UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2012

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT

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.)

Bay Wellington Tower, 181 Bay Street, Suite 4750, Toronto, Ontario Canada M5J 2T3

(Address of principal executive offices) (Zip code)

(866) 441-0690

(Registrant’s telephone number, including area code)

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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer x

Non-accelerated filer o		Smaller reporting company o
(Do not check if a smaller reporting company)

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 184,111,345 shares outstanding as of August 2, 2012 (and 84,183,039 exchangeable shares).

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MCEWEN MINING INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)

(in thousands, except per share)

	Three months ended						Six months ended
	June 30,						June 30,
	2012			2011			2012			2011
REVENUE
Income on investment in Minera Santa Cruz S.A.	$	1,595		$	—		$	5,597		$	—
Amortization of fair value increments	(1,803		)	—			(4,607		)	—
	(208		)	—			990			—
COSTS AND EXPENSES
General and administrative	4,089			2,143			8,816			3,519
Acquisition costs	47			208			1,442			208
Property holding costs	407			155			1,980			1,108
Exploration costs	10,073			10,626			21,857			17,535
Mine construction costs	6,994			—			8,635			—
Mine operating costs	3,494			—			6,216			—
Accretion of asset retirement obligation	120			137			232			266
Depreciation	263			139			484			259
Gain on sale of assets	(128		)	—			(130		)	(10		)
Asset impairments	179			—			179			—
Total costs and expenses	25,538			13,408			49,711			22,885

Operating loss	(25,746		)	(13,408		)	(48,721		)	(22,885		)

OTHER INCOME (EXPENSE)
Interest income	57			22			182			31
Interest expense	—			(6		)	—			(17		)
Gain on sale of gold and silver bullion - note 4	434			—			1,842			524
Unrealized loss on silver bullion - note 4	(359		)	—			(359		)	—
Other-than-temporary impairment on marketable equity securities - note 3	(1,993		)	—			(1,993		)	—
Foreign currency gain	79			238			46			459
Total other (expense) income	(1,782		)	254			(282		)	997

Loss before income taxes	(27,528		)	(13,154		)	(49,003		)	(21,888		)
Recovery of income taxes - note 2	6,277			—			8,550			—
Net loss	(21,251		)	(13,154		)	(40,453		)	(21,888		)

OTHER COMPREHENSIVE LOSS
Unrealized gain (loss) on available-for-sale securities, net of taxes	1,375			(1,463		)	999			(866		)

Comprehensive loss	$	(19,876	)	$	(14,617	)	$	(39,454	)	$	(22,754	)
Basic and diluted per share data:
Net loss - basic and diluted	$	(0.08	)	$	(0.09	)	$	(0.16	)	$	(0.16	)
Weighted average common shares outstanding:
- basic and diluted	268,009			139,646			251,001			134,310

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

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MCEWEN MINING INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

	June 30,			December 31,
	2012			2011
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	23,398		$	13,416
Short-term investments	—			3,933
Marketable equity securities - note 3	486			1,480
Gold and silver bullion (market value - 2012 - $13,994; 2011 - $24,483) - note 4	12,963			22,810
IVA taxes receivable	6,068			2,983
Other inventories	834			139
Prepaid and other current assets	2,967			3,122
Assets held for sale - note 7	1,763			—
Total current assets	48,479			47,883

Mineral property interests - note 5	843,764			245,454
Restrictive time deposits for reclamation bonding - note 5	5,190			5,190
Investment in Minera Santa Cruz S.A. - note 6	225,989			—
Property and equipment, net - note 7	13,742			11,772
Other assets	54			56
TOTAL ASSETS	$	1,137,218		$	310,355

LIABILITIES & SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	8,223		$	5,612
Current portion of asset retirement obligation - note 5	510			512
Total current liabilities	8,733			6,124

Asset retirement obligation, less current portion - note 5	6,108			5,741
Deferred income tax liability - note 2	268,615			78,786
Other liabilities	400			400
Total liabilities	$	283,856		$	91,051

Shareholders’ equity:
Common stock, no par value, 500,000 shares authorized;
Common: 183,207 shares as of June 30, 2012 and 136,572 shares as of December 31, 2011 issued and outstanding
Exchangeable: 2012: 85,088 shares as of June 30, 2012 and nil shares as of December 31, 2011 issued and outstanding
Exchangeable: 2007: nil shares as of June 30, 2012 and 3,181 shares as of December 31, 2011 issued and outstanding	1,287,343			613,831
Accumulated deficit	(433,691		)	(393,238		)
Accumulated other comprehensive loss	(290		)	(1,289		)
Total shareholders’ equity	853,362			219,304

TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY	$	1,137,218		$	310,355

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)

	Common Stock			Accumulated Other Comprehensive			Accumulated
	Shares	Amount		Loss			Deficit			Total

Balance, December 31, 2010	122,186	$	504,389	$	257		$	(331,366	)	$	173,280
Stock-based compensation	—	1,222		—			—			1,222
Sale of shares for cash, net of issuance costs	17,250	105,415		—			—			105,415
Exercise of stock options	163	412		—			—			412
Exercise of stock options from 2007 acquisition	70	361		—			—			361
Shares issued for Mexico mining concessions	42	325		—			—			325
Unrealized loss on marketable equity securities	—	—		(866		)	—			(866		)
Net loss	—	—		—			(21,888		)	(21,888		)
Balance, June 30, 2011	139,711	$	612,124	$	(609	)	$	(353,254	)	$	258,261

Balance, December 31, 2011	139,753	$	613,831	$	(1,289	)	$	(393,238	)	$	219,304
Stock-based compensation	—	2,135		—			—			2,135
Issuance of exchangeable shares to acquire Minera Andes Inc.	127,331	664,671		—			—			664,671
Assumption of stock options in connection with the acquisition of Minera Andes Inc.	—	3,175		—			—			3,175
Exercise of stock options	317	594		—			—			594
Exercise of stock options from Minera Andes Inc.	852	2,710		—			—			2,710
Shares issued for Mexico mining concessions	42	227		—			—			227
Realized loss on marketable equity securities	—	—		(994		)	—			(994		)
Other-than-temporary impairment on marketable equity securities	—	—		1,993			—			1,993
Net loss	—	—		—			(40,453		)	(40,453		)
Balance, June 30, 2012	268,295	$	1,287,343	$	(290	)	$	(433,691	)	$	853,362

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

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MCEWEN MINING INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	For Six Months Ended
	June 30,
	2012			2011
Cash flows (used in) from operating activities:
Cash paid to suppliers and employees	$	(42,781	)	$	(22,372	)
Interest received	125			31
Cash used in operating activities	(42,656		)	(22,341		)
Cash flows (used in) provided by investing activities:
Cash and short-term investments received from acquisition of Minera Andes Inc.	36,337			—
Short-term investments (net)	3,933			—
Acquisition of mineral property interests	(563		)	(792		)
Additions to property and equipment	(1,658		)	(7,196		)
Proceeds from disposal of property and equipment	53			23
Investment in gold and silver bullion	—			(31,299		)
Proceeds from sale of gold and silver bullion	11,330			2,173
Increase in restricted investments securing reclamation	—			(413		)
Cash provided by (used in) investing activities	49,432			(37,504		)
Cash flows from financing activities:
Sale of common stock for cash, net of issuance costs	—			105,415
Exercise of stock options	3,304			773
Cash provided by financing activities	3,304			106,188
Effect of exchange rate change on cash and cash equivalents	(98		)	190
Increase in cash and cash equivalents	9,982			46,533
Cash and cash equivalents, beginning of period	13,416			6,818
Cash and cash equivalents, end of period	$	23,398		$	53,351

