MUX US Equity☆

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

This section of this Annual Report on Form 10-K generally discusses fiscal 2022 and 2021 items including our results of operations and financial condition, and year-to-year comparisons between 2022 and 2021 with a particular emphasis on 2022. In each case, we discuss factors that we believe have affected our operating results and financial condition and may do so in the future. For a discussion of our financial condition and results of operations for 2021 compared to 2020, please refer to Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 7, 2022.

Regarding properties and projects that are not in production, we provide some details of our plan of operation. This section provides information up to the date of filing this report.

The discussion contains financial performance measures that are not prepared in accordance with United States Generally Accepted Accounting Principles (“US GAAP” or “GAAP”). Each of the following is a non-GAAP measure: cash gross profit, cash costs, cash cost per ounce, all-in sustaining costs (“AISC”), all-in sustaining cost per ounce, average realized price per ounce, and liquid assets. These non-GAAP measures are used by management in running the business and we believe they provide useful information that can be used by investors to evaluate our performance and our ability to generate cash flows. These measures do not have standardized definitions and should not be relied upon in isolation or as a substitute for measures prepared in accordance with GAAP. Cash Costs equals Production Costs Applicable to Sales and is used interchangeably throughout the document. For a reconciliation of these non-GAAP measures to the amounts included in our Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020 and to our Balance Sheets as of December 31, 2022 and 2021 and certain limitations inherent in such measures, please see the discussion under “Non-GAAP Financial Performance Measures”, beginning on page 70.

This discussion also includes references to advanced-stage properties, which are defined as properties for which advanced studies and reports have been completed indicating the presence of mineralized material or proven or probable reserves, or that have obtained or are in the process of obtaining the required permitting. Our designation of certain properties as “advanced-stage properties” should not suggest that we have or will have proven or probable reserves at those properties as defined by S-K 1300. This section provides information up to the date of the filing of this report.

The information in this section should be read in conjunction with our consolidated financial statements and the notes thereto included in this Annual Report on Form 10-K.

Throughout this Management’s Discussion and Analysis (“MDA”), the reporting periods for the three months ended on December 31, 2022 and December 31, 2021 are abbreviated as Q4/22 and Q4/21, the reporting for the years ended December 31, 2022 and 2021 are abbreviated as the full year 2022 and the full year 2021 respectively. All financial quarterly and other interim results are unaudited.

In addition, in this report, gold equivalent ounces (“GEO”) includes gold and silver ounces calculated based on a silver to gold ratio of 78:1 for Q1/22, 83:1 for Q2/22, 90:1 for Q3/22, and 85:1 for Q4/22. Beginning with Q2/19, we adopted a variable silver to gold ratio for reporting that approximates the average price during each fiscal quarter.

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Response to the COVID-19 Pandemic

We are continuing to closely monitor and respond, as possible, to the ongoing COVID-19 pandemic. As the situation continues to evolve, ensuring the health and safety of the Company’s employees and contractors is one of our top priorities.

The long-term impact of the COVID-19 pandemic on our 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, related advisories and restrictions and the success and acceptance of various vaccines, and other adverse effects caused (or contributed to) by pandemic, such as supply chain constraints, labor shortages and inflationary pressures. Management is actively monitoring the global situation and its effect on our financial condition, liquidity, operations, suppliers, industry and workforce.

In response to the need to protect our employees and our company, we formed our COVID-19 Task Team. The Task Team consists of management members from each operating site and office and has coordinated steps to prevent a wider spread of the virus, while exchanging information with associations, governments, and industry peers. We have implemented preventative measures to ensure a safe working environment for our employees and contractors and to prevent the spread of COVID-19 including facilitating access to vaccinations at our sites by coordinating with local health authorities and continue to maintain these systems and safety protocols through 2023.

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Index to Management’s Discussion and Analysis:

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2022 and Q4/22 Operating and Financial Highlights 56

Selected Consolidated Financial and Operating Results 58

Consolidated Performance 58

Consolidated Financial Review 59

Liquidity and Capital Resources 60

Operations Review 61

U.S.A Segment 61

Gold Bar mine operating results 61

Exploration Activities - Nevada 62

Canada Segment 62

Fox Complex, Black Fox mine and Froome mine development 62

Froome Underground Mine Development 63

Exploration Activities - Fox Complex 63

Mexico Segment 64

El Gallo mine operating results 64

Advanced-Stage Properties - Fenix Project 65

MSC Segment, Argentina 66

MSC operating results 66

McEwen Copper Inc 67

Los Azules Project 68

Commitments and Contingencies 69

Non-GAAP Financial Performance Measures 70

Critical Accounting Estimates 75

Forward Looking Statements 77

Risk Factors Impacting Forward-Looking Statements 78

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2022 AND Q4/22 OPERATING AND FINANCIAL HIGHLIGHTS

Highlights for the year and quarter ended December 31, 2022 are summarized below and discussed further in the section entitled “Consolidated Performance”:

Corporate Developments

Operational Highlights

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Financial Highlights

Exploration and Mineral Resources and Reserves

(1) At our 49% attributable interest.

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SELECTED CONSOLIDATED FINANCIAL AND OPERATING RESULTS

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The following tables present selected financial and operating results of our company for the three months ended December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021, and 2020:

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​ ​ Three months ended December 31, ​ Year ended December 31,

​ ​ (in thousands, except per share)

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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Three months ended December 31, ​ Year ended December 31,

​ ​ (in thousands, except per ounce)

Cash cost per ounce ($/GEO):(2) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

AISC per ounce ($/GEO):(2) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

(3) On sales from 100% owned operations only, excluding streaming arrangement.

(4) Average for the quarter or year as presented.

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CONSOLIDATED PERFORMANCE

For the year ended December 31, 2022, we reported a net loss of $81.1 million (or $1.71 per share) compared to a net loss of $56.7 million (or $1.25 per share) for the year ended December 31, 2021. The current net loss includes $81.7 million of expenditures on exploration activities and advanced projects, of which $61.1 million was related to expenditures for the Los Azules project and $14.9 million on the continued exploration at our Canadian, US and Mexico operating sites. In addition, our revenues decreased by $26.1 million, driven by a 13.8% decrease in GEOs sold and a slightly lower average realized price compared to 2021. Partially offsetting these impacts were a $27.8 million decrease in our cost of sales as we improved our operating margins, and a $12.8 million improvement in the operating results of our attributable interest in MSC.

Cash gross profit of $19.2 million for 2022 increased by $1.9 million compared to a cash gross profit of $17.3 million in

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2021, driven by our improved operating margin despite decreases in production and revenue. See “Non-GAAP Financial Performance Measures” for a reconciliation to gross (loss) profit, which we consider to be the nearest GAAP measure.

Production from our 100% owned mines of 64,171 GEOs in full year 2022 decreased by 13,381 GEOs as compared to full year 2021. We had 39% lower production at our Gold Bar mine due to the impacts of carbonaceous ore and the transition to a new mining contractor, as well as lower residual leach production from the El Gallo mine as it ramps down. Production at the Fox Complex improved by 22% year over year, partially offsetting these decreases.

Our share of the San José mine production of 69,129 GEO in 2022 was 7,709 lower than in 2021. This decrease was attributable to lower processed tonnes due to COVID-19 impacts and mill availability issues in early 2022.

CONSOLIDATED FINANCIAL REVIEW

Year ended December 31, 2022, compared to 2021

Revenue from gold and silver sales infull year 2022 of $110.4 million decreased by 19% compared to full year 2021. This decrease was driven by lower sales of 13,478 GEOs from our 100% owned mines in 2022 compared to 2021 as well as a slightly lower average realized price of $1,788 per GEO or a $15 per GEO decrease compared to 2021. The decrease in GEOs sold for the full year 2022 consists of an increase of 6,377 GEOs sold from the Black Fox mine, a decrease of 17,043 GEOs sold from the Gold Bar mine, and a decrease of 2,812 GEOs sold from the El Gallo mine.

