UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2020~~March 31, 2021

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-33190

MCEWEN MINING INC.

(Exact name of registrant as specified in its charter)


Colorado		84-0796160
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

150 King Street West, Suite 2800, Toronto, Ontario Canada M5H 1J9

(Address of principal executive offices) (Zip code)

(866) 441-0690

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, no par value	MUX	New York Stock Exchange (“NYSE”)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~408,841,891~~459,187,391 shares outstanding as of ~~October 29, 2020~~May 7, 2021.

Table of Contents

MCEWEN MINING INC.

FORM 10-Q

Index

	Part I FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Consolidated Statements of Operations and Comprehensive Loss for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ (unaudited)	3

	Consolidated Balance Sheets at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 (unaudited)	4

	Consolidated Statements of Changes in Shareholders’ Equity for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ (unaudited)	5

	Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ (unaudited)	6

	Notes to Consolidated Financial Statements (unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosure about Market Risk	4546

Item 4.	Controls and Procedures	4748

	Part II OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4849

Item 4.	Mine Safety Disclosures	48

~~Item 5.~~	~~Other Information~~	4849

Item 6.	Exhibits	50

SIGNATURES		51

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

MCEWEN MINING INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)

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


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
	2020		2019		2020		2019		2021		2020
Revenue from gold and silver sales	$	27,395	$	32,691	$	77,086	$	84,657	$	23,740	$	31,400
Production costs applicable to sales		(23,526)		(23,584)		(74,267)		(59,432)		(23,589)		(28,387)
Depreciation and depletion		(4,570)		(7,488)		(16,080)		(17,501)		(5,137)		(6,698)
Gross (loss) profit		(701)		1,619		(13,261)		7,724
Gross loss										(4,986)		(3,685)

OTHER OPERATING EXPENSES:
Advanced projects		(4,027)		(2,140)		(9,464)		(6,881)		(1,799)		(2,550)
Exploration		(4,423)		(13,695)		(11,761)		(23,717)		(4,956)		(3,790)
General and administrative		(2,532)		(2,645)		(6,836)		(8,078)		(2,083)		(2,064)
Income (loss) from investment in Minera Santa Cruz S.A. (note 10)		2,582		(328)		(1,139)		(6,775)
Loss from investment in Minera Santa Cruz S.A. (Note 9)										(574)		(2,676)
Depreciation		(88)		(96)		(317)		(417)		(75)		(115)
Revision of estimates and accretion of asset retirement obligations (note 12)		(886)		(495)		(2,003)		(1,383)
Impairment of mineral property interests and plant and equipment (note 9)		—		—		(83,805)		—
Other operating (note 4)		—		—		(1,968)		—
Revision of estimates and accretion of asset retirement obligations (Note 11)										(911)		(660)
Impairment of mineral property interests and plant and equipment (Note 8)										—		(83,805)
		(9,374)		(19,399)		(117,293)		(47,251)		(10,398)		(95,660)
Operating loss		(10,075)		(17,780)		(130,554)		(39,527)		(15,384)		(99,345)

OTHER INCOME (EXPENSE):
Interest and other finance expense, net		(1,945)		(650)		(5,576)		(3,946)
Other income (note 5)		2,090		4,773		6,071		6,283
Total other income		145		4,123		495		2,337
Interest and other finance expenses, net										(509)		(1,877)
Other income (Note 4)										1,412		937
Total other income (expense)										903		(940)
Loss before income and mining taxes		(9,930)		(13,657)		(130,059)		(37,190)		(14,481)		(100,285)
Income and mining tax recovery		152		2,192		1,276		2,575		2,015		1,094
Net loss	$	(9,778)	$	(11,465)	$	(128,783)	$	(34,615)
Net loss and comprehensive loss									$	(12,466)	$	(99,191)


Net loss per share (note 14):
Net loss per share (Note 13):
Basic and Diluted	$	(0.02)	$	(0.03)	$	(0.32)	$	(0.10)	$	(0.03)	$	(0.25)
Weighted average common shares outstanding (thousands) (note 14):
Weighted average common shares outstanding (thousands) (Note 13):
Basic and Diluted		403,887		362,175		401,603		356,218		441,794		400,370

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

Table of Contents

MCEWEN MINING INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands of U.S. dollars)


	September 30,		December 31,		March 31,		December 31,
	2020		2019		2021		2020
ASSETS
Current assets:
Cash and cash equivalents	$	7,954	$	46,452	$	47,402	$	20,843
Restricted cash (note 18)		10,193		—
Investments (note 6)		—		1,885
Receivables, prepaids and other assets (note 7)		5,155		5,265
Inventories (note 8)		34,244		38,376
Receivables, prepaids and other assets (Note 6)						5,700		5,690
Inventories (Note 7)						27,910		26,964
Total current assets		57,546		91,978		81,012		53,497
Mineral property interests and plant and equipment, net (note 9)		330,202		418,791
Investment in Minera Santa Cruz S.A. (note 10)		108,762		110,183
Inventories, long-term (note 8)		5,457		9,603
Restricted cash (note 18)		3,595		48
Mineral property interests and plant and equipment, net (Note 8)						334,866		329,112
Investment in Minera Santa Cruz S.A. (Note 9)						102,768		108,326
Inventories, long-term (Note 7)						4,999		4,785
Restricted cash (Note 17)						3,625		3,595
Other assets		618		620		910		621
TOTAL ASSETS	$	506,180	$	631,223	$	528,180	$	499,936

LIABILITIES & SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	28,852	$	34,070	$	35,542	$	36,055
Flow-through share premium (note 13)		2,058		—
Debt, current portion (note 11)		—		5,000
Debt to related party, current portion (notes 11 and 15)		—		5,000
Flow-through share premium (Note 12)						3,736		3,827
Lease liabilities, current portion		2,213		2,115		2,638		2,440
Asset retirement obligation, current portion (note 12)		2,860		2,610
Asset retirement obligation, current portion (Note 11)						3,817		3,232
Total current liabilities		35,983		48,795		45,733		45,554
Lease liabilities, long-term		3,408		5,018		2,850		3,056
Debt (note 11)		23,997		19,758
Debt to related party (notes 11 and 15)		23,997		19,758
Asset retirement obligation, long-term (note 12)		30,932		29,591
Debt (Note 10)						24,163		24,080
Debt to related party (Notes 10 and 14)						24,163		24,080
Asset retirement obligation, long-term (Note 11)						31,167		30,768
Other liabilities		3,365		3,910		3,114		3,257
Deferred income and mining tax liability		3,697		4,914		3,241		3,813
Total liabilities	$	125,379	$	131,744	$	134,431	$	134,608

Shareholders’ equity:
Common shares: 408,842 as of September 30, 2020 and 400,339 as of December 31, 2019 issued and outstanding (in thousands) (note 13)	$	1,540,807	$	1,530,702
Common shares: 459,188 as of March 31, 2021 and 416,587 as of December 31, 2020 issued and outstanding (in thousands) (Note 12)					$	1,589,763	$	1,548,876
Accumulated deficit		(1,160,006)		(1,031,223)		(1,196,014)		(1,183,548)
Total shareholders’ equity		380,801		499,479		393,749		365,328
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY	$	506,180	$	631,223	$	528,180	$	499,936

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

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MCEWEN MINING INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(UNAUDITED)

(in thousands of U.S. dollars and shares)

Common Stock

and Additional

Paid-in Capital

Accumulated

Three months ended September 30, 2019 and 2020:

Shares

Amount

Deficit

Total
Balance, June 30, 2019

361,957

$
1,482,640

$
(994,626)

$
488,014
Stock-based compensation

—

284

—

284
Exercise of stock options

147

151

—

151
Shares issued for acquisition of mineral property interests

354

724

—

724
Net loss

—

—

(11,465)

(11,465)
Balance, September 30, 2019

362,458

$
1,483,799

$
(1,006,091)

$
477,708

Balance, June 30, 2020

402,491

$
1,532,940

$
(1,150,228)

$
382,712
Stock-based compensation

—

30

—

30
Sale of flow-through common shares

6,298

7,767

—

7,767
Shares issued for acquisition of mineral property interests

53

70

—

70
Net loss

—

—

(9,778)

(9,778)
Balance, September 30, 2020

408,842

$
1,540,807

$
(1,160,006)

$
380,801


	Common Stock							Common Stock
	and Additional							and Additional
	Paid-in Capital			Accumulated				Paid-in Capital			Accumulated
Nine months ended September 30, 2019 and 2020:	Shares	Amount		Deficit		Total
Balance, December 31, 2018	344,560	$	1,457,422	$	(971,476)	$	485,946
Stock-based compensation	—		481		—		481
Exercise of stock options	405		411		—		411
Units issued in connection with registered direct offering , net of issuance costs	16,129		22,910		—		22,910
Sale of shares in ATM offering	1,010		1,851		—		1,851
Shares issued for acquisition of mineral property interests	354		724		—		724
Net loss	—		—		(34,615)		(34,615)
Balance, September 30, 2019	362,458	$	1,483,799	$	(1,006,091)	$	477,708
								Shares	Amount		Deficit		Total
Balance, December 31, 2019	400,339	$	1,530,702	$	(1,031,223)	$	499,479	400,339	$	1,530,702	$	(1,031,223)	$	499,479
Stock-based compensation	—		332		—		332	—		88		—		88
Exercise of stock options								60		62		—		62
Net loss								—		—		(99,191)		(99,191)
Balance, March 31, 2020								400,399	$	1,530,852	$	(1,130,414)	$	400,438

Balance, December 31, 2020								416,587	$	1,548,876	$	(1,183,548)	$	365,328
Stock-based compensation								—		227		—		227
Sale of flow-through common shares	6,298		7,767		—		7,767	12,601		10,785		—		10,785
Exercise of stock options	60		61		—		61	—		—		—		—
Shares issued for debt refinancing	2,092		1,875		—		1,875
Shares issued for acquisition of mineral property interests	53		70		—		70
Sale of shares for cash								30,000		29,875		—		29,875
Net loss	—		—		(128,783)		(128,783)	—		—		(12,466)		(12,466)
Balance, September 30, 2020	408,842	$	1,540,807	$	(1,160,006)	$	380,801
Balance, March 31, 2021								459,188	$	1,589,763	$	(1,196,014)	$	393,749

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

Table of Contents

MCEWEN MINING INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands of U.S. dollars)

Nine months ended September 30,

2020

2019

Cash flows from operating activities:

Net loss

$
(128,783)

$
(34,617)

Adjustments to reconcile net loss from operating activities:

Impairment of mineral property interests and plant and equipment (note 9)

83,805

—

Loss from investment in Minera Santa Cruz S.A., net of amortization (note 10)

1,139

6,775

Loss (gain) on disposal of fixed assets

—

134

Depreciation and amortization

16,232

18,158

Loss (gain) on investments (note 6)

619

(4,972)

Income and mining tax (recovery)

(1,276)

(2,575)

Stock-based compensation

332

481

Revision of estimates and accretion of asset retirement obligations (note 12)

1,776

1,817

Foreign exchange (gain) loss

(11)

329

Decrease (increase) in other assets related to operations

6,572

(13,139)

(Decrease) increase in liabilities related to operations

(5,678)

5,693

Cash used in operating activities

$
(25,273)

$
(21,916)

Cash flows from investing activities:

Additions to mineral property interests and plant and equipment

$
(9,304)

$
(27,027)

Proceeds from sale of investments, net of investments (note 6)

1,266

4,204

Dividends received from Minera Santa Cruz S.A. (note 10)

282

4,045

Cash used in investing activities

$
(7,756)

$
(18,778)

Cash flows from financing activities:

Proceeds from sale of units, net of issuance costs (note 13)

$
—

$
22,910

Sale of flow-through common shares, net of issuance costs (note 13)

9,825

—

Proceeds of at-the-market share sale (note 13)

—

1,851

Proceeds of exercise of stock options

61

411

Payment of finance lease obligations

(1,626)

(1,564)

Cash provided by financing activities

$
8,260

$
23,608

Effect of exchange rate change on cash and cash equivalents

11

(329)

(Decrease) in cash, cash equivalents and restricted cash

(24,758)

(17,415)

Cash, cash equivalents and restricted cash, beginning of period

46,500

30,489

Cash, cash equivalents and restricted cash, end of period (note 18)

$
21,742

$
13,074

Supplemental disclosure of cash flow information:

Cash received (paid) during year for:

Interest paid

$
(3,850)

$
(3,911)

Interest received

158

60


	Three months ended March 31,
	2021		2020
Cash flows from operating activities:
Net loss	$	(12,466)	$	(99,191)
Adjustments to reconcile net loss from operating activities:
Impairment of mineral property interests and plant and equipment (Note 8)		—		83,805
Loss from investment in Minera Santa Cruz S.A., net of amortization (Note 9)		574		2,676
Depreciation and amortization		4,662		6,757
Loss on investments (Note 5)		—		898
Unrealized foreign exchange loss (gain) and adjustment to estimate (Note 11)		152		(868)
Income and mining tax (recovery)		(2,015)		(1,094)
Stock-based compensation		227		88
Revision of estimates and accretion of asset retirement obligations (Note 11)		911		660
Change in non-cash working capital items:
(Increase) decrease in other assets related to operations		(1,562)		1,234
(Decrease) in liabilities related to operations		(626)		(6,873)
Cash used in operating activities	$	(10,143)	$	(11,908)

Cash flows from investing activities:
Additions to mineral property interests and plant and equipment	$	(10,085)	$	(5,503)
Proceeds from sale of investments, net of investments		—		112
Dividends received from Minera Santa Cruz S.A. (Note 9)		4,984		—
Cash used in investing activities	$	(5,101)	$	(5,391)

Cash flows from financing activities:
Proceeds from sale of shares, net of issuance costs (Note 12)	$	29,875	$	—
Sale of flow-through common shares, net of issuance costs (Note 12)		11,966		—
Proceeds of exercise of stock options		—		62
Payment of finance lease obligations		(8)		(555)
Cash provided by (used in) financing activities	$	41,833	$	(493)
Effect of exchange rate change on cash and cash equivalents		—		114
Increase (decrease) in cash, cash equivalents and restricted cash		26,589		(17,678)
Cash, cash equivalents and restricted cash, beginning of period		24,438		46,500
Cash, cash equivalents and restricted cash, end of period (Note 17)	$	51,027	$	28,822

Supplemental disclosure of cash flow information:
Cash received (paid) during period for:
Interest paid	$	(1,215)	$	(1,289)
Interest received		7		135

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

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MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~September 30, 2020~~March 31, 2021

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

NOTE 1 NATURE OF OPERATIONS AND BASIS OF PRESENTATION

McEwen Mining Inc. (the “Company”) was organized under the laws of the State of Colorado on July 24, 1979. The Company is engaged in the exploration, development, production and sale of gold and silver and exploration for copper.

The Company operates in the United States, Canada, Mexico and Argentina. The Company owns a 100% interest in the Gold Bar gold mine in Nevada, the Black Fox gold mine in Ontario, Canada, the El Gallo gold project and the Fenix silver-gold project in Sinaloa, Mexico, the Los Azules copper deposit in San Juan, Argentina and a portfolio of exploration properties in Nevada, Canada, Mexico and Argentina. It also owns a 49% interest in Minera Santa Cruz S.A. (“MSC”), owner of the producing San José silver-gold mine in Santa Cruz, Argentina, which is operated by the joint venture majority owner, Hochschild Mining plc.

The interim consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and are unaudited. While information and note disclosures normally included in financial statements which are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations, the Company believes that the information and disclosures included are adequate and not misleading.

In management’s opinion, the unaudited Consolidated Statements of Operations and Comprehensive Loss (“Statement of Operations”) for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ the unaudited Consolidated Balance Sheets as at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the unaudited Consolidated Statement of Changes in Shareholders’ Equity for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ and the unaudited Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ contained herein, reflect all adjustments, consisting solely of normal recurring items, which are necessary for the fair presentation of the Company’s financial position, results of operations and cash flows on a basis consistent with that of the Company’s prior audited consolidated financial statements. However, the results of operations for the interim periods may not be indicative of results to be expected for the full fiscal year. Therefore, these financial statements should be read in conjunction with the audited financial statements and notes thereto and the summary of significant accounting policies included in the Company’s annual report on Form 10-K for the year ended December 31, ~~2019.~~2020. 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, ~~2019.~~2020. The consolidated financial statements include the accounts of the Company and its ~~wholly owned~~wholly-owned subsidiaries. Inter-company accounts and transactions have been eliminated.

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MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2021

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

NOTE 2 SIGNIFICANT ACCOUNTING POLICIES

Risks and Uncertainties

COVID-19

~~On March 11,~~The Company continues to closely monitor and respond, as possible, to the ~~World Health Organization (“WHO”) declared the~~ongoing COVID-19 ~~virus a global~~ pandemic. As ~~a result~~the situation continues to rapidly change globally, ensuring the health and safety of the ~~pandemic, many~~Company’s employees and contractors is one of the Company’s top priorities. Many jurisdictions including the United States, Canada, Mexico, and Argentina ~~instituted~~have varied but continued restrictions onto travel, public gatherings, and certain business operations. ~~Even absent of~~Unlike the year 2020, there were no government-mandated ~~shut-downs, the Company was~~shutdowns or other legally required ~~to suspend operations at its mines to protect the health and safety of its employees and contractors. This resulted in~~ temporary ~~shutdowns of all or a portion of operations at all of the Company’s mine sites at the start of Q2 2020. Since that date, all~~suspensions of the Company’s operations including El Gallo in Mexico, have successfully recommenced operations. In the third quarter, operations at the San José mine were again in a ramp-up phase as a result of the ongoing countrywide restrictions on the movement of people. Resumption of operations at normal capacity is expected towards the end of the year.during Q1 2021.

~~Table of Contents~~

~~MCEWEN MINING INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~September 30, 2020~~

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

The temporary shutdowns adversely impacted the Company’s operations, cash flow, and liquidity in the second quarter of 2020 and some of these effects continued to be felt in the third quarter. In addition to the adverse effect on revenue, the Company incurred costs in connection with the shutdowns and subsequent ramp-up. This, in turn, adversely affected its liquidity. The long-term impact of the COVID-19 ~~outbreak~~pandemic on the Company’s results of operations, financial position and cash flows will depend on future developments, including the duration and spread of the outbreak, variants of the COVID-19 virus, the availability and ~~related~~distribution of vaccinations, and government advisories, restrictions, and ~~restrictions. These developments~~financial assistance offered. To ensure a safe working environment for the Company’s employees and contractors, and to prevent the spread of COVID-19, the Company continues to reinforce safety measures at all sites and offices including contact tracing, restricting non-essential travel, and complying with public health orders. The impact of COVID-19 on the global financial markets, ~~and~~ the overall economy and the Company are highly uncertain and cannot be predicted. Achieving and maintaining normal operating capacity is also ~~dependant~~dependent on the continued availability of supplies and contractors, which isare out of the Company’s control. If the financial markets and/or the overall economy ~~are~~continue to be impacted, ~~for an extended period,~~ the Company’s results of operations, financial position and cash flows may be further affected. As the situation continues to evolve, the Company will continue to monitor market conditions closely and respond accordingly.

~~The~~Throughout COVID-19, the Company ~~is not able to estimate the duration of the pandemic~~has raised $12.7 million and ~~potential impact on its business if disruptions or delays~~$31.5 million through a Canadian Development Expenses (“CDE”) flow-through common share issuance and an equity financing respectively during Q1 2021, and raised $20.2 million in ~~business developments and shipments of product occur. In addition, a~~Canadian Exploration Expenditures (“CEE”) financings during 2020. A severe prolonged economic downturn could result in a variety of risks to the business, including access to capital markets when needed on acceptable terms, if at all. ~~As the situation continues to evolve, the Company will continue to closely monitor market conditions and respond accordingly.~~ The Company has completed various scenario planning analyses to consider the potential impacts of COVID-19 on its business, including volatility in commodity prices, temporary disruptions and/or curtailments of operating activities (voluntary or involuntary).

El Gallo Project Blockade

~~Going Concern~~

~~The accompanying interim financial statements have been prepared on the going concern basis of accounting, which assumes that~~On March 15, 2021, the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. In the preparation of the interim financial statements, management is required to identify when events or conditions indicate that substantial doubt may exist about the Company’s ability to continue as a going concern. Substantial doubt about the Company’s ability to continue as a going concern would exist when relevant conditions and events, considered in aggregate, indicate that the Company will not be able to meet its obligations as they become due for a period of at least, but not limited to, 12 months from the most recent balance sheet date. When the Company identifies conditions or events that raise potential for substantial doubt about its ability to continue as a going concern, the Company considers whether its plans that are intended to mitigate those relevant conditions or events will alleviate the potential substantial doubt.

