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, ~~2019~~2020

☐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: ~~362,488,425~~408,841,891 shares outstanding as of October 29, ~~2019.~~2020

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, ~~2019~~2020 and ~~2018~~2019 (unaudited)	3

	Consolidated Balance Sheets at September 30, ~~2019~~2020 and December 31, ~~2018~~2019 (unaudited)	4

	Consolidated Statements of Changes in Shareholders’ Equity for the three and nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 (unaudited)	5

	Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2019~~2020 and ~~2018~~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	4345

Item 4.	Controls and Procedures	4547

	Part II OTHER INFORMATION

Item ~~1A.~~	~~Risk Factors~~	46

~~Item 2~~2.	Unregistered Sales of Equity Securities and Use of Proceeds	4648

Item 4.	Mine Safety Disclosures	4648

Item 55.	Other Information	4648

Item 6.	Exhibits	4750

SIGNATURES		4851

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,


2019

2018

2019

2018
Revenue from gold and silver sales

$
32,691

$
26,896

$
84,657

$
101,743
Production costs applicable to sales

(23,584)

(17,740)

(59,432)

(62,078)
Depreciation and depletion

(7,488)

(3,143)

(17,501)

(10,332)
Gross profit

1,619

6,013

7,724

29,333

OTHER OPERATING EXPENSES:

Advanced projects

(2,140)

(5,230)

(6,881)

(10,990)
Exploration

(13,695)

(8,231)

(23,717)

(29,715)
General and administrative

(2,645)

(2,192)

(8,078)

(8,323)
Loss from investment in Minera Santa Cruz S.A. (note 8)

(328)

(4,973)

(6,775)

(7,450)
Depreciation

(96)

(279)

(417)

(912)
Revision of estimates and accretion of asset retirement obligations (note 11)

(495)

(314)

(1,383)

(896)

(19,399)

(21,219)

(47,251)

(58,286)
Operating loss

(17,780)

(15,206)

(39,527)

(28,953)

OTHER (EXPENSE) INCOME:

Interest and other finance expense, net

(650)

(832)

(3,946)

(612)
Other income (note 3)

4,773

1,135

6,283

793
Total other income

4,123

303

2,337

181
Loss before income and mining taxes

(13,657)

(14,903)

(37,190)

(28,772)
Income and mining tax recovery

2,192

1,613

2,575

4,891
Net loss and comprehensive loss

$
(11,465)

$
(13,290)

$
(34,615)

$
(23,881)
Net loss per share (note 13):

Basic and Diluted

$
(0.03)

$
(0.04)

$
(0.10)

$
(0.07)
Weighted average common shares outstanding (thousands) (note 13):

Basic and Diluted

362,175

337,278

356,218

337,083

Shareholders' distribution declared per common share (note 12)

$
—

$
0.005

$
—

$
0.010


	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
Revenue from gold and silver sales	$	27,395	$	32,691	$	77,086	$	84,657
Production costs applicable to sales		(23,526)		(23,584)		(74,267)		(59,432)
Depreciation and depletion		(4,570)		(7,488)		(16,080)		(17,501)
Gross (loss) profit		(701)		1,619		(13,261)		7,724

OTHER OPERATING EXPENSES:
Advanced projects		(4,027)		(2,140)		(9,464)		(6,881)
Exploration		(4,423)		(13,695)		(11,761)		(23,717)
General and administrative		(2,532)		(2,645)		(6,836)		(8,078)
Income (loss) from investment in Minera Santa Cruz S.A. (note 10)		2,582		(328)		(1,139)		(6,775)
Depreciation		(88)		(96)		(317)		(417)
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)		—
		(9,374)		(19,399)		(117,293)		(47,251)
Operating loss		(10,075)		(17,780)		(130,554)		(39,527)

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
Loss before income and mining taxes		(9,930)		(13,657)		(130,059)		(37,190)
Income and mining tax recovery		152		2,192		1,276		2,575
Net loss	$	(9,778)	$	(11,465)	$	(128,783)	$	(34,615)


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

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,

2019

2018

ASSETS

Current assets:

Cash and cash equivalents

$
4,262

$
15,756

Investments (note 4)

3,224

3,131

Receivables and other current assets (note 5)

6,268

3,765

Inventories (note 6)

34,368

22,039

Restricted cash (note 12)

8,764

14,685

Total current assets

56,886

59,376

Mineral property interests and plant and equipment, net (note 7)

424,837

423,879

Investment in Minera Santa Cruz S.A. (note 8)

116,994

127,814

Inventories, long-term (note 6)

7,737

4,591

Other assets

757

1,281

TOTAL ASSETS

$
607,211

$
616,941

LIABILITIES & SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued liabilities

$
32,110

$
30,817

Flow-through share premium (note 12)

839

2,950

Long-term debt, current portion (note 10)

2,000

—

Long-term debt from related party, current portion (note 10)

2,000

—

Lease liabilities, current portion (note 9)