Production costs applicable to sales in full year 2022 decreased by 23% to $91.3 million compared to full year 2021. The decrease was partially due to lower sales, as well as improved operational efficiencies resulting in margin improvements at both our Gold Bar and Froome mines.

Advanced projects of $66.7 million in full year 2022 increased by $54.3 million compared to full year 2021. We spent $61.2 million at our Los Azules project in Argentina, continuing to advance our project to feasibility. Expenditures included in advanced projects also related to the construction of the Gold Bar South haul road in Nevada.

Exploration costs of $15.0 million in full year 2022 decreased by $7.6 million compared to full year 2021. Exploration activities decreased in 2022, as we limited our spending to funding received from our flow-through share issuances closed in December 2020 and March 2022. Flow-through funds are being used to expand high potential target areas at our Fox Complex and exploration activities are expected to continue through the end of 2023.

General and administrative of $11.9 million in full year 2022 increased slightly by $0.5 million compared to full year 2021, due to higher insurance premiums, corporate fees and other employee costs.

Gain from investment in MSC of $2.8 million in full year 2022 represents a $10.3 million improvement from the $7.5 million loss recognized in 2021. The gain from investment in MSC includes the amortization of fair value increments arising from the initial purchase price allocation and its related income tax recovery. This is discussed further in Note 9 to the Consolidated Financial Statements.

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Revision of estimates and accretion of reclamation and remediation obligations of $3.3 million in full year 2022, decreased by $0.2 million from full year 2021. This year over year decrease was driven by cost estimate updates for our properties in Nevada. This is discussed further in Note 12 to the Consolidated Financial Statements.

Other income was $22.9 million for 2022 compared to $6.3 million for 2021. Other income in 2022 includes realized gains from our Blue Chip Swap transactions. This is discussed further in Notes 4 and 5 to the Consolidated Financial Statements.

Income and mining tax expense of $5.8 million for 2022 increased by $13.1 million from the $7.3 million recovery recognized in 2021. The increase in tax expense was primarily due to the taxable gains in Argentine entities partly offset by flow-through share premium amortization and by a change in the valuation allowance mainly caused by the fluctuating Argentine and Mexican pesos against the U.S. dollar, causing fluctuations to the Company’s deferred tax liabilities denominated in the respective foreign currency.

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LIQUIDITY AND CAPITAL RESOURCES

Our cash and cash equivalents balance as at December 31, 2022 of $43.6 million decreased by $17.1 million from $60.6 million as at December 31, 2021. The decrease in cash and cash equivalents for the year ended December 31, 2022 was primarily driven by our increased exploration and advanced project expenditures of $29.1 million as well as additions to our mineral property, plant, and equipment of $8.1 million, which were partially offset by forward gold sales and an increase in liabilities, as well as our equity and debt financings in 2022.

Cash used in investing activities of $23.9 million in 2022 decreased slightly from $24.6 million from 2021. Our additions to mineral property interests, plant and equipment were lower by $10.7 million due to lower capital development required at the Froome mine. This was largely offset by a decrease of $9.5 million in dividends received from MSC during 2022 as a result of commodity price and production impacts at MSC.

Cash provided by financing activities provided $65.5 million in 2022 compared to $81.0 million in 2021. Cash provided by financing activities were derived from three primary sources during 2022: private placements related to McEwen Copper to support the continued development of Los Azules; a flow-through share sale; and a loan received from Evanachan Limited, a related party.

We closed two tranches of our private placement offering for McEwen Copper during June and August 2022, receiving gross proceeds of $41.9 million and net proceeds of $41.3 million. The proceeds received from the private placements will be used to advance the Los Azules project in Argentina.

In March 2022, the Company closed a private placement totaling $14.4 million (gross proceeds of $15.5 million) from the issuance of Canadian Development Expenditures (“CDE”) flow-through shares. We are required to spend the flow-through share proceeds on CDE flow-through eligible expenditures as defined by subsection 66.2(5) of the Income Tax Act (Canada). For more details on our flow-through share financing, refer to Note 13 to the Consolidated Financial Statements, Shareholders’ Equity.

In addition, during March 2022, the Company issued into a $15 million Promissory Note to Evanachan Limited maturing on September 30, 2025. The Promissory Note bears interest of 8% payable monthly in arrears and can be repaid by the Company at any time without penalty. The proceeds of the Promissory Note were used for working capital purposes.

Working capital as at December 31, 2022 of ($2.5) million decreased by $35.2 million over 2022. The change in working capital is primarily attributable to the decrease in cash and cash equivalents as discussed above, an increase in our current debt payable of $10.0 million and current contract liabilities of $6.2 million.

Subsequent to December 31, 2022, the Company and its subsidiary McEwen Copper completed two transactions that substantially improved the working capital position of each entity and entered into two binding letters of intent (“LOIs”) that, if completed, would further enhance each entities’ liquidity and capital position.

On February 23, 2023, the Company and McEwen Copper announced the closing of an ARS $30.0 billion investment by FCA Argentina S.A., a subsidiary of Stellantis N.V. (“Stellantis”) to acquire shares of McEwen Copper in a two-part transaction that closed on February 23, 2023. The transaction consisted of: 1. Private placement of 2,850,000 common shares, and 2. Purchase of 1,250,000 common shares indirectly owned by McEwen Mining in a secondary sale. The proceeds of the private placement will be used to advance development of the Los Azules copper project in San Juan, Argentina, and for general corporate purposes.

Also on March 9, 2023, McEwen Copper and Nuton LLC, a current shareholder of McEwen Copper and subsidiary of Rio Tinto (“Nuton”), consummated the agreement pursuant to which Nuton exercised its preemptive rights under an existing shareholder agreement and agreed 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, Nuton and the Company consummated the agreement pursuant to which Nuton purchased 1,250,000 shares of McEwen Copper common stock from the Company through its subsidiary for an aggregate purchase price of $23.4 million.

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Upon consummation of each of the Nuton transactions discussed above, the Company owns 51.9% of McEwen Copper common stock on a fully diluted basis, and each of Nuton and Stellantis own 14.2%.

Funds received by McEwen Copper are expected to be used to advance the Los Azules project, while funds received by the Company are expected to be used to repay third-party debt as well as for general corporate purposes. The Company believes that it has sufficient liquidity along with funds generated from ongoing operations to fund anticipated cash requirements for operations, capital expenditures and working capital purposes for the next 12 months.

OPERATIONS REVIEW

United States Segment

The United States segment is comprised of the Gold Bar mine and our exploration properties in the State of Nevada.

Gold Bar mine

The following table sets out operating results for the Gold Bar mine for the three months ended December 31,2022 and 2021 and year ended December 31, 2022, compared to 2021 and 2020:

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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Three months ended December 31, ​ Year ended December 31,

Operating Results ​ (in thousands, unless otherwise indicated) ​ ​ ​

Gold ounces: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Silver ounces: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Sold ​ — ​ — ​ 0.6 ​ — ​ 0.6 ​

Gold equivalent ounces: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2022 compared to 2021

The Gold Bar mine produced 7,943 and 26,619 GEOs in Q4/22 and the full year 2022, respectively. This represents a 20% and 39% decrease from the 9,965 and 43,849 GEOs produced in Q4/21 and the full year 2021, respectively. The decrease was primarily driven by lower tonnes mined and processed, due to the presence of carbonaceous ore mined in Q2/22 and Q3/22 which was classified as waste. During Q4/22, mining activities also slowed during a transition period while we mobilized a new mining contractor.

Revenue from gold and silver sales was $13.6 million in Q4/22 compared to $18.3 million in Q4/21. The decrease in revenue was due to a decrease in GEOs sold during Q4/22 together with a lower average realized gold price ($1,642 per GEO in Q4/22 compared with $1,806 per GEO in Q4/21). Revenue from gold and silver sales was $47.9 million for the

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full year 2022 compared to $79.2 million for the full year 2021, with the decrease driven by both lower volumes sold and lower gold prices.