The Company refinanced its senior secured term loan facility (note 11) in June 2020 and also completed a flow-through financing (note 13) in September 2020 and remains in full compliance with its debt covenants as at September 30, 2020. However, based on the significant expected resource reductionreported an illegal blockade at the ~~Gold Bar mine, resulting in an initial revised mine plan which yields less cash flow, coupled with operational challenges at Black Fox, the commitment to develop the Froome~~main access ~~portal, flow-through spending requirements, and the disruptions~~point to the Company’s El Gallo project in Mexico. Certain individuals involved in the blockade believed that the annual payments and infrastructure improvements made to the local communities should increase significantly. The Company has operated harmoniously with local communities since mining began in 2012, and has had a long standing track record of supporting local communities. On March 29, 2021, after operations ~~caused~~were briefly disrupted, the Company reported the successful resolution of the concerns raised by the ~~COVID-19 pandemic, there is uncertainty about~~local community members. A 10-year agreement was reached to provide additional support to the ~~Company’s ability to generate sufficient operating cash flow to both conduct further operation, exploration~~communities and ~~development of its mineral properties and to remain in compliance with certain of its financial debt covenants, over~~greater long-term certainty for the ~~next 12 months. Non-compliance with these covenants would result in a breach under the Company’s debt agreement.~~El Gallo project.

In response to this uncertainty, the Company is evaluating all options, including accessing capital markets, sale of certain assets, and expenditure reductions across the Company. The Company’s ability to continue as a going concern is dependent on the successful completion of one or a combination of these initiatives to ensure that the Company has sufficient liquidity in order to fund its operations and remain in compliance with its debt covenants. After considering its plans, management has concluded that there are no material uncertainties relating to events or conditions that cast substantial doubt upon the Company’s ability to continue as a going concern for a period of 12 months from the consolidated balance sheet date. The estimates used by management in reaching this conclusion are based on information available as at the date these financial statements were authorized for issuance and include internally generated cash flow forecasts. Accordingly, actual results could differ from these estimates and resulting variances may be material to management’s assessment.

Table of Contents

MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~September 30, 2020~~March 31, 2021

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

Recently Adopted Accounting Pronouncements

~~Accounting for Government Assistance:~~ In June 2020, the Company analogized guidance to account for the COVID relief funds received from the United States Small Business Administration (SBA) and the Canada Revenue Agency (“CRA”). The ability to analogize standards from other GAAP sources is provisioned under ASC 105-05-2 when guidance is not provided for certain transactions under US GAAP. The adoption of the standard had a material impact on the financial statements as of September 30, 2020. Under this policy, the Company has recognized the income from the relief funds in the Statement of Operations, as the criteria for recognition of the funds have been met.

~~Changes to the Disclosure Requirements for Fair Value Measurement:~~ In August 2018, the FASB issued ASU 2018- 13, “Fair Value Measurement (ASC 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement”. This update modifies the disclosure requirements for fair value measurements by removing, modifying, or adding disclosures. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019. The adoption of ASU 2018-13 in 2020 did not have a material impact on the Company’s financial statements and related disclosures.

~~Recently Issued Accounting Pronouncements~~

Income Taxes: In December 2019, the FASB issued ASU 2019-12 “Income Taxes (Topic 740).” ASU 2019-12 simplifies the accounting for income taxes by reducing existing complexity in the accounting ~~standards.~~standard. The update to the accounting ~~standards~~standard is effective for the Company for the fiscal years beginning after December 15, 2020, with early adoption permitted. The ~~Company is currently evaluating the effect~~adoption of ~~this amendment and the~~ASU 2019-12 in 2021 did not have a material impact ~~it may have~~ on the Company’s ~~consolidated~~ financial ~~statements.~~statements and related disclosures.

NOTE 3 OPERATING SEGMENT REPORTING

~~McEwen Mining Inc.~~The Company is ~~engaged in the exploration, development,~~a mining and minerals production and ~~sale of gold and silver and~~ exploration ~~for copper, with operations located~~company focused on precious metals in the United States, Canada, Mexico, and Argentina. The Company’s chief operating ~~decisions~~decision maker (“CODM”) reviews the operating results, assesses performance and makes decisions about the allocation of resources to these segments at the geographic region level or major mine/project where the economic characteristics of the individual mines or projects within a geographic region are not alike. As a result, these operating segments also represent the Company’s reportable segments. The Company’s business activities that are not considered operating segments are included in General and Administrative and other and are provided in this note for reconciliation purposes.

The CODM reviews segment income or loss, defined as gold and silver sales less production costs applicable to sales, depreciation and depletion, advanced projects and exploration costs for all segments except for the MSC segment, which is evaluated based on the attributable equity income or loss. Gold and silver sales and production costs applicable to sales for the reportable segments are reported net of intercompany transactions.

Production costs applicable to sales for the El Gallo project of $11.2 million for the nine months ended September 30, 2020 (same period in 2019 - $14.6 million) include $5.2 million of residual leaching spending in the period, net of $3.1 million capitalized in inventory (same period in 2019 - $5.7 million, net of $2.7 million capitalized in inventory) with the remainder representing costs recorded in the leach pad inventory balances in prior periods.

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 is summarized in the tables below:

Three months ended March 31, 2021

USA

Canada

Mexico

MSC

Los Azules

Total

Revenue from gold and silver sales

12,893

8,561

2,286

—

23,740

Production costs applicable to sales

(13,557)

(6,656)

(3,376)

—

(23,589)

Depreciation and depletion

(1,741)

(3,395)

(1)

—

(5,137)

Gross (loss)

(2,405)

(1,490)

(1,091)

—

(4,986)

Advanced projects

(84)

(623)

(1,092)

—

(1,799)

Exploration

(864)

(3,434)

(8)

—

(650)

(4,956)

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

—

Loss from investment in Minera Santa Cruz S.A.

—

(574)

—

(574)

Segment loss

(3,353)

(5,547)

(2,191)

(574)

(650)

(12,315)

General and Administrative and other

(2,166)

Loss before income and mining taxes

(14,481)

Capital expenditures

757

9,567

—

10,324


Three months ended March 31, 2020	USA		Canada		Mexico		MSC		Los Azules		Total
Revenue from gold and silver sales	$	14,317	$	12,739	$	4,344	$	—	$	—	$	31,400
Production costs applicable to sales		(17,032)		(7,207)		(4,148)		—		—		(28,387)
Depreciation and depletion		(3,862)		(2,748)		(88)		—		—		(6,698)
Gross (loss) profit		(6,577)		2,784		108		—		—		(3,685)

Advanced projects		(366)		(1,066)		(1,118)		—		—		(2,550)
Exploration		(809)		(2,405)		—		—		(576)		(3,790)

Table of Contents

MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~September 30,~~March 31, 2021

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

Impairment of mineral property interests and plant and equipment (Note 8)		(83,805)		—		—		—		—		(83,805)
Loss from investment in Minera Santa Cruz S.A.		—		—		—		(2,676)		—		(2,676)
Segment loss	$	(91,557)	$	(687)	$	(1,010)	$	(2,676)	$	(576)	$	(96,506)
General and Administrative and other												(3,779)
Loss before income and mining taxes											$	(100,285)

Capital expenditures	$	1,807	$	3,729	$	—	$	—	$	—	$	5,536

Geographic information

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


	Long-lived Assets				Revenue ⁽¹⁾
	March 31,		December 31,		Three months ended March 31,
	2021		2020		2021		2020
USA	$	46,280	$	46,801	$	12,893	$	14,317
Canada		85,811		78,986		8,561		12,739
Mexico		20,018		20,021		2,286		4,344
Argentina ⁽²⁾		294,259		299,816		—		—
Total consolidated ⁽³⁾	$	446,368	$	445,624	$	23,740	$	31,400

(1)	Presented based on the location from which the product originated.

(2)	Includes Investment in MSC of $102.8 million as of March 31, 2021 (December 31, 2020–$108.3 million).

(3)	Total excludes $0.8 million related to the Company's ROU office lease asset as the business activities related to corporate are not considered to be a part of the operating segments.

NOTE 4 OTHER INCOME

The following is a summary of other income for the three months ended March 31, 2021 and 2020:


	Three months ended March 31,
	2021		2020
COVID-19 Relief	$	1,111	$	—
Unrealized and realized (loss) on investments (Note 5)		—		(898)
Foreign currency (loss) gain		291		1,808
Other income, net		10		27
Total other income	$	1,412	$	937

During the period ending March 31, 2021, the Company recognized $1.1 million (three months ended March 31, 2020 - $nil) of other income through COVID-19 relief from the Canadian government via the Canadian Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS) programs.

Table of Contents

MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2021

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

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

Three months ended September 30, 2020

USA

Canada

Mexico

MSC

Los Azules

Total
Revenue from gold and silver sales

$
13,042

$
10,352

$
4,001

$
—

$
—

$
27,395
Production costs applicable to sales

(10,791)

(8,874)

(3,861)

—

—

(23,526)
Depreciation and depletion

(2,099)

(2,404)

(67)

—

—

(4,570)
Gross profit (loss)

152

(926)

73

—

—

(701)

Advanced projects

(240)

(2,784)

(1,003)

—

—

(4,027)
Exploration

(2,395)

(1,189)

(427)

—

(412)

(4,423)
Income from investment in Minera Santa Cruz S.A.

—

—

—

2,582

—

2,582
Segment (loss) income

$
(2,483)

$
(4,899)

$
(1,357)

$
2,582

$
(412)

$
(6,569)
General and Administrative and other

(3,361)
Loss before income and mining taxes

$
(9,930)

Capital expenditures

$
106

488

—

—

—

$
594

Nine months ended September 30, 2020

USA


Canada

Mexico

MSC

Los Azules

Total
Revenue from gold and silver sales

$
38,129

$
27,257

$
11,700

$
—

$
—

$
77,086
Production costs applicable to sales

(38,863)

(24,231)

(11,173)

—

$
—

(74,267)
Depreciation and depletion

(8,527)

(7,336)

(217)

—

$
—

(16,080)
Gross (loss) profit

(9,261)

(4,310)

310

—

—

(13,261)

Advanced projects

(789)

(5,609)

(3,066)

—

$
—

(9,464)
Exploration

(5,235)

(4,434)

(463)

—

$
(1,629)

(11,761)
Impairment of mineral property interests and plant and equipment (note 9)

(83,805)

—

—

—

$
—

(83,805)
Loss from investment in Minera Santa Cruz S.A.

—

—

—

(1,139)

$
—

(1,139)
Other operating

(1,390)

(578)

—

—

—

(1,968)
Segment loss

$
(100,480)

$
(14,931)

$
(3,219)

$
(1,139)

$
(1,629)

$
(121,398)
General and Administrative and other

(8,661)
Loss before income and mining taxes

$
(130,059)

Capital expenditures

$
4,712

$
4,428

$
—

$
—

$
—

$
9,140

Three months ended September 30, 2019

USA

Canada

Mexico

MSC

Los Azules

Total
Revenue from gold and silver sales

$
16,577

$
11,147

$
4,967

$
—

$
—

$
32,691
Production costs applicable to sales

(12,156)

(7,550)

(3,878)

—

—

(23,584)
Depreciation and depletion

(3,790)

(3,589)

(109)

—

—

(7,488)
Gross profit

631

8

980

—

—

1,619

Advanced projects

(46)

(384)

(1,710)

—

—

(2,140)
Exploration

(4,253)

(8,691)

(2)

—

(749)

(13,695)
Loss from investment in Minera Santa Cruz S.A.

—

—

—

(328)

—

(328)
Segment loss

$
(3,668)

$
(9,067)

$
(732)

$
(328)

$
(749)

$
(14,544)
General and Administrative and other

887
Loss before income and mining taxes

$
(13,657)

Capital expenditures

$
1,190

$
2,500

$
—

$
—

$
—

$
3,690

~~Table of Contents~~

~~MCEWEN MINING INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~September 30, 2020~~

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

Nine months ended September 30, 2019

USA

Canada

Mexico

MSC

Los Azules

Total
Revenue from gold and silver sales

$
28,941

$
36,139

$
19,577

$
—

$
—

$
84,657
Production costs applicable to sales

(20,798)

(24,025)

(14,609)

—

—

(59,432)
Depreciation and depletion

(6,510)

(10,520)

(471)

—

—

(17,501)
Gross profit

1,633

1,594

4,497

—

—

7,724

Advanced projects

(632)

(384)

(5,865)

—

—

(6,881)
Exploration

(6,155)

(15,174)

(2)

—

(2,386)

(23,717)
Loss from investment in Minera Santa Cruz S.A.

—

—

—

(6,775)

—

(6,775)
Segment loss

$
(5,154)

$
(13,964)

$
(1,370)

$
(6,775)

$
(2,386)

$
(29,649)
General and Administrative and other

(7,541)
Loss before income and mining taxes

$
(37,190)

Capital expenditures

$
17,804

$
10,375

$
—

$
—

$
—

$
28,179

~~Geographic information~~

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

Long-lived Assets

Revenue ⁽¹⁾

September 30,

December 31,

Three months ended September 30,

Nine months ended September 30,


2020

2019

2020

2019

2020

2019
USA

$
49,299

$
135,854

$
13,042

$
16,577

$
38,129

$
28,941
Canada

78,161

77,147

10,352

11,147

27,257

36,139
Mexico

20,051

23,551

4,001

4,967

11,700

19,577
Argentina ⁽²⁾

300,252

302,598

—

—

—

—
Total consolidated ⁽³⁾

$
447,763

$
539,150

$
27,395

$
32,691

$
77,086

$
84,657

~~(1)~~

~~Presented based on the location from which the product originated.~~

~~(2)~~

~~Includes Investment in MSC of~~ ~~$108.8~~ ~~million as of September 30, 2020 (December 31, 2019~~ –~~$110.2~~ ~~million).~~

~~(3)~~

~~Total excludes~~ ~~$0.9~~ ~~million related to the Company's office lease asset as the business activities related to corporate are not considered to be a part of the operating segments~~.

~~NOTE 4 OTHER OPERATING~~

During Q2 2020, the Company temporarily suspended operations at its Gold Bar and Black Fox mine sites as measures to combat COVID-19. Costs incurred while operations were suspended total $0.9 million at Gold Bar and $0.6 million at Black Fox during the nine months ended September 30, 2020. In addition, the Gold Bar operational shutdown was extended while the Company conducted a thorough review of its resource and mine plan during Q2 2020. Upon completion of this review, the Company commenced a controlled and phased ramp up of operations through the remainder of the second quarter. Costs incurred due to the resource review were $0.5 million.

~~Table of Contents~~

~~MCEWEN MINING INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~September 30, 2020~~

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

NOTE 5 ~~OTHER INCOME~~

~~The following is a summary of other income for the three and nine months ended September 30, 2020~~ ~~and 2019:~~

Three months ended September 30,

Nine months ended September 30,


2020

2019

2020

2019
COVID Relief

$
2,628

$
—

$
5,319

$
—
Unrealized and realized (loss) gain on investments (note 6)

—

3,220

(619)

4,972
Foreign currency (loss) gain

(132)

1,616

1,736

1,242
Other (expense) income, net

(406)

(63)

(365)

69
Total other income

$
2,090

$
4,773

$
6,071

$
6,283

In response to COVID-19, the United States and Canadian governments enacted significant relief measures to support businesses directly and adversely impacted by the pandemic. During 2020, the Company secured $1.9 million of relief from the US government under the paychecks protection (“PPP”) program. The funds are fully forgivable so long as sufficient eligible expenditures are incurred in a 24 week period. The income from the PPP program is recognized on a systematic basis as eligible forgivable expenditures are incurred. As at September 30, 2020, the full amount has been recognized as other income. The Company also secured $3.4 million of government relief in Canada through the Canadian Emergency Wage Subsidy program all of which has been recognized in other income.

~~NOTE 6~~ INVESTMENTS

The following is a summary of the activity in investments for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019:~~2020:

As at

Additions/

Disposals/

Unrealized

Fair value

December 31,

transfers during

Net (loss) on

transfers during

(loss) on

September 30,


2019

period

securities sold

period

securities held

2020
Marketable equity securities

$
1,885

$
—

$
(619)

$
(1,266)

$
—

$
—


	As at		Additions/		Net gain		Disposals/		Unrealized		Fair value		As at		Additions/				Disposals/		Unrealized		Fair value
	December 31,		transfers during		(loss) on		transfers during		gain on		September 30,		December 31,		transfers during		Net (loss) on		transfers during		(loss) on		March 31,
	2018		period		securities sold		period		securities held		2019		2020		period		securities sold		year		securities held		2021
Marketable equity securities	$	2,718	$	2,314	$	3,375	$	(5,653)	$	470	$	3,224	$	—	$	—	$	—	$	—	$	—	$	—
Warrants		413		—		—		(1,540)		1,127		—
Investments	$	3,131	$	2,314	$	3,375	$	(7,193)	$	1,597	$	3,224

As at

Additions/

Net gain

Disposals/

Unrealized

Fair value

December 31,

transfers during

(loss) on

transfers during

(loss) on

March 31,

2019

period

securities sold

year

securities held

2020

Marketable equity securities

1,885

—

(16)

(112)

(882)

875

During the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, the Company sold marketable equity securities for proceeds of ~~$1.3 million (nine~~$nil (three months ended ~~September 30, 2019~~March 31, 2020 - ~~$5.7 million), and realized a loss of $0.6 million (nine months ended September 30, 2019 - realized a gain of $3.4~~$0.1 million).

~~The cost of marketable equity securities at September 30, 2020 was $nil (December 31, 2019 – $1.3 million).~~

~~Table of Contents~~

~~MCEWEN MINING INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~September 30, 2020~~

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

NOTE 76 RECEIVABLES, PREPAIDS AND OTHER ASSETS

The following is a breakdown of balances in receivables, prepaids and other assets as at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019:~~2020:


	September 30, 2020		December 31, 2019		March 31, 2021		December 31, 2020
Government sales tax receivable		1,453		2,658	$	1,502	$	1,810
Prepaids and other assets		3,702		2,607		4,198		3,880
Receivables and other current assets	$	5,155	$	5,265	$	5,700	$	5,690

Government sales tax receivable includes $0.7 million of Mexican ~~value added~~value-added tax (“VAT”) at ~~September 30, 2020~~March 31, 2021 (December 31, ~~2019~~2020 – ~~$0.7~~$0.9 million). The ~~Company~~Company collected ~~$1.1~~$0.6 million of VAT during the ~~nine~~three months ended ~~September 30,~~March 31, 2021 (March 31, 2020 ~~(September 30, 2019~~ – ~~$1.3~~$0.4 million).

NOTE 87 INVENTORIES

Inventories at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 consisted of the following:


	September 30, 2020		December 31, 2019		March 31, 2021		December 31, 2020
Material on leach pads	$	29,069	$	37,328	$	21,200	$	21,003
In-process inventory		4,283		3,847		3,377		3,922
Stockpiles		586		1,384		2,537		635
Precious metals		945		1,038		1,560		1,344
Materials and supplies		4,818		4,382		4,235		4,845
Inventories	$	39,701	$	47,979	$	32,909	$	31,749
Less current portion		34,244		38,376		27,910		26,964
Long-term portion	$	5,457	$	9,603	$	4,999	$	4,785

During the three months ended ~~September 30, 2020 there were 0 inventory write downs to net realizable value. During the nine months ended September 30, 2020,~~March 31, 2021, the inventory of ~~the Black Fox Mine was~~Gold Bar and El Gallo were written down to ~~its~~their net realizable ~~value. The write-down was $1.9~~value by $1.4 million (March 31, 2020 - $1.2); and $0.8 (March 31, 2020 - $nil), respectively. Of these write-downs, a total of ~~which $1.5~~$2.1 million (March 31, 2020 – $1.0 million) was included in production costs applicable to sales ~~(three~~ and ~~nine months ended September 30, 2019 - $nil). In addition, the inventory of the Gold Bar Mine was written down to its net realizable value. The write-down was $1.2 million, of which $1.1~~$0.1 million was included in ~~production costs applicable to sales (three~~depreciation and ~~nine months ended September 30, 2019~~depletion (March 31, 2020 - ~~$nil)~~$0.2 million) in the Statement of Operations.

Table of Contents

MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2021

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

NOTE 98 MINERAL PROPERTY INTERESTS AND PLANT AND EQUIPMENT

The definition of proven and probable reserves is set forth in the SEC Industry Guide 7. 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, Black Fox and San José properties have proven and probable reserves estimated in accordance with SEC Industry Guide 7.

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.