Reconciliation of net loss to cash used in operating activities:
Net loss	$	(40,453	)	$	(21,888	)
Adjustments to reconcile net loss from operating activities:
Income on investment in Minera Santa Cruz S.A. (net of amortization)	(990		)	—
Deferred income taxes	(8,550		)	—
Gain on sale of gold and silver bullion	(1,842		)	(524		)
Unrealized loss on silver bullion	359			—
Other-than-temporary impairment on marketable equity securities	1,993			—
Gain on sale of assets	(130		)	(10		)
Asset impairments	179			—
Stock-based compensation	2,135			1,222
Accretion of asset retirement obligation	232			266
Depreciation	484			259
Foreign exchange loss (gain)	98			(190		)
Change in non-cash working capital items:
Increase in other assets related to operations	(2,810		)	(2,311		)
Dividend receivable obtained from acquisition of Minera Andes Inc.	9,363			—
(Increase) decrease in liabilities related to operations	(2,724		)	835
Cash used in operating activities	$	(42,656	)	$	(22,341	)

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)

June 30, 2012

NOTE 1 NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Basis of Presentation

McEwen Mining Inc. (the “Company” or “McEwen Mining”) was organized under the laws of the State of Colorado on July 24, 1979. Since inception, the Company has been engaged in the exploration for, development of, production and sale of gold and silver. On January 24, 2012, the Company changed its name from US Gold Corporation to McEwen Mining Inc. after the completion of the acquisition, by way of a statutory plan of arrangement under the laws of the Province of Alberta, Canada, of Minera Andes Inc. (“Minera Andes”).

As a result of the acquisition of Minera Andes, the Company acquired a 49% interest in Minera Santa Cruz S.A. (“MSC”), owner of the producing San José Silver-Gold Mine in Santa Cruz, Argentina; a 100% interest in the Los Azules Copper Deposit in San Juan, Argentina, and a large portfolio of exploration properties in Santa Cruz, Argentina. The San José Mine is operated by the majority owner of the joint venture, Hochschild Mining plc (‘‘Hochschild’’).

The Company is currently in its final stages of constructing Phase 1 of the El Gallo Complex in Mexico, with gold production scheduled to begin during the second half of 2012.

The interim consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) has been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures included are adequate to make the information presented not misleading.

In management’s opinion, the unaudited consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2012 and 2011, the consolidated balance sheets as at June 30, 2012 (unaudited) and December 31, 2011, the unaudited consolidated statement of changes in shareholders’ equity for the six months ended June 30, 2012 and 2011, and the unaudited consolidated statements of cash flows for the six months ended June 30, 2012 and 2011, 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 summary of significant accounting policies included in the Company’s Form 10-K for the year ended December 31, 2011. 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.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated.

Significant Accounting Policies

Business Combinations — The Company accounts for business combinations using the acquisition method of accounting pursuant to Accounting Standards Codification (“ASC”) Topic 805 — Business Combinations. The acquisition method requires the Company to determine the fair value of all acquired assets, including identifiable intangible assets, and all assumed liabilities. The total cost of acquisitions is allocated to the underlying identifiable net assets, based on their respective estimated fair values. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment, and the utilization of independent valuation experts, and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, and asset lives, among other items. Transaction costs are expensed as incurred and are reported on the acquisition costs line within the consolidated statements of operations and comprehensive loss.

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MCEWEN MINING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2012

NOTE 1 NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Investments — Equity Method and Joint Ventures - The Company accounts for investments over which the Company exerts significant influence using the equity method of accounting pursuant to ASC Topic 323 — Investments, Equity Method and Joint Ventures. Under this method, the Company’s share of earnings and losses is included in the consolidated statement of operations and comprehensive loss and the balance of the investment is adjusted by a like amount. Under the equity method, dividends received from an investee are recorded as decreases in the investment account, not as income. Where there has been a loss in value that is other than a temporary decline, the carrying value is reduced to its fair value.

IVA taxes receivable — In Mexico, value added taxes (IVA) are assessed on purchases of materials and services and sales of products. Businesses are generally entitled to recover the taxes they have paid related to purchases of materials and services, either as a refund or as a credit against future taxes payable. In Argentina, except at the San José Mine, the Company expenses all IVA as their recoverability is uncertain.

Ore Stockpile Inventories — Ore stockpile inventories are carried at the lower of average cost or net realizable value, if commercial production is achieved. Net realizable value represents the estimated future sales price of the product based on current and long-term metals prices, less the estimated costs to complete production and bring the product to sale. Write-downs of ore stockpiles and concentrate inventories, resulting from net realizable value impairments, are reported as a component of production costs applicable to sales. The current portion of ore stockpiles is determined based on the expected amounts to be processed within the next 12 months. Ore stockpile inventories not expected to be processed within the next 12 months, if any, are classified as long-term. At June 30, 2012, all ore stockpile inventories at El Gallo Phase 1 were expensed since commercial production has not yet been achieved. Ore stockpile inventories represent mineralized materials that have been mined and are available for further processing. Ore stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, an estimate of the contained metals (based on assay data) and the estimated metallurgical recovery rates. Costs are allocated to ore stockpile inventories based on relative values of material stockpiled and processed using current mining costs incurred up to the point of stockpiling the ore. Material is removed from the stockpile at an average cost per tonne.

Other Inventories — Other inventories include materials and supplies. Materials and supplies inventories are comprised of chemicals, reagents and consumable parts used in drilling and other operating activities. They are valued at the lower of average cost or net realizable value. Cost includes applicable taxes and freight.

Revenue Recognition — Revenue includes sales value received for the Company’s principal products, gold and silver. Revenue is recognized when title to gold and silver passes to the buyer and when collectability is reasonably assured. Title passes to the buyer based on terms of the sales contract. Product pricing is determined at the point revenue is recognized by reference to active and freely traded commodity markets, for example, the London Bullion Market for both gold and silver, in an identical form to the product sold. All sales prior to commercial production will be used to offset related mining costs.

Proven and Probable Reserves — The definition of proven and probable reserves is set forth in the SEC Industry Guide 7. Proven reserves are reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes, grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geological character is so well defined that size, shape, depth and mineral content of the reserves are well-established. Probable reserves are reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observations.

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MCEWEN MINING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2012

NOTE 2 BUSINESS ACQUISITION

On January 24, 2012, the Company completed the acquisition of Minera Andes (“the Arrangement”) through a court-approved plan of arrangement under Alberta, Canada law, under which Minera Andes, a Canadian company, became an indirect wholly-owned subsidiary of the Company.

The Company’s management and Board of Directors believes that the combination with Minera Andes is in the best interests of the Company and its shareholders because the combined company is expected to have a stronger combined cash position and balance sheet, sources of revenue, active mining operations, enhanced trading liquidity, a significant growth profile, industry leading costs, an expanded exploration program and additional technical expertise.