Production costs applicable to sales were $8.7 million in Q4/22 compared to $20.6 million in Q4/21. The decrease is due to lower sales as described above, in addition to lower costs realized while awaiting the mobilization of a new mining contractor at the end of Q4/22. Production costs applicable to sales were $43.5 million for full year 2022, compared to $74.0 million for the full year 2021. A higher proportion of operational costs were in respect of development capital during 2022 in respect of managing carbonaceous ore.

Cash cost and AISC per GEO sold were $1,083 and $1,395 in Q4/22 respectively compared to $2,038 and $2,104 in Q4/21 respectively. The decrease in cash cost per ounce was lower due to reduced contract mining costs coupled with lower ounces sold. AISC was lower as a result of lower production costs and lower sustaining exploration costs.

Cash cost and AISC per GEO sold were $1,622 and $1,989 for full year 2022 respectively compared to $1,687 and $1,753 for full year 2021 respectively. The year-over-year decrease in cash costs was primarily a result of reduced contract mining costs. AISC for full year 2022 was higher due to higher capital spend such as reclamation activity, capital exploration, plant and equipment, and securing environmental credits for the Gold Bar South project.

Exploration Activities – Nevada

In Q4/22 activities were focused on the Cabin South deposit, where we trenched approximately 3,550 feet and drilled 12 shallow RAB drill holes for a total of 990 feet. Positive results on three of these holes were received in early 2023 and we are planning a phase one drill program to expand on interesting intercepts. This compares with Q4/21 core drilling of 3,684 ft at the Cabin North and Pick Pits.

For 2022, exploration activities were primarily focused on field activities and target development with RC and core drilling at the Cabin North Pit, Atlas Pit, and Pick Pit for an aggregate of 16,924 feet. This compares to 2021 RC and core drilling of 27,698 feet at the Pick Pit, Atlas Pit, North Ridge deposit, and Tonkin property.

Aggressive drill programs are planned in 2023 at numerous exploration targets with the primary focus on oxide targets within the existing Gold Bar Mine Plan of Operations (“MPO”). Additional targets within and outside of the MPO will be tested to determine the potential for large, high-grade mineralized zones.

Canada Segment

The Canada segment is comprised of the Fox Complex properties, which includes the Black Fox mine, currently on care and maintenance; our currently operating Froome underground mine; the Grey Fox and Stock West advanced-stage projects; the Stock mill; and a number of exploration properties located near the city of Timmins, Ontario, Canada.

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Fox Complex

On January 26, 2022, we announced the results of our PEA on the Fox Complex, effective December 31, 2021. The PEA estimates positive economics for our expansion project at the Fox Complex, where after depletion of Froome, production could continue for another 9 years, at an average production of 80,800 gold ounces per year. Overall, we predict an IRR

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of 21% at a gold price of $1,650/oz, at average cash costs and AISC of $769/oz and $1,246/oz, respectively. We continue to review opportunities to shorten the payback period of the Fox Complex.

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The following table sets out operating results for the Fox Complex mines for the three months ended December 31, 2022 and 2021, and the years ended December 31, 2022, 2021, and 2020:

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​ ​ Three months ended December 31, ​ Year ended December 31,

Operating Results ​ ​ (in thousands, unless otherwise indicated) ​ ​ ​

Gold equivalent ounces: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2022 compared to 2021

The Froome mine produced 9,869 and 36,652 GEOs in Q4/22 and full year 2022, respectively. This represents a 4% change and a 22% increase from the 9,458 and 30,016 GEOs produced in Q4/21 and full year 2021, respectively. We wound down production from the Black Fox mine during 2021 and began production from the Froome mine in Q4/21, which improved the Fox Complex production profile for 2022.

Revenue from gold and silver sales was $14.6 million in Q4/22 compared to $15.7 million in Q4/21. The decrease was primarily due to a lower average realized gold price per ounce ($1,674/oz gold in Q4/22 compared with $1,806/oz gold in Q4/21). Revenue from gold and silver sales was $60.8 million for full year 2022 compared to $50.7 million for full year 2021, driven by higher ounces sold and slightly offset by lower realized prices.

Production costs applicable to sales were $10.7 million and $37.0 million in Q4/22 and full year 2022, respectively, compared to $10.3 million and $33.0 million in Q4/21 and full year 2021, respectively. Production costs in Q4/22 were consistent with Q4/21. During 2022, we processed 14% more tonnes at lower cost as a result of productivity improvements compared with 2021.

Cash cost and AISC per GEO sold were $1,137 and $1,606 in Q4/22, respectively, compared to $1,122 and $1,760 in Q4/21, respectively. Cash cost per GEO sold in Q4/22 was consistent with Q4/21. The decrease in AISC per GEO sold in Q4/22 was primarily due to lower capitalized underground development associated with the mine plan.

For full year 2022, cash cost and AISC per GEO sold were $1,020 and $1,465, respectively compared to $1,108 and $1,461 for full year 2021. The decrease in cash cost per GEO sold was driven by mining and milling efficiency gains in 2022. AISC was similar year over year.

Exploration Activities

During 2022, we concentrated on resource delineation and exploration expansion at both our Stock and Grey Fox

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properties. The principle aim of the diamond drilling was to enhance the initial PEA for Stock West by identifying additional resources in proximity to the proposed ramp to Stock West. As a result of our exploration results, longer term exploration targets were identified at Stock.

During Q4/22, we incurred $3.3 million in exploration expenses at Stock West and Grey Fox, which included 43,232 feet of diamond drilling over 28 holes (25 at the Stock property and 3 at Grey Fox) using 5 surface drill rigs. During full year 2022, we incurred $11.4 million in exploration expenses, completing 181,148 feet of drilling over 139 holes (125 holes at the Stock property and 14 at Grey Fox). We also completed scanning of diamond drill core using a hyperspectral scanning device; a total of 39,370 feet of core was scanned during Q4/22 for both the Stock and Grey Fox properties. All expenditures were considered flow-through expenditures.

Encouraging intercepts were drilled at the Fox Complex during Q4/22 including SM22-110, which returned an intercept of 6.5 g/t gold over 34.4 feet true width and is located just southwest of the proposed ramp system to Stock West, and S22-255W1, which returned 4 g/t gold over 32.8 feet true width and is located approximately 200 feet down plunge of the current Stock West resource. Drilling at Grey Fox successfully identified at least 4 new C-1 oriented vein systems at the Gibson zone. We are optimistic that these vein systems will continue in the southwest direction towards the historic Goldpost ramp which opens nearly 1,640 feet of generally untested ground for additional drilling.

Mexico Segment

The Mexico segment includes the El Gallo mine and the related advanced-stage Fenix Project, both located in Sinaloa state.

El Gallo mine

Activities at the El Gallo mine in 2022 were limited to residual leaching as part of closure and reclamation plans.

The following table summarizes certain operating results at the El Gallo mine for the three months ended December 31, 2022 and 2021, and for the years ended December 31, 2022, 2021, and 2020:

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​ ​ Three months ended December 31, ​ Year ended December 31,

Operating Results ​ (in thousands, unless otherwise indicated)

Gold ounces: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Silver ounces: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Gold equivalent ounces: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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Cash costs and All-in-sustaining costs

The residual leaching activities of the El Gallo mine ceased in Q3/22, and remaining costs are recognized as general and administrative expenses.

2022 compared to 2021

Production and revenue decreased in Q4/22 and full year 2022 compared to Q4/21 and full year 2021, as we ceased our residual heap leach operation.

Advanced-Stage Properties – Fenix Project

We announced on December 31, 2020 the results of a feasibility study for the development of our 100%-owned Fenix Project, which includes HLM at the El Gallo mine and the El Gallo Silver deposit.

