

Mexico

    

MSC

    

Los Azules

    

Total

Revenue from gold and silver sales

$

26,343

$

12,178

$

2,185

$

$

$

40,706

Production costs applicable to sales

(21,067)

(6,331)

(3,734)

(31,132)

Depreciation and depletion

(2,326)

(3,189)

(5,515)

Gross profit (loss)

2,950

2,658

(1,549)

4,059

Advanced projects

116

(564)

(375)

(823)

Exploration

(1,591)

(4,281)

(10)

(1,034)

(6,916)

Loss from investment in Minera Santa Cruz S.A.

(1,853)

(1,853)

Segment income (loss)

$

1,475

$

(2,187)

$

(1,934)

$

(1,853)

$

(1,034)

$

(5,533)

General and administrative and other

(1,478)

Loss before income and mining taxes

$

(7,011)

Capital expenditures

$

353

$

10,775

$

$

$

$

11,128

Six months ended June 30, 2021

    

USA

    

Canada

    

Mexico

    

MSC

    

Los Azules

    

Total

Revenue from gold and silver sales

$

39,236

$

20,739

$

4,471

$

$

$

64,446

Production costs applicable to sales

(34,623)

(12,987)

(7,111)

(54,721)

Depreciation and depletion

(4,068)

(6,584)

(10,652)

Gross profit (loss)

545

1,168

(2,640)

(927)

Advanced projects

32

(1,188)

(1,466)

(2,622)

Exploration

(2,455)

(7,716)

(17)

(1,684)

(11,872)

Loss from investment in Minera Santa Cruz S.A.

(2,427)

(2,427)

Segment loss

$

(1,878)

$

(7,736)

$

(4,123)

$

(2,427)

$

(1,684)

$

(17,848)

General and Administrative and other

(3,644)

Loss before income and mining taxes

$

(21,492)

Capital expenditures

$

1,110

$

20,342

$

$

$

$

21,452

10

Table of Contents

MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30, 2022

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

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)

Revenue (1)

June 30,

December 31,

Three months ended June 30,

Six months ended June 30,

    

2022

    

2021

    

2022

    

2021

  

2022

2021

USA

$

38,600

$

37,877

$

9,996

$

26,343

$

21,739

$

39,236

Canada

99,185

93,294

20,246

12,178

33,141

20,739

Mexico

26,558

26,561

405

2,185

1,309

4,471

Argentina (2)

283,983

282,583

Total consolidated (3)

$

448,326

$

440,315

$

30,647

$

40,706

$

56,189

$

64,446

(1) Presented based on the location from which the precious metals originated.
(2) Includes Investment in MSC and other subsidiaries of $92.1 million as of June 30, 2022 (December 31, 2021 $90.9 million).
(3) Total excludes $0.4 million related to the Company's Right of use office lease asset as the business activities related to corporate are not considered to be a part of the operating segments.

NOTE 4 OTHER INCOME

The following is a summary of other income for the three and six months ended June 30, 2022 and 2021:

Three months ended June 30,

Six months ended June 30,

    

2022

    

2021

    

2022

    

2021

COVID-19 Relief

$

$

1,725

$

$

2,836

Unrealized and realized gain on investments

168

612

Foreign currency gain (loss)

6,069

(194)

9,056

97

Other income (loss), net

(435)

2,264

4

2,274

Total other income

$

5,802

$

3,795

$

9,672

$

5,207

During the three and six months ended June 30, 2022, the Company recognized $nil (three and six months ended June 30, 2021 - $1.7 million and $2.8 million, respectively) of other income through COVID-19 relief from the Canadian government via the Canadian Emergency Wage Subsidy and Canada Emergency Rent Subsidy programs.

From time to time, the Company may acquire and transfer marketable securities (“Blue Chip Swap”) to facilitate intragroup funding transfers between the U.S. parent and its Argentine subsidiary.

The Company does not acquire marketable securities or engage in these transactions for speculative purposes. Under this strategy, the Company generally uses marketable securities of large, well-established companies, with high trading volumes and low volatility. The Company does this to improve cash management for funding its Argentinean subsidiary. Nonetheless, as the process to acquire, transfer and ultimately sell the marketable securities occurs over several days, some fluctuations are unavoidable.

As the marketable securities are acquired with the intention of a near term sale, generally less than seven days, they are considered financial instruments that are held for trading. Accordingly, all changes in the fair value of the instruments, between acquisition and disposition, are recognized through profit or loss in the Consolidated Statements of Operations. Upon receipt of the transferred equity instruments by the local investment broker, the Company realizes an immediate foreign exchange impact. This foreign exchange impact is incurred directly as a result of holding equity instruments with the intention of trading, and as such the foreign exchange impact is also recognized through profit and loss.

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Table of Contents

MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30, 2022

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

For the six months ended June 30, 2022, the Company completed 6 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. For the three and six months ended June 30, 2022, the Company realized a net gain of $2.1 million and $6.1 million, respectively. The net gain for the three and six months ended June 30, 2022 was comprised of a foreign currency gain of $2.2 million and $4.4 million and a realized loss on investments of $0.1 million and $0.4 million, respectively, including the impact of fees and commissions.

During the three and six months ended June 30, 2021, no marketable securities were transferred between the U.S. parent and its Argentine subsidiary for intragroup funding purposes.

NOTE 5 INVESTMENTS