On the closing date of the Arrangement, holders of Minera Andes’ common stock received a number of exchangeable shares of McEwen Mining Minera Andes Acquisition Corporation (“2012-Exchangeable Shares”), an indirect wholly-owned Canadian subsidiary of the Company, equal to the number of Minera Andes shares, multiplied by the exchange ratio of 0.45. In the aggregate, former Minera Andes shareholders received 127,331,498 2012-Exchangeable Shares. After closing of the Arrangement, the name of the Company was changed to McEwen Mining Inc. The Company’s common stock began trading on the NYSE and TSX under the symbol “MUX” and the 2012-Exchangeable Shares began trading on the TSX under the symbol “MAQ” on January 27, 2012.

As a result of the Arrangement and on the date of closing, the combined company was held approximately 52% by then-existing McEwen Mining shareholders and 48% by former Minera Andes shareholders. On a diluted basis, the combined company was held approximately 53% by existing McEwen Mining shareholders and 47% by former Minera Andes shareholders.

In June 2011, Robert R. McEwen, the Company’s Chairman, President, Chief Executive Officer and largest shareholder and then also the Chairman, President, Chief Executive Officer and largest shareholder of Minera Andes, proposed the Arrangement. In connection with the Arrangement, Mr. McEwen received approximately 38.7 million 2012 Exchangeable Shares. Mr. McEwen owns approximately 25.1% of the shares of the Company.

The 2012-Exchangeable Shares are exchangeable for the Company’s common stock on a one-for-one basis. Option holders of Minera Andes received replacement options entitling them to receive, upon exercise, shares of the Company’s common stock, reflecting the exchange ratio of 0.45 with the appropriate adjustment of the exercise price per share. The option life and vesting period of the replacement options has not changed from the option life granted under the Minera Andes option plan.

The estimated fair value of the vested portion of the replacement options of $3.2 million have been included as part of the purchase price consideration at their fair values based on the Black-Scholes pricing model as illustrated below.

The principal assumptions used in applying the Black-Scholes option pricing model were as follows:

		January 24, 2012
Risk-free interest rate		0.02% to 0.39%
Dividend yield		n/a
Volatility factor of the expected market price of common stock		46% to 77%
Weighted-average expected life of option		1.4 years

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MCEWEN MINING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2012

NOTE 2 BUSINESS ACQUISITION (Continued)

The acquisition has been accounted for using the acquisition method in accordance with ASC Topic 805, Business Combinations, with the Company being identified as the acquirer. The measurement of the purchase consideration was based on the market price of the Company’s common stock on January 24, 2012, which was $5.22 per share. The total purchase price, including the fair value of the options, amounted to $667.8 million. The total transaction costs incurred through June 30, 2012 by the Company was $5.3 million, of which $3.9 million was reported in the year ended December 31, 2011 in general and administrative expenses, and $1.4 million for the six months ended June 30, 2012 in acquisition costs in the consolidated statements of operations and comprehensive loss.

The allocation of the purchase price on a preliminary basis, based on the estimated fair value of assets acquired and liabilities assumed on January 24, 2012, is summarized in the following table (in thousands).

	Fair Value
Purchase price:
Exchangeable shares of McEwen Mining Minera Andes Acquisition Corp. issued on acquisition	$	664,671
Stock options to be exchanged for options of McEwen Mining	3,175
	$	667,846

Net assets acquired:
Cash and cash equivalents	$	31,385
Short-term investments	4,952
Other current assets	9,828
Inventories	1,362
Mineral property interests	597,374
Investment in Minera Santa Cruz S.A.	224,999
Equipment	1,647
Accounts payable	(5,323		)
Deferred income tax liability	(198,378		)
	$	667,846

The purchase consideration for the mineral property interests exceeded the carrying value of the underlying assets for tax purposes by approximately $567.0 million. This amount has been applied to increase the carrying value of mineral property interests for accounting purposes. However, this did not increase the carrying value of the underlying assets for tax purposes and resulted in a temporary difference between accounting and tax value. The resulting estimated deferred income tax liability originally associated with this temporary difference was approximately $198.4 million, which is included in the preliminary allocation of purchase price above. For the three and six months ended June 30, 2012, the Company recorded a deferred income tax recovery of $6.3 million and $8.3 million, respectively, as a result of fluctuations in the foreign exchange rates between the Argentine pesos and U.S. dollar from January 24, 2012 to June 30, 2012. As a result of the fluctuations in the foreign exchange rates from the two periods, the deferred income tax liability on these assets were reduced to $190.0 million, which is included in the deferred income tax liability balance of $268.6 million on the consolidated balance sheet as at June 30, 2012.

For the purposes of the Company’s financial statements, the purchase consideration has been allocated to the fair value of assets acquired and liabilities assumed, based on an independent valuation report and management’s best estimates and taking into account all available information at the time these consolidated financial statements were prepared. The allocation is still preliminary and is subject to change.

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MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

June 30, 2012

NOTE 2 BUSINESS ACQUISITION (Continued)

Unaudited Pro Forma Results

ASC Topic 805 requires supplemental information on a pro forma basis to disclose the results of operations for the interim period as though the business combination had been completed as of the beginning of the periods being reported.

The following table sets forth on a pro forma basis, the results of operations for McEwen Mining, had the acquisition of Minera Andes been completed on January 1, 2012 and 2011 (in thousands):

Six months ended June 30, 2012	McEwen Mining			Minera Andes (a)		Combined

Revenue	$	990		$	4,979	$	5,969
Net (loss) income for the period	(40,453		)	3,498		(36,955		)

Six months ended June 30, 2011	McEwen Mining			Minera Andes		Combined

Revenue	$	—		$	25,716	$	25,716
Net (loss) income for the period	(21,888		)	18,706		(3,182		)

(a) Six months ended June 30, 2012 represents the results of Minera Andes’ operations from January 1, 2012 through January 24, 2012, closing date of the acquisition. Beginning January 25, 2012, the results of Minera Andes’ operations are included in McEwen Mining’s consolidated financial statements.

NOTE 3 MARKETABLE EQUITY SECURITIES

These securities are valued at fair value. Any resulting gain or loss is recorded to an unrealized gain and loss account (accumulated other comprehensive (loss)) that is reported as a separate line item in the shareholders’ equity section of the balance sheet. The gains and losses on available-for-sale securities are not reported on the statement of operations until the securities are sold or are other-than-temporarily impaired. As at June 30, 2012, the Company deemed most of its available-for-sale securities to be other-than-temporarily impaired and as a result recorded an impairment of $2.0 million in the statement of operations and comprehensive loss for the three and six months ended June 30, 2012. The Company does not intend to hold the securities for a period of time sufficient to allow for any anticipated recovery in fair value.

Changes in the Company’s holdings of marketable securities for the six months ended June 30, 2012 and year ended December 31, 2011 are as follows (in thousands):

	Six Months Ended June 30,			Year Ended December 31,
	2012			2011
Opening Balance	$	1,480		$	4,576
Purchases	—			284
Proceeds from sale	—			(1,853		)
Gain on sale	—			19
Unrealized loss	—			(1,546		)
Realized loss	(994		)	—
Ending Balance	$	486		$	1,480

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MCEWEN MINING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2012

NOTE 4 GOLD AND SILVER BULLION

The Company invested a portion of its cash in physical gold and silver bullion. Below is the balance of its holdings of gold and silver as at June 30, 2012 and December 31, 2011.