The study envisions a 9.5-year mine life with an after-tax IRR of 28% at a commodity price of using $1,500/oz gold and $17/oz silver, with an estimated initial capital expenditure of $41.6 million for Phase 1 and $24 million for Phase 2. The project implementation is envisioned in two distinct phases: Phase 1 (years 1 to 6) - gold production from heap leach reprocessing, and Phase 2 (years 7 to 10) - silver production from open pit mining. The Fenix Project feasibility study was published on February 16, 2021 and is available on our website and SEDAR (www.sedar.com).

Key environmental permits for Phase 1 were received in 2019, including the approval for an in-pit tailings storage facility and process plant construction.

An agreement to purchase a second-hand gold processing plant and associated equipment was executed in September 2022 for a purchase price of $2.8 million. This package includes substantially all the major components required for Phase 1 of the anticipated Fenix Project as well as surplus items that can be sold or used at our other operations. This equipment purchase materially reduces the Phase 1 capital investment required which, for the process plant, was $25.3 million out of the $41.6 million total estimate in our Fenix Project feasibility study.

Multiple strategic alternatives continue to be evaluated for the project including financing options, lower capital costs, potential base metal evaluation and the possible divestiture of our Mexican business unit. No development decision has been made on the Fenix Project as we evaluate these alternatives.

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MSC Segment, Argentina

The MSC segment is comprised of a 49% interest in the San José mine, located in Santa Cruz, Argentina.

MSC – Operating Results

The following table sets out operating results for the San José mine for the three months ended December 31, 2022 and 2021, and for the years ended December 31, 2022, 2021, and 2020 (on a 100% basis):

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​ ​ Three months ended December 31, ​ Year ended December 31,

Operating Results ​ (in thousands, except otherwise indicated)

San José Mine—100% basis ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Average grade mined (g/t) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Average grade processed (g/t) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Average recovery (%): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Gold ounces: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Silver ounces: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Gold equivalent ounces: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Average realized price: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

The comparative analysis below compares the operating and financial results of MSC on a 100% basis.

2022 compared to 2021

GEOs produced decreased by 4% in Q4/22 compared to Q4/21, driven by lower gold and silver grades processed as well as lower recoveries. GEOs produced decreased by 10% in full year 2022, compared to full year 2021 primarily as a result of a 6% decrease in processed mineralized material and a 1% decrease in gold recovery. As previously discussed, production at the San José mine was impacted in early 2022 due to COVID-19 impacts and mill availability.

Revenue from gold and silver sales increased by 2% in Q4/22 compared to Q4/21 as a result of provisional sales adjustments on concentrate sales contributing to an increased average realized gold price per ounce over the comparative

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period. Revenue decreased by 6% in full year 2022 compared to full year 2021, driven by lower GEOs sold in full year 2022 compared to full year 2021.

Cash costs per GEO in Q4/22 decreased by 23% compared to Q4/21, driven by $18.9 million lower production costs applicable to sales as a result of costs related to COVID-19 impacts in 2021. Cash costs per GEO in full year 2022 increased by 3% compared to full year 2021 as a result of lower GEOs sold as described above, and partially offset by $13.8 million lower production costs.

AISC per GEO in Q4/22 decreased by 17% compared to Q4/21. AISC per GEO for full year 2022 increased by 7% compared to full year 2021. Changes in AISC per GEO resulted largely from the same issues described in changes in cash costs per GEO, discussed above.

Investment in MSC

We recognized a gain of $5.3 million in full year 2022 attributable to our 49% share of operations from our investment in MSC, compared to a loss of $7.5 million recognized in full year 2021. MSC recognized higher net income in full year 2022 compared to full year 2021 primarily driven by a decrease in year over year current and deferred tax expenses.

MSC Dividend Distribution (49%)

We received $0.3 million in dividends from MSC for full year 2022, compared to $9.8 million received during 2021. The decrease in 2022 was predominately related to a significant decrease in metal prices compared to 2021. Additionally, the operation was impacted by COVID-19 and mill availability in Q1 2022 which have since been resolved.

McEwen Copper Inc.

We own a 68.1% interest in McEwen Copper Inc. (“McEwen Copper”), which owns a 100% interest in the Los Azules copper project in San Juan, Argentina, and the Elder Creek exploration project in Nevada, USA.

On August 23, 2021, McEwen Copper successfully closed the first tranche of the proposed $81.9 million private placement (the “Offering”), with a $40.0 million investment by Robert McEwen, Chairman and Chief Owner. A second tranche offering was closed on June 21, 2022, with a $10.0 million investment by the Victor Smorgon Group and $5 million from other investors, for total gross proceeds of $15.0 million. On August 31, 2022, a final tranche of $26.9 million was raised, with an investment by Nuton LLC, a Rio Tinto Venture, completing the Offering.

McEwen Copper continues to use the proceeds from the Offering to conduct exploration drilling, complete a new resource model, continue baseline monitoring for environmental permitting, continue community development and relations, and for other technical work partially focused on the publication of an updated PEA and to advance to Feasibility Study (“FS”) level of confidence. As described below, our team is continuing to work on an updated PEA on the Los Azules copper project targeting early Q2/23.

On October 21, 2022, McEwen Copper signed an agreement whereby Kennecott Exploration Company (“KEX”), a subsidiary of Rio Tinto, for KEX to earn a 60% interest in the Elder Creek property by investing $18 million over up to seven years (the “Expenditure Commitment”). If and when the Expenditure Commitment is completed, KEX and McEwen Copper will form an unincorporated 60:40 joint venture.

Subsequent to December 31, 2022, we announced the closing of an ARS $30.0 billion investment by FCA Argentina S.A., a subsidiary of Stellantis N.V. (“Stellantis”) to acquire shares of McEwen Copper in a two-part transaction that closed on February 24, 2023. The transaction consisted of: 1. Private placement of 2,850,000 common shares, and 2. Purchase of 1,250,000 common shares indirectly owned by McEwen Mining in a secondary sale. The proceeds of the private placement will be used to advance development of the Los Azules copper project in San Juan, Argentina, and for general corporate purposes. After the closing of the Transaction, McEwen Mining was separately compensated for the secondary sale by McEwen Copper in U.S. dollars. Subsequent to the transaction, the Stellantis companies and Nuton both hold

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approximately 14.2% of the outstanding shares of McEwen Copper, while McEwen Mining reduced its ownership to 51.9% of the outstanding shares.

Los Azules, San Juan, Argentina

The Los Azules project is one of the world’s largest undeveloped open-pit copper porphyry deposits and is located in the Province of San Juan, Argentina. The total indicated and inferred resources were estimated at 6.9 and 13.1 billion lbs. of copper, respectively, as defined in our 2017 PEA. Since that time, extensive enterprise optimization work has been completed on potential larger scale, lower cost and lower carbon footprint options compared with the 2017 PEA.

McEwen Copper spent $28.2 million dollars in Q4/22 on the activities below:

Drilling Program

Several drilling contractors were secured for the 2022-2023 drilling season. We began mobilizing drill rigs in September 2022, with six rigs on site by year end and another three in early 2023. Drilling began in the first week of October 2022, when our exploration road reopened subsequent to seasonal closures.

The drilling program aims to:

1. Increase drill hole density in an effort to upgrade our copper mineral resource classification and better understand our payback pit design;

2. Provide metallurgical, hydrological and geotechnical data to facilitate mine design; and

3. Test for potential extensions of the resource to the north, south and at depth to determine how much larger the identified deposit could be.

Road Construction

A new low altitude access road (max. 11,155 feet ASL) was completed in 2022, which has only one high mountain pass and we share part of the road with other mining projects, including El Pachón (Glencore) and Altar (Stillwater-Sibanye and Aldebaran Resources). We expect the new road will be further upgraded and adapted for winter operating conditions. It was successfully used for demobilization and allowed the drilling season to be extended until May 2022. In addition, work is being done on the initial exploration access road, extending road widths, improving berms and primarily working on the switchback both in the Totora as well as the Cabeza de Leon passes to allow the passage of semi-trailer transport. As we advance, this will allow for safer operation and more cost and logistics efficiencies. It is anticipated that the two existing roads to the site will provide almost year-round access to adequately support the current phase of work.

