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.