~~As part~~Upon completion of the analysis ~~conducted in~~for Q1 ~~2020,~~2021, the Company ~~determined that~~did not identify any indicators of impairment existed for the long-lived assets at the Gold Bar mine and that the long-lived assets at the Gold Bar mine were not recoverable on an undiscounted basis. The fair value of the Gold Bar mine was estimated using the discounted cash flow method, coupled with an in-situ resource multiple for mineralized material not included in the life of mine plan. Future cash flows wereimpairment.

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MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~September 30, 2020~~March 31, 2021

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

estimated based on estimated quantities of recoverable mineralized material, expected gold prices, estimated production levels, operating costs, capital requirements and reclamation costs, all based on the life-of-mine plan using the preliminary estimated resources. The in-situ resource multiple applied to the mineralized material not included in the life-of-mine plan was estimated by evaluating observable market transactions. The Company concluded that the carrying value of the long-lived assets at the Gold Bar mine was impaired and recorded a non-cash impairment charge reducing plant and equipment and mineral property interests by the amount of $83.8 million.

The following table sets forth a summary of the quantitative and qualitative information related to the unobservable inputs used in the calculation of the Company’s non-recurring Level 3 fair value measurement of the Gold Bar mine:



	~~Date of Fair Value Measurement~~	~~Valuation Technique~~	~~Unobservable Input~~	~~Range/ Weighted Average~~

~~Gold Bar Mine~~	~~March 31, 2020~~	~~Discounted Cash Flow~~	~~Discount Rate~~	9%
			~~Long Term Gold Price~~	~~$1,430/oz~~
			~~United States Inflation Index~~	2%

The estimated 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 prices, production levels and costs of capital are each subject to significant risks and uncertainties.

NOTE 109 INVESTMENT IN MINERA SANTA CRUZ S.A. (“MSC”) – SAN JOSÉ MINE

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 U.S. GAAP. As such, the summarized financial data presented under this heading is in accordance with U.S. GAAP.

A summary of the operating results for MSC for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ is as follows:


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
	2020		2019		2020		2019		2021		2020
Minera Santa Cruz S.A. (100%)
Minera Santa Cruz S.A. (100%)
Revenue from gold and silver sales	$	70,195	$	74,530	$	154,666	$	189,348	$	53,303	$	37,390
Production costs applicable to sales		(41,512)		(43,345)		(100,230)		(119,392)		(36,367)		(28,316)
Depreciation and depletion		(7,107)		(18,158)		(22,084)		(50,083)		(6,953)		(7,327)
Gross profit		21,576		13,027		32,352		19,873		9,983		1,747
Exploration		(2,814)		(1,482)		(7,855)		(7,373)		(2,236)		(2,866)
Other expenses(1)		(6,509)		(5,394)		(17,651)		(8,926)		(5,536)		(2,217)
Net income before tax	$	12,253	$	6,151	$	6,846	$	3,574
Net income (loss) before tax									$	2,211	$	(3,336)
Current and deferred tax expense		(4,922)		(4,512)		(2,989)		(8,350)		(1,629)		49
Net income (loss)	$	7,331	$	1,639	$	3,857	$	(4,776)	$	582	$	(3,287)

Portion attributable to McEwen Mining Inc. (49%)
Portion attributable to McEwen Mining Inc. (49%)
Net income (loss)	$	3,592	$	803	$	1,890	$	(2,340)	$	285	$	(1,611)
Amortization of fair value increments		(1,255)		(2,551)		(3,891)		(6,922)		(1,071)		(1,385)
Income tax recovery		245		1,420		862		2,487		212		320
Income (loss) from investment in MSC, net of amortization	$	2,582	$	(328)	$	(1,139)	$	(6,775)
Loss from investment in MSC, net of amortization									$	(574)	$	(2,676)

(1) Other expenses include foreign exchange, accretion of asset retirement obligations, and other finance related expenses

The loss from 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, 2021 and year ended December 31, 2020 are as follows:


	March 31, 2021		December 31, 2020
Investment in MSC, beginning of period	$	108,326	$	110,183
Attributable net income from MSC		285		2,745
Amortization of fair value increments		(1,071)		(5,390)
Income tax recovery		212		1,128
Dividend distribution received		(4,984)		(340)
Investment in MSC, end of period	$	102,768	$	108,326

During the three months ended March 31, 2021, the Company received $5.0 millionin dividends from MSC (three months ended March 31, 2020 – $nil).

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MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~September 30, 2020~~March 31, 2021

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

Shutdown costs related to the COVID-19 pandemic for MSC were recognized in other expenses and totaled $nil during the three months ended September 30, 2020 and $7.2 million for the nine months ended September 30, 2020.

The income or loss from investment in MSC attributable to the Company includes the 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 devaluation of the Argentine peso against the U.S. dollar on the peso-denominated deferred tax liability recognized at the time of acquisition.

~~Changes in the Company’s investment in MSC for the nine months ended September 30, 2020 and year ended December 31, 2019 are as follows:~~

Nine months ended September 30, 2020

Year ended December 31, 2019
Investment in MSC, beginning of period

$
110,183

$
127,814
Attributable net gain (loss) from MSC

1,890

(2,097)
Amortization of fair value increments

(3,891)

(9,448)
Income tax recovery

862

2,791
Dividend distribution received

(282)

(8,877)
Investment in MSC, end of period

$
108,762

$
110,183

~~During the three and nine months ended September 30, 2020, the Company received $nil and $0.3 millionin dividends from MSC, respectively (three and nine months ended September 30, 2019 – $2.0 million and $4.0 million, respectively).~~

A summary of the key assets and liabilities of MSC on a 100% basis as at ~~September 30, 2020,~~March 31, 2021, before and after adjustments to fair value on acquisition and amortization of the fair value increments arising from the purchase price allocation, are as follows:

As at September 30, 2020

Balance excluding FV increments

Adjustments

Balance including FV increments

As at March 31, 2021

Balance excluding FV increments

Adjustments

Balance including FV increments

Current assets

95,364

854

96,218

86,274

488

86,762

Total assets

190,746

110,885

301,631

176,082

105,603

281,685

Current liabilities

(44,761)

—

(44,761)

(39,203)

—

(39,203)

Total liabilities

(75,190)

(4,478)

(79,668)

(68,461)

(3,502)

(71,963)

NOTE 1110 DEBT

On August 10, 2018, the Company finalized a $50.0 million senior secured ~~three year~~three-year term loan facility with Royal Capital Management Corp., as administrative agent, and the lenders party thereto. Interest on the loan accrued at the rate of 9.75% per annum with interest due monthly and was secured by a lien on certain of the Company’s and its subsidiaries’ assets.

On June 25, 2020, the Company entered into an Amended and Restated Credit Agreement (“ARCA”) which refinanced the outstanding $50 million and which terms differed in material respects from the old loan as follows:

●

Sprott Private Resource Lending II (Collector), LP replaced Royal Capital Management Corp. as the administrative agent.

●

Sprott Private Resource Lending II (Collector), LP replaced certain lenders. An affiliate of Robert McEwen remains as a lender.

●

Scheduled repayments of the principal ~~are~~were extended by two ~~years. Monthly~~years; monthly repayments of principal in the amount of $2.0 million are now due beginning on August 31, 2022 and continuing for 12 months, followed by a final principal payment of $26.0 million, ~~plus~~and any accrued interest on August 31, 2023.

●

The minimum working capital maintenance requirement was reduced from $10.0 million under the original term loan to $nil at June 30, 2020 to December 31, 2020 and from $10.0 million to $2.5 million at March 31, 2021 to

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~~MCEWEN MINING INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~September 30, 2020~~

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

the end of 2021. The working capital requirement increases to $5.0 million for March 31, 2022, $7.0 million for June 30, 2022, and $10 million for September 30, 2022 and thereafter.

●

The Company issued 2,091,700 shares valued at $1,875,000 to the lenders as ~~bonus interest.~~consideration for the maintenance, continuation, and extension of the maturity date of the loan. The value of the shares plus the unamortized costs of the original term loan will be amortized over the modified term of the loan.

The remaining principal terms of the original agreement remain unchanged. The Company was in compliance with the minimum working capital maintenance requirement as at March 31, 2021.

A reconciliation of the Company’s long-term debt for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and for the year ended December 31, ~~2019~~2020 is as follows:


	Nine months ended September 30, 2020		Year ended December 31, 2019		Three months ended March 31, 2021		Year ended December 31, 2020
Balance, beginning of period	$	49,516	$	49,206
Balance, beginning of year					$	48,160	$	49,516
Interest expense		4,003		5,185		1,368		5,394
Interest payments		(3,650)		(4,875)		(1,202)		(4,875)
Debt amendment - Equity-based fees		(1,875)		—
Balance, end of period	$	47,994	$	49,516
Bonus Interest - Equity based financing fee						—		(1,875)
Balance, end of year					$	48,326	$	48,160
Less current portion		—		10,000		—		—
Long-term portion	$	47,994	$	39,516	$	48,326	$	48,160

~~During the nine months ended September 30, 2020, $nil~~14

Table of ~~interest was capitalized~~Contents

MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2021

(tabular amounts are in ~~plant and equipment (nine months ended September 30, 2019 – $0.6 million, capitalized to Gold Bar construction).~~thousands of U.S. dollars, unless otherwise noted) (Continued)

NOTE 1211 ASSET RETIREMENT OBLIGATIONS

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

A reconciliation of the Company’s asset retirement obligations for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and for the year ended December 31, ~~2019~~2020 are as follows:


	September 30, 2020		December 31, 2019		March 31, 2021		December 31, 2020
Asset retirement obligation liability, beginning balance	$	32,201	$	29,402	$	34,000	$	32,201
Settlements		(185)		(513)		(80)		(267)
Accretion of liability		1,389		1,680		487		1,901
Adjustment reflecting updated estimates		673		1,012		425		(54)
Foreign exchange revaluation		(286)		620		152		219
Asset retirement obligation liability, ending balance	$	33,792	$	32,201	$	34,984	$	34,000
Less current portion		2,860		2,610		3,817		3,232
Long-term portion	$	30,932	$	29,591	$	31,167	$	30,768

The Company’s reclamation expenses for the periods presented consisted of the following:

Three months ended September 30,

Nine months ended September 30,

2020

2019

2020

2019
Reclamation adjustment reflecting updated estimates

$
411

$
—

$
614

$
88
Reclamation accretion

475

495

1,389

1,295
Total

$
886

$
495

$
2,003

1,383


	Three months ended March 31,
	2021		2020
Reclamation adjustment reflecting updated estimates	$	425	$	203
Reclamation accretion		486		457
Total	$	911		660

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MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~September 30, 2020~~March 31, 2021

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

NOTE 1312 SHAREHOLDERS’ EQUITY

Equity Issuances

~~September~~Equity Financing

On February 9, 2021, the Company completed a registered direct offering of common stock with several existing and new institutional investors and issued 30,000,000 shares priced at $1.05 per share for gross proceeds of $31.5 million. The purpose of this financing was to fund the continued development of the Froome deposit, which is part of the Fox Complex in Timmins, Ontario, and to strengthen the Company’s balance sheet and working capital position. Total issuance costs amounted to $1.7 million for net proceeds of $29.9 million.

Flow-Through Shares Issuance – Canadian Development Expenses (“CDE”)

On January 29, 2021, the Company issued 12,600,600 flow-through common shares priced at $1.01 per share for gross proceeds of $12.7 million. The purpose of this offering was also to fund the development of the Froome deposit. The total proceeds were allocated between the sale of tax benefits and the sale of common shares. The total issuance costs related to the issuance of the flow-through shares was $0.7 million, which are accounted for as a reduction to the common shares. The net proceeds of $12.0 million were allocated between the sale of tax benefits in the amount of $1.2 million and the sale of common shares in the amount of $10.8 million.

The Company is required to spend flow-through share proceeds on flow-through eligible CDE as defined by subsection 66.2(5) of the Income Tax Act (Canada). As of March 31, 2021, the Company has incurred a total of $7.9 million in eligible CDE. The Company expects to fulfill its CDE commitments by the end of 2022.

Flow-Through Shares Issuance – Canadian Exploration Expenditures (“CEE”)

On December 31, 2020, ~~Flow-through~~the Company issued an additional 7,669,900 flow-through common shares priced at $1.28 per share for gross proceeds of $9.8 million. The purpose of this offering was to fund exploration activities on the Company’s properties in the Timmins region of Canada. NaN issuance costs were incurred as part of this issuance. Proceeds of $9.8 million were allocated between the sale of tax benefits in the amount of $2.1 million and ~~Restricted cash~~the sale of common shares in the amount of $7.7 million.

On September 10, 2020, the Company issued 6,298,166 flow-through common shares priced at $1.65 per share for gross proceeds of $10.4 million. The purpose of this offering was to fund exploration activities on the Company’s properties in the Timmins region of Canada. The total ~~proceeds were allocated between the sale of tax benefits and the sale of common shares. The total~~ issuance costs related to the issuance of the flow-through shares was $0.6 million, which are accounted for as a reduction to the common shares. The net proceeds of $9.8 million ~~was~~were allocated between the sale of tax benefits in the amount of $2.0 million and the sale of common shares in the amount of $7.8 ~~million~~million.

The Company is required to spend flow-through share proceeds on flow-through eligible ~~Canadian exploration expenditures (“CEE”)~~CEE as defined by subsection ~~66(15)~~66.1(6) of the Income Tax Act (Canada) ~~and accordingly recorded~~. As of March 31, 2021, the ~~proceeds as restricted cash on the~~ ~~Consolidated Balance Sheets~~ as ~~at September 30, 2020.~~Company has incurred a total of $4.3 million in eligible CEE. The Company expects to fulfill its CEE commitments ~~in 2021.~~

~~Shares issued for acquisition~~by the end of ~~mineral property interest~~

~~During the three months ended September 30, 2020, the Company issued a total of 53,600 shares of common stock in exchange for the acquisition of mineral interests in Nevada.~~

~~Stock-based compensation~~

~~During the three months ended September 30, 2020, 4,796,550 stock options were granted to officers, directors and certain employees at a weighted average exercise price of $1.25 per share.~~

~~Stock option expense for the three and nine months ended September 30, 2020 was $0.3 million, (September 30, 2019 – $0.3 million and $0.5 million, respectively).~~

During the nine months ended September 30, 2020, the Company issued 60,000 shares of common stock for proceeds of $0.1 million upon the exercise of the same number of stock options at a weighted average exercise price of $1.06 per share. During the nine months ending September 30, 2019, the Company issued 405,000 shares of common stock for proceeds of $0.4 million upon the exercise of the same number of stock options at a weighted average exercise price of $1.01 per share.2022.

June 2020 Amended and Restated Credit Agreement

Pursuant to the ARCA executed on June 25, 2020, the Company issued 2,091,700 shares of common stock during Q2 2020 to the lenders as consideration for the maintenance, continuation, and ~~the~~ extension of the maturity date of the loan. The Company valued the shares at $1.9 million.

Table of Contents

MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2021

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

November 2019 Offering

On November 20, 2019 (the “November Offering”), the Company issued 37,750,000 Units at $1.325 per Unit, for net proceeds of $46.6 million (net of issuance costs of $3.5 million). Each Unit consisted of 1 share of common stock and one-half of one warrant. An additional 2,831,250 warrants were issued on the date of the November Offering upon exercise of the overallotment option. Each whole warrant is exercisable at any time for 1 share of common stock of the Company at a price of $1.7225, subject to customary adjustments, expiring five years from the date of issuance. The warrants provide for cashless exercise under certain conditions. The warrants under the November Offering are listed for trading on an over-the-counter market.

The Company concluded that both common stock and warrants are equity-linked financial instruments and should be accounted for permanently in the shareholders’ equity section in the Consolidated Balance Sheets, with no requirement to subsequently revalue any of the instruments. Of the net proceeds of $46.6 million, $37.3 million was allocated to common stock and $9.3 million was allocated to warrants, based on their relative fair values at issuance.

The Company used the Black-Scholes pricing model to determine the fair value of warrants issued in connection with the November Offering using the following assumptions:


	November 20, 2019
Risk-free interest rate		1.55	%
Dividend yield		0.00	%
Volatility factor of the expected market price of common stock		60	%
Weighted-average expected life		5 years
Weighted-average grant date fair value	$	0.52

All 21,706,250 warrants issued under the November Offering remain outstanding and unexercised as at March 31, 2021.

March 2019 Registered Offering

On March 29, 2019, the Company issued 14,193,548 Units at $1.55 per Unit, for net proceeds of $20.3 million (net of issuance costs of $1.7 million). Each Unit consisted of 1 share of common stock and one-half of one warrant. Each whole warrant is exercisable at any time for 1 share of common stock at a price of $2.00, subject to customary adjustments, expiring three years from the date of issuance. The warrants issued under the offering are not listed for trading.

On March 29, 2019, the Company also issued 1,935,484 Subscription Receipts at $1.55 per Subscription Receipt to certain executive officers, directors, employees and consultants. Upon shareholder and NYSE approval on May 23, 2019, the

~~Table of Contents~~

~~MCEWEN MINING INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~September 30, 2020~~

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

Subscription Receipts were converted into 1,935,484 Units for net proceeds of $2.6 million (net of issuance costs of $0.4 million). All Units issued under the offering have identical terms.

All 8,064,516 warrants issued under the March 2019 registered offering remain outstanding and unexercised as at March 31, 2021.

~~At-the-market (“ATM”) Offering~~Stock Options

~~Pursuant~~The Company’s Amended and Restated Equity Incentive Plan (“Plan”) allows for equity awards to ~~an equity distribution agreement dated November 8, 2018,~~be granted to employees, consultants, advisors, and directors. The Plan is administered by the ~~Company was permitted~~Compensation Committee of the Board of Directors (“Committee”), which determines the terms pursuant to ~~offer~~which any award is granted. The Committee may delegate to certain officers the authority to grant awards to certain employees (other than such officers), consultants and ~~sell from time to time~~advisors. The number of shares of ~~its~~ common stock ~~having~~reserved for issuance thereunder is 17.5 million shares, including shares issued under the Plan before it was amended, with no more than 0.5 million shares subject to grants of options to an ~~aggregate offering price~~

Table of upContents

MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2021

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

individual in a calendar year. The Plan provides for the grant of incentive options under Section 422 of the Internal Revenue Code

(the “Code”), which provide potential tax benefits to ~~$90.0 million, with~~ the ~~net proceeds~~recipients compared to ~~fund working capital~~non-qualified options. At March 31, 2021, 3,200,483 awards were authorized and ~~general corporate purposes. During~~available for issuance under the Plan (March 31, 2020 – 4,963,516 awards).

NaN stock options were exercised during the three months ended March 31, ~~2019,~~2021. During the same period in 2020, the Company issued ~~an aggregate of 1,010,545~~60,000 shares of common stock for ~~gross and net~~ proceeds of ~~$1.9 million. The Company terminated~~$0.1 million upon the ~~agreement on March 13, 2019.~~exercise of the same number of stock options at a weighted average exercise price of $1.06 per share.

Shareholders’ Distributions

Pursuant to the ARCA (Note 1110), the Company is prevented from paying any dividends on its common stock, so long as the loan is outstanding.

NOTE 1413 NET LOSS PER SHARE

Basic net loss per share is computed by dividing the net loss attributable to 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 ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ as they would be anti-dilutive.

For the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, all of the outstanding options ~~(8,808,001)~~(6,118,817) and all of the outstanding warrants (29,770,766) were excluded from the computation of diluted loss per share ~~(September 30, 2019~~(March 31, 2020 – ~~5,672,944~~4,430,784 outstanding options and ~~8,064,150~~29,770,766 outstanding warrants).

NOTE 1514 RELATED PARTY TRANSACTIONS

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


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
	2020		2019		2020		2019		2021		2020
Lexam L.P.	$	—	$	36	$	87	$	113	$	11	$	76
REVlaw		34		56		122		184		35		38

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


	September 30, 2020		December 31, 2019		March 31, 2021		December 31, 2020
Lexam L.P.	$	71	$	65	$	64	$	72
REVlaw		53		12		194		90

An aircraft owned by Lexam L.P. (controlled by Robert R. McEwen, limited partner and beneficiary of Lexam L.P. and the Company’s Chairman and Chief Executive Officer) has been made available to the Company to expedite business travel. As Chairman and Chief Executive Officer of the Company, Mr. McEwen must travel extensively and frequently on short notice. Mr. McEwen is able to charter the aircraft from Lexam L.P. at a preferential rate approved by the Company’s independent board members under a policy whereby only the variable expenses of operating this aircraft for business related travel are eligible for reimbursement by the Company.

REVlaw is a company owned by Ms. Carmen Diges, General Counsel of the Company. The legal services of Ms. Diges as General Counsel and other support staff, as needed, are provided by REVlaw in the normal course of business and have been recorded at their exchange amount.