Technical Studies

Our study teams continued to work on an updated PEA to include all available drill information, assay information and metallurgical testing of core obtained during the 2017, 2018 and 2022 exploration seasons. Work on trade-off studies related to power supply and the potential for renewables, mining methods and processing options, an updated glacier study, and initial geotechnical field of work for the design of the tailing and waste storage facilities were continued during the quarter. Hydro-geological holes have commenced and complement the works on the assessments of historical information and the re-establishment of existing water monitoring locations.

Hyperspectral scanning of all available core has been completed for new and historic core. Data from this initiative will ensure a refined and improved geological and resource model. By the end of Q4/22, over 220,000 feet of current and historic drilling has been scanned and processed. Hyperspectral data is expected to be used for geotechnical, metallurgical and resource modelling.

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A preliminary optimization study was completed in Q1/22 using existing information and was further refined during the remainder of the year. The study focused on the following objectives: value improvement, scale and capital requirement optimization, reduction in complexity, risk minimization and to enable fast trade-off analysis of environmentally friendly and regenerative solutions. Currently, we are developing a scenario for Los Azules as an open pit mine that initially processes leachable copper content in a heap leach, with a solvent extraction and electrowinning (“SX/EW”) facility to produce LME Grade A copper cathodes for export or consumption in Argentina. This scenario is would greatly reduce capital expenditures as compared to using concentrator technology, and in addition, would be more environmentally friendly due to a lower carbon footprint. The project design makes use of renewable energy, reduces overall complexity while still conceived as a long-life asset with upside opportunity further enhancing the life of mine and financial attractiveness.

Metallurgical studies continue, utilizing international certified laboratories as well as additional confirmation work with the Institute of Mining Investigations, part of the engineering faculty of the University of San Juan and our partners from Nuton, the Rio Tinto venture specialized in heap leaching of copper ore. Initial results show promising recoveries and reduced acid consumption for the scenario described above.

The preparation of the Exploitation Environmental Impact Report (“EIR”), the basis for environmental permitting in Argentina, has been awarded to Knight Piesold and the drafting of the report is underway and on track for presenting to San Juan authorities by April 2023.

COMMITMENTS AND CONTINGENCIES

As of December 31, 2022, we have the following consolidated contractual obligations:

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Payments due by period

Exploration - Los Azules ​ ​ 29,428 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ 29,428

Exploration - Other ​ ​ 13,155 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ 13,155

(1) Amounts presented represent the undiscounted uninflated future payments.

With respect to reclamation cost commitments disclosed above, we have surety bonds outstanding to provide bonding for our obligations in the United States and Canada. These surety bonds are available for draw down in the event we do not perform our reclamation obligations. If the bond is drawn, we would be obligated to reimburse the surety. When the specific reclamation requirements are met, the beneficiary of the surety bonds will cancel and/or return the instrument to the issuing entity. As of December 31, 2022, no additional liability has been recognized for our surety bonds of $39.4 million.

Lease obligations disclosed above include long term leases covering office space, exploration expenditures, option payments and option payments on properties.

​

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NON-GAAP FINANCIAL PERFORMANCE MEASURES

We have included in this report certain non-GAAP performance measures as detailed below. In the gold mining industry, these are common performance measures but do not have any standardized meaning and are considered non-GAAP measures. We use these measures to evaluate our business on an ongoing basis and believe that, in addition to conventional measures prepared in accordance with GAAP, certain investors use such non-GAAP measures to evaluate our performance and ability to generate cash flow. We also report these measures to provide investors and analysts with useful information about our underlying costs of operations and clarity over our ability to finance operations. Accordingly, they are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. There are limitations associated with the use of such non-GAAP measures. We compensate for these limitations by relying primarily on our US GAAP results and using the non-GAAP measures supplementally.

The non-GAAP measures are presented for our wholly owned mines and our interest in the San José mine. The GAAP information used for the reconciliation to the non-GAAP measures for our minority interest in the San José mine may be found in Item 8. Financial Statements and Supplementary Data, Note 9, Investment in Minera Santa Cruz S.A. (“MSC”)– San José Mine. The amounts in the reconciliation tables labeled “49% basis” were derived by applying to each financial statement line item the ownership percentage interest used to arrive at our share of net income or loss during the period when applying the equity method of accounting. We do not control the interest in or operations of MSC and the presentations of assets and liabilities and revenues and expenses of MSC do not represent our legal claim to such items. The amount of cash we receive is based upon specific provisions of the Option and Joint Venture Agreement (“OJVA”) and varies depending on factors including the profitability of the operations.

The presentation of these measures, including the minority interest in the San José, has limitations as an analytical tool. Some of these limitations include:

Cash Gross Profit

Cash gross profit is a non-GAAP financial measure and does not have any standardized meaning. We use cash gross profit to evaluate our operating performance and ability to generate cash flow from mining operations; we disclose cash gross profit or loss as we believe this measure provides valuable assistance to investors and analysts in evaluating our ability to finance our ongoing business and capital activities. The most directly comparable measure prepared in accordance with GAAP is gross profit or loss. Cash gross profit or loss is calculated by adding depletion and depreciation to gross profit or loss.

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The following tables present a reconciliation of cash gross profit or loss to the most directly comparable GAAP measure, gross profit or loss:

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year ended December 31, 2022 ​

​ Gold Bar Fox Complex El Gallo Total (100% owned) ​

​ ​ (in thousands) ​

Add: Depreciation and depletion ​ ​ 4,737 ​ ​ 14,964 ​ ​ — ​ ​ 19,701 ​

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Three months ended December 31, ​ Year ended December 31,

​ ​ (in thousands)

San José mine cash gross profit (100% basis) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year ended December 31, 2021

​ Gold Bar Fox Complex El Gallo Total (100% owned)

​ ​ (in thousands)

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year ended December 31, 2020

​ Gold Bar Fox Complex El Gallo Total (100% owned)

​ ​ (in thousands)

​

Cash Costs and All-In Sustaining Costs

The terms cash costs, cash cost per ounce, all-in sustaining costs (“AISC”), and all-in sustaining cost per ounce used in this report are non-GAAP financial measures. We report these measures to provide additional information regarding operational efficiencies on an individual mine basis, and believe these measures provide investors and analysts with useful information about our underlying costs of operations.

Cash costs consist of mining, processing, on-site general and administrative expenses, community and permitting costs related to current operations, royalty costs, refining and treatment charges (for both doré and concentrate products), sales costs, export taxes and operational stripping costs, but exclude depreciation and amortization (non-cash items). The sum of these costs is divided by the corresponding gold equivalent ounces sold to determine a per ounce amount.

All-in sustaining costs consist of cash costs (as described above), plus accretion of retirement obligations and amortization of the asset retirement costs related to operating sites, environmental rehabilitation costs for mines with no reserves, sustaining exploration and development costs, sustaining capital expenditures and sustaining lease payments. Our all-in sustaining costs exclude the allocation of corporate general and administrative costs. The following is additional information regarding our all-in sustaining costs:

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The sum of all-in sustaining costs is divided by the corresponding gold equivalent ounces sold to determine a per ounce amount.

Costs excluded from cash costs and all-in sustaining costs, in addition to depreciation and depletion, are income and mining tax expenses, all corporate financing charges, costs related to business combinations, asset acquisitions and asset disposal, and any items that are deducted for the purpose of normalizing items.