	June 30, 2012				December 31, 2011
	Gold		Silver		Gold		Silver
	(dollars in thousands, except ounces and per ounce)
# of ounces	3,223		326,512		5,656		552,812
Average cost per ounce	$	1,278.63	$	27.08	$	1,278.63	$	28.18
Total cost	$	4,121	$	8,842	$	7,232	$	15,578
Fair value per ounce	$	1,598.50	$	27.08	$	1,574.50	$	28.18
Total fair value	$	5,152	$	8,842	$	8,905	$	15,578

The fair value of gold and silver was based on the daily London P.M. fix as at June 30, 2012 and December 31, 2011. Since ASC Topic 815 does not consider gold and silver to be readily convertible to cash, the Company carries these assets at the lower of cost or market.

During the first half of 2012, the Company sold 2,433 ounces of gold and 226,299 ounces of silver with a cost of $3.1 million and $6.4 million, respectively. As at June 30, 2012, the Company’s average cost per ounce for silver was $28.18 as compared to its fair value of $27.08. As a result of the fair value being lower than the carrying value, the Company reduced its average cost per ounce to fair value and recorded an unrealized loss of $0.4 million in its statements of operations and comprehensive loss for the three and six month periods ended June 30, 2012. Changes in the Company’s holdings of gold and silver for the six months ended June 30, 2012 and year ended December 31, 2011 are as follows (in thousands):

	Six Months Ended June 30,									Year Ended December 31,
	2012									2011
	Gold			Silver			Total			Gold			Silver			Total
Opening Balance	$	7,232		$	15,578		$	22,810		$	4,569		$	—		$	4,569
Purchases	—			—			—			7,387			23,912			31,299
Proceeds from sale	(4,026		)	(7,304		)	(11,330		)	(6,218		)	(5,521		)	(11,739		)
Gain on sale	915			927			1,842			1,494			581			2,075
Unrealized loss	—			(359		)	(359		)	—			(3,394		)	(3,394		)
Ending Balance	$	4,121		$	8,842		$	12,963		$	7,232		$	15,578		$	22,810

NOTE 5 MINERAL PROPERTY INTERESTS AND ASSET RETIREMENT OBLIGATIONS

At June 30, 2012, the Company holds mineral interests in Nevada, mineral rights in Argentina and mineral concession rights in Mexico, including the El Gallo complex. The Magistral Mine is a former producing gold mine located within the El Gallo complex which has been held on a care and maintenance basis since 2005. In August 2011, the Company announced that it would put this mine back into production as Phase 1 of mining operations at the El Gallo complex, with production scheduled to begin during the second half of 2012.

The Company increased its mineral property interests by $598.3 million, of which $597.4 million was due to the acquisition of Minera Andes as discussed in Note 2 above, to $843.8 million as at June 30, 2012 from $245.5 million at the end of 2011. The values for the mineral properties from Argentina noted below are on a preliminary basis.

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MCEWEN MINING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2012

NOTE 5 MINERAL PROPERTY INTERESTS AND ASSET RETIREMENT OBLIGATIONS (Continued)

The following table summarizes all of the Company’s mineral property interests in Nevada, Argentina and Mexico (in thousands):

Name of Property/Complex	State/Province	Country	Carrying Value
Tonkin Complex	Nevada	United States	$	52,430
Gold Bar Complex	Nevada	United States	$	77,012
Limo Complex	Nevada	United States	$	50,098
Battle Mountain Complex	Nevada	United States	$	31,106
Other United States Properties	Nevada	United States	$	22,009
Los Azules Copper Project	San Juan	Argentina	$	486,862
Other Argentina Exploration Properties	San Juan	Argentina	$	7,819
Cerro Negro Region	Santa Cruz	Argentina	$	80,889
Other Argentina Exploration Properties	Santa Cruz	Argentina	$	19,194
Other Argentina Exploration Properties	Catamarca	Argentina	$	2,362
Other Argentina Exploration Properties	Chubut	Argentina	$	248
El Gallo Complex	Sinaloa	Mexico	$	9,469
Other Mexico Exploration Properties	Sinaloa	Mexico	$	4,266
Total			$	843,764

The Company is responsible for reclamation of certain past and future disturbances at its properties. The two most significant properties subject to these obligations are the historic Tonkin property in Nevada and the Magistral mine portion of the El Gallo Complex in Mexico. The current undiscounted estimate of the reclamation costs for existing disturbances on the Tonkin property to the degree required by the U.S. Bureau of Land Management (“BLM”) and the Nevada Department of Environmental Protection (“NDEP”) is $3.8 million. The Company submitted a mine closure plan to the NDEP and BLM for the Tonkin property during the fourth quarter of 2010. Based on the Company’s estimate, the change in its bonding requirements was insignificant. As at June 30, 2012, the closure plan has already been approved by the NDEP but is still currently under review by the BLM. It is possible that reclamation plan cost estimates and bonding requirements may increase as a result of its review. The Company, however, is unable to meaningfully estimate possible increases at this time. The costs of undiscounted projected reclamation of El Gallo Phase 1 are currently estimated at $4.6 million.

For mineral properties in the United States, the Company maintains required reclamation bonding with various governmental agencies, and at June 30, 2012 and December 31, 2011, had cash bonding in place of $5.2 million. Under Mexican regulations, surety bonding of projected reclamation costs is not required.

Changes in the Company’s asset retirement obligations for the six months ended June 30, 2012 and year ended December 31, 2011 are as follows (in thousands):

	Six Months Ended			Year Ended
	June 30,			December 31,
	2012			2011
Asset retirement obligation liability- opening balance	$	6,253		$	6,153
Settlements	(14		)	(82		)
Accretion of liability	232			524
Adjustment reflecting updated estimates	147			(342		)
Asset retirement obligation liability - ending balance	$	6,618		$	6,253

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MCEWEN MINING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2012

NOTE 5 MINERAL PROPERTY INTERESTS AND ASSET RETIREMENT OBLIGATIONS (Continued)

It is anticipated that the capitalized asset retirement costs will be charged to expense based on the units of production method commencing with gold and silver production at the Company’s properties, if any. There was no amortization adjustment recorded during the three and six months ended June 30, 2012 or the year ended December 31, 2011 related to the capitalized asset retirement cost since the properties were not in operation. Reclamation expenditures are expected to be incurred between 2012 and 2040. As at June 30, 2012 and December 31, 2011, the current portion of the asset retirement obligation was $0.5 million.

NOTE 6 INVESTMENT IN MINERA SANTA CRUZ S.A. (“MSC”) — SAN JOSÉ MINE

As discussed above in Note 2, the Company acquired a 49% interest in MSC, owner and operator of the San José Silver-Gold Mine in Santa Cruz, Argentina. The Company’s share of earnings and losses from its investment in MSC is included in the consolidated statement of operations and comprehensive loss and includes 49% of MSC’s net income of $5.6 million for the period ended June 30, 2012. Since the acquisition closed on January 24, 2012, MSC reported to the Company only its net income from January 25, 2012 to June 30, 2012.