Table of Contents

MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2021

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

An affiliate of Mr. McEwen participated as a lender in the $50.0 million term loan by providing $25.0 million of the total $50.0 million funding and continued as such under the ARCA. During the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, the Company paid $0.6 million ~~and $1.8 million, respectively,~~ (three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 – $0.6 ~~million and $1.8 million, respectively)~~million) in interest to this ~~affiliate.Furthermore, pursuant to the ARCA, 1,045,850 shares of common stock valued at $0.9 million were issued to the~~ affiliate. The payments to the affiliate of Mr. McEwen are on the same terms as the non-affiliated lender (Note 1110).

~~Table of Contents~~

~~MCEWEN MINING INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~September 30, 2020~~

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

NOTE 1615 FAIR VALUE ACCOUNTING

As required by accounting guidance, assets and liabilities 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 the Company’s assets and liabilities measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy as at September 30, 2020 andAt year-end December 31, ~~2019, as reported in~~2020, the ~~Consolidated Balance Sheets~~:

Fair value as at September 30, 2020

Fair value as at December 31, 2019


Level 1

Level 2

Total

Level 1

Level 2

Total
Marketable equity securities

$
—

$
—

$
—

$
1,885

$
—

$
1,885

~~The Company’s investments consisted of~~Company no longer held any marketable ~~equity securities which were exchange-traded and valued using quoted market prices in active markets and as such were classified within Level 1 of the fair value hierarchy.~~securities. The fair value of ~~the investments was calculated as the quoted market price of the marketable equity security multiplied by the quantity of shares held by the Company.~~

~~During the nine months ended September 30, 2020, the Company recorded an impairment of long-lived assets at the Gold Bar Mine totaling $83.8 million based on Level 3 inputs. See~~ ~~Note 9~~ ~~for details.~~

~~Debt is recorded at an amortized cost of $47.9 million (December 31, 2019 – $49.5 million). The debt is not traded on quoted markets.~~

~~The fair value of other~~ financial assets and liabilities held at March 31, 2021 were assumed to approximate their carrying values due to their historically negligible credit losses.

Debt is recorded at a carrying value of $48.3 million (December 31, 2020 – $48.2 million). The debt is not traded on quoted markets and approximates its fair value based on recent refinancing.

Impairment of Mineral Property

During the three months ended March 31, 2021, there were no indicators of impairment for the Company’s long-lived assets and the Company did not record any impairments. During the three months ended March 31, 2020, the Company recorded an impairment of long-lived assets at the Gold Bar mine totaling $83.8 million using Level 3 inputs.

NOTE 1716 COMMITMENTS AND CONTINGENCIES

In addition to the commitments for payments on operating and finance leases and the repayment of long-term debt (Note 1110), as at ~~September 30, 2020,~~March 31, 2021, the Company has the following 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 of $20.1 million in Nevada pertaining primarily to the Tonkin and the Gold Bar properties and ~~$11.2~~$11.9 million (C$14.9 million) in Canada with respect to the Black Fox Complex. In addition, under Canadian regulations, the Company was required to deposit approximately $0.1 million with respect to its Lexam properties in Timmins, which is recorded as non-current restricted cash (Note ~~18)~~17).

Surety Bonds

As at ~~September 30, 2020,~~March 31, 2021, the Company ~~has~~had a surety facility in place to cover all its bonding obligations, which include $20.1 million of bonding in Nevada and ~~$11.2~~$11.9 million (C$14.9 million) of bonding in Canada. The terms of the facility carry an average annual financing fee of 2.3% and require a deposit of 11%. The surety bonds are available for ~~draw down~~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 ~~September 30, 2020~~March 31, 2021, the Company held $3.6 million in restricted cash as a deposit against the surety facility.

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~~MCEWEN MINING INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~September 30, 2020~~

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

Streaming Agreement

As part of the acquisition of the Black 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

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MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2021

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

Black Fox mine 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 ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, the Company recorded revenue of ~~$0.2~~$0.3 million, ~~and $0.9 million, respectively,~~ (for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 – ~~$0.4 million and $1.2 million, respectively)~~$0.5 million) related to the gold stream sales.

Flow-through Eligible Expenses

In January 2021, the Company closed a flow-through share issuance to fund the development at the Froome deposit. The total proceeds of $12.7 million will be used to incur qualifying CDE through the year 2022. In Q1 2021, the Company incurred $7.9 million of the required CDE.

In 2020, the Company completed 2 flow-through share issuances. The total proceeds of $18.3 million will be used to incur qualifying CEE in the Timmins region of Ontario through 2022. Through March 31, 2021, the Company has incurred $4.3 million of the required CEE spend ($1.9 million in 2020).

NOTE 1817 CASH, CASH EQUIVALENTS AND RESTRICTED CASH

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the Consolidated Balance Sheets to the amounts disclosed in the Consolidated Statements of Cash flows:


	September 30, 2020		December 31, 2019		March 31, 2021		December 31, 2020
Cash and cash equivalents	$	7,954	$	46,452	$	47,402	$	20,843
Restricted cash - current (Note 13)		10,193		-
Restricted cash - non-current (Note 17)		3,595		48
Restricted cash - non-current						3,625		3,595
Total cash, cash equivalents, and restricted cash	$	21,742	$	46,500	$	51,027	$	24,438

Restricted cash includes ~~proceeds received from the Flow Through Financing~~ ~~(Note 13)~~ ~~of $10.2 million completed on September 10, 2020 and $3.6 million associated with~~ deposits related to our reclamation obligations and surety facility (Note ~~17)~~16).

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In the following discussion, “McEwen Mining”, the “Company”, “we”, “our”, and “us” refers to McEwen Mining Inc. and as the context requires, its consolidated subsidiaries.

The following discussion updates our plan of operation for the foreseeable future. It also analyzes our financial condition at ~~September 30, 2020~~March 31, 2021 and compares it to our financial condition at December 31, ~~2019.~~2020. Finally, the discussion analyzes our results of operations for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and compares those to the results for the three ~~and nine~~ months ended ~~September 30, 2019.~~March 31, 2020. With regard to properties or projects that are not in production, we provide some details of our plan of operation. We suggest that you read this discussion in conjunction with MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS and our audited consolidated financial statements contained in our annual report on Form 10-K for the year ended December 31, ~~2019.~~2020.

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, 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, our ability to generate cash flows and our liquidity. 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.~~this report.

For a reconciliation of these non-GAAP measures to the amounts included in our Statements of Operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ and to our Balance Sheets as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 and certain limitations inherent in such measures, please see the discussion under “Non-GAAP Financial Performance Measures”, on page ~~38.~~42.

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 and 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 ~~the~~ Guide 7.

OVERVIEW

We were organized under the laws of the State of Colorado on July 24, 1979. We are engaged in the exploration, development, production and sale of gold and silver and exploration for copper.

We operate in the United States, Canada, Mexico and Argentina. We own a 100% interest in the Gold Bar mine in Nevada, the Black Fox gold mine in Ontario, Canada, the El Gallo Project and the Fenix silver-gold project in Sinaloa, Mexico, the Los Azules copper deposit in San Juan, Argentina, and a portfolio of exploration properties in Nevada, Canada, Mexico and Argentina. We also own a 49% interest in Minera Santa Cruz S.A. (“MSC”), owner of the producing San José silver-gold mine in Santa Cruz, Argentina, which is operated by the joint venture majority owner, Hochschild Mining plc.

In this report, “Au” represents gold; “Ag” represents silver; “oz” represents troy ounce; “t” represents metric tonne; “gpt” represents grams per metric tonne; “ft.” represents feet; “m” represents meter; “sq.” represents square; and C$ refers to Canadian dollars. All of our financial information is reported in United States (U.S.) dollars, unless otherwise noted. Throughout this Management’s Discussion and Analysis (“MDA”), the reporting periods for the three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ are abbreviated as ~~Q3/20~~Q1/21 and ~~Q3/19~~~~, respectively, and the reporting periods for the nine months ended September 30, 2020 and 2019 are abbreviated as~~ ~~9M/~~Q1/20 ~~and~~ ~~9M/19~~, respectively.

In addition, in this report, gold equivalent ounces (“Au Eq. oz”) includes gold and silver ounces calculated based on a 68:1 silver to gold ratio for the first quarter of 2021, and 94:1 silver to gold ratio for the first quarter of ~~2020, 104:1 silver to gold ratio for the second quarter of 2020, 79:1 silver to gold~~2020.

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ratio for the third quarter of 2020, 75:1 silver to gold ratio for the first quarter of 2019, 88:1 for the second quarter of 2019, and 87:1 for the third quarter of 2019. Beginning with the second quarter of 2019, we adopted a variable silver:gold ratio for reporting that approximates the average price during each fiscal quarter.

Note: We ceased active mining and processing at the El Gallo mine in the second quarter of 2018. We use the term “El Gallo Project” to refer to the ongoing reclamation and residual ~~heap-leaching that is~~heap leaching taking place at this ~~formerly-producing~~formerly producing mine.

Reliability of Information: MSC, the owner of the San José mine, is responsible for and has supplied to us all reported results from the San José mine. The technical information regarding the San José mine contained herein is, with few exceptions as noted, based entirely on information provided to us by MSC. Our joint venture partner, which is a subsidiary of Hochschild Mining plc, and its affiliates other than MSC do not accept responsibility for the use of project data or the adequacy or accuracy of this document.

Response to the COVID-19 Pandemic

~~On March 11, 2020,~~We are continuing to closely monitor and respond, as possible, to the ~~World Health Organization (“WHO”) declared~~ongoing COVID-19 pandemic. As the ~~COVID-19 virus a global pandemic. During late March and early April, our operations were disrupted by temporary shutdowns~~situation continues to ~~protect our workforce from~~rapidly evolve, ensuring the ~~spread of the virus. An update of our operations is as follows:~~

●

~~All operations at Black Fox were temporarily suspended on March 26 and resumed on April 13;~~

●

~~Mining operations at the Gold Bar mine were suspended on April 1 and resumed on May 4, while leaching activities continued throughout the suspended period;~~

●

~~Operating activities at the El Gallo Project were suspended on April 1, while leaching activities continued. Operations resumed June 1;~~

●

Operations at the San José mine owned by MSC (operated by our joint venture partner) closed March 20 and resumed with scaled back operations by the end of April. In the third quarter, operations at the San José mine were again in a ramp-up phase as a result of the ongoing countrywide restrictions on the movement of people. Resumption of operations at normal capacity is expected towards the end of the year; and

●

~~Our head office in Toronto, Canada was shut down on March 13 and remains closed. All employees are performing their functions remotely.~~

~~During the shutdown periods, rigorous policies and procedures have been implemented at each site to minimize potential~~ health and safety ~~risks to our workforce.~~

~~The temporary shutdowns continue to adversely impact our mine operations, cash flow,~~of the Company’s employees and liquidity and are expected to continue to have adverse consequences to us beyond Q3/20. In addition to the adverse effect on production and revenue, we have incurred costs in connection with the shutdowns and subsequent ramp-up at each operation. Our liquidity and financial condition have been adversely affected and we are at an increased risk of not having sufficient cash flow to fund our operations as well as an increased risk of default under our debt agreement. Achieving and maintaining normal operating capacitycontractors is ~~also dependent on the continued availability and logistical delivery of supplies, which remains out~~one of our ~~control.~~ top priorities. Many jurisdictions including the United States, Canada, Mexico, and Argentina have varied but continued restrictions to travel, hold public gatherings, and certain business operations. Unlike the year 2020, there were no government-mandated shutdowns or other legally required temporary suspensions of the Company’s operations during Q1 2021.

The long-term impact of the COVID-19 ~~outbreak~~pandemic on our results of operations, financial position and cash flows will depend on future developments, including the duration and spread of the outbreak, ~~and~~variants of the COVID-19 virus, related advisories and restrictions. Management is actively monitoring the global situation on our financial condition, liquidity, operations, suppliers, industry and workforce.

In response to the need of protecting 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 have 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. These measures include:

●

Continuing to reinforce safety measures at all sites and offices, including contact tracing, restricting non-essential travel, and complying with public health orders,

●

Facilitating the access to vaccines, as supplies permit, by coordinating with local health authorities,

●

Performing functions remotely as advised by certain jurisdictions. Our head office in Toronto, Canada was shut down on March 13, 2020 and has remained closed. All corporate employees have continued to perform their functions remotely.

The ~~governments of~~worsening COVID-19 infection rate in Ontario is being closely monitored; to date it has not had a material impact on operations or exploration activities at the ~~United States, Canada, Mexico and Argentina have enacted or proposed legislation to provide~~Fox Complex.

In Q1/21, we qualified for $1.1 million in COVID-19 relief to companies and/or individuals affected by the enforced reduction in operations. In Q3/20 and 9M/20, we secured $nil and $1.9 million of relief from the US government under the paycheck protection program (“PPP”). The funds ~~are fully forgivable so long as eligible expenditures are incurred in a 24-week period. In Q3/20 and 9M/20, we also secured $1.9 million and $3.4 million, respectively, of government relief in Canada~~ through the Canadian government’s Canadian Emergency Wage Subsidy (“CEWS”) ~~program.~~and Canadian Emergency Rent Subsidy (“CERS”) programs.

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Index to Management’s Discussion and Analysis:

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OPERATING AND FINANCIAL HIGHLIGHTS

Highlights for ~~Q3/20~~Q1/21 are included below and discussed further under Consolidated Financial Performance:

~~COVID-19 shutdowns~~Operational Highlights & Impacts

●

~~During Q3/20,~~All operations delivered production ~~rebounded after~~results in line with our expectations; production is expected to increase throughout 2021 and to be 20-40% greater than 2020.

●

Mining at Black Fox has begun transitioning to the ~~successful restart~~Froome deposit, where a progressive ramp-up is planned, with commercial production expected in Q4/21.

●

Operations at El Gallo were briefly disrupted by a blockade of ~~all operations at our operating mines and~~the mine entrance by members of the local community, which has been resolved. A new 10-year agreement has been reached between the El Gallo ~~Project. As previously disclosed, operations were temporary suspended during~~operation and the ~~second quarter, mainly due to actions taken to prevent the spread of COVID-19 among our workers, business partners, and~~neighboring communities.

●

~~The San José minecontinued~~We are continuing to ~~operate below normal capacity during Q3/20 due to continued government-imposed COVID-19 travel restrictions, which has created challenges in mobilizing personnel~~closely monitor the evolving situation as it relates to the ~~mine site.~~impact of COVID-19 on our operations and the safety of all personnel. As of March 31, 2021 all of our mines remain in operation.

●

Announced two senior management additions: Stephen McGibbon has joined as the Executive Vice President of Exploration; and Ruben Wallin has joined as the Vice President of Environment, Health, Safety and Sustainability.

Performance

●

~~We produced 30,400~~A total of 30,600 gold equivalent ounces were produced in the Q1/21 period, including ~~15,900~~16,700 attributable gold equivalent ounces from the San José mine⁽¹⁾.

●

~~We sold 30,500~~A total of 30,200 gold equivalent ounces were sold in the Q1/21 period, including ~~16,000~~16,400 attributable gold equivalent ounces from the San José mine.

Cash Flow and Results of Operations

●

WeCash, cash equivalents and restricted cash of $51.0 million were reported ~~revenue~~as at March 31, 2021; $12.0 million and $29.9 million in net proceeds were raised from a flow-through common share issuance and a registered direct equity offering, respectively.

●

Revenues of ~~$27.4~~$23.8 million were reported from the sale of ~~14,500~~13,800 gold equivalent ounces from our 100% owned properties at an average realized price⁽²⁾ of ~~$1,925~~$1,763 per gold equivalent ounce.

●

We reported a cash gross profit⁽²⁾ of $0.2 million in Q1/21, with a gross loss of $5.0 million. We reported a net loss of $12.5 million, which included $6.8 million spent on exploration and advanced projects related to the Fox Complex expansion technical study as well as the Fenix project in Mexico.

●

We received dividends of $5.0 million from Minera Santa Cruz S.A (“MSC”) in Q1/21 related to our 49% interest in the San José mine in Argentina.

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●

~~We reported cash gross profit~~⁽²⁾ ~~of $3.9 million~~

●

~~We reported gross loss of $0.7 million on a US GAAP basis.~~

●

~~We reported net loss of $9.8 million, primarily due to a gross loss of $0.7 million and $8.5 million spent on exploration and advanced projects.~~

●

~~We reported positive working capital of $21.6 million~~

●

~~We reported cash, cash equivalents and restricted cash of $21.7 million at September 30, 2020, which includes cash and cash equivalents of $7.9 million and restricted cash of $13.8 million.~~

Exploration and Reserves

●

~~During Q3, we completed a flow-through financing, which provided gross proceeds of $10.4 million for exploration activities~~We successfully reached the first development ore at the Froome deposit in ~~the Timmins region over the next one to two years. The initial focus is on two high-potential targets, Stock West and Whiskey Jack.~~

●

~~We completed 53,400 feet (16,300 meters) of underground diamond drilling in the Black Fox Mine focused on refining the known limits of several ore blocks adjacent to the existing Black Fox ore body.~~late Q1/21.

●

We ~~continued~~spent $5.0 million on exploration drilling and other exploration work in Q1/21, with the ~~review of our Gold Bar mine reserve.~~ primary focus on growing the Fox Complex.

●

A ~~new reserve estimate and feasibility study update for Gold Bar are~~Preliminary Economic Assessment (PEA) to expand the production from the Fox Complex is expected to be ~~announced toward~~released at the end of ~~2020.~~Q2/21.

(1)	At our 49% attributable interest.

(2)	As used here and elsewhere in this report, this is a Non-GAAP financial performance measure. See “Non-GAAP Financial Performance Measures” beginning on page ~~38.~~42.

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SELECTED CONSOLIDATED FINANCIAL AND OPERATING RESULTS

The following tables present select financial and operating results of our company for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~2019:~~2020:


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
	2020		2019		2020		2019		2021		2020

	(in thousands, except per share)								(in thousands, except per share)
Revenue from gold and silver sales⁽¹⁾	$	27,395	$	32,691	$	77,086	$	84,657	$	23,740	$	31,400
Production costs applicable to sales	$	(23,526)	$	(23,584)	$	(74,267)	$	(59,432)	$	(23,589)	$	(28,387)
Loss before income and mining taxes	$	(9,930)	$	(13,657)	$	(130,059)	$	(37,190)	$	(14,481)	$	(100,285)
Net loss⁽²⁾	$	(9,778)	$	(11,465)	$	(128,783)	$	(34,615)	$	(12,466)	$	(99,191)
Net loss per share⁽²⁾	$	(0.02)	$	(0.03)	$	(0.32)	$	(0.10)	$	(0.03)	$	(0.25)
Cash (used in) operating activities	$	(5,174)	$	(12,764)	$	(25,273)	$	(21,916)	$	(10,143)	$	(11,908)
Cash additions to mineral property interests and plant and equipment	$	801	$	2,543	$	9,304	$	27,027	$	10,085	$	5,503

(1)	Excludes revenue from the San José mine, which is accounted for under the equity method.

(2)	Results for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 include an impairment charge of $83.8 million, or $0.21 per share.


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
	2020		2019		2020		2019		2021		2020

	(in thousands, except per ounce)								(in thousands, except per ounce)
Produced - gold equivalent ounces⁽¹⁾		30.4		45.9		84.6		128.1		30.6		35.1
100% owned operations		14.5		21.5		44.9		60.6		13.9		20.2
San José mine (49% attributable)		15.9		24.4		39.7		67.5		16.7		14.9
Sold - gold equivalent ounces⁽¹⁾		30.5		45.8		85.5		129.3		30.2		32.5
100% owned operations		14.5		22.6		45.6		63.0		13.8		20.3
San José mine (49% attributable)		16.0		23.2		39.9		66.3		16.4		12.2
Average realized price ($/Au Eq. oz)⁽²⁾⁽³⁾	$	1,925	$	1,478	$	1,732	$	1,372	$	1,763	$	1,591
P.M. Fix Gold ($/oz)	$	1,909	$	1,472	$	1,735	$	1,364	$	1,794	$	1,583
Cash cost per ounce ($/Au Eq. oz sold):⁽²⁾
100% owned operations	$	1,583	$	1,027	$	1,622	$	924	$	1,611	$	1,375
San José mine (49% attributable)	$	1,269	$	915	$	1,232	$	883	$	1,088	$	1,138
AISC per ounce ($/Au Eq. oz sold):⁽²⁾
100% owned operations	$	1,713	$	1,289	$	1,967	$	1,272	$	1,777	$	1,768
San José mine (49% attributable)	$	1,538	$	1,204	$	1,536	$	1,179	$	1,328	$	1,592
Cash gross profit⁽²⁾	$	3,869	$	9,107	$	2,819		25,225	$	151	$	3,013
Silver : Gold ratio⁽¹⁾		79 : 1		87:1		86 : 1		84:1		68 : 1		94:1

(1)	Silver production is presented as a gold equivalent; silver:gold ratio of ~~79:~~68:1 for ~~Q3/20~~Q1/21 and ~~87:~~94:1 for ~~Q3/19.~~Q1/20. See page 21.