The following tables reconcile these non-GAAP measures to the most directly comparable GAAP measure, production costs applicable to sales; the El Gallo mine results are excluded from this reconciliation for 2021 and 2020 as the economics of residual leaching operations are measured by incremental revenue exceeding incremental costs. Residual leaching costs for the year ended December 31, 2022 were $0.7 million compared to $9.3 million for the year ended in 2021. As a result, we have ceased using cash cost and all-in sustaining cost per gold equivalent ounce to evaluate the El Gallo mine on an ongoing basis and have therefore ceased disclosure of such metric:

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Three months ended December 31, 2022 ​ Year ended December 31, 2022

​ Gold Bar Fox Complex Total Gold Bar Fox Complex Total

​ ​ (in thousands, except per ounce) ​ (in thousands, except per ounce)

​

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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Three months ended December 31, 2021 ​ Year ended December 31, 2021

​ Gold Bar Fox Complex Total Gold Bar Fox Complex Total

​ ​ (in thousands, except per ounce) ​ (in thousands, except per ounce)

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year ended December 31, 2020

​ ​ Gold Bar ​ Fox Complex ​ Total

​ ​ (in thousands, except ounces and per ounce)

Mine site reclamation, accretion and amortization ​ ​ 1,223 ​ ​ 414 ​ ​ 1,637

Capitalized underground mine development (sustaining) ​ ​ — ​ ​ 3,646 ​ ​ 3,646

Ounces sold, including stream (GEO) ​ ​ 27.8 ​ ​ 24.8 ​ ​ 52.6

Cash cost per ounce ($/GEO sold) ​ $ 2,106 ​ $ 1,397 ​ $ 1,772

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Three months ended December 31, ​ Year ended December 31,

San José mine cash costs (100% basis) ​ (in thousands, except per ounce) ​ ​ ​

​

Average realized prices

The term average realized price per ounce used in this report is also a non-GAAP financial measure. We prepare this measure to evaluate our performance against market (London P.M. Fix). Average realized price is calculated as gross sales of gold and silver, less streaming revenue, divided by the number of net ounces sold in the period, less ounces sold under the streaming agreement.

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The following table reconciles this non-GAAP measure to the most directly comparable U.S. GAAP measure, revenue from gold and silver sales. Ounces of gold and silver sold for the San José mine are provided to us by MSC.

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Three months ended December 31, ​ Year ended December 31,

Average realized price - 100% owned ​ (in thousands, except per ounce)

Less: gold ounces sold, stream ​ ​ 0.9 ​ ​ 0.7 ​ ​ 3.0 ​ ​ 2.3 ​ ​ 2.1

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Three months ended December 31, ​ Year ended December 31,

​

​

Liquid assets

The term liquid assets used in this report is also a non-GAAP financial measure. We report this measure to better understand our liquidity in each reporting period.

Liquid assets are calculated as the sum of the Balance Sheet line items of cash and cash equivalents, restricted cash and investments, plus ounces of doré held in precious metals inventories valued at the London PM Fix spot price at the corresponding period. The following table summarizes the calculation of liquid assets as of December 31, 2022 and 2021:

​ ​ ​ ​ ​ ​ ​

​ ​ December 31,

​ ​ (in thousands)

Precious metals valued at market value (1)(2) ​ ​ 1,982 ​ ​ 1,018

​

​

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​ ​ ​ ​ ​ ​ ​

CRITICAL ACCOUNTING ESTIMATES AND ACCOUNTING DEVELOPMENTS

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in conformity with US GAAP. The preparation of these statements requires that we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. We base these estimates on historical experience and on assumptions that we consider reasonable under the circumstances; however, reported results could differ from those based on the current estimates under different assumptions or conditions. The summary of our significant accounting policies is detailed in Note 2 of the Consolidated Financial Statements.

We believe that significant areas requiring the use of management estimates and assumptions relate to environmental reclamation and closure obligations; asset useful lives utilized for depletion, depreciation, amortization and accretion calculations; the fair value of equity investments and asset groups used in impairment testing; recoverable gold in leach pad inventory; current and long-term inventory and mine development capitalization costs; the collectability of value added taxes receivable; fair values of assets and liabilities acquired in business combinations; reserves; valuation allowances for deferred tax assets; income and mining tax provisions and reserves for contingencies and litigation. There are other items within our financial statements that require estimation but are not deemed to be critical. However, changes in estimates used in these and other items could have a material impact on our financial statements. In the section below we identify estimates critical to the understanding of our financial condition and results of operations and that require the application of significant management judgment.

Asset Retirement Obligation, Reclamation and Remediation Costs: The Company records the fair value of a liability for an asset retirement obligation (“ARO”) in the period that it is incurred if a reasonable estimate of fair value can be made. The Company prepares estimates of the timing and amounts of expected cash flows when an ARO is incurred, which are updated to reflect changes in facts and circumstances. Estimation of the fair value of AROs requires significant judgment, including amount of cash flows, timing of reclamation, inflation rate and credit risk. Accrued reclamation and closure costs can represent a significant and variable liability on our balance sheet. The company has estimated its liabilities under appropriate accounting guidance and reviews its liabilities on at least an annual basis. However, the ranges of liability could exceed the liabilities recognized. If substantial damages were awarded, claims were settled, or remediation costs were incurred in excess of our accruals, our financial results or condition could be materially adversely affected.

Mineral Property Interests, Plant and Equipment and Mine Development Costs: The Company amortizes its mineral property interests, plant and equipment, and mine development costs using the most appropriate method, which includes the units-of-production method over the estimated life of the mine or ore body based on recoverable ounces to be mined from proven and probable reserves, or the straight-line method over the useful life. The accounting estimates related to amortization are critical accounting estimates because (1) the determination of reserves involves uncertainties with respect to the ultimate geology of its reserves and the assumptions used in determining the economic feasibility of mining those reserves and (2) changes in estimated proven and probable reserves and asset useful lives can have a material impact on net (loss) income.

Estimates regarding mine development capitalization costs involve the determination of proven and probable reserves.

Impairment of Long-lived Assets: The Company reviews and evaluates its long-lived assets for impairment 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 fair value.

For asset groups where an impairment loss is determined using the discounted future net cash flows method or discounted future net cash flows method, future cash flows are estimated based on quantities of recoverable mineralized material, expected gold and silver prices (considering current and historical prices, trends and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on life-of-mine plans. The term “recoverable mineralized material” refers to the estimated amount of gold or other commodities that will be obtained after considering losses during processing and treatment. The Company’s estimates of future cash flows are based on numerous assumptions and uncertainties. It is possible that actual future cash flows will be significantly different than the estimates, as actual future quantities of recoverable minerals, gold, silver and other commodity prices, production levels and costs of capital are each subject to significant risks and uncertainties.

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Stockpiles, Material on Leach Pads, In-process Inventory, Precious Metals Inventory and Materials and Supplies: Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, an estimate of the contained metals (based on assay data) and the estimated metallurgical recovery rates. Costs are allocated to stockpiles based on current mining costs incurred including applicable overhead relating to mining operations.

Costs are attributed to the mineralized material on leach pads based on current mining costs incurred up to the point of placing the ore on the pad. Costs are removed from the leach pad inventory based on the average cost per estimated recoverable ounce of gold on the leach pad as the gold is recovered. The estimates of recoverable gold on the leach pads are calculated from the quantities of mineralized material placed on the leach pads (measured tonnes added to the leach pads), the grade of mineralized material placed on the leach pads (based on assay data) and a recovery percentage.

Although the quantities of recoverable gold placed on the leach pads are reconciled by comparing the grades of ore placed on the pads to the quantities of gold recovered (metallurgical balancing), the nature of the leaching process inherently limits the ability to precisely monitor inventory levels. As a result, the metallurgical balancing process is constantly monitored, and the engineering estimates are refined based on actual results over time.

In-process material is measured based on assays of the material from the various stages of processing. Costs are allocated to in-process inventories based on the costs of the material fed into the process attributable to the source material coming from the mines, stockpiles and/or leach pads plus the in-process conversion costs incurred to that point in the process.

Costs are allocated to precious metal inventories based on costs of the respective in-process inventories incurred prior to the refining process plus applicable refining costs.