The change in the Company’s investment in MSC is summarized as follows:

	As at
	June 30, 2012
	(in thousands)
Investment in MSC, beginning of period	$	—
Fair value of investment in MSC from acquisition of Minera Andes	224,999
Income from equity investment	5,597
Amortization of fair value increments	(4,607		)
Investment in MSC, end of period	$	225,989

	Three Months Ended		Period Ended
	June 30, 2012		June 30, 2012
	(in thousands)		(in thousands)
Summary of MSC’s financial information from operations
Sales - MSC 100%	$	56,375	$	96,603
Net income - MSC 100%	3,255		11,422
McEwen Mining’s portion - 49%	1,595		5,597
Net income on investment in MSC	$	1,595	$	5,597

As at June 30, 2012, MSC had current assets of $131.2 million, total assets of $714.7 million, current liabilities of $94.1 million and total liabilities of $279.8 million.

On July 27, 2012, MSC declared a dividend of $20.0 million Argentine pesos ($4.4 million), of which $9.8 million Argentine pesos ($2.2 million) was payable to the Company, and was subsequently received on July 30, 2012.

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MCEWEN MINING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2012

NOTE 7 PROPERTY AND EQUIPMENT

At June 30, 2012 and December 31, 2011, property and equipment consisted of the following (in thousands):

	June 30, 2012			December 31, 2011
Trucks and trailers	$	1,468		$	1,247
Office furniture and equipment	1,012			638
Drill rigs	1,869			998
Building	1,469			853
Land	8,669			8,619
Mining equipment	956			956
Inactive milling equipment	749			778
Subtotal	$	16,192		$	14,089
Less: accumulated depreciation	(2,450		)	(2,317		)
Total	$	13,742		$	11,772

As a result of the acquisition of Minera Andes, the Company increased its net property and equipment by $1.6 million during the first quarter of 2012. In addition, during the first quarter of 2012, the Company invested an additional $1.0 million in drill rigs and accessories in Argentina.

During the second quarter of 2012, the Company made a decision to sell four drill rigs and their related accessories, with a net realizable value of $1.8 million, net of impairment of $0.2 million, from its operations in Argentina since they no longer meet the Company’s needs. The Company reported this balance as assets held for sale on the balance sheet as at June 30, 2012. Subsequent to June 30, 2012, these assets were sold for $1.8 million.

NOTE 8 SHAREHOLDERS’ EQUITY

At the special meeting on January 19, 2012, the shareholders approved the Second Amended and Restated Articles of Incorporation which, among other things, increased the authorized capital of the Company to 500,000,000 shares of common stock, and added one share of Series B Special Voting Preferred Stock.

As discussed in Note 2 above, on January 24, 2012, the Company issued 127.3 million 2012-Exchangeable Shares in connection with the acquisition of Minera Andes.

During the six months ended June 30, 2012, 45.4 million exchangeable shares were converted into common stock, of which 42.2 million were related to the 2012-Exchangeable Shares. At June 30, 2012, total outstanding exchangeable shares not exchanged totaled 85.1 million.

On March 26, 2012, the Company announced that its subsidiary, US Gold Canadian Acquisition Corporation, has established a redemption date of May 30, 2012, in respect of all of its outstanding exchangeable shares relating to the acquisitions from 2007 (“2007-Exchangeable Shares”). As of May 30, 2012, 2.5 million of the remaining 2007-Exchangeable Shares were redeemed for issuance of 2.5 million shares of common stock and there were nil outstanding as at June 30, 2012.

During the six months ended June 30, 2012, the Company issued 1.2 million shares of common stock upon exercise of stock options under the Equity Incentive Plan as well as for exercise of stock options assumed by the Company in the acquisition of Minera Andes, at exercise prices ranging from $0.91 to $3.35 per share for proceeds of $3.3 million. During the same period, the Company issued 41,500 shares of common stock as part payment for mining concessions in Mexico.

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MCEWEN MINING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2012

NOTE 9 STOCK-BASED COMPENSATION

On January 19, 2012, at a special meeting of shareholders, the Company’s shareholders approved amendments to the Equity Incentive Plan to, among other things, increase the number of shares of common stock reserved for issuance thereunder from 9 million to 13.5 million shares.

During the first half of 2012, the Company granted 0.3 million of stock options to the Company’s Chief Operating Officer, as part of his employment contract, at an exercise price of $5.80 per share. During the same period in 2011, the Company granted stock options to certain employees, directors and consultants for an aggregate of 0.9 million shares of common stock at an exercise price of $7.10 per share. The options vest equally over a three year period if the individual remains affiliated with the Company (subject to acceleration of vesting in certain events) and are exercisable for a period of 10 years from the date of issue.

The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model. During the three and six months ended June 30, 2012, the Company recorded stock option expense of $0.5 million and $2.1 million, respectively. During the three and six months ended June 30, 2011, the Company recorded stock option expense of $0.7 million and $1.2 million, respectively. The stock option expense reported during the three and six months ended June 30, 2012 also included $0.3 million and $1.0 million, respectively, resulting from stock options assumed by the Company in the acquisition of Minera Andes.

The principal assumptions used in applying the Black-Scholes option pricing model for the awards for the three and six months ended June 30, 2012 and 2011 were as follows:

	Three Months Ended		Six Months Ended
	June 30, 2012	June 30, 2011	June 30, 2012	June 30, 2011
Risk-free interest rate	—	—	0.97%	2.33% to 3.09%
Dividend yield	—	—	n/a	n/a
Volatility factor of the expected market price of common stock	—	—	75%	90% to 99%
Weighted-average expected life of option	—	—	6.0 years	6.6 years
Weighted-average grant date fair value	—	—	$3.80	$5.31

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MCEWEN MINING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2012

NOTE 9 STOCK-BASED COMPENSATION (Continued)

The following tables summarize information about stock options outstanding and exercisable at June 30, 2012 for the Company’s Option Plan, the replacement options from the acquisition of Nevada Pacific Gold Ltd. in 2007, and the replacement options from the acquisition of Minera Andes in 2012. C$ refers to Canadian dollars.

McEwen Mining

	Options Outstanding				Options Exercisable
				Weighted				Weighted
		Weighted		Average		Weighted		Average
		Average		Remaining		Average		Remaining
Range of	Number	Exercise		Contractual	Number	Exercise		Contractual
Exercise Price	Outstanding	Price		Life (Years)	Exercisable	Price		Life (Years)
$0.00-$2.00	1,389,000	$	1.07	6.43	1,389,000	$	1.07	6.43
$2.01-$4.00	1,054,000	$	2.57	6.33	847,334	$	2.59	6.02
$4.01-$6.00	366,500	$	5.66	8.75	66,500	$	5.01	4.95
$6.01-$8.31	925,166	$	7.20	8.32	363,830	$	7.35	7.72

Nevada Pacific Gold Ltd.

