EQUITY METHOD INVESTMENTS

9 Months Ended

Sep. 30, 2024

EQUITY METHOD INVESTMENTS

EQUITY METHOD INVESTMENTS

NOTE 9 EQUITY METHOD 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 investments 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 method investment in McEwen Copper

A summary of the operating results for McEwen Copper for the three and nine months ended September 30, 2024, is as follows:

	Three months ended		Nine months ended
	September 30, 2024		September 30, 2024
McEwen Copper (100%)
Advanced projects	$	(6,147)	$	(91,877)
Other expenses		(678)		(4,529)
Foreign exchange loss		(308)		(3,990)
Interest and other income (1)		3,295		23,590
Loss before tax	$	(3,838)	$	(76,806)
Current and deferred taxes		—		—
Net loss	$	(3,838)	$	(76,806)
Portion attributable to McEwen Mining (48.3%)
Net loss on investment in McEwen Copper	$	(1,852)	$	(36,680)

(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 nine months ended September 30, 2024, and for the year ended December 31, 2023, are as follows:

	Nine months ended		Year ended
	September 30, 2024		December 31, 2023
Investment, beginning of period	$	326,147	$	—
Additional investment in McEwen Copper		14,000		—
Deconsolidation of McEwen Copper		—		383,968
Attributable net loss from McEwen Copper		(36,680)		(57,821)
Investment, end of period	$	303,467	$	326,147

A summary of the key assets and liabilities of McEwen Copper as at September 30, 2024 is as follows:

As at	September 30, 2024
Current assets	$	18,787
Total assets	$	201,902
Current liabilities	$	(5,031)
Total liabilities	$	(5,256)

As at September 30, 2024, the Company's investment in McEwen Copper exceeded its proportionate share of the underlying net assets by $207.5 million. This basis difference is attributable to equity-method goodwill and not amortized.

Equity method investment in MSC

A summary of the operating results for MSC for the three and nine months ended September 30, 2024, and 2023 is as follows:

	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Minera Santa Cruz S.A. (100%)
Revenue from gold and silver sales	$	70,361	$	64,495	$	210,635	$	177,947
Production costs applicable to sales		(58,031)		(43,380)		(154,136)		(131,434)
Depreciation and depletion		(13,248)		(15,190)		(36,897)		(37,783)
Gross profit (loss)		(918)		5,925		19,602		8,730
Exploration		(3,329)		(2,538)		(8,451)		(7,336)
Other income (expense) (1)		1,649		(2,652)		699		(13,797)
Income (loss) before tax	$	(2,598)	$	735	$	11,850	$	(12,403)
Current and deferred tax recovery (expense)		1,280		(3,953)		947		4,190
Net income (loss)	$	(1,318)	$	(3,218)	$	12,797	$	(8,213)
Portion attributable to McEwen Mining Inc. (49%)
Net income (loss)	$	(646)	$	(1,577)	$	6,271	$	(4,025)
Amortization of fair value increments		(833)		(1,217)		(2,209)		(3,370)
Income tax recovery		251		122		689		348
Income (loss) from investment in MSC, net of amortization	$	(1,228)	$	(2,672)	$	4,751	$	(7,047)

(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 nine months ended September 30, 2024, and for the year ended December 31, 2023, are as follows:

	Nine months ended		Year ended
	September 30, 2024		December 31, 2023
Investment, beginning of period	$	93,218	$	93,451
Attributable net income from MSC		6,271		4,157
Amortization of fair value increments		(2,209)		(4,612)
Income tax recovery		689		517
Dividend distribution received		(383)		(295)
Investment, end of period	$	97,586	$	93,218

A summary of the key assets and liabilities of MSC as at September 30, 2024 is as follows:

As at	September 30, 2024
Current assets	$	119,562
Total assets	$	211,075
Current liabilities	$	(45,055)
Total liabilities	$	(80,298)

As at September 30, 2024, the Company's investment in MSC exceeded its proportionate share of the underlying net assets by $69.3 million. This basis difference is primarily attributable to mineral property interests and amortized on a unit of production basis.