2,045

1,511

Asset retirement obligation, current portion (note 11)

1,435

734

Total current liabilities

40,429

36,012

Lease liabilities, long-term (note 9)

5,465

4,918

Long-term debt (note 10)

22,718

24,603

Long-term debt from related party (note 10)

22,718

24,603

Asset retirement obligation, long-term (note 11)

28,319

28,668

Other liabilities

4,018

5,765

Deferred income and mining tax liability

5,836

6,426

Total liabilities

$
129,503

$
130,995

Shareholders’ equity:

Common stock and additional paid-in capital, 0 par value, 500,000 shares authorized (in thousands);

Common: 362,458 as of September 30, 2019 and 344,560 as of December 31, 2018 issued and outstanding (in thousands) (note 12)

1,483,799

1,457,422

Accumulated deficit

(1,006,091)

(971,476)

Total shareholders’ equity

477,708

485,946

TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY

$
607,211

$
616,941


	September 30,		December 31,
	2020		2019
ASSETS
Current assets:
Cash and cash equivalents	$	7,954	$	46,452
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
Total current assets		57,546		91,978
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
Other assets		618		620
TOTAL ASSETS	$	506,180	$	631,223

LIABILITIES & SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	28,852	$	34,070
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
Lease liabilities, current portion		2,213		2,115
Asset retirement obligation, current portion (note 12)		2,860		2,610
Total current liabilities		35,983		48,795
Lease liabilities, long-term		3,408		5,018
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
Other liabilities		3,365		3,910
Deferred income and mining tax liability		3,697		4,914
Total liabilities	$	125,379	$	131,744

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
Accumulated deficit		(1,160,006)		(1,031,223)
Total shareholders’ equity		380,801		499,479
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY	$	506,180	$	631,223

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

~~Subsequent event: note 10~~

Table of Contents

MCEWEN MINING INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(UNAUDITED)

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


	Common Stock							Common Stock
	and Additional							and Additional
	Paid-in Capital			Accumulated				Paid-in Capital			Accumulated
Three months ended September 30, 2018 and 2019:	Shares	Amount		Deficit		Total
Balance, June 30, 2018	337,268	$	1,447,025	$	(937,197)	$	509,828
Stock-based compensation	—		(214)		—		(214)
Exercise of stock options	18		18		—		18
Shareholder distribution	—		(1,687)		—		(1,687)
Net loss	—		—		(13,290)		(13,290)
Balance, September 30, 2018	337,286	$	1,445,142	$	(950,487)	$	494,655

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	361,957	$	1,482,640	$	(994,626)	$	488,014
Stock-based compensation	—		284		—		284	—		284		—		284
Exercise of stock options	147		151		—		151	147		151		—		151
Shares issued for acquisition of mineral property interests	354		724		—		724	354		724		—		724
Net loss	—		—		(11,465)		(11,465)	—		—		(11,465)		(11,465)
Balance, September 30, 2019	362,458	$	1,483,799	$	(1,006,091)	$	477,708	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

and Additional

Paid-in Capital

Accumulated

Nine months ended September 30, 2018 and 2019:

Shares

Amount

Deficit

Total

Balance, December 31, 2017

337,051

$
1,447,879

$
(926,606)

$
521,273

Stock-based compensation

—

182

—

182

Exercise of stock options

57

63

—

63

Shareholder distribution

—

(3,373)

—

(3,373)

Shares issued for acquisition of mineral property interests

178

391

—

391

Net loss

—

—

(23,881)

(23,881)

Balance, September 30, 2018

337,286

$
1,445,142

$
(950,487)

$
494,655

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 share issue costs

16,129

22,910

—

22,910

Sale of common stock 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


	Common Stock
	and Additional
	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

Balance, December 31, 2019	400,339	$	1,530,702	$	(1,031,223)	$	499,479
Stock-based compensation	—		332		—		332
Sale of flow-through common shares	6,298		7,767		—		7,767
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
Net loss	—		—		(128,783)		(128,783)
Balance, September 30, 2020	408,842	$	1,540,807	$	(1,160,006)	$	380,801

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,

2019

2018
Cash flows from operating activities:

Cash paid to suppliers and employees

$
(102,722)

$
(102,775)
Cash flow from revenues

84,657

102,360
Interest paid (note 9 and note 10)

(3,911)

(695)
Interest received

60

276
Cash used in operating activities

(21,916)

(834)
Cash flows from investing activities:

Additions to mineral property interests and plant and equipment

(27,027)

(53,228)
Investment in marketable equity securities (note 4)

(510)

(1,384)
Proceeds from sale of investments (note 4)

4,714

3,667
Return of investment received from Minera Santa Cruz S.A. (note 8)

4,045

9,360
Cash used in investing activities

(18,778)

(41,585)
Cash flows from financing activities:

Net proceeds from equity registered direct offering (note 12)

22,910

—
Proceeds of at-the-market common share issuance (note 12)