Options Outstanding

Options Exercisable

Weighted

Average

Weighted

Average

Remaining

Average

Remaining

Range of

Number

Exercise

Contractual

Number

Exercise

Contractual

Exercise Price

Outstanding

Price

Life (Years)

Exercisable

Price

Life (Years)

C$0.00-C$5.00

271,543

4.54

3.76

271,543

4.54

3.76

C$5.01-C$6.70

123,050

5.96

2.51

123,050

5.96

2.51

Minera Andes

Options Outstanding

Options Exercisable

Weighted

Average

Weighted

Average

Remaining

Average

Remaining

Range of

Number

Exercise

Contractual

Number

Exercise

Contractual

Exercise Price

Outstanding

Price

Life (Years)

Exercisable

Price

Life (Years)

C$0.00-C$2.22

310,500

1.61

1.60

297,000

1.62

1.57

C$2.23-C$3.02

525,150

2.40

2.56

377,101

2.45

2.44

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MCEWEN MINING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2012

NOTE 11 OPERATING SEGMENT REPORTING

McEwen Mining is engaged in the exploration for and production of precious metals in the U.S., Mexico and Argentina. The Company identifies its reportable segments as those consolidated operations that are currently engaged in the exploration for and production of precious metals. Operations not actively engaged in the exploration for, or production of precious metals, are aggregated at the corporate level for segment reporting purposes.

										Corporate &
	Argentina			Mexico			U.S.			Other			Total
	(in thousands)
For the three months ended June 30, 2012
Income on investment in Minera Santa Cruz S.A. (net of amortization)	$	(208	)	$	—		$	—		$	—		$	(208	)
Exploration costs	5,025			3,792			1,092			164			10,073
Mine construction costs	—			6,994			—			—			6,994
Mine development and operating costs	—			3,494			—			—			3,494
Operating loss	(6,153		)	(15,268		)	(1,301		)	(3,024		)	(25,746		)
For the six months ended June 30, 2012
Income on investment in Minera Santa Cruz S.A. (net of amortization)	$	990		$	—		$	—		$	—		$	990
Exploration costs	9,830			8,547			2,906			574			21,857
Mine construction costs	—			8,635			—			—			8,635
Mine development and operating costs	—			6,216			—			—			6,216
Operating loss	(10,427		)	(26,083		)	(3,630		)	(8,581		)	(48,721		)
As at June 30, 2012
Investment in Minera Santa Cruz S.A.	$	225,989		$	—		$	—		$	—		$	225,989
Mineral property interests	597,374			13,735			232,655			—			843,764
Total assets	843,476			39,552			237,926			16,264			1,137,218

								Corporate &
	Argentina	Mexico			U.S.			Other			Total
	(in thousands)
For the three months ended June 30, 2011
Exploration costs	—	$	7,185		$	3,144		$	297		$	10,626
Operating loss	—	(7,639		)	(4,175		)	(1,594		)	(13,408		)
For the six months ended June 30, 2011
Exploration costs	—	$	12,024		$	4,952		$	559		$	17,535
Operating loss	—	(13,532		)	(5,974		)	(3,379		)	(22,885		)
As at December 31, 2011
Mineral property interests	—	$	12,750		$	232,704		$	—		$	245,454
Total assets	—	33,899			238,402			38,054			310,355

NOTE 12 FAIR VALUE ACCOUNTING

Fair value accounting establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3 Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

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MCEWEN MINING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2012

NOTE 12 FAIR VALUE ACCOUNTING (Continued)

The following table identifies certain of the Company’s assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy. As 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.

	Fair Value as at June 30, 2012
	Total		Level 1		Level 2		Level 3
	(in thousands)
Assets:
Cash and cash equivalents	$	23,398	$	23,398	$	—	$	—
Marketable equity securities	486		447		39		—
	$	23,884	$	23,845	$	39	$	—
Liabilities:
Accounts payable and accrued liabilities	$	8,223	$	—	$	8,223	$	—

	Fair Value as at December 31, 2011
	Total		Level 1		Level 2		Level 3
	(in thousands)
Assets:
Cash and cash equivalents	$	13,416	$	13,416	$	—	$	—
Short-term investments	3,933		3,933		—		—
Marketable equity securities	1,480		897		583		—
	$	18,829	$	18,246	$	583	$	—
Liabilities:
Accounts payable and accrued liabilities	$	5,612	$	—	$	5,612	$	—

The Company’s cash and cash equivalents is classified within Level 1 of the fair value hierarchy because it is valued using quoted market prices. The fair value of this balance approximates the carrying amounts due to its short-term nature and historically negligible credit losses. The cash equivalent instruments that are valued based on quoted market prices in active markets are primarily money market securities.

The Company’s marketable equity securities which are exchange traded are valued using quoted market prices in active markets and as such are classified within Level 1 of the fair value hierarchy. The fair value of the marketable equity securities is calculated as the quoted market price of the marketable equity security multiplied by the quantity of shares held by the Company. The other portion of the Company’s marketable equity securities, which are comprised of share purchase warrants not listed on a public exchange, are valued using option pricing models. Valuation models require a variety of inputs, including strike price, contractual terms, market prices, measures of volatility and interest rate. Because the inputs are derived from observable market data, the other portion of the marketable equity securities is classified within Level 2 of the fair value hierarchy.

The fair value of accounts payable and accrued liabilities approximates the carrying amounts due to their short-term nature.

NOTE 13 COMPARATIVE FIGURES

Certain prior year information was reclassified to conform with the current year’s presentation.

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

In the following discussion, “McEwen Mining”, “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 as of August 2, 2012 for the foreseeable future. It also analyzes our financial condition at June 30, 2012 and compares it to our financial condition at December 31, 2011. Finally, the discussion analyzes our results of our operations for the three and six months ended June 30, 2012 and compares those results to the three and six months ended June 30, 2011. We suggest that you read this discussion in connection with the MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS contained in our annual report on Form 10-K for the year ended December 31, 2011.

Reliability of Information: Minera Santa Cruz S.A., 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 contained herein is, with few exceptions as noted, based entirely on information provided to us by Minera Santa Cruz S.A. (“MSC”). Our joint venture partner, 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. As we are not the operator of the San José Mine, there can be no assurance that production information reported to us by MSC is accurate, we have not independently verified such information and readers are therefore cautioned regarding the extent to which they should rely upon such information.

Overview

Business

McEwen Mining Inc. was organized under the laws of the State of Colorado on July 24, 1979. Since inception, the Company has been engaged in the exploration for, development of, production and sale of gold and silver. On January 24, 2012, we changed our name from US Gold Corporation to McEwen Mining Inc. after the completion of the acquisition, by way of a statutory plan of arrangement pursuant to the laws of the Province of Alberta, Canada, of Minera Andes Inc. (“Minera Andes”). Our principal assets consists of our 49% interest in the San José Mine in Santa Cruz, Argentina; the El Gallo Complex in Sinaloa, Mexico; the Gold Bar Project in Nevada, United States; the Los Azules Project in San Juan, Argentina, and a large portfolio of exploration properties in Argentina, Nevada and Mexico.

In this report, Au represents gold, Ag represents silver, oz represents ounce, opt represents troy ounces per short ton, gpt represents grams per metric tonne, ft. represents feet, m represents meters, km represents kilometer, and sq. represents square. All of our financial information is reported in United States (“U.S.”) dollars, unless otherwise noted.

