EQUITY INVESTMENTS

3 Months Ended

Mar. 31, 2024

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 MSC, MSC’s financial statements, which are originally prepared by MSC in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, have been adjusted to conform with US GAAP.

Equity investment in McEwen Copper

A summary of the operating results for McEwen Copper for the three months ended March 31, 2024 and 2023 is as follows:

	Three months ended March 31,
	2024		2023
McEwen Copper (100%)
Advanced projects	$	(48,183)	$	—
Other expenses		(2,016)		—
Foreign exchange loss		(3,992)		—
Interest and other income(1)		16,454		—
Loss before tax	$	(37,737)	$	—
Current and deferred taxes		—		—
Net loss	$	(37,737)	$	—
Portion attributable to McEwen Mining (47.7%)
Net loss on investment in McEwen Copper	$	(18,012)	$	—

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

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

	March 31, 2024		December 31, 2023
Investment, beginning of period	$	326,147	$	—
Deconsolidation of McEwen Copper		—		383,968
Attributable net loss from McEwen Copper		(18,012)		(57,821)
Investment, end of period	$	308,135	$	326,147

A summary of the key assets and liabilities of McEwen Copper as at March 31, 2024, before and after adjustments for fair value increments arising from the purchase price allocation, is as follows:

As at March 31, 2024	Balance excluding FV increments		Adjustments		Balance including FV increments
Current assets	$	65,374	$	—	$	65,374
Total assets	$	248,682	$	262,494	$	511,176
Current liabilities	$	(31,694)	$	—	$	(31,694)
Total liabilities	$	(31,969)	$	—	$	(31,969)

Equity investment in MSC

A summary of the operating results for MSC for the three months ended March 31, 2024 and 2023 is as follows:

	Three months ended March 31,
	2024		2023
Minera Santa Cruz S.A. (100%)
Revenue from gold and silver sales	$	65,927	$	45,740
Production costs applicable to sales		(47,884)		(41,124)
Depreciation and depletion		(8,926)		(8,230)
Gross profit (loss)		9,117		(3,614)
Exploration		(2,104)		(1,952)
Other income (expense)(1)		1,501		(3,234)
Income (loss) before tax	$	8,514	$	(8,800)
Current and deferred tax recovery (expense)		(4,847)		3,315
Net income (loss)	$	3,667	$	(5,485)
Portion attributable to McEwen Mining Inc. (49%)
Net income (loss)	$	1,796	$	(2,687)
Amortization of fair value increments		(709)		(884)
Income tax recovery		191		110
Income (loss) from investment in MSC, net of amortization	$	1,278	$	(3,461)

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

The income or loss from the investment in MSC attributable to the Company includes amortization of the fair value increments arising from the initial purchase price allocation and related income tax recovery. The income tax recovery reflects the impact of the devaluation of the Argentine peso against the U.S. dollar on the peso-denominated deferred tax liability recognized at the time of acquisition, as well as income tax rate changes over the periods.

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

	March 31, 2024		December 31, 2023
Investment, beginning of period	$	93,218	$	93,451
Attributable net income from MSC		1,796		4,157
Amortization of fair value increments		(709)		(4,612)
Income tax recovery		191		517
Dividend distribution received		—		(295)
Investment, end of period	$	94,496	$	93,218

A summary of the key assets and liabilities of MSC as at March 31, 2024 before and after adjustments for fair value increments arising from the purchase price allocation, are as follows:

As at March 31, 2024	Balance excluding FV increments		Adjustments		Balance including FV increments
Current assets	$	107,710	$	732	$	108,442
Total assets	$	201,995	$	70,166	$	272,161
Current liabilities	$	(45,171)	$	—	$	(45,171)
Total liabilities	$	(79,538)	$	149	$	(79,389)