(2)	As used here and elsewhere in this report, this is a Non-GAAP financial performance measure. See “Non-GAAP Financial Performance Measures” beginning on page ~~38.~~42.

(3)	On sales from 100% owned operations only, excluding sales from our stream.

CONSOLIDATED PERFORMANCE

For ~~Q3/20,~~the quarter ended March 31, 2021, we reported a net loss of ~~$9.8~~$12.5 million (or ~~$0.02~~$0.03 per share) compared to a ~~$11.5~~$99.2 million loss ~~in Q3/19~~ (or ~~$0.03~~$0.25 per share)~~. Exploration expenses decreased $9.3 million~~ in the ~~2020 period, as we tried~~quarter ended March 31, 2020. The decrease in net loss relates to ~~conserve capital. The $2.6~~the Q1/20 non-cash $83.8 million ~~income~~impairment charge recorded at Gold Bar and a reduced loss from our investment in MSC ~~resulting from improved operations at the San José mine contributed to the reduced loss. These were partially offset by a $2.3 million decrease~~ in ~~gross profit, a $2.7 million reduction in other income and a $2.0 million decrease in income and mining tax compared to 2019.~~

~~The larger drill program for Q3/19 was also due to flow-through exploration commitments that needed to be expended in 2019.~~Q1/21. MSC’s results benefited from significantly higher average realized ~~gold and~~ silver prices ~~(30% and 58% higher average gold and silver prices, respectively,~~ in ~~Q3/20 compared to Q3/19) and~~Q1/21. These improvements were partially offset by a decrease in gross profits at our operations as a result of lower ~~depreciation and depletion expenses due to lower mineralized material mined and processed.~~production.

Cash gross profit (a non-GAAP measure) of $0.2 million for Q1/21 decreased by $2.8 million from the $3.0 million Q1/20 cash gross profit. The change is attributable to decreased production in Q1/21 and subsequently lower revenues, partially offset by a decrease in production costs applicable to sales. The decrease in costs was driven by lower costs per ounce at Gold Bar due to reduced pre-strip costs and a buildup of stockpile inventory. The decrease was offset by higher costs per ounce at the Black Fox mine as we transition to the Froome deposit and at El Gallo as the operation continues to wind

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~~Lower~~down. See “Non-GAAP Financial Performance Measures” for a reconciliation to gross (loss) profit, ~~was~~ the result of less gold and silver ounces produced and sold and higher cash cost per ounce which were partially offset by higher average realized gold prices. Other income was lower in Q3/20 due to $nil gain on investments ($3.2 million gain in Q3/19) and a $0.1 million foreign currency loss ($1.6 million foreign currency gain in Q3/19), both partially offset by $2.6 million COVID relief received in Q3/20 ($nil in Q3/19).

In Q2/19, we adopted a variable silver:gold ratio for reporting gold equivalent ounces produced and sold, which approximates the average market ratio during the current period. We had previously we used a fixed 75:1 silver:gold ratio. The change in the silver:gold ratio primarily impacts gold equivalent ounces produced and sold as well as cash cost and all-in sustaining cost per gold equivalent ounce for the San José mine.nearest GAAP measure.

Production from our 100% owned mines ~~were 14,500~~of 13,900 gold equivalent ounces in ~~Q3/20, which~~Q1/21 decreased by ~~7,000~~6,300 gold equivalent ounces ~~or 33%,~~(GEO) compared to ~~Q3/19.~~Q1/20. The ~~decline reflects~~decreases relative to the ~~ramp-up to normal capacity being phased over the quarter~~prior period at ~~the Gold Bar mine (4,200 fewer ounces), where day and night shifts only resumed during September, and~~ the Black Fox ~~mine~~(3,100 fewer GEOs) and El Gallo (1,500 fewer GEOs) operations were in line with our expectations given the winding down of activities. The Gold Bar mining operations were impacted by winter conditions and lower leach pad ounces available to draw down from prior periods, which resulted in decreased production (1,700 fewer ~~ounces). In addition, there was lower expected production from residual leaching at the El Gallo Project (1,100 fewer ounces)~~GEOs).

Our share of the San José mine production was ~~15,900~~16,700 gold equivalent ounces in ~~Q3/20, which was 8,500~~Q1/21 as expected and also 12% higher than the 14,900 gold equivalent ounces ~~or 35%, lower than~~produced in Q3/19. Although the mine was able to restart operations in late April, the operations remain below capacity due to government imposed travel restrictions to combat the spread of COVID-19. This continues to pose significant challenges in mobilizing personnel to the mine site.Q1/20.

CONSOLIDATED FINANCIAL REVIEW

Revenue from gold and silver sales in ~~Q3/20~~Q1/21 of $23.7 million decreased by ~~16% to $27.4~~24% or $7.7 million compared to ~~Q3/19,reflecting 8,100, or 36%,~~Q1/20. The decrease reflects 6,500 fewer gold equivalent ounces sold from our 100% owned ~~mines, partly~~mines. The decrease in sales volume was partially offset by a higher average realized gold price ~~per ounce~~in the quarter compared to ~~same period in 2019~~Q1/20 ($~~1,925/~~1,763/oz in ~~Q3/20 or $447/~~Q1/21; $1,591/oz ~~higher)~~in Q1/20).

The decrease in gold equivalent ounces sold ~~in Q3/20 is due~~includes 1,400 fewer GEOs from El Gallo as operations continue to ~~lower production reflecting~~wind down, 3,300 fewer GEOs from Black Fox as activities wind down and our focus shifts to the ~~phased ramp-up to normal capacity at~~Froome deposit, and 1,800 fewer GEOs from the Gold Bar ~~and Black Fox mines noted above.~~

~~Revenue from gold and silver sales~~ ~~in 9M/20 decreased by 9% to $77.1 million compared to 9M/19,~~reflecting 17,400, or 28%, fewer gold equivalent ounces sold from our 100% owned mines, which was partly offset by a higher average realized price per ounce compared to same period in 2019 ($1,732/oz in 9M/20 or $360/oz higher). Themine. Despite the decrease in gold ~~equivalent ounces sold in 9M/20 is mainly due to lower production~~sales in the ~~second and third quarters of 2020 as result of the temporary shutdown and phased ramp-up of~~Q1/21 period, all operations due to the COVID-19 pandemic; partially offset by increased production at the Gold Bar mine in the first quarter of 2020 compared to the same period of 2019, when the Gold Bar mine was in pre commercial production.delivered results within our expectations.

Production Costs applicable to sales in ~~Q3/20remained consistent at $23.5~~Q1/21 decreased by 17% to $23.6 million compared to ~~Q3/19, despite 36% less~~Q1/20.Despite a 19% decrease in gold equivalent ounces sold, ~~which was almost totally offset by a significantly higher~~our consolidated cost per ounce ~~at all our operations (details in~~decreased due to Gold Bar’s lower pre-strip costs and the ~~“Operations Review” section).~~

~~Production Costs applicable to sales~~ ~~in 9M/20increased by 25% to $74.3 million compared to 9M/19, despite 28% less gold equivalent ounces sold, which~~buildup of stockpile inventory. The decrease was ~~more than~~partially offset by ~~a significantly~~ higher ~~cost~~costs per ounce at ~~all our operations (details in~~ the ~~“Operations Review” section).~~Black Fox mine as a result of capital underground mine costs being expensed given the remaining Black Fox mine life was less than 12 months. Refer to the “Results of Operations” sections for further details.

Depreciation and depletion ~~for Q3/20~~in Q1/21 decreased by ~~39%~~$1.5 million to ~~$4.6~~$5.1 million compared to ~~Q3/19,~~Q1/20, reflecting fewer gold equivalent ounces ~~sold from all our sites and a lower depreciable and depletable asset base after the Gold Bar impairment in the first quarter.~~

~~Depreciation and depletion~~ ~~for 9M/20 decreased by 8% to $16.1 million compared to 9M/19, reflectingfewer gold ounces sold from the Black Fox mine and the El Gallo Project, which was partly offset by slightly more gold ounces sold from the Gold Bar mine in 9M/20.~~sold.

Advanced projects ~~costs~~of $1.8 millionin Q1/21 decreased from the $2.6 million spent in Q1/20. Costs during Q1/21 included continued spending for ~~Q3/20~~the Fox Complex expansion PEA, and ~~9M/20 increased to $4.0 million and $9.5 million, or 88% and 38% higher, respectively, compared to the same periods of 2019. Advanced projects in Q3/20 and 9M/20 included spending for~~

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~~advancing the Froome project in Timmins, Ontario, expenditures related to property holding payments and other spending for~~ the Fenix project in ~~Mexico and engineering and permit work at~~Mexico. Costs during Q1/20 related to Froome that are now being capitalized as the ~~Gold Bar South property in Nevada.~~project has continued to progress.

Exploration costs of ~~$4.4~~$5.0 million ~~and $11.8~~in Q1/21 increased by $1.2 million ~~respectively for Q3/20 and 9M/20, decreased by 68% and 50%,~~ compared to ~~the same periods of 2019.~~Q1/20. Exploration activities ~~decreased since we did not have any~~ramped up in Q1/21 following the funding received from our flow-through ~~spending requirements~~share programs in the second half of 2020. The funds are being used to ~~satisfy during the first eight months in 2020. During 9M/19, $11.0 million of flow-through qualifying~~expand high potential target areas and are incurring eligible Canadian exploration expenditures ~~were incurred compared to $0.4 million during 9M/20.~~(“CEE”) in the Timmins region of Ontario.

General and administrative expenses of ~~$2.5 million and $6.8~~$2.1 million in ~~Q3/20 and 9M/20, respectively, decreased by 4% and 15%~~Q1/21 remained consistent compared to ~~2019 as a result of the reduction of corporate activities in 2020.~~Q1/20.

~~Income~~Loss from investment in MSCof ~~$2.6~~$0.6 million in ~~Q3/20 compared~~Q1/21 decreased by $2.1 million from Q1/20. The change is driven partially by an increase in attributable net income relative to Q1/20. Net income increased as a ~~loss~~function of $0.3 million in Q3/19, while a loss from investment in MSC of $1.1 million in 9M/20 compared to a loss of $6.8 million in the same period of 2019. Improved performance in Q3/20 and 9M/20 reflects significantly higherincreased gross profit of $21.6 million and $32.4 million, respectively, on a 100% basis, compared to $13.0 million and $19.9 million in Q3/19 and 9M/19, and lower current and deferred income and mining tax expense of $3.0 million in 9M/20, compared to $8.4 million in 9M/19. Higher gross profit in Q3/20 was partiallyprofits offset by ~~higher exploration expenses ($2.8 million compared~~an increase in other expenditures relating to ~~$1.5 million in Q3/19). Higher gross profit~~losses on the sale of sovereign bonds and lower current and deferred income and mining tax expense in 9M/20 were partially offset by $7.2 million of other expenses incurred during the shutdown of operations in 2020 ($nil in 2019). Higher gross profit in 2020 was due primarily to higher average realized gold and silver prices, despite fewer gold equivalent ounces sold and $10.2 million and $15.5 million operating costs due to the COVID-19 pandemic in Q3/20 and 9M/20, respectively.loan interest.

Revision of estimates and accretion of asset retirement obligations of $0.9 million ~~and $2.0 million~~ in ~~Q3/20 and 9M/20~~Q1/21 increased by ~~79% and 45% respectively,~~$0.3 million compared to ~~Q3/19 and 9M/19, due~~Q1/20. The change primarily todriven by a $0.2 million increase in reclamation adjustments ~~reflecting updated estimates of $0.4 million and $0.6 million in 2020, compared to $nil and $0.1 million in 2019.~~

~~Impairment~~ of Gold Bar mine mineral property interests and plant and equipment carrying value for 9M/20 was $83.8 million. During the first quarter of 2020, we performed a comprehensive review of our Gold Bar mine and determined that indicators of impairment existed. A recoverability test was performed and we concluded that the carrying value of the long-lived assetsrecorded for the ~~Gold Bar mine was impaired based on a reduction in preliminary estimated resources and expected future production.~~

~~Other operating~~ of $nil and $2.0 million in Q3/20 and 9M/20 compared to $nil in the same periods of 2019. Other operating relate to the expenses of the temporary suspension or curtailment of our operations at the Gold Bar and Black Fox ~~mines resulting from the pandemic.~~mine in Q1/21.

Interest and other finance ~~expense,~~expenses, net ~~was $2.0 million and $5.6~~of $0.5 million in ~~Q3/20 and 9M/20 compared to $0.7 million and $3.9~~Q1/21 decreased from $1.9 million in ~~Q3/19 and 9M/19.~~Q1/20. The ~~increase~~Q1/21 amount includes $1.0 million in ~~Q3/20 was mainly due to $0.3 million higher interest expense for~~income from the ~~debt facility and other finance expense. The increase in 9M/20 is due primarily to~~expiration of the ~~capitalization~~Argentinian stamp tax contingency.

Table of $0.6 million of interest expense for the debt facility which were capitalized to the Gold Bar mine construction in 2019, while $nil was capitalized in 2020 as the mine is in full production, and other finance expense.Contents

Other income of ~~$2.1~~$1.4 million ~~and $6.1 million for Q3/20 and 9M/20, respectively, decreased by $2.7 and $0.2 million when~~in Q1/21 increased compared to ~~Q3/19~~Q1/20. The Q1/21 increase relates largely to proceeds from federal COVID-19 relief programs in Canada. The Q1/20 amount includes offsetting gains and ~~9M/19. Other income in Q3/20 decreased mainly due~~losses relating to ~~$nil gain on investments ($3.2 million gain in Q3/19) and a $0.1 million~~ foreign currency loss ($1.6 million foreign currency gain in Q3/19). Both were partially offset by $2.6 million COVID relief funds in Q3/20 ($nil in Q3/19). Other income in 9M/20 decreased mainly due to a $0.6 million loss on investments ($5.0 million gain in 9M/19) partly offset by $5.3 million COVID relief funds in Q3/20 ($nil in Q3/19).fluctuations and investment sales.

Income and mining tax recovery of ~~$0.2~~$2.0 million ~~and~~in Q1/21, compared to $1.1 million recovery in Q1/20. The increase in the recovery of $0.9 million is primarily due to a flow-through share premium reversal of $1.3 million ~~respectively, for Q3/20 and 9M/20, compared to $2.2 million and $2.6 million in~~partially offset by lower recoveries from the ~~same periods of 2019. The changes in the income and mining tax recovery primarily reflect the fluctuations of the~~weakening 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 ~~balance at September 30, 2020 of $18.1 million, which includes cash~~ and cash equivalents balance as at March 31, 2021 of ~~$7.9~~$47.4 million, ~~and current restricted cash of $10.2~~increased from $20.8 million ~~decreased from $46.5 million~~as at December 31, ~~2019 ($46.5 million cash and cash equivalents).~~2020. The ~~decrease~~increase in cash and cash equivalents as at ~~September 30, 2020 is mainly~~March 31, 2021 was primarily due to ~~$25.3~~cash from financing activities of $42.0 million, offset by $10.1 million of cash used in operations ~~including a~~and $5.2 million ~~reduction~~used in accounts payable and accrued liabilities, and $9.3 million invested in mineral property interests and plant and equipment. Restricted cash represents remaining exploration commitments of $10.2 million from the flow-through financing completed on September 10, 2020. For more details on our flow-through financing refer to Note 13 to the Consolidated Financial Statements, ~~Shareholders’ Equity.~~investing activities.

Cash from financing activities included gross proceeds of $12.7 million (net proceeds of $12.0 million) from the issuance of flow-through shares on January 29, 2021 and gross proceeds of $31.5 million (net proceeds of $29.9 million) from a registered direct equity offering on February 9, 2021. We are required to spend the flow-through share proceeds on flow-through eligible Canadian ~~exploration~~development expenditures (“~~CEE”~~CDE”) as defined by subsection ~~66(15)~~66.2(5) of the Income Tax Act (Canada)~~. We expect~~ over the next two years. For more details on our flow-through share financing refer to ~~fulfill our CEE commitments in 2021.~~Note 12 to the Consolidated Financial Statements, Shareholders’ Equity.

Working capital as at ~~September 30, 2020~~March 31, 2021 of ~~$21.6~~$35.3 million ~~decreased~~increased by ~~$21.6~~$27.4 million from December 31, ~~2019, reflecting~~2020. The change is largely attributed to the ~~decrease~~increase in cash and cash equivalents ~~and current restricted cash of $28.4 million and~~driven by the decrease of $4.1 million in our heap leach pad inventory balances. These factors were partly offset by $10.0 million of current debt as of December 31, 2019 reclassified to non-current liabilities due to the two-year extension of the principal repayments under the Amended and Restated Credit Agreement (“ARCA”) closed on June 25, 2020. For more details on the ARCA, please refer to Note 11 to the Consolidated Financial Statements, ~~Debt.~~financing activities discussed above.

Cash used in operations ~~during 9M/20 was $25.3~~in Q1/21 of $10.1 million ~~compared to $21.9~~decreased slightly from the $11.9 million ~~cash~~ used in operations in ~~9M/19, the~~Q1/20. The change ~~was due~~is driven by a $6.7 million increase in liabilities related to ~~the lower revenue from the sale of 28% fewer ounces~~operations and ~~higher production costs applicable to sales~~a $1.0 million increase in ~~2020. Both lower revenue and higher production costs applicable to sales in 2020 were~~unrealized foreign exchange, partially offset by a ~~26% higher average realized price per ounce sold, lower exploration spending due to not having any flow-through spending commitments during the first eight months of 2020 and an increase~~$2.8 million decrease in other ~~income as~~assets related to operations, a ~~result of COVID-19 relief funds.~~$2.1 decrease in our loss from our investment in MSC and a $2.1 million decrease in depreciation and amortization.

Cash used in investing activities of ~~$7.8~~$5.1 million in ~~9M/20~~Q1/21 decreased ~~significantly compared~~slightly relative to ~~$18.8~~the $5.4 million used in ~~9M/19, with~~Q1/20. The change is attributed to the ~~reduction primarily due~~capital development costs incurred at the Froome deposit as we transition production from the Black Fox Mine to ~~$17.7 million less spending for mineral property interests and plant and equipment as~~ the ~~construction of the Gold Bar mine was completed~~Froome deposit in ~~May 2019. This decrease was partially~~2021 offset by ~~lower proceeds from sale of investments ($1.3~~a $5.0 million ~~in 2020 compared to $4.2 million in 2019) and lower dividends~~dividend received from MSC in ~~9M/20 ($0.3 million in 2020 compared to $4.0 million in 2019).~~the Q1/21 period.

~~During 9M/20,~~In Q1/21, we spent ~~$9.3~~$10.1 million on mineral property and plant and equipment (an increase of $4.7 million relative to the Q1/20 period). The additions were predominately ~~for~~related to capital development costs at the ~~Black Fox mine and infill drilling at the Gold Bar mine.~~Froome deposit as we are on schedule to transition to commercial production in Q4/21.

Financing activities provided ~~$8.3~~$42.0 million in cash in ~~9M/20, with $9.8~~Q1/21, primarily from $12.0 million ~~coming~~provided from the net proceeds from the “CDE “ flow-through ~~financing~~share raise completed in ~~September 2020 (less the issuance costs); compared to $23.6~~January 2021 and $29.8 million ~~generated in 9M/19, with $22.9 million coming~~provided from the ~~March 2019 Registered Offering.~~

~~Going concern~~February 2021 registered direct common stock offering.

The ~~accompanying interim financial statements have been prepared on the going concern basis of accounting, which assumes that the~~ Company ~~will continue as a going concern~~believes it has sufficient liquidity along with funds generated from ongoing operations, to fund anticipated cash requirements for operations, capital expenditures and which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. In the preparation of the interim financial statements, management is required to identify when events or conditions indicate that substantial doubt may exist about the Company’s ability to continue as a going concern. Substantial doubt about the Company’s ability to continue as a going concern would exist when relevant conditions and events, considered in aggregate, indicate that the Company will not be able to meet its obligations as they become dueworking capital purposes for a period of at least, but not limited to, 12 months from the balance sheet date. When the Company identifies conditions or events that raise potential for substantial doubt about its ability to continue as a going concern, the Company considers whether its plans that are intended to mitigate those relevant conditions or events will alleviate the potential substantial doubt.