Argentina Update

During the second quarter of 2012, we did not receive any dividend payments from MSC. Approximately 44% of second quarter gold and silver sales were delayed due to changes in the export revenue repatriation requirements in Argentina. In April 2012, the Ministry of the Economy in Argentina announced rules which reduced the number of days mining companies have to repatriate funds back to the country to 15 days. While MSC and other mining companies sought clarification and amendment to this policy, given the impracticality of meeting this requirement, doré and concentrate production continued at the mine but were not exported for refining and sale. In May, this repatriation period was increased to 30 days which allowed MSC to resume a portion of silver and gold doré sales. The repatriation period for doré was subsequently increased to 45 days. For concentrate sales, MSC was granted an extension for repatriation to 120 days in June and finally in July to 180 days. Concentrate exports resumed in June and the accumulated concentrate inventory at June 30, 2012 is expected to be sold in the third quarter of 2012.

Due to the disruption in cash flow, the long processing timeline for concentrates and other factors, we are not able to estimate the amount and timing of dividends we may receive during the remainder of 2012. In July 2012, we received a dividend payment from MSC of $2.2 million.

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Development and Exploration Activities

El Gallo Complex, Mexico

During the second quarter of 2012, development and construction continued at El Gallo Phase 1 and as of August 1, 2012, physical construction of the crushing plant and leach pad expansion were completed and startup procedures are currently underway. Construction of the process plant should be completed in September 2012 with commercial production slated to begin October 1, 2012. Phase 1 consists of a 3,000 tonne per day two stage crushing circuit, Adsorption-Desorption-Recovery (“ADR”) process plant, a new heap leach pad, expansion of an existing heap leach pad, and related infrastructure. Total capital costs are expected to be slightly below the $15 million budget established for the project with the majority of the $1.8 million contingency unused when all final costs are determined. Since December 2011, approximately 190,000 tonnes of mineralized material averaging 1.30 gpt gold has been stockpiled for future processing. Approximately 3.8 million tonnes of waste and overburden have been removed during the same period.

During the first half of 2012, 70,713 ft. (21,552 m) of diamond drilling was completed at the El Gallo Complex. The main areas of focus included the Palmarito and Mina Grande deposits. Drilling results from Mina Grande showed a new gold vein that returned multiple intersections of high-grade gold over narrow intersections, although there has been limited drilling in the area. Drilling is currently focused on extending the high-grade mineralization at depth and laterally. Drilling results from Palmarito, which is located inside the Phase 1 production area, encountered wide intersections of low grade gold mineralization that could have a positive impact on the growth of the project should follow-up drilling be successful. A 15-hole program is currently underway in an effort to expand the mineralization.

Gold Bar Project, Nevada

During the second quarter of 2012, baseline studies for the summer season began in support of the U.S. Bureau of Land Management and State of Nevada permitting required for mine development and construction. Sites for constructing test wells for water supply were selected and plans are underway to drill and test these locations during the third quarter of 2012. Two options for right of ways for road access and powerline/water pipeline corridors were also selected and baseline studies are underway in those areas.

Los Azules Copper Project, Argentina

During the first half of 2012, drilling at the project was slow due to difficult ground conditions and equipment problems. A total of 9,301 ft. (2,835 m) was drilled during the field season in eight holes, which ran from early January to late April and fell short of the 26,247 ft. (8,000 m) originally planned. Although significant intercepts of copper mineralization were encountered (summarized in our May 10, 2012 press release), most of the drill holes started were unable to reach their target depth due to difficult ground conditions.

In order to address the problems encountered during this past drilling season at Los Azules, we signed a contract with a drilling company to provide us with four core drills and one reverse-circulation drill for the upcoming 2012-2013 drill season which are considerably more powerful than the ones used this past season. We anticipate commencing the upcoming drill season in November 2012, weather permitting.

In June 2012, we announced an updated resource estimate on the Los Azules project which showed that drilling has increased both the level of confidence associated with the mineralization and the estimated amount of the mineralized material.

Santa Cruz Exploration, Argentina

During the second quarter of 2012, a total of 26,903 ft. (8,200 m) of percussion drilling was completed on our Celestina project near Anglo Ashanti’s Cerro Vanguardia mine. Exploration work ceased towards the end of May 2012 with the onset of Argentinian winter. We are currently evaluating the results of this exploration work to see if further drilling is justified at this project.

The drill permits for our 100% owned claim package adjacent to the San José Mine and Goldcorp’s Cerro Negro project are in review with the provincial government. We have been notified that we should receive the approval of these permits

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by the end of the third quarter of 2012. We are planning to establish a diamond core drilling program to commence with the receipt of these permits

Corporate Development Activities

Business Acquisition

On January 24, 2012, we completed the acquisition of Minera Andes (“Arrangement”) through a court-approved plan of arrangement under Alberta, Canada law, under which Minera Andes, a Canadian company, became an indirect wholly-owned subsidiary of McEwen Mining.

Our management and Board of Directors believes that the combination with Minera Andes is in the best interests of our company and our shareholders because the combined company is expected to have a stronger combined cash position and balance sheet, sources of revenue, active mining operations, enhanced trading liquidity, a significant growth profile, industry leading costs, an expanded exploration program and additional technical expertise.

On the closing date of the Arrangement, holders of Minera Andes’ common stock received a number of exchangeable shares of McEwen Mining Minera Andes Acquisition Corporation (“2012-Exchangeable Shares”), an indirect wholly-owned Canadian subsidiary of McEwen Mining, equal to the number of Minera Andes shares, multiplied by the exchange ratio of 0.45. In the aggregate, former Minera Andes shareholders received 127,331,498 2012-Exchangeable Shares. Our common stock began trading on the NYSE and TSX under the symbol “MUX” and the 2012-Exchangeable Shares began trading on the TSX under the symbol “MAQ” on January 27, 2012.

In June 2011, Robert R. McEwen, our Chairman, President, Chief Executive Officer and largest shareholder and then also the Chairman, President, Chief Executive Officer and largest shareholder of Minera Andes, proposed the Arrangement. In connection with the Arrangement, Mr. McEwen received approximately 38.7 million 2012 Exchangeable Shares. Mr. McEwen owns approximately 25.1% of the shares of the Company.

As a result of the Arrangement and on the date of closing, the combined company was held approximately 52% by existing McEwen Mining shareholders and 48% by former Minera Andes shareholders. On a diluted basis, the combined company was held approximately 53% by then-existing McEwen Mining shareholders and 47% by former Minera Andes shareholders.

The 2012-Exchangeable Shares are exchangeable for our common stock on a one-for-one basis. Option holders of Minera Andes received replacement options entitling them to receive, upon exercise, shares of our common stock, reflecting the exchange ratio of 0.45 with the appropriate adjustment of the exercise price per share. The option life and vesting period of the replacement options has not changed from the option life granted under the Minera Andes option plan.

The principal assumptions used in applying the Black-Scholes option pricing model were as follows:

		January 24, 2012
Risk-free interest rate		0.02% to 0.39%
Dividend yield		n/a
Volatility factor of the expected market price of common stock		46% to 77%
Weighted-average expected life of option		1.4 years

The acquisition has been accounted for using the acquisition method in accordance with ASC Topic 805, Business Combinations, with McEwen Mining being identified as the acquirer. The measurement of the purchase consideration was based on the market price of our common stock on January 24, 2012, which was $5.22 per share. The total purchase price, including the fair value of the options, amounted to $667.8 million. The total transaction costs incurred through June 30, 2012 by us was $5.3 million, of which $3.9 million was reported in the year ended December 31, 2011 in general and administrative expenses, and $1.4 million for the six months ended June 30, 2012 in acquisition costs in the consolidated statements of operations and comprehensive loss.