The assumptions used by the Company to measure metal content during each stage of the inventory conversion process includes estimated recovery rates based on laboratory testing and assaying. The Company periodically reviews its estimates compared to actual experience and revises its estimates when appropriate. The ultimate recovery will not be known until leaching operations cease.

Proven and Probable Reserves: Critical estimates are inherent in the process of determining the Company’s reserves. The Company’s reserves are affected largely by our assessment of future metals prices, as well as by engineering and geological estimates of ore grade, accessibility and production cost. The Company’s assessment of reserves occurs at least annually, and periodically utilizes external audits.

Reserve estimates are used in determining appropriate rates of units-of-production depreciation, with net book value of many assets depreciated over remaining estimated reserves. Reserves are also a key component in forecasts, with which the Company compares future cash flows to current asset values to ensure that carrying values are reported appropriately. The Company’s forecasts are also used in determining the level of valuation allowances on the Company’s deferred tax assets. Reserves also play a key role in the valuation of certain assets in the determination of the purchase price allocations for acquisitions. Reserves involve many estimates and are not guarantees that the Company will recover the indicated quantities of metals. Changes in the estimates could result in material adjustments to the Company’s reserves and asset values.

Income and Mining Taxes: The Company accounts for income and mining taxes under ASC 740 using the liability method, recognizing certain temporary differences between the financial reporting basis of liabilities and assets and the related tax basis for such liabilities and assets. This method generates either a net deferred income and mining tax liability or asset for the Company, as measured by the statutory tax rates in effect. The Company derives the deferred income and mining tax charge or benefit by recording the change in either the net deferred income and mining tax liability or asset balance for the year. The Company records a valuation allowance against any portion of those deferred income and mining tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all the deferred income and mining tax asset will not be realized.

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FORWARD-LOOKING STATEMENTS

This report contains or incorporates by reference “forward-looking statements”, as that term is used in federal securities laws, about our financial condition, results of operations and business. These statements include, among others:

These statements may be made expressly in this document or may be incorporated by reference to other documents that we will file with the SEC. Many of these statements can be found by looking for words such as “believes”, “expects”, “anticipates”, “estimates” or similar expressions used in this report or incorporated by reference in this report.

Forward-looking statements and information are based upon several estimates and assumptions that, while considered reasonable by management, they are inherently subject to significant business, economic and competitive uncertainties, risks and contingencies, and there can be no assurance that such statements and information will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such statements and information.

Included among the forward-looking statements and information that we may provide is production guidance. From time to time the Company provides guidance on operations, based on stand-alone budgets for each operating mine. In developing the mine production portion of the budget, we evaluate several factors and assumptions, which include, but are not limited to:

● gold and silver price forecasts.

● average gold and silver grade mined, using a resource model.

● expected tonnes moved and strip ratios.

● available stockpile material (grades, tonnes, and accessibility).

● estimated mill recovery rates (San José mine and Fox Complex).

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● dilution of material processed.

● internal and contractor equipment and labor availability.

● seasonal weather patterns.

Actual production results are sensitive to variances in any of the key factors and assumptions noted above. As a result, we frequently evaluate and reconcile actual results to budgeted results to determine if key assumptions and estimates require modification. Any changes will, in turn, influence production guidance.

We caution you not to put undue reliance on these forward-looking statements, which speak only as of the date of this report. Further, the information contained in this document or incorporated herein by reference is a statement of our present intention and is based on present facts and assumptions, and may change at any time and without notice, based on changes in such facts or assumptions. Readers should not place undue reliance on forward-looking statements.

RISK FACTORS IMPACTING FORWARD-LOOKING STATEMENTS

The important factors that could prevent us from achieving our stated goals and objectives include, but are not limited to, those set forth in other “Risk Factors” section in this report and the following:

● decisions of foreign countries, banks and courts within those countries.;

● operating results of MSC;

● timing and amount of mine production;

● our ability to retain and attract key personnel;

● technological changes in the mining industry;

● changes in operating, exploration or overhead costs;

● results of current and future exploration activities;

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● changes in our business strategy;

● the uncertainty of reserve estimates and timing of development expenditures;

● litigation or regulatory investigations and procedures affecting us;

● changes in federal, state, provincial and local laws and regulations;

● accidents, public health issues, and labor disputes;

● our continued listing on a public exchange;

● uncertainty relating to title to mineral properties;

● decisions by third parties over which we have no control.

We undertake no responsibility or obligation to update publicly these forward-looking statements, except as required by law and we may update these statements in the future in written or oral statements. Investors should take note of any future statements made by or on our behalf.

​

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Our exposure to market risks includes, but is not limited to, the following risks: changes in foreign currency exchange rates, equity price risks, commodity price fluctuations, credit risk and inflationary risk. We do not use derivative financial instruments as part of an overall strategy to manage market risk.

Further, our participation in the joint venture with Hochschild for the 49% interest held at MSC creates additional risks because, among other things, we do not exercise decision-making power over the day-to-day activities at MSC; however, implications from our partner’s decisions may result in us having to provide additional funding to MSC or in a decrease in our percentage of ownership.

Foreign Currency Risk

In general, the devaluation of non-U.S. dollar currencies with respect to the U.S. dollar has a positive effect on our costs and liabilities which are incurred outside the U.S. while it has a negative effect on our assets denominated in non-U.S. dollar currency. Although we transact most of our business in U.S. dollars, some expenses, labor, operating supplies and property and equipment are denominated in Canadian dollars, Mexican pesos or Argentine pesos.

Since 2008, the Argentine peso has been steadily devaluing against the U.S. dollar by 10% to 53% on an annual basis. As noted in the graph below, during 2022 the Argentine peso devalued 41% compared to devaluations of 18% and 29% in 2021 and 2020 respectively. During 2022, the Mexican peso appreciated 12% against the US dollar, compared to a devaluation of 3% and 5% in 2021 and 2020 respectively.

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During 2022, the Canadian dollar devalued by 6% against the U.S. dollar, compared to a devaluation of 0.4% in 2021 and an increase in value of 2% in 2020.

The following chart illustrates changes in the value of these currencies compared to the U.S. dollar in the twelve months ended December 31, 2022:

​

​

The value of cash and cash equivalents denominated in foreign currencies also fluctuates with changes in currency exchange rates. Appreciation of non-U.S. dollar currencies results in a foreign currency gain on such investments and a depreciation in non-U.S. dollar currencies results in a loss. We have not utilized material market risk-sensitive instruments to manage our exposure to foreign currency exchange rates but may do so in the future. We hold minor portions of our cash reserves in non-U.S. dollar currencies.

Based on our Canadian cash balance of $1.00 million (C$1.37 million) at December 31, 2022, a 1% change in the Canadian dollar would result in a gain/loss of $0.01 million in the Consolidated Statements of Operations and Comprehensive (Loss) Income. Based on our Argentine peso balance of $2.14 million (ARG$379.77 million) at December 31, 2022, a 1% change in the Argentine peso would result in a gain/loss of $0.02 million in the Consolidated Statements of Operations and Comprehensive (Loss) Income. We also hold negligible portions of our cash reserves in Mexican pesos, with effect of a 1% change in this currency resulting in gains/losses immaterial for disclosure purposes.

Further, we are also subject to foreign currency risk on the fluctuation of the Mexican peso on our VAT receivable balance. As of December 31, 2022, our VAT receivable balance was MEX$19.95 million, equivalent to approximately $0.6 million, for which a 1% change in the Mexican peso would have resulted in a gain/loss of less than $0.01 million in the Consolidated Statements of Operations and Comprehensive (Loss) Income.

MSC holds a portion of its local cash balances in Argentine pesos and is therefore exposed to the effects of this continued devaluation and also the risk that there may be a sudden severe devaluation of the Argentine peso. A severe devaluation could result in material foreign exchange losses as reported in U.S. dollars.

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Equity Price Risk

We have in the past sought and will likely in the future seek to acquire additional funding by sale of common stock or other equity securities. Movements in the price of our common stock have been volatile in the past and may also be volatile in the future. As a result, there is a risk that we may not be able to sell equity securities at an acceptable price to meet future funding requirements.

