McEwen Mining Inc

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 unauditedConsolidated Statements of Operations and Comprehensive Loss (“Statement of Operations”) for the three months ended March 31, 2024 and 2023, the unauditedConsolidated Balance Sheet as at March 31, 2024 and the auditedConsolidated Balance Sheetas at December 31, 2023, the unauditedConsolidated Statement of Changes in Shareholders’ Equity for the three months ended March 31, 2024 and 2023, and the unauditedConsolidated 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.

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

Geographic information

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

NOTE 3 OTHER EXPENSE

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

During the three months ended March 31, 2023, the Company completedtwo 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 theConsolidated Balance Sheets:

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:

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:

NOTE 7 INVENTORIES

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

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 theStatement 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.

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:

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

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

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:

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:

(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:

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:

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:

NOTE 11 ASSET RETIREMENT OBLIGATIONS

The Company is responsible for the reclamation of certain past and future disturbances at its properties. The properties subject to these obligations are the Gold Bar and Tonkin properties in Nevada, the Fox Complex properties in Canada and the El Gallo mine in Mexico.

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

Reclamation expense in theStatement of Operationsincludes adjustments for updates in the reclamation liability for properties that do not have mineral reserves that conform to guidance under S-K 1300. Reclamation accretion for all properties is as follows:

NOTE 12 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, 2024 and 2023, as they would be anti-dilutive.

For the three months ended March 31, 2024, all 936,670 outstanding stock options and all 2,169,966 outstanding warrants were excluded from the computation of diluted loss per share. Similarly, for the three months ended March 31, 2023, all 409,470 outstanding stock options and all 2,170,366 outstanding warrants were excluded.

NOTE 13 RELATED PARTY TRANSACTIONS

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

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

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.

The Company has the following outstanding accounts receivable balance in respect to the related party outlined below:

An affiliate of Robert R. McEwen, Chairman and Chief Executive Officer acted as a lender in the restructured$40.0 million term loan and continued as such under the Amended and Restated Credit Agreement. During the three months ended March 31, 2024, the Company paid$1.0 million (three months ended March 31, 2023 –$0.9 million) in interest to this affiliate.* *Interest is payable monthly at a rate of 9.75% per annum.

NOTE 14 FAIR VALUE ACCOUNTING

As required by accounting guidance, certain assets and liabilities on theConsolidated Balance Sheets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

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, 2024 and December 31, 2023, as reported in theConsolidated Balance Sheets:

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 as at March 31, 2024 were assumed to approximate their carrying values due to their historically negligible credit losses.

Debt is recorded at a carrying value of $40.0 million (December 31, 2023 – $40.0 million). The debt is not traded on quoted markets and approximates its fair value based on recent refinancing.

NOTE 15 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, 2024, the Company had surety facilities in place to cover its bonding obligations, which include $30.1 million of bonding in Nevada and $11.5 million (C$15.6 million) of bonding in Canada.

The terms of the facilities carry an average annual financing fee of 2.3% and require a deposit of 11%. 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, 2024, the Company recorded $4.4 million in restricted cash in non-current assets as a deposit against the surety facility.

Streaming agreement

As part of the acquisition of the 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 (including the Froome deposit) 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, 2024, the Company recorded revenue of $0.4 million (three months ended March 31, 2023 – $0.4 million) related to the gold stream sales.

Flow-through eligible expenses

On December 14, 2023,** **the Company completed a flow-through share issuance for gross proceeds of $16.1 million. The proceeds of this offering will be used for the continued exploration and development of the Company’s properties in the Timmins region of Canada. As at March 31, 2024, the Company has renounced$2.7 million in CEEand expects to fulfill its remaining CEE and CDE obligations by the end of 2024.

Prepayment agreement

In November 2023, the Company extended the existing 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:

During the three months ended March 31, 2024, the Company received net proceeds of $4.8 million from the sales on a Supplier Advance Basis (three months ended March 31, 2023 – $22.8 million). The Company recorded revenue of $2.8 million related to the gold sales (three months ended March 31, 2023 – $26.7 million), with the remaining $2.0 million (March 31, 2023 – $2.3 million) representing 900 ounces pledged but not yet delivered to Auramet, recorded as a contract liability on theConsolidated 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 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 16 SUBSEQUENT EVENTS

On April 16, 2024, the Company entered into a definitive agreement and plan of merger to acquire all of the issued and outstanding shares of Timberline Resources Corporation (“Timberline”) by way of a merger between Timberline and the Company. Timberline shareholders will have the right to receive 0.01 of a share of the Company’s common stock for each share of Timberline’s common stock. At closing, the Company expects to issue approximately 1.8 million shares.