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	Fair Value
Purchase price:
Exchangeable shares of McEwen Mining Minera Andes Acquisition Corp. issued on acquisition	$	664,671
Stock options to be exchanged for options of McEwen Mining	3,175
	$	667,846

Net assets acquired:
Cash and cash equivalents	$	31,385
Short-term investments	4,952
Other current assets	9,828
Inventories	1,362
Mineral property interests	597,374
Investment in Minera Santa Cruz S.A.	224,999
Equipment	1,647
Accounts payable	(5,323		)
Deferred income tax liability	(198,378		)
	$	667,846

For the purposes of our financial statements, the purchase consideration has been allocated to the fair value of assets acquired and liabilities assumed, based on an independent valuation report and management’s best estimates and taking into account all available information at the time these consolidated financial statements were prepared. The allocation is still preliminary and could be subject to change. Mineral property interests acquired relate primarily to the Los Azules Copper Project while the Investment in Minera Santa Cruz S.A. reflects the 49% ownership of the San José Mine. The deferred income tax liability arises due to the excess of the fair market values reflected herein compared to the underlying tax values of those assets.

Dividend Payment

As a result of the acquisition of Minera Andes, we also acquired a dividend receivable of $9.4 million reported by Minera Andes as at December 31, 2011. On February 24, 2012, Minera Santa Cruz S.A. (“MSC”), owner of the San José Mine, made its first dividend payment in the company’s history; our portion of the dividend amounted to $9.4 million.

Results of Operations — MSC

Overview

The following discussion is related only to MSC and is disclosed on a 100% basis of which we indirectly own 49%. We account for our investment in MSC using the equity method. Furthermore, this discussion is based on the results for the first half of 2012 whereas we have only recorded income from our equity investment for the period from January 25, 2012 to June 30, 2012. MSC, the entity which owns and operates the San José Mine, is responsible for and has supplied to us all reported results and operational updates from the San José Mine.

For the three and six months ended June 30, 2012, MSC reported net income of $3.3 million and $21.6 million, respectively. The amortization of the fair value increments arising from the preliminary purchase price allocation reduced the current reported net income from MSC by $3.7 million and $9.4 million for the same respective periods.

During the three months ended June 30, 2012, production was 21,946 ounces of gold and 1,500,000 ounces of silver. This represented an increase of 24% for gold production and 13% for silver production compared to production of 17,700 ounces of gold and 1,332,000 ounces of silver in the same period in 2011. The increase was mainly attributable to an increase in tonnage of 31% processed through the mill in the second quarter of 2012 compared to the same period in 2011. During the second quarter of 2011, mill throughput decreased due to a strike at the mine which resulted in the loss of 18 days of production.

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For the three months ended June 30, 2012, net sales decreased by 36% as compared to the same period in 2011, primarily due to changes in the export revenue repatriation requirements in Argentina. Please refer to a more detailed discussion in the sales section below.

The following table sets out operating cash costs and total cash costs (on a co-product basis) of the San José Mine for the first half of 2012 and for the comparable period in 2011, and they are considered to be non-GAAP measures (see non-GAAP measures, page 30), as well as production totals and sales totals for the same periods. Also included are the production figures on a 49% attributable basis

	Q2 YTD 2012		Q2 2012		Q1 2012		Q2 YTD 2011		Q2 2011		Q1 2011
San José - 100%
Tonnes processed (‘000)	245		129		116		212		98		114
Ounces gold produced (‘000)	42		22		20		39		18		21
Ounces gold sold (‘000)	32		18		14		40		22		18
Ounces silver produced (‘000)	2,856		1,500		1,356		2,854		1,332		1,522
Ounces silver sold (‘000)	2,178		1,146		1,032		2,926		1,584		1,342
Net sales (‘000)	$	116,139	$	56,375	$	59,764	$	155,989	$	88,166	$	67,823
Operating cash cost (‘000)	48,793		25,535		23,258		39,001		18,382		20,619
Operating cash cost/tonne ($/t)	199		198		201		184		187		181
Total cash cost/oz Au ($/oz)	770		842		697		519		527		514
Total cash cost/oz Ag ($/oz)	14.67		15.32		13.90		12.60		13.56		11.70

McEwen Mining - 49% share
Ounces gold produced (‘000)	21		11		10		19		9		10
Ounces silver produced (‘000)	1,399		735		664		1,398		653		746
Ounces gold equivalent produced (‘000) (1)	48		25		23		46		22		24

(1) Gold equivalent calculated using an average silver:gold ratio of 52:1

Sales

Net sales realized by MSC from the sale of gold and silver for the quarter ended June 30, 2012 totaled $56.4 million as compared to $88.2 million for the same period in 2011, a decrease of $31.8 million or 36%. During the first half of 2012, net sales totaled $116.1 million as compared to $156.0 million for the same period in 2011, a decrease of $39.9 million or 26%. As noted previously, approximately 44% of gold and silver sales for the second quarter of 2012 were delayed due to changes in the export revenue repatriation requirements in Argentina. As these issues appear to be resolved, the unsold inventory at June 30, 2012 is expected to be sold during the third quarter of 2012.

The average gross sale price for gold sold in the second quarter of 2012 was $1,559 per ounce, an increase of 4% compared to $1,496 per ounce received in the same period in 2011. In comparison, the average London P.M. fix price for gold increased by 6% to $1,603 per ounce during the second quarter of 2012, as compared to $1,506 per ounce for the same period in 2011.

The average weighted gross sale price for silver sold in the second quarter of 2012 was $25.90 per ounce, a decrease of 28% compared to $36.18 per ounce received in the same period in 2011. In comparison, the average London P.M. fix price for silver significantly decreased by 23% to $29.38 per ounce during the second quarter of 2012, as compared to $37.96 per ounce for the same period in 2011.

Operating and Total Costs

The terms operating cash cost or total cash cost used in this section are for the reporting of the MSC operations only and are considered to be non-GAAP measures (see non-GAAP measures, page 30). Operating cash cost per tonne consists of geology, mining, processing, general and administration, royalty costs and refining and treatment costs (for doré product only). Total cash cost per ounce consists of geology, mining, processing, general and administration, royalty costs,

	Part I FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2012 and 2011 (unaudited)	3

	Consolidated Balance Sheets at June 30, 2012 (unaudited) and December 31, 2011	4

	Consolidated Statement of Changes in Shareholders’ Equity for the six months ended June 30, 2012 and 2011 (unaudited)	5

	Consolidated Statements of Cash Flows for the six months ended June 30, 2012 and 2011 (unaudited)	6

	Notes to Consolidated Financial Statements (unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosure about Market Risk	36

Item 4.	Controls and Procedures	37

	Part II OTHER INFORMATION

Item 1.	Legal Proceedings	38

Item 6.	Exhibits	40

SIGNATURES		41