~~In June 2020, the Company refinanced its senior secured term loan facility (for more information refer to Note 11 to the Consolidated Financial Statements,~~ ~~Debt~~~~) and in September 2020, the Company completed a flow through financing (for more information refer to Note 13 to the Consolidated Financial Statements,~~ ~~Shareholder’s Equity~~ ~~). The Company was~~

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also in full compliance with its debt covenants as at September 30, 2020. However, based on the significant expected resource reduction at the Gold Bar mine, resulting in an initial revised mine plan which yields less cash flow, operational challenges at Black Fox, the capital investment commitment required to develop the Froome access portal and the disruptions to the Company’s operations caused by the COVID-19 pandemic, there is uncertainty about our ability to both generate sufficient operating cash flow to conduct further operation, exploration and development of our mineral properties and to remain in compliance with certain of our debt covenants over the next 12 months. ~~Non-compliance with these covenants would result in a breach under the Company’s debt agreement.~~

In response to this uncertainty, we are evaluating all options, including accessing capital markets, sale of certain assets, and expenditure reductions across the Company. Our ability to continue as a going concern is dependent on the successful completion of one or a combination of these initiatives to ensure that we have sufficient liquidity in order to fund our operations and remain in compliance with our debt covenants. After considering these plans, management has concluded that there are no material uncertainties relating to events or conditions that cast substantial doubt upon the our ability to continue as a going concern for a period of 12 months from the consolidated balance sheet date. The estimates used by management in reaching this conclusion are based on information available as at the date these financial statements were authorized for issuance, and include internally generated cash flow forecasts. Accordingly, actual results could differ from these estimates and resulting variances may be material to management’s assessment.

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OPERATIONS REVIEW

U.S.A. Segment

The U.S.A. segment is comprised of the Gold Bar mine and ~~certain~~other exploration properties.

Gold Bar Mine

The following table sets out certain operating results for the Gold Bar mine for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and 2019. As the Gold Bar mine achieved commercial production on May 23, 2019, the comparatives for cash costs, cash cost per ounce, all-in sustaining costs and all-in sustaining costs per ounce for the nine months ended September 30, 2019 include sales and costs from pre-commercial production during the first months of 2019:2020.


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
	2020			2019	2020		2019		2021		2020

Operating Results	(in thousands, unless otherwise indicated)
Mined mineralized material (t)		222		631		715		1,302		465		428
Average grade (gpt Au)		0.73		0.88		0.70		0.93		0.75		0.67
Processed mineralized material (t)		229		867		812		1,690		402		475
Average grade (gpt Au)		0.73		0.92		0.68		0.91		0.75		0.63
Gold ounces:
Produced		6.8		11.0		22.0		21.0
Sold		6.8		11.2		22.1		20.5
Silver ounces:
Produced		0.1		0.2		0.5		0.4
Sold		0.0		0.3		0.6		0.3
Gold equivalent ounces:
Produced		6.8		11.0		22.0		21.0		7.4		9.1
Sold		6.8		11.2		22.1		20.5		7.3		9.0
Revenue from gold and silver sales	$	13,042	$	16,577	$	38,129	$	28,941	$	12,893	$	14,317
Cash costs⁽¹⁾	$	10,791	$	12,156	$	38,863	$	20,798	$	13,557	$	17,032
Cash cost per ounce ($/Au Eq. oz sold)⁽¹⁾	$	1,585	$	1,088	$	1,762	$	1,014	$	1,865	$	1,887
All‑in sustaining costs⁽¹⁾	$	12,043	$	13,795	$	47,031	$	24,613	$	14,061	$	19,651
AISC per ounce ($/Au Eq. oz sold)⁽¹⁾	$	1,769	$	1,235	$	2,132	$	1,200	$	1,934	$	2,177
Silver : gold ratio		79 : 1		87 : 1		86 : 1		83 : 1		68 : 1		94 : 1

(1)	As used here and elsewhere in this report, this is a Non-GAAP financial performance measure. Cash costs for the Company’s 100% owned operations equal Production costs applicable to sales. See “Non-GAAP Financial Performance Measures” beginning on page 3842 for additional information.

~~In Q3/20,~~ Gold Bar produced ~~6,800~~7,415 gold equivalent ~~ounces. Full operations with day~~ounces in Q1/21 period. This reflects a 19% decrease from the 9,133 gold equivalent ounces produced in Q1/20. Production was negatively impacted by decreased mining and ~~night shifts resumed in September. The slower ramp up~~crusher availability resulting from winter weather and lower leach pad ounces available to draw down from prior periods. We continue to execute improvement initiatives at Gold Bar after the COVID-19 related shut down, was due to the Company completing drilling, assaying, and a new in-house resource model to develop a plan forward that includes mining from Gold Bar South. During the quarter, we progressed several key business improvement initiatives intendedtargeted to support the turnaround of ~~our~~the operations, which ~~include mining optimization evaluations,~~includes but are not limited to the following: improving contractor mining efficiencies, ~~assessing material handling~~processing optimizations and ~~processing alternatives, and further definition~~ongoing exploration drilling ~~at the Gold Pick. A new reserve estimate and feasibility study update for Gold Bar are expected to be announced towards the end of the fourth quarter.~~targeting potentially economic near-term gold production mineralization.

Revenue from gold and silver sales of $12.9 million decreased in ~~Q3/20~~Q1/21 by ~~$3.5~~$1.4 million compared to ~~Q3/19,~~Q1/20, reflecting ~~the~~a 19% decrease in gold equivalent ounces produced and sold, which was partially offset by higher average realized gold prices in ~~2020.~~Q1/21.

~~Revenue from gold and silver sales~~ significantly increased in 9M/20 by $9.2 million compared to 9M/19, mainly due to higher average realized gold prices in 2020, coupled with a slight increase in the number of in gold equivalent ounces produced and sold in 2020. The mine reached commercial production in May 2019.

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Production costs applicable to sales ~~were $10.8~~of $13.6 million in ~~Q3/20, compared to $12.2~~Q1/21 decreased by $3.6 million from $17.0 million in ~~Q3/19, reflecting 39% fewer gold ounces sold in Q3/20, partly offset by higher~~Q1/20. The decrease is primarily attributed to lower pre-strip and processing labor costs and an increase of the gold ounces drawn down from the heap leach and in-circuit inventory balances. Production costs applicable to sales were $38.9 million in 9M/20, compared to $20.8 million in 9M/19, due primarily to a 8% increase in gold ounces sold in 9M/20 and the higher costs of the gold ounces drawn down from our inventories as noted above.stockpile inventory.

Cash cost and AISC per gold equivalent ounce ~~of $1,585~~were $1,865 and ~~$1,769~~$1,934 in ~~Q3/~~Q1/21 and $1,877 and $2,177 in Q1/20. Cash costs per gold equivalent ounce were comparable to Q1/20 were negatively impacted by lower tonnes mined and placed on the heap leach pad, as noted above, and slower than expected ramp up after the temporary suspension caused by the COVID-19 pandemic in the second quarter.

~~Cash cost and~~despite fewer ounces sold. AISC per gold equivalent ounce ~~of $1,762 and $2,132 in 9M/20 were also significantly~~ was positively impacted by ~~$4.5 million of pre-strip costs, $1.3 million of in-mine exploration expenditures and a $1.0 million write-down of the stockpile, heap leach and in-circuit inventory balances earlier in the year.~~decreased sustaining capital requirements.

~~Gold Bar mine impairment~~Exploration Activities – Nevada

In Q1/~~20,~~21, we ~~recorded an impairment charge of $83.8~~incurred $0.5 million ~~based on the preliminary revised mine plan, which indicated a significant reduction~~($0.4 million in ~~contained ounces relative to the 2018 reserve estimate. The impairment charge reduced the carrying value of~~Q1/20) in exploration expenditures in the Gold Bar mine ~~mineral property interests~~area. Drilling activities were focused primarily on the Ridge deposit in order to provide improved density and ~~plant and equipment.~~

~~Evaluation of~~metallurgical data for the ~~resource estimate continued in the third quarter of 2020 and a new reserve estimate and feasibility study update for Gold Bar~~potential resource. Exploration initiatives are expected to ~~be announced towards~~continue at the ~~end of the fourth quarter of 2020.~~

~~Exploration Activities – Nevada~~

~~In Q3/20 and 9M/20, we spent $2.4 million and $5.2 million, respectively, on exploration activities~~Ridge deposit in ~~and around the Gold Bar mine, compared to $4.3 million and $6.2 million spent on same activities in Q3/19 and 9M/19.~~

~~Exploration drilling was conducted in and around the Pick pit in Q3/20 and increased our confidence in the revised geologic model and demonstrated potential near mine exploration opportunities.~~

~~Drilling~~Q2/21 while drill programs plans at the Gold Bar, Tonkin and Old Gold Bar areas were reviewed.

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Exploration at Gold Bar South ~~satellite deposit continued in Q3/20. We verified~~has successfully advanced the project and ~~extended mineralization toward~~is expected to contribute to Gold Bar mine’s future production. Subject to the ~~north and south~~receipt of permit approvals as planned, the ~~deposit. Permitting for development and production from~~mining of Gold Bar South is ~~also~~scheduled to begin in ~~progress and we expect to start mining this satellite deposit in the second half of 2021.~~Q2 2022.

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Canada Segment

The Canada segment is comprised of the ~~Black~~ Fox Complex, which includes the Black Fox gold mine, ~~and~~the Froome underground mine development, the Grey Fox ~~Stock~~ and ~~Froome~~Stock advanced-stage projects, the Stock mill, and other gold exploration properties located in Timmins, Ontario, Canada.

Black Fox ~~Mine~~mine and Froome mine development

The Black Fox mine ~~currently has less than one year remaining~~production is winding down in ~~its expected~~Q2/21 while exploration activities will continue at known targets and production is ramped up at Froome targeting commercial production in Q4/21. There are an estimated 111,000 ounces in the life of mine plan at the Froome Project with more underground exploration drilling planned to extend the Froome deposit near existing and planned infrastructure.

In Q1/21 work progressed on the expansion of the Fox Complex with a PEA which is examining the potential for increasing gold production and mine life. ~~We plan~~The PEA will analyze mining from several potential deposits that could be economically processed at the Stock Mill. The results of the PEA are expected to ~~continue our near-mine exploration efforts, even when operations commence at Froome, with the goal~~be released in Q2 of ~~increasing resources, converting resources to reserves and extending the mine life.~~this year.

The following table ~~sets out certain~~summarizes the operating results for the Black Fox mine for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~2019:~~2020:


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
	2020		2019		2020		2019		2021		2020

Operating Results	(in thousands, unless otherwise indicated)									(in thousands, unless otherwise indicated)
Mined mineralized material (t)		67		48		139		145		47		40
Average grade (gpt Au)		3.00		4.82		3.28		5.05		3.27		4.58
Processed mineralized material (t)		70		58		167		164		48		56
Average grade (gpt Au)		2.96		4.02		2.95		4.99		3.25		3.53
Gold equivalent ounces:
Produced		5.8		7.4		16.3		25.8		5.2		8.3
Sold		5.6		8.0		16.8		28.0		5.3		8.6
Revenue from gold and silver sales	$	10,352	$	11,147	$	27,257	$	36,139	$	8,561	$	12,739
Cash costs(1)	$	8,874	$	7,550	$	24,231	$	24,025	$	6,656	$	7,207
Cash cost per ounce ($/Au Eq. oz sold)(1)	$	1,581	$	941	$	1,440	$	859	$	1,262	$	838
All‑in sustaining costs(1)	$	9,230	$	10,939	$	29,450	$	37,097	$	8,232	$	11,519
AISC per ounce ($/Au Eq. oz sold)(1)	$	1,644	$	1,363	$	1,750	$	1,326	$	1,560	$	1,339
Silver : gold ratio		79 : 1		87 : 1		86 : 1		83 : 1		68 : 1		94 : 1

(1) As used here and elsewhere in this report, this is a Non-GAAP financial performance measure. Cash costs for the Company’s 100% owned operations equal Production costs applicable to sales. See “Non-GAAP Financial Performance Measures” beginning on page 42 for additional information.

2021 compared to 2020

Production in ~~Q3/20 and 9M/20 were 5,800 and 16,300~~Q1/21 was 5,227 gold equivalent ounces, ~~respectively,~~ or ~~22% and~~ 37% fewer ounces compared Q1/20. This is in line with our expectations as mining at Black Fox has begun transitioning to the ~~same periods of 2019. Production decreased mainly due~~Froome deposit, where a progressive ramp-up is planned through to ~~lower gold grades of processed mineralized material~~commercial production expected in Q3/20 and 9M/20 and despite 21% and 2% increases in tonnes processed. We expect production to trend higher in the fourth quarter and mining from Black Fox to continue into the first quarter of 2021, with the potential of extending further into the year, while we transition to mining the Froome deposit.Q4/21.

Revenue from gold and silver sales of $8.6 million decreased from $12.7 million in ~~Q3/~~Q1/20 ~~and 9M/20~~(or by ~~$0.8 million and $8.9 million, respectively, compared to Q3/19 and 9M/19, reflecting the~~33%). The decrease inreflects fewer gold equivalent ounces produced and sold, which was partially offset by higher average realized gold prices in ~~2020.~~2021.

Production costs applicable to sales ~~increased~~of $6.7 million decreased from $7.2 million (or by ~~$1.3 million or 18%~~7%) in ~~Q3/20,~~Q1/21, compared to ~~Q3/19, despite fewer gold ounces produced and sold.~~Q1/20. The ~~68%~~ increase in cash cost per gold equivalent ounce in ~~Q3/20~~Q1/21 reflects the impact of ~~26%~~a 8% lower average grade of the mineralized material processed in ~~Q3/20~~Q1/21 compared to ~~Q3/19.~~Q1/20. In addition, production costs applicable to sales included underground development costs that were ~~not capitalized given~~expensed as incurred due to the end of mine ~~life is less than one year.~~

~~Production costs applicable to sales~~ increased marginally by $0.2 million or 1% in 9M/20 compared to 9M/19, despite fewer gold ounces produced and sold. The 68% increase in cash cost per gold equivalent ounce in 9M/20, reflects the impact of 41% lower average grade of the mineralized material processed in 9M/20 compared to 9M/19.life.

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All-in sustaining costs decreased by ~~$1.7~~$3.3 million or ~~16% and $7.6 million or 20%~~29% in ~~Q3/20 and 9M/20, respectively,~~Q1/21, compared to ~~Q3/19 and 9M/19,~~Q1/20. The decrease is mainly due to significantly lower in-mine ~~exploration~~operational expenses, capitalized underground mine development costs and capital ~~expenditures.~~

expenditures as compared to the same period last year.

~~Advanced-Stage Properties –~~

Froome ~~Project~~Underground Mine Development

~~Part~~The Froome deposit, which is part of the overall Fox Complex, is accessed from two declines at the bottom of the Black Fox ~~Complex located in Ontario, Canada, the Froome deposit is located~~pit and situated approximately one-half mile west of the Black Fox ~~mine and approximately 20 miles~~mine. As with the material from the Black Fox ~~(Stock Mine) mill, where we expect the ore~~mine, mineralized material from Froome will be ~~processed.~~hauled approximately 20 miles to the Stock Mine mill for processing.

~~The Froome deposit is being developed as an underground mine and will be accessed from the bottom of the Black Fox pit. We commenced the~~Underground development ~~of the underground access to~~successfully reached the Froome deposit in ~~late February 2020 and as of September 30, 2020 have advanced 47% of the way. The plan is~~Q1/21. Plans remain on schedule to reach ~~the main deposit in the second quarter of 2021 and begin~~commercial production in ~~the fourth quarter of 2021. Production from the Froome deposit will strategically supplement Black Fox~~Q4/21. The low-cost and bulk mining method is expected to bridge production while ~~we assess~~exploration of potential additional resources at the Black Fox, Grey Fox and Stock projects ~~for future development and production.~~progresses towards expanded production contingent on a positive PEA.

~~The estimated mine life of Froome is two years once~~We are targeting improved production ~~begins following a one-year ramp-up construction phase. We expect that~~and cost profiles at the Fox Complex leveraging the potential for operational synergies through shared resources and infrastructure, ~~with~~a longer life of mine and expanded production scale for the ~~ongoing production of the Black Fox Complex would improve cash flow for both sites.~~combined projects.

Exploration Activities – Timmins

~~In 2020, we continued to focus~~The Company remains focused on ~~growing the resources~~our principal exploration goal of cost-effectively discovering and ~~reserves~~extending gold deposits adjacent to our existing operations ~~in order~~ to contribute to near-term gold production. We incurred ~~$1.2 million and $4.4~~$3.4 million in ~~Q3/20 and 9M/20, respectively,~~Q1/21 for exploration initiatives, compared to ~~$8.7~~$2.4 million in Q1/20.

Exploration activities ramped up following the funding from the flow-through share programs in 2020. Exploration efforts were focused around the Stock West and ~~$15.2 million of exploration expenditures in Q3/19 and 9M/19. We had flow-through exploration commitments to satisfy in 2019, which also resulted in a larger drill program for 2019.~~Stock Main (historical mine) targets.

Black Fox mine

In Q3/20, we completed a flow-through financing, which provided gross proceeds of $10.4 million for exploration activities in the Timmins region over the next one to two years. The initial focus is on two high-potential targets, Stock West and Whiskey Jack. Both of these targets returned very encouraging results during the 2018-2019Q1/21, underground drilling ~~campaigns and we are looking forward to continue exploration at these exciting discoveries, with the objective of defining additional resources.~~

~~Whiskey Jack Target~~

Drilling 650 feet (200 m) north of existing resource blocks at the Grey Fox deposit in 2019 resulted in the discovery of a new zone called Whiskey Jack. The 2020 drilling has been designed to: a) test for extensions of the gold mineralization, which is open at depth and along strike, and b) infill the central discovery area with 100 ft (30 m) spaced drilling, in order to assess gold distribution. Drilling commenced in September 2020.

~~Black Fox Mine~~

~~A total of 53,400 feet (16,300 meters) of underground diamond drilling was completed~~ at the Black Fox Mine ~~during Q3/20, focused on refining the known limits of several ore blocks~~continued to return encouraging high-grade intercepts at depth. Underground diamond drilling is being completed to identify additional mineralization adjacent to the ~~existing~~ Black Fox ore ~~body.~~body where mineralization remains unconstrained in multiple directions.

Grey Fox project

Activities at the Grey Fox project were limited in Q1/21 as the focus shifted to permitting and environmental baseline work for the PEA. See discussion below.

Stock Property

The Stock exploration area sits adjacent to our Stock mill, which currently processes ore from our Black Fox mine and Froome deposit. This facility processed ore from the historical underground Stock mine, which operated intermittently from the early 1980s until 2004, producing a total of 137,000 ounces of gold.

The Stock West mineralized zone was discovered in mid-2019; in 2020 exploration activities were focused on follow-up drilling. Initial results suggest the potential to define a significant new zone of mineralization 800m (1/2 mile) from our Stock processing facility. In Q1/21, we contracted four drill rigs at Stock to increase the density of our intercepts needed to develop a 3D model and to generate an initial resource estimate for Stock West and to test/confirm historical drill results below 300 m at Stock Main. A total of 58,015 feet (or 17,683 meters) of surface exploration drilling was completed in Q1/21 at Stock West and Stock Main with the primary focus at the Stock West mineralized zone.

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Fox Complex Expansion – Economic Study

We have engaged an independent engineering group to complete a Preliminary Economic Assessment (PEA) on the Grey Fox - Black Fox, Froome, Stock and Timmins resources ~~utilizing~~using our existing ~~central~~centralized milling ~~capacity.~~capacity at Stock. The PEA activities in Q1/21 included baseline work to support permitting, environmental and preliminary cash-flow analyses. The PEA will include an underground design study and is expected to be completed ~~in fourth quarter~~by the end of ~~2020.~~Q2/21. The objective of the PEA is to develop a plan for the ~~Black~~ Fox Complex over a 10-year life. ~~Production growth is envisioned to start ramping up in 2022.~~

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Mexico Segment

The Mexico segment includes the El Gallo Project (formerly “El Gallo 1” or “El Gallo Mine”) and the advanced-stage Fenix Project, located in Sinaloa.

El Gallo Project

Current activities at the El Gallo Project are limited to residual leaching as part of closure and reclamation plans.

The economics of residual leaching are measured by incremental revenues exceeding incremental costs. Residual leaching is expected to continue as long as incremental revenues exceed incremental costs. Incremental residual leaching costs for Q3/20 and 9M/20 were $3.1 million or $1,505 per gold equivalent ounce sold and $8.3 million or $1,242 per gold equivalent ounce sold, respectively, compared to $2.8 million or $832 and $8.4 million or $581 per gold equivalent ounce sold in the same periods of 2019.

