EQUITY INVESTMENTS

12 Months Ended

Dec. 31, 2023

EQUITY INVESTMENTS

EQUITY INVESTMENTS

NOTE 9 EQUITY INVESTMENTS

The Company accounts for investments over which it exerts significant influence but does not control through majority ownership using the equity method of accounting. In applying the equity method of accounting to the Company’s investment in McEwen Copper and MSC, MSC’s financial statements, which are originally prepared by MSC in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, have been adjusted to conform with US GAAP.

Equity investment in McEwen Copper

A summary of the operating results post-deconsolidation of McEwen Copper for the period from October 10, 2023 to December 31, 2023, is as follows:

	December 31, 2023
McEwen Copper (100%)
Advanced projects	$	(36,475)
Other expenses		(4,684)
Foreign exchange loss		(99,338)
Interest and other income		19,356
Net loss before tax	$	(121,141)
Current and deferred taxes		-
Net loss	$	(121,141)
Portion attributable to McEwen Mining (47.7%)
Net income loss on investment in McEwen Copper	$	(57,821)

Changes in the Company’s investment in McEwen Copper for the years ended December 31, 2023, and 2022 are as follows:

	December 31, 2023
Investment, beginning of year	$	—
Deconsolidation of McEwen Copper (Note 20)		383,968
Attributable net loss from McEwen Copper		(57,821)
Investment, end of year	$	326,147

A summary of the key assets and liabilities of McEwen Copper as at December 31, 2023, before and after adjustments for fair value increments arising from the purchase price allocation, is as follows:

As at December 31, 2023	Balance excluding FV increments		Adjustments		Balance including FV increments
Current assets	$	104,195	$	—	$	104,195
Total assets	$	281,353	$	262,494	$	543,847
Current liabilities	$	(23,988)	$	—	$	(23,988)
Total liabilities	$	(24,287)	$	—	$	(24,287)

Equity investment in MSC

A summary of the operating results of MSC for the years ended December 31, 2023, 2022, and 2021, is as follows:

	Year ended December 31,
	2023		2022			2021
Minera Santa Cruz S.A. (100%)
Revenue from gold and silver sales	$	254,926	$	254,698	$	271,863
Production costs applicable to sales		(177,234)		(182,195)		(196,033)
Depreciation and depletion		(58,935)		(32,200)		(39,948)
Gross profit		18,757		40,303		35,882
Exploration		(9,346)		(8,946)		(10,602)
Other expenses(1)		(3,977)		(19,715)		(17,077)
Net income before tax	$	5,434	$	11,642	$	8,203
Current and deferred tax recovery (expense)		3,051		1,221		(7,934)
Net income	$	8,485	$	12,863	$	269
Portion attributable to McEwen Mining Inc. (49%)
Net income	$	4,157	$	6,303	$	132
Amortization of fair value increments		(4,612)		(4,155)		(8,331)
Income tax recovery		517		628		666
Income (loss) from investment in MSC, net of amortization	$	62	$	2,776	$	(7,533)

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

The income (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 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 years ended December 31, 2023, and 2022 are as follows:

	December 31, 2023		December 31, 2022
Investment, beginning of year	$	93,451	$	90,961
Attributable net income from MSC		4,157		6,303
Amortization of fair value increments		(4,612)		(4,155)
Income tax recovery		517		628
Dividend distribution received		(295)		(286)
Investment, end of year	$	93,218	$	93,451

A summary of the key assets and liabilities of MSC as at December 31, 2023, and 2022, before and after adjustments for fair value increments arising from the purchase price allocation, is as follows:

As at December 31, 2023	Balance excluding FV increments		Adjustments		Balance including FV increments
Current assets	$	101,572	$	937	$	102,509
Total assets	$	196,617	$	71,528	$	268,145
Current liabilities	$	(44,785)	$	—	$	(44,785)
Total liabilities	$	(77,742)	$	(239)	$	(77,981)

As at December 31, 2022	Balance excluding FV increments		Adjustments		Balance including FV increments
Current assets	$	98,956	$	1,103	$	100,059
Total assets	$	204,671	$	81,434	$	286,105
Current liabilities	$	(60,584)	$	—	$	(60,584)
Total liabilities	$	(82,185)	$	(1,295)	$	(83,480)