We have invested and may continue to invest in shares of common stock of other entities in the mining sector. Some of our investments may be highly volatile and lack liquidity caused by lower trading volumes. As a result, we are inherently exposed to fluctuations in the fair value of our investments, which may result in gains or losses upon their valuation.

Commodity Price Risk

We produce and sell gold and silver, therefore changes in the market price of gold and silver could significantly affect our results of operations and cash flows in the future. Change in the price of gold and silver could materially affect our revenues. Based on our revenues from gold and silver sales of $110.4 million for the year ended December 31, 2022, with all other variables held constant, a 10% change in the price of gold and silver would have had resulted in an additional income or loss before income and mining taxes of approximately $11.0 million. Changes in the price of gold and silver can also affect the provisionally priced sales that we make under agreements with refiners and other purchasers of our products. At December 31, 2022, we had no gold or silver sales subject to final pricing. Decreases in the market price of gold or silver can also significantly affect the value of our product inventory, stockpiles and leach pads, and it may be necessary to record a write-down to net realizable value.

We have in the past and may in the future hold a portion of our treasury in gold and silver bullion, where the value is recorded at the lower of cost or market. Gold and silver prices may affect the value of any bullion that we hold in treasury.

We do not hedge any of our sales and are therefore subject to all changes in commodity prices.

Credit Risk

We may be exposed to credit loss through our precious metals and doré sales agreements with Canadian and American financial institutions and refineries, should these customers be unable to make payment in accordance with the terms of the agreements. However, based on the history and financial condition of our counterparties, we do not anticipate any of the financial institutions or refineries to default on their obligation. As of December 31, 2022, we do not believe we have any significant credit exposure associated with precious metals and our doré sales agreements.

​

In Mexico, we are exposed to credit loss regarding our VAT taxes receivable if the Mexican tax authorities are unable or unwilling to make payments in accordance with our monthly filings. Timing of collection on VAT receivables is uncertain as VAT refund procedures require a significant amount of information and follow-up. The risk is mitigated to the extent that the VAT receivable balance can be applied against future income taxes payable. However, at this time we are uncertain when, if ever, our Mexican operations will generate sufficient taxable operating profits to offset this receivable against taxes payable. We continue to face risk on the collection of our VAT receivables, which amount to $0.6 million as at December 31, 2022.

In Nevada and Ontario, Canada we are required to provide security to cover our projected reclamation costs. As at December 31, 2022, we have surety bonds of $39.4 million in place to satisfy bonding requirements for this purpose. The bonds have an annual fee of 2.3% of their value and require a deposit of 11% of the amount of the bond. Although we do not believe we have any significant credit exposure associated with these bonds, we are exposed to the risk that the surety bonds may no longer be accepted by the governmental agencies as satisfactory reclamation coverage, in which case we would be required to replace the surety bonding with cash.

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Interest rate risk

Our outstanding debt consists of various equipment leases, a revolving gold prepayment facility, and the senior secured credit facility. The leases and senior secured facility are at fixed rates; the prepayment facility is subject to variable rates. Exposure to variable rates is very limited, (less than 30 days) and as the debt is at fixed rates, we consider our interest rate risk exposure to be insignificant at this time.

Inflationary Risk

Argentina has experienced a significant amount of inflation over the last ten years and has now been classified as a highly inflationary economy. ASC 830 defines a hyperinflationary economy as one where the cumulative inflation rate exceeds 100% over the last three years which precede the reporting period. In this scenario, ASC 830 requires companies to change the functional currency of its foreign subsidiaries operating in a highly inflationary economy, to match the company’s reporting currency. In our case, the functional currency of all our Argentine subsidiaries has always been our reporting currency, the U.S. dollar. As such, we do not expect the classification of Argentina’s economy as a highly inflationary economy, to change our financial reporting methodology.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements: ​ ​

​ ​ ​

Management’s Report on Internal Control Over Financial Reporting ​ 84

​ ​ ​

Reports of Independent Registered Public Accounting Firm (PCAOB ID: 1263) ​ 85

​ ​ ​

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Consolidated Balance Sheets as of December 31, 2022 and 2021 ​ 89

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​ ​ ​

​ ​ ​

Notes to Consolidated Financial Statements ​ 92

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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Securities Exchange Act of 1934 defines internal control over financial reporting in Rule 13a-15(f) and 15d-15(f) as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013). Based upon its assessment, management concluded that, as of December 31, 2022, the Company’s internal control over financial reporting was effective based upon those criteria.

Ernst & Young LLP, an independent registered public accounting firm, has audited the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of McEwen Mining Inc.

​

Opinion on the consolidated financial statements

​

We have audited the accompanying consolidated balance sheets of McEwen Mining Inc. [the “Company”] as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive (loss), changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes [collectively referred to as the “consolidated financial statements”]. In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and its results of operations and its consolidated cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.

​

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) [the “PCAOB”], the Company’s internal control over financial reporting as of December 31, 2022, based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 13, 2023 expressed an unqualified opinion thereon.

​

Basis for opinion

​

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

​

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

​

Critical audit matters

​

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: [1] relates to accounts or disclosures that are material to the financial statements; and [2] involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the

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consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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​ ​

​ ​ Valuation of Inventory at the Gold Bar mine

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/s/ Ernst & Young LLP

Chartered Professional Accountants

Licensed Public Accountants

​

We have served as the Company's auditor since 2016.

​ ​

Toronto, Canada ​

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of McEwen Mining Inc.

​

Opinion on internal control over financial reporting

​

We have audited McEwen Mining Inc.’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) [the “COSO criteria”]. In our opinion, McEwen Mining Inc. [the “Company”] maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

​

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) [the “PCAOB”], the consolidated balance sheets of the Company as of December 31, 2022 and 2021, and the related consolidated statements of operations and comprehensive (loss), changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and our report dated March 13, 2023 expressed an unqualified opinion thereon.

​

Basis for opinion

​

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

​

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

​

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

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Definition and limitations of internal control over financial reporting

​

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that [1] pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; [2] provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and [3] provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

​

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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​

/s/ Ernst & Young LLP

Chartered Professional Accountants

Licensed Public Accountants

​

​ ​

Toronto, Canada ​

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​

MCEWEN MINING INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)

FOR THE YEARS ENDED DECEMBER 31,

(in thousands of U.S. dollars, except per share amounts)

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

OTHER OPERATING INCOME (EXPENSES): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Advanced projects - Los Azules ​ ​ (61,148) ​ (5,019) ​ —

Other operating ​ ​ ​ — ​ ​ — ​ ​ (1,968)

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

OTHER INCOME (EXPENSE): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Interest and other finance expenses, net ​ ​ (7,789) ​ (6,200) ​ (7,434)

Total other income (expense) ​ ​ 15,149 ​ ​ 81 ​ ​ (541)

Income and mining tax (expense) recovery (Note 19) ​ ​ ​ (5,806) ​ 7,315 ​ 1,390

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net loss per share (Note 14): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Basic and diluted ​ ​ $ (1.71) ​ $ (1.25) ​ $ (3.78)

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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

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MCEWEN MINING INC.

CONSOLIDATED BALANCE SHEETS

AS AT DECEMBER 31,

(in thousands of U.S. dollars)

​

​ ​ ​ ​ ​ ​ ​ ​

​ ​ December 31, ​ December 31, ​

ASSETS ​ ​ ​ ​ ​ ​ ​

Current assets: ​ ​ ​ ​ ​ ​ ​

Restricted cash (Note 18) ​ ​ — ​ ​ 2,550 ​

Receivables, prepaids and other assets (Note 6) ​ 8,840 ​ 10,591 ​

Investment in Minera Santa Cruz S.A. (Note 9) ​ 93,451 ​ 90,961 ​

​ ​ ​ ​ ​ ​ ​ ​