~~The~~ following table summarizes certain operating results at the El Gallo Project for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~2019:~~2020:


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
	2020		2019		2020		2019		2021		2020

Operating Results	(in thousands, unless otherwise indicated)								(in thousands, unless otherwise indicated)
Gold ounces:
Produced		1.9		3.0		6.5		13.8		1.3		2.7
Sold		2.0		3.3		6.6		14.5		1.3		2.7
Silver ounces:
Produced		3.5		3.4		4.7		6.0		0.2		0.7
Sold		3.1		6.6		5.0		6.8		—		—
Gold equivalent ounces:
Produced		2.0		3.1		6.6		13.8		1.3		2.7
Sold		2.1		3.4		6.7		14.5		1.3		2.7
Revenue from gold and silver sales	$	4,001	$	4,967	$	11,700	$	19,577	$	2,286	$	4,344
Silver : gold ratio		79 : 1		87 : 1		86 : 1		83 : 1		68 : 1		94 : 1

~~Production~~Cash costs and ~~revenue decreased in Q3/20~~All-in-sustaining costs and ~~9M/20, compared to Q3/19~~Cash cost and ~~9M/19, reflecting decreasing recoveries, as expected, as~~AISC per gold equivalent ounce

As the El Gallo ~~Project has been in~~Project’s gold production and sales are the result of residual leaching ~~since mid-2018.~~activities, we have ceased relying on, and disclosing, cash cost and all-in sustaining cost per gold equivalent ounce as key metrics for the Project. The economics of residual leaching are measured by incremental revenues exceeding incremental costs; residual leaching is expected to continue as long as incremental revenues exceed incremental costs. Cash costs and all-in sustaining costs include, in addition to current period residual leaching costs, prior-year leach pad inventory costs expensed in the current period, with the latter not relevant on the evaluation of the economics of the residual leaching operations.

In the quarter, mining operations were temporarily suspended for two weeks due to an illegal blockade of the main access of the property. Access was restored following successful negotiations and we signed a ten-year agreement with the neighboring communities.

Incremental residual leaching costs for the Q1/21 period were $2.6 million, or $2,065 per gold equivalent ounce resulting in a $0.8 million write-down of the heap leach and in-circuit inventory balances. The residual leaching activities at El Gallo are expected to wind down in 2021.

Q1/21 compared to Q1/20

Production and revenue, as expected, decreased in Q1/21, compared to Q1/20, as we continue to operate as a residual heap leach production.

The decrease in revenue, due to a decrease in production, was partially offset by a ~~significantly~~ higher average realized gold price during ~~Q3/20 and 9M/20,~~Q1/21, compared to the same ~~periods~~period of ~~2019.~~2020.

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Advanced-Stage Properties – Fenix Project

~~Strengthening~~In December 2020, we announced the positive results of a feasibility study for the development of our 100%-owned Fenix Project, which includes the El Gallo Gold and El Gallo Silver deposits, located in Sinaloa, Mexico.

The study envisions a 9.5-year mine life with an attractive after-tax IRR of 28% using $1,500/oz gold and $17/oz silver, ~~prices have renewed our focus on advancing~~with an estimated initial capital expenditure of $42 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 key environmental permits for Phase 1 were received in 2019, including the ~~Fenix Project and the Feasibility Study is expected to be published in the fourth quarter of 2020.~~

~~Mine permitting continued to progress during 2020, building upon the environmental permit~~ approval for an in-pit tailings storage ~~in the Samaniego pit~~facility and ~~the additional approval for the~~ process plant ~~for phase 1 received in September 2019.~~construction.

We incurred $0.7 million and $1.9 million in Q3/20 and 9M/20, respectively, on activities required to advance the Fenix Project as well as property holding payments for land titles. This compares to $0.5 million and $2.1 million spent during Q3/19 and 9M/19. The Fenix Project ~~PEA~~feasibility study was published on February 16, 2021. The feasibility study is available for review on our website and SEDAR (www.sedar.com).

The Company incurred $1.3 million in Q1/2021 ($0.7 million in Q1/20) on activities required to advance the Fenix Project and is currently evaluating multiple financing alternatives to advance the project, including the potential divestiture of our Mexican business unit.

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MSC Segment, Argentina

The MSC segment is comprised of the San José mine, located in Argentina.

MSC – Operating Results

The following table sets out certain operating results for the San José mine for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ on a 100% basis:


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
	2020		2019		2020		2019		2021		2020

Operating Results	(in thousands, except otherwise indicated)								(in thousands, except otherwise indicated)
San José Mine—100% basis
Mined mineralized material (t)		126		140		305		400		96		106
Average grade mined (gpt)
Gold		4.6		6.9		5.8		6.8		5.8		7.5
Silver		336		498		403		476		364		503.6
Processed mineralized material (t)		129		147		291		399		101		84.9
Average grade processed (gpt)
Gold		4.7		6.6		5.6		6.8		6.5		7.6
Silver		313		456		362		450		344		466
Average recovery (%):
Gold		90.2		89.2		89.5		88.5		90.8		88.8
Silver		89.9		89.4		89.2		88.2		90.8		88.5
Gold ounces:
Produced		17.6		27.7		47.2		76.8		19.3		18.4
Sold		17.6		26.1		47.3		75.0		18.8		14.6
Silver ounces:
Produced		1,165		1,925		3,024		5,087		1,005		1,126
Sold		1,192		1,852		3,060		5,041		997		963
Gold equivalent ounces:
Produced		32.4		49.8		81.0		137.7		34.1		30.3
Sold		32.7		47.4		81.3		135.3		33.4		24.9
Revenue from gold and silver sales	$	70,195	$	74,530	$	154,666	$	189,348	$	53,303	$	37,390
Average realized price:
Gold ($/Au oz)	$	2,002	$	1,542	$	1,873	$	1,424	$	1,585	$	1,697
Silver ($/Ag oz)	$	29.30	$	18.54	$	21.59	$	16.39	$	23.62	$	13.03
Cash costs(1)	$	41,512	$	43,345	$	100,230	$	119,392	$	36,367	$	28,316
Cash cost per ounce ($/Au Eq. oz sold)(1)	$	1,269	$	915	$	1,232	$	883	$	1,088	$	1,138
All‑in sustaining costs(1)	$	50,311	$	57,016	$	124,968	$	159,449	$	44,390	$	39,612
AISC per ounce ($/Au Eq. oz sold)(1)	$	1,538	$	1,204	$	1,536	$	1,179	$	1,328	$	1,592
Silver : gold ratio		79 : 1		87 : 1		90 : 1		84 : 1		68 : 1		94 : 1

______________________

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

~~Q3/20~~Q1/21 compared to ~~Q3/19~~Q1/20

Gold and silver production ~~decreased by 36% and 39%, respectively, in Q3/20 compared~~increased slightly from Q1/21 to ~~Q3/19 as a result of a 12% decrease~~Q1/20. The increase is attributed to an increase in processed mineralized material ~~coupled with 28% and 31% decreases in the average grades of~~slightly offset by lower processed grades.

Revenue from gold and silver ~~respectively,~~sales increased by 43% in Q1/21 compared to Q1/20, reflecting an increase in gold equivalent ounces sold. Significant increases in average realized silver prices contributed to the increase in revenues in the quarter.

Cash costs in Q1/21 increased by $8.1 million or 28% in Q1/21 compared to Q1/20, reflecting increased tonnes of ~~the~~ mineralized material processed in Q3/20. The decrease in processed mineralized material reflected the impact of operating below capacity throughout the entire period, as the ongoing countrywide restrictions on the movement of people resulted in the ramp-up being phased over a significant period of time with full production expected toward the end of the year.

~~Gold~~ and ~~silver production decreased by 39%~~increased gold equivalent ounces produced and 41%, respectively, in 9M/20 compared to 9M/19 due to a 27% decrease in processed mineralized material and 17% and 19% decreases in the average grades of gold and silver of the mineralized material processed in 9M/20, mainly due to the same operational and labor challenges noted above.sold. All-in sustaining costs for Q1/21

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~~Revenue from gold and silver sales~~ ~~decreased~~increased by 6% and 18% in Q3/20 and 9M/20 respectively, compared to Q3/19 and 9M/19, reflecting fewer gold equivalent ounces sold due to lower production as noted above, partly offset by higher average realized price of gold (30% and 32% higher in Q3/20 and 9M/20, respectively, compared to the same periods of 2019) and silver (58% and 32% higher in Q3/20 and 9M/20, respectively, compared to 2019).

~~Cash costs~~ in Q3/20 and 9M/20 decreased by $1.8 million, or 4%, and $19.2 million, or 16%, respectively, compared to Q3/19 and 9M/19, reflecting lower tonnes of mineralized material processed and fewer ounces produced and sold. All-in sustaining costs for Q3/20 and 9M/20 decreased by $6.7$4.8 million or 12% ~~and $34.5 million or 22%,~~ compared to ~~the same periods of 2019, mainly~~Q1/20, due to ~~lower~~increased cash costs ~~coupled with lower~~offset by decreased sustaining capital expenditures and sustaining capitalized underground mine ~~development and sustaining capital investment in plant and equipment.~~development.

Cash cost and all-in sustaining ~~and~~ ~~All-in sustaining~~ costper gold equivalent ouncesold in Q1/21 were ~~higher for Q3/20 and 9M/20~~lower compared to ~~the same periods in 2019, as lower aggregate cash~~Q1/20 costs ~~and AISC were spread over 31% and 40% fewer~~primarily due to increased gold ~~equivalent~~ ounces sold ~~respectively, as noted above.~~in Q1/21.

An increased proportion in gold concentrate sales relative to the Q1/20 period contributed to the lower average realized price per GEO in Q1/21. Concentrate sales are recorded net of the applicable treatment and refining charges.

Investment in MSC

Our 49% attributable share of operations from our investment in MSC ~~was income of $2.6 million and a loss of $1.1~~included $0.3 million in ~~Q3/20 and 9M/20, respectively,~~attributed net income compared to a $2.7 million loss ~~of $0.3~~in Q1/20. The change is driven by the $8.2 million ~~and $6.8 million~~increase in ~~Q3/19 and 9M/19.~~

~~On a 100% basis, improved performance reflects significantly higher~~ gross profit of $21.6 million and $32.4 million in Q3/20 and 9M/20, respectively, compared to $13.0 million and $19.9 million in Q3/19 and 9M/19 and lower current and deferred income and mining tax expense of $3.0 million in 9M/20, compared to $8.4 million in 9M/19. Higher gross profit in Q3/20 were partially(driven by higher realized metal prices as well as increased GEOs sold) offset by ~~higher exploration expenses ($2.8~~a $3.3 million ~~compared to $1.5 million~~increase in ~~Q3/19). Higher gross profit and lower current and deferred income and mining tax expense in 9M/20 were partially offset by $7.2 million of~~ other ~~expenses incurred during the shutdown of operations in 2020 ($nil in 2019).~~

Higher gross profit in 2020 was due primarily to higher average realized gold and silver prices. In addition, there were lower production costs applicable to sales and depreciation and depletion expense mainly as a result of fewer gold equivalent ounces sold. These all were partially offset by $10.2 million and $15.5 million operating costs due to the COVID-19 pandemic in Q3/20 and 9M/20, respectively. The additional costs include labor costs for idle employees, additional transportation and accommodation costs to maintain social distancing and additional personal protective equipment.expenditures from financing activities.

In ~~Q3/20,~~Q1/21, on a 100% basis, MSC generated a cash gross profit of ~~$28.7~~$16.9 million and incurred ~~$6.1~~$4.8 million of development and other capital expenditures, ~~$2.8~~$2.2 million of exploration spending, and ~~$6.5~~$5.5 million of other expenditures. Other expenditures primarily included $5.2 million of ~~financial~~financing expenses and foreign exchange losses.

~~In 9M/20, on a 100% basis, MSC generated a cash gross profit~~The Company is currently evaluating the potential divestiture of $54.4 million and incurred $18.7 million of development and other capital expenditures, $7.9 million of exploration spending and $17.7 million of other expenditures. Other expenditures primarily included $7.2 million related to costs of suspending activitiesour investment in ~~connection with the COVID-19 pandemic, $6.6 million of financial expenses, as noted above, and foreign exchange losses.~~MSC.

MSC Dividend Distribution (49%)

We received ~~$nil and $0.3~~$5.0 million in dividends from MSC in ~~Q3/20 and 9M/20,~~Q1/21, compared to ~~$2.0 million and $4.0 million~~$nil in dividends received during the same ~~periods~~period in ~~2019.~~2020. For more details on our Investment in MSC, refer to Note 109 to the Consolidated Financial Statements, Investment in Minera Santa Cruz S.A. (“MSC”) — San José mine.

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Los Azules Segment, Argentina

Los Azules project is a copper exploration project located in San Juan, Argentina.

Los Azules Project

~~During Q3/20, the environmental baseline monitoring~~In Q1/21, work continued ~~as planned. We expect~~on preliminary engineering and developing cost estimates to ~~continue environmental studies~~advance the ~~rest~~proposed low altitude all-year access route. Most of the surveying and staking of the mining rights was completed to be able to consolidate all the mining rights into a single mining group. Site surveying and staking at the Escorpio IV and Mercedes areas were completed in January 2021.

Throughout the remainder of the year, work will continue on baseline studies related to ~~gather further information necessary~~flora, fauna, surface water quality and archeology as required by the environmental and mining authorities for the ~~Environmental Impact Assessment~~current stage of exploration. In addition, the Company is looking at a road study to reduce costs for potential drilling and site work campaigns.

Two strategic alternatives are being evaluated with regard to Los Azules to realize more value for our shareholders: one is pursuing a joint venture with a senior mining company and/or strategic investor(s) to advance the ~~next development phase.~~project towards a production decision; and the other alternative is spinning out the asset into a new public company with the same goal. Concurrently, work will progress in identifying opportunities to improve the economics of Los Azules with bulk ore sorting technologies and other value-add alternatives.

The preliminary economic assessment (PEA) for the Los Azules Project, completed and announced in September 2017, is available on our website at www.mcewenmining.com.

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NON-GAAP FINANCIAL PERFORMANCE MEASURES

We have included in this report certain non-GAAP financial 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 in evaluating our business 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. 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 U.S. GAAP results and using the non-GAAP measures supplementally.

The non-GAAP measures are presented for our ~~wholly owned~~wholly-owned mines and the San José mine. The GAAP information used for the reconciliation to the non-GAAP measures for the San José mine may be found in Note ~~10,~~9, Investment in Minera Santa Cruz S.A. (“MSC”) – San José Mine. 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 those for MSC, has limitations as an analytical tool. Some of these limitations include:

●

The amounts shown on MSC’s individual line items do not represent our legal claim to its assets and liabilities, or the revenues and expenses; and

●

Other companies in our industry may calculate their cash gross profit, cash costs, cash cost per ounce, ~~all in~~all-in sustaining costs, ~~all in~~all-in sustaining cost per ounce, average realized price per ounce, and liquid assets differently than we do, limiting the usefulness as a comparative measure.

Cash Gross Profit

Cash gross profit is a non-GAAP financial measure and does not have any standardized meaning under GAAP. We use cash gross profit to evaluate our operating performance and ability to generate cash flow; we disclose cash gross profit 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 is calculated by adding back the depreciation and depletion expense to gross profit or loss.

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


	Three months ended September 30, 2020								Nine months ended September 30, 2020								Three months ended March 31, 2021
	Gold Bar		Black Fox		El Gallo		Total (100% owned)		Gold Bar		Black Fox		El Gallo		Total (100% owned)		Gold Bar		Black Fox		El Gallo		Total (100% owned)

	(in thousands)								(in thousands)								(in thousands)
Gross profit (loss)	$	152	$	(926)	$	73	$	(701)	$	(9,261)	$	(4,310)	$	310	$	(13,261)
Gross (loss) profit																	$	(2,405)	$	(1,490)	$	(1,091)	$	(4,986)
Add: Depreciation and depletion		2,099		2,404		67		4,570		8,527		7,336		217		16,080		1,741		3,395		1		5,137
Cash gross profit (loss)	$	2,251	$	1,478	$	140	$	3,869	$	(734)	$	3,026	$	527	$	2,819
Cash gross (loss) profit																	$	(664)	$	1,905	$	(1,090)	$	151

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	Three months ended September 30, 2019								Nine months ended September 30, 2019								Three months ended March 31, 2020
	Gold Bar		Black Fox		El Gallo		Total (100% owned)		Gold Bar		Black Fox		El Gallo		Total (100% owned)		Gold Bar		Black Fox		El Gallo		Total (100% owned)

	(in thousands)								(in thousands)								(in thousands)
Gross profit	$	631	$	8	$	980	$	1,619	$	1,633	$	1,594	$	4,497	$	7,724
Gross (loss) profit																	$	(6,577)	$	2,784	$	108	$	(3,685)
Add: Depreciation and depletion		3,790		3,589		109		7,488		6,510		10,520		471		17,501		3,862		2,748		88		6,698
Cash gross profit	$	4,421	$	3,597	$	1,089	$	9,107	$	8,143	$	12,114	$	4,968	$	25,225
Cash gross profit (loss)																	$	(2,715)	$	5,532	$	196	$	3,013


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
	2020		2019		2020		2019		2021		2020

San José mine cash gross profit (100% basis)	(in thousands)								(in thousands)
Gross profit	$	21,576	$	13,027	$	32,352	$	19,873	$	9,983	$	1,747
Add: Depreciation and depletion		7,107		18,158		22,084		50,083		6,953		7,327
Cash gross profit	$	28,683	$	31,185	$	54,436	$	69,956	$	16,936	$	9,074

Cash Costs and All-In Sustaining Costs

The terms cash costs, cash cost per ounce, all-in sustaining costs, 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, which are 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. Following is additional information regarding our all-in sustaining costs:

●

Sustaining operating costs represent expenditures incurred at current operations that are considered necessary to maintain current annual production at the mine site and include mine development costs and ongoing replacement of mine equipment and other capital facilities. Sustaining capital costs do not include costs of expanding the project that would result in improved productivity of the existing asset, increased existing capacity or extended useful life.

●

Sustaining exploration and development costs include expenditures incurred to sustain current operations and to replace reserves and/or resources extracted as part of the ongoing production. Exploration activity performed near-mine (brownfield) or new exploration projects (greenfield) are classified as non-sustaining.

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 expense, all corporate financing charges, costs related to business combinations, asset acquisitions and asset disposal, impairment charges and any items that are deducted for the purpose of normalizing items.

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The following tables reconcile these non-GAAP measures to the most directly comparable GAAP measure, production costs applicable to sales; the El Gallo project results are excluded from this reconciliation as the economics of residual leaching operations are measured by incremental revenue exceeding incremental costs. Incremental residual leaching costs for ~~Q3/20 and 9M/20~~Q1/21 were ~~$3.1~~$2.6 million or ~~$1,505~~$2,035 per gold equivalent ounce sold, ~~and $8.3 million or $1,242 per gold equivalent ounce sold, respectively,~~ compared to $2.8 million or ~~$832 and $8.4 million or $581~~$1,025 per gold equivalent ounce sold in the same ~~periods~~period of ~~2019.~~2020.


	Three months ended September 30, 2020						Nine months ended September 30, 2020						Three months ended March 31, 2021
	Gold Bar		Black Fox		Total		Gold Bar		Black Fox		Total		Gold Bar		Black Fox		Total

	(in thousands, except per ounce)						(in thousands, except per ounce)						(in thousands, except per ounce)
Production costs applicable to sales - Cash costs (100% owned)	$	10,791	$	8,874	$	19,665	$	38,863	$	24,231	$	63,094	$	13,557	$	6,656	$	20,213
Mine site reclamation, accretion and amortization		230		101		331		738		295		1,033		157		538		694
In‑mine exploration		474		90		564		1,315		707		2,022		185		577		762
Capitalized underground mine development (sustaining)		—		—		—		—		3,646		3,646		—		231		231
Capital expenditures on plant and equipment (sustaining)		75		61		136		4,663		322		4,985		121		104		225
Sustaining leases		473		104		577		1,452		249		1,701		41		127		168
All‑in sustaining costs	$	12,043	$	9,230	$	21,273	$	47,031	$	29,450	$	76,481	$	14,061	$	8,232	$	22,293
Ounces sold, including stream (Au Eq. oz)⁽¹⁾		6.8		5.6		12.4		22.1		16.8		38.9		7.3		5.3		12.5
Cash cost per ounce ($/Au Eq. oz sold)	$	1,585	$	1,581	$	1,583	$	1,762	$	1,440	$	1,622	$	1,865	$	1,262	$	1,611
AISC per ounce ($/Au Eq. oz sold)	$	1,769	$	1,644	$	1,713	$	2,132	$	1,750	$	1,967	$	1,934	$	1,560	$	1,777

(1)

Total gold equivalent ounces sold for ~~Q3/20 and 9M/20 is 14,500 and 45,600, respectively,~~Q1/21 was 13,800 and includes gold equivalent ounces sold from the operating mines of 12,400, ~~and 38,900,~~ as disclosed above, and ~~2,100 and 6,700~~1,300 gold equivalent ounces sold from the El Gallo Project for ~~Q3/20 and 9M/20, respectively.~~Q1/21.


	Three months ended September 30, 2019						Nine months ended September 30, 2019						Three months ended March 31, 2020
	Gold Bar		Black Fox		Total		Gold Bar		Black Fox		Total		Gold Bar		Black Fox		Total

	(in thousands, except per ounce)						(in thousands, except per ounce)						(in thousands, except per ounce)
Production costs applicable to sales - Cash costs (100% owned)	$	12,156	$	7,550	$	19,706	$	20,798	$	24,025	$	44,823	$	17,032	$	7,207	$	24,239
Mine site reclamation, accretion and amortization		489		155		644		860		475		1,335		352		96		448
In‑mine exploration		—		955		955		—		3,430		3,430		—		425		425
Capitalized underground mine development (sustaining)		—		1,711		1,711		—		7,286		7,286		—		3,646		3,646
Capital expenditures on plant and equipment (sustaining)		663		470		1,133		1,533		1,610		3,143		1,790		50		1,840
Sustaining leases		487		98		585		1,422		271		1,693		477		95		572
All‑in sustaining costs	$	13,795	$	10,939	$	24,734	$	24,613	$	37,097	$	61,710	$	19,651	$	11,519	$	31,170
Ounces sold, including stream (Au Eq. oz)⁽¹⁾		11.2		8.0		19.2		20.5		28.0		48.5		9.0		8.6		17.6
Cash cost per ounce ($/Au Eq. oz sold)	$	1,088	$	941	$	1,027	$	1,014	$	859	$	924	$	1,887	$	838	$	1,375
AISC per ounce ($/Au Eq. oz sold)	$	1,235	$	1,363	$	1,289	$	1,200	$	1,326	$	1,272	$	2,177	$	1,339	$	1,768

(1)

Total gold equivalent ounces sold for ~~Q3/19 and 9M/19 is 22,600 and 63,000, respectively,~~Q1/20 was 20,300 and includes gold equivalent ounces sold from the operating mines of ~~19,200 and 48,500~~17,600, as disclosed above, and ~~3,400 and 14,500~~2,700 gold equivalent ounces sold from the El Gallo Project for ~~Q3/19 and 9M/19, respectively.~~Q1/20.


	Three months ended March 31,
	2021		2020

San José mine cash costs (100% basis)	(in thousands, except per ounce)
Production costs applicable to sales - Cash costs	$	36,367	$	28,316
Mine site reclamation, accretion and amortization		99		136
Site exploration expenses		2,840		2,866
Capitalized underground mine development (sustaining)		4,672		6,446
Less: Depreciation		(396)		(343)
Capital expenditures (sustaining)		808		2,191
All‑in sustaining costs	$	44,390	$	39,612
Ounces sold (Au Eq. oz)		33.4		24.9
Cash cost per ounce ($/Au Eq. oz sold)	$	1,088	$	1,138
AISC per ounce ($/Au Eq. oz sold)	$	1,328	$	1,592

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Three months ended September 30,

Nine months ended September 30,


2020

2019

2020

2019
San José mine cash costs (100% basis)

(in thousands, except per ounce)
Production costs applicable to sales - Cash costs

$
41,512

$
43,345

$
100,230

$
119,392
Mine site reclamation, accretion and amortization

113

301

359

859
Site exploration expenses

2,820

1,482

6,603

7,373
Capitalized underground mine development (sustaining)

4,292

8,150

13,411

20,061
Less: Depreciation

(229)

(672)

(916)

(1,732)
Capital expenditures (sustaining)

1,803

4,410

5,281

13,496
All‑in sustaining costs

$
50,311

$
57,016

$
124,968

$
159,449
Ounces sold (Au Eq. oz)

32.7

47.4

81.3

135.3
Cash cost per ounce ($/Au Eq. oz sold)

$
1,269

$
915

$
1,232

$
883
AISC per ounce ($/Au Eq. oz sold)

$
1,538

$
1,204

$
1,536

$
1,179

Average realized price

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.

The following table reconciles the average realized prices 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 September 30,				Nine months ended September 30,				Three months ended March 31,
	2020		2019		2020		2019		2021		2020

Average realized price - 100% owned	(in thousands, except per ounce)								(in thousands, except per ounce)
Revenue from gold and silver sales	$	27,395	$	32,691	$	77,086	$	84,657	$	23,740	$	31,400
Less: revenue from gold sales, stream		202		380		883		1,231		465		502
Revenue from gold and silver sales, excluding stream	$	27,193	$	32,311	$	76,203	$	83,426	$	23,275	$	30,898
Gold equivalent ounces sold		14.5		22.6		45.6		63.0		13.8		20.3
Less: gold ounces sold, stream		0.4		0.7		1.6		2.2		0.6		0.9
Gold equivalent ounces sold, excluding stream		14.1		21.9		44.0		60.8		13.2		19.4
Average realized price per Au Eq. oz sold, excluding stream	$	1,925	$	1,478	$	1,732	$	1,372	$	1,763	$	1,591


	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
	2020		2019		2020		2019		2021		2020

Average realized price - San José mine (100% basis)	(in thousands, except per ounce)								(in thousands, except per ounce)
Gold sales	$	35,265	$	40,203	$	88,602	$	106,728	$	29,751	$	24,838
Silver sales		34,930		34,327		66,064		82,620		23,552		12,552
Gold and silver sales	$	70,195	$	74,530	$	154,666	$	189,348	$	53,303	$	37,390
Gold ounces sold		17.6		26.1		47.3		75.0		18.8		14.6
Silver ounces sold		1,192		1,852		3,060		5,041		997		963
Gold equivalent ounces sold		32.7		47.4		81.3		135.3		33.4		24.9
Average realized price per gold ounce sold	$	2,002	$	1,542	$	1,873	$	1,424	$	1,585	$	1,697
Average realized price per silver ounce sold	$	29.30	$	18.54	$	21.59	$	16.39	$	23.62	$	13.03
Average realized price per gold equivalent ounce sold	$	2,146	$	1,574	$	1,901	$	1,400	$	1,594	$	1,503

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Liquid assets

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

Liquid assets is 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 at ~~September 30, 2020~~March 31, 2021 and ~~2019:~~2020:


	September 30,				March 31,
	2020		2019		2021		2020

	(in thousands)				(in thousands)
Cash and cash equivalents	$	7,954	$	4,262	$	47,402	$	28,774
Restricted cash		10,193		8,764		3,625		—
Investments		-		3,224		-		875
Receivables from marketable securities sales		-		928
Precious Metals valued at market value ⁽¹⁾⁽²⁾		676		1,284		1,493		1,323
Total liquid assets	$	18,823	$	18,462	$	52,520	$	30,972

(1)	As at ~~September 30, 2020~~March 31, 2021 and ~~2019~~2020 we held ~~358~~832 and ~~864~~800 gold equivalent ounces in inventory, respectively, net of our streaming agreement, valued at ~~$1,887~~$1,794 and ~~$1,485~~$1,609 per ounce, respectively.

(2)	Precious metals valued at cost, inclusive of ounces to be delivered under the streaming agreement, equals ~~$945~~$1,550 and ~~$1,278,~~$1,486, respectively.

CRITICAL ACCOUNTING POLICIES

Critical accounting policies and estimates used to prepare our financial statements are discussed with our Audit Committee as they are implemented and on an annual basis.

The were no significant changes in our Critical Accounting Policies since December 31, ~~2019~~2020. For further details on the Company’s accounting policies, refer to the December 31, 2020 10-K.

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:

●

statements about our anticipated exploration results, costs and feasibility of production, production estimates, receipt of permits or other regulatory or government approvals and plans for the development of our properties;

●

statements regarding the potential impacts of the COVID-19 pandemic, government responses to the continuing pandemic, and our response to those issues;

●

statements regarding strategic alternatives that we are, or may in the future, evaluate in connection with our business;

●

statements concerning the benefits or outcomes that we expect will result from our business activities and certain transactions that we contemplate or have completed, such as receipt of proceeds, increased revenues, decreased expenses and avoided expenses and expenditures; and

●

statements of our expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts.

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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.

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Forward-looking statements and information are based upon a number of estimates and assumptions that, while considered reasonable by management, 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.

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 forward-looking 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

Important factors that could prevent us from achieving our stated goals and objectives include, but are not limited to, those set forth in the “Risk Factors” section in our report on Form 10-K and other reports filed with the SEC, and the following:

●

our ability to raise funds required for the execution of our business strategy;

●

the effects of pandemics such as COVID-19 on health in our operating jurisdictions and the ~~world-wide,~~worldwide, national, state and local responses to such pandemics;

●

our ability to secure permits or other regulatory and government approvals needed to operate, develop or explore our mineral properties and projects;

●

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

●

unexpected changes in business, economic, and political conditions;

●

operating results of MSC;

●

fluctuations in interest rates, inflation rates, currency exchange rates, or commodity prices;

●

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;

●

access and availability of materials, equipment, supplies, labor and supervision, power and water;

●

results of current and future exploration activities;

●

results of pending and future feasibility studies or the expansion or commencement of mining operations without feasibility studies having been completed;

●

changes in our business strategy;

●

interpretation of drill hole results and the geology, grade and continuity of mineralization;

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●

the uncertainty of reserve estimates and timing of development expenditures;

●

litigation or regulatory investigations and procedures affecting us;

~~Table of Contents~~

●

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

●

local and community impacts and issues including criminal activity and violent crimes;

●

accidents, public health issues, and labor disputes;

●

our continued listing on a public exchange;

●

uncertainty relating to title to mineral properties; ~~and~~

●

changes in relationships with the local communities in the areas in which we ~~operate.~~operate; and

●

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 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.

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Item 3. 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, interest rate 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 result 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 40% on an annual basis. During the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, the Argentine peso devalued ~~21%~~9% compared to a devaluation of ~~52%~~7% in the same period of ~~2019.~~2020.

During the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, the Mexican peso devalued ~~15%~~3%, compared to ~~it staying relatively flat~~a devaluation of 20% against the U.S Dollar in the same period in ~~2019.~~2020.

The Canadian dollar experienced a ~~3% depreciation~~1% appreciation against the U.S. dollar for the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, compared to a ~~3% appreciation~~8% depreciation in the comparable period of ~~2019.~~2020.

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 portions of our cash reserves in non-U.S. dollar currencies.

Based on our Canadian cash balance of ~~$7.4~~$4.5 million (C$~~9.8~~5.7 million) at ~~September 30, 2020,~~March 31, 2021, a 1% change in the Canadian dollar would result in a gain/loss of less than $0.1 million in the Consolidated Statements of Operations. We also hold negligible portions of our cash reserves in Mexican and Argentina pesos, with the effect that a 1% change in these respective currencies would result in gains/losses immaterial for disclosure.

Further, we are also subject to foreign currency risk on the fluctuation of the Mexican peso on our VAT receivable balance. As of ~~September 30, 2020,~~March 31, 2021, our VAT receivable balance was Mexican peso ~~15,350,664,~~14,367,980, equivalent to approximately $0.7 million, for which a 1% change in the Mexican peso would have resulted in a gain/loss of less than $0.1 million in the Consolidated Statements of Operations.

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.

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Commodity Price Risk

We produce and sell gold and silver, therefore changes in the market price of gold and silver have and could in the future significantly affect our results of operations and cash flows. Change in the price of gold and silver could materially affect our revenues. Based on our revenues from gold and silver sales of ~~$77.1~~$23.7 million for the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, a 10% change in the price of gold and silver would have had an impact of approximately ~~$7.7~~$2.4 million on our revenues. Changes in the price of gold and silver can also affect the ~~provisionally-priced~~provisionally priced sales that we make under agreements with refiners and other purchasers of our products. At ~~September 30, 2020,~~March 31, 2021, we had no gold or silver sales subject to final pricing.

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 financial institutions and refineries if these customers are 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 that any of the financial institutions or refineries will default on their obligation. As of ~~September 30, 2020,~~March 31, 2021, 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 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 $0.7 million as at ~~September 30, 2020.~~March 31, 2021.

In Nevada and Ontario, Canada we are required to provide security to cover our projected reclamation costs. As at ~~September 30, 2020,~~March 31, 2021, we have surety bonds of ~~$31.3~~$32.4 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 or the deposit, we are exposed to the risk that the surety may default in returning our deposit or 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.

Interest rate risk

Our outstanding debt consists of various equipment leases and the senior secured credit facility. 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 ~~nine~~ten years and has 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 preceding 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 4. CONTROLS AND PROCEDURES

(a)

We maintain a system of controls and procedures designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended (“Exchange Act”), is recorded, processed, summarized and reported, within time periods specified in the SEC’s rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. As of ~~September 30, 2020,~~March 31, 2021, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management has evaluated the effectiveness of our disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.

(b)	There were no changes in our internal control over financial reporting during the quarter ended ~~September 30, 2020~~March 31, 2021 that materially affected or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II OTHER INFORMATION

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On ~~September 10, 2020,~~January 28, 2021, we sold ~~6,298,166~~12,600,600 shares of our common stock in a transaction that was not registered under the Securities ~~Act of 1933, as amended (the “Securities Act”).~~Act. The shares were sold to institutional investors pursuant to an Underwriting Agreement with Cantor Fitzgerald Canada Corporation, as representative of the underwriters listed therein, for gross proceeds of ~~$10.4~~$12.7 million, before deducting underwriting discounts and commissions and other estimated offering expenses payable by us. ~~We paid the underwriters discounts and commissions of $0.4 million in connection with the sale.~~

The common stock sold in the transaction was not registered under the Securities Act in reliance on the exemption provided by Rule 903 of Regulation S promulgated under the Securities Act. The sale of the common stock was made in an offshore transaction, was not offered or sold to a “U.S. Person” within the meaning of Regulation S and offering restrictions were implemented.

Item 4. MINE SAFETY DISCLOSURES

At McEwen Mining, safety is a core value, and we strive for superior performance. Our health and safety management system, which includes detailed standards and procedures for safe production, addresses topics such as employee training, risk management, workplace inspection, emergency response, accident investigation and program auditing. In addition to strong leadership and involvement from all levels of the organization, these programs and procedures form the cornerstone of safety at McEwen Mining, ensuring that employees are provided a safe and healthy environment and are intended to reduce workplace accidents, incidents and losses, comply with all mining-related regulations and provide support for both regulators and the industry to improve mine safety.

The operation of our Gold Bar mine is subject to regulation by the Federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). MSHA inspects our Gold Bar mine on a regular basis and may issue citations and orders when it believes a violation has occurred under the Mine Act. While we contract a majority of the mining operations at Gold Bar to an independent contractor, we may be considered an “operator” for purposes of the Mine Act and may be issued notices or citations if MSHA believes that we are responsible for violations.

We are required to report certain mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K, and that required information is included in Exhibit 95 filed with this report.

~~Item 5. OTHER INFORMATION~~

~~As previously reported on Form 8-K filed on October 1, 2020, Anna~~ ~~Ladd-Kruger was appointed as our Chief Financial Officer,~~ effective September 29, 2020. On October 2, 2020, we finalized the terms and conditions of her employment and memorialized those terms in an offer letter (the “Offer Letter”). This summary of the terms of the Offer Letter is provided in lieu of an amendment to the Form 8-K, as stated in the original filing.

Ms. Ladd-Kruger will be paid a salary of CAD $320,000 per year and is entitled to participate in all employee benefit plans consistent with other senior executives of the Company. Ms. Ladd-Kruger is also entitled to earn a performance bonus in the discretion of the Compensation Committee of the Board of Directors based on achievement of certain key performance indicators. The target for this bonus is 60% of Ms. Ladd-Kruger’s annual salary.

The Offer Letter provides certain severance benefits and change of control protections. If Ms. Ladd-Kruger is terminated by the Company without cause during her first year of employment, we would be obligated to provide her with twelve months’ notice or pay in lieu of such notice. If Ms. Ladd-Kruger is terminated without cause following the first year of her employment, she would be entitled to the greater of (i) three weeks notice for the first year of employment, plus an additional three weeks notice for every completed year thereafter, to a maximum of twelve weeks, or pay in lieu of such

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notice, or (ii) her minimum entitlement under the Ontario Employment Standards Act, 2000, as amended. If we terminate her employment without cause following a change in control of the company (as such term is defined in the Offer Letter), we would be obligated to pay her an amount equal to 18 months of salary, plus her target bonus and required benefits.

~~A copy of the Offer Letter is filed with this report as Exhibit 10.1 and the summary of the Offer Letter in this report is expressly qualified by reference to such Exhibit.~~

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Item 6. EXHIBITS

The following exhibits are filed or incorporated by reference with this report:


3.1.1		Second Amended and Restated Articles of Incorporation of the Company as filed with the Colorado Secretary of State on January 20, 2012 (incorporated by reference from the Current Report on Form 8-K filed with the SEC on January 24, 2012, Exhibit 3.1, File No. 001-33190).
3.1.2		Articles of Amendment to the Second Amended and Restated Articles of Incorporation of the Company as filed with the Colorado Secretary of State on January 24, 2012 (incorporated by reference from the Current Report on Form 8-K filed with the SEC on January 24, 2012, Exhibit 3.2, File No. 001-33190).
3.2		Amended and Restated Bylaws of the Company (incorporated by reference from the Current Report on Form 8-K filed with the SEC on March 12, 2012, Exhibit 3.2, File No. 001-33190).
10.1		~~Employment~~Placement Agency Agreement among the Company, Cantor Fitzgerald & Co. and Roth Capital Partners, dated February 5, 2021, (incorporated by reference from the Current Report on Form 8-K filed with the SEC on February 9, 2021, Exhibit 10.1, File No. 001-33190)
10.2		Form of Securities Purchase Agreement between the Company and ~~Anna Ladd-Kruger~~certain Institutional Investors, dated ~~October 2, 2020.~~February 5, 2021 (incorporated by reference from the Current Report on Form 8-K filed with the SEC on February 9, 2021, Exhibit 10.2, File No. 001-33190)
10.3		Employment agreement between the Company and Stephen McGibbon dated April 8, 2021
31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Robert R. McEwen, principal executive officer.
31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Anna Ladd-Kruger, principal financial officer.
32		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Robert R. McEwen and Anna Ladd-Kruger.
95		Mine safety disclosure.
101		The following materials from McEwen Mining Inc.’s Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2020~~March 31, 2021 are filed herewith, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Unaudited Consolidated Statements of Operations and Comprehensive (Loss) for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and 2019, (ii) the Unaudited Consolidated Balance Sheets as of ~~September 30, 2020~~March 31, 2021 and December 31, 2019, (iii) the Unaudited Consolidated Statement of Changes in Shareholders’ Equity for the three months ~~and nine months~~ ended ~~September 30, 2020~~March 31, 2021 and 2019, (iv) the Unaudited Consolidated Statements of Cash Flows for the nine months ended ~~September 30, 2020~~March 31, 2021 and 2019, and (v) the Unaudited Notes to the Consolidated Financial Statements.
104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2020,~~March 31, 2021, formatted in Inline XBRL and contained in Exhibit 101.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MCEWEN MINING INC.

	/s/ Robert R. McEwen
Date: ~~October 29, 2020~~May 7, 2021	By: Robert R. McEwen,
	Chairman and Chief Executive Officer

	/s/ Anna Ladd-Kruger
Date: ~~October 29, 2020~~May 7, 2021	By: Anna Ladd-Kruger,
	Chief Financial Officer



Operating and Financial Highlights	2324
Selected Consolidated Financial and Operating Results	2526
Consolidated Performance	2526
Consolidated Financial Review	2627
Liquidity and Capital Resources	28
Operations Review	3029
U.S.A Segment	3029
Gold Bar mine operating results	3029
Exploration Activities – Nevada	3129
Canada Segment	3231
Black Fox mine operating results	3231
Advanced-Stage Properties – Froome Project	3332
Exploration Activities – Timmins	3332
Mexico Segment	34
El Gallo Project operating results	34
Advanced-Stage Properties – Fenix Project	3435
MSC Segment, Argentina	3536
MSC operating results	3536
Los Azules Segment, Argentina	3738
Los Azules Project	3738
Non-GAAP Financial Performance Measures	3839
Critical Accounting Policies	4243
Forward-Looking Statements	4243
Risk Factors Impacting Forward-Looking Statements	4344


	Fair value as at September 30, 2020						Fair value as at December 31, 2019
	Level 1		Level 2		Total		Level 1		Level 2		Total
Marketable equity securities	$	—	$	—	$	—	$	1,885	$	—	$	1,885