1,851

—
Proceeds of exercise of stock options (note 12)

411

63
Payment of lease obligations

(1,564)

(392)
Shareholders' distribution (note 12)

—

(3,372)
Proceeds of loan from related party (note 10 and note 14)

—

25,000
Proceeds of loan (note 10)

—

25,000
Debt issuance costs and lender fees (note 10)

—

(908)
Cash provided by financing activities

23,608

45,391
Effect of exchange rate change on cash and cash equivalents

(329)

763
(Decrease) increase in cash, cash equivalents and restricted cash

(17,415)

3,735
Cash, cash equivalents and restricted cash, beginning of period

30,489

37,153
Cash, cash equivalents and restricted cash, end of period (note 17)

$
13,074

$
40,888

Reconciliation of net loss to cash used in operating activities:

Net loss

$
(34,615)

$
(23,881)
Adjustments to reconcile net loss from operating activities:

Loss from investment in Minera Santa Cruz S.A., net of amortization (note 8)

6,775

7,450
(Gain) loss on investments (note 4)

(4,972)

2,526
Loss on disposal of fixed assets

134

99
Income and mining tax recovery

(2,575)

(4,891)
Stock-based compensation (note 12)

481

182
Revision of estimates and accretion of asset retirement obligations (note 11)

1,383

896
Unrealized foreign exchange loss (gain) (note 11)

434

(411)
Depreciation and amortization

18,158

12,276
Effect of exchange rate changes on cash and cash equivalents

329

(763)
Change in non-cash working capital items:

(Increase) decrease in other assets related to operations

(13,139)

12,241
Increase (decrease) in liabilities related to operations

5,691

(6,558)
Cash used in operating activities

$
(21,916)

$
(834)


	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

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

Table of Contents

MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, ~~2019~~2020

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

NOTE 1 NATURE OF OPERATIONS AND ~~RECENT ACCOUNTING PRONOUNCEMENTS~~

~~Nature of Operations and Basis of Presentation~~BASIS OF PRESENTATION

McEwen Mining Inc. ~~(“McEwen Mining” or the~~(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 ~~Project~~gold project and the Fenix silver-gold project in Sinaloa, Mexico, the Los Azules copper deposit in San Juan, Argentina ~~the Fenix silver-gold project in Sinaloa, Mexico,~~ and a portfolio of exploration properties in Nevada, Canada, Mexico and Argentina. ~~The Company~~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. ~~Certain~~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, ~~although~~ the Company believes that the information and disclosures included are adequate ~~to make the information presented~~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, ~~2019~~2020 and ~~2018,~~2019, the unaudited Consolidated Balance Sheets as at September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the unaudited Consolidated Statement of Changes in Shareholders’ Equity for the three and nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, and the unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2019~~2020 and ~~2018,~~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 summary of significant accounting policies included in the Company’s annual report on Form 10-K for the year ended December 31, ~~2018.~~2019. 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, ~~2018.~~2019. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Inter-company accounts and transactions have been eliminated.

~~Recently Adopted Accounting Pronouncements~~NOTE 2 SIGNIFICANT ACCOUNTING POLICIES

~~Leases – ASC 842:~~Risks and Uncertainties ~~From 2016 to 2019,~~

COVID-19

On March 11, the ~~FASB issued multiple accounting standard updates~~World Health Organization (“~~ASU”~~WHO”) ~~regarding~~declared the ~~new ASC 842. The ASUs outline amendments~~COVID-19 virus a global pandemic. As a result of the pandemic, many jurisdictions, including the United States, Canada, Mexico and ~~updates to ASC 842, which provides that a lessee should recognize~~Argentina, instituted restrictions on travel, public gatherings, and certain business operations. Even absent of government-mandated shut-downs, the ~~assets and the liabilities that arise from leases, including operating leases. Under the new requirements, a lessee is~~Company was required to ~~recognize~~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 ~~statement~~Company’s mine sites at the start of ~~financial position~~Q2 2020. Since that date, all 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 ~~liability to make lease payments (the lease liability) and~~ramp-up phase as a result of the ~~right-of-use asset representing~~ongoing countrywide restrictions on the ~~right to~~movement of people. Resumption of operations at normal capacity is expected towards the ~~underlying asset for~~end of the lease term. Adoption of this ASC was completed by the Company under a modified retrospective transition method with certain practical expedients. The Company’s initial date of adoption was January 1, 2019; the adoption of ASC 842 did not result in significant changes to the financial statements.year.

~~Practical expedients and elections under ASUs and ASC 842 made by the Company are as follows:~~

ASU 2018-11: This update permitted an entity to elect an optional transitional practical expedient to continue to apply ASC 840, Leases, including its disclosure requirements, in the comparative periods presented in the year of adoption of ASC 842. Under this optional practical expedient, the Company applied the transition provisions

Table of Contents

MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, ~~2019~~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 ~~January 1, 2019 (the date of adoption) rather than January 1, 2017 (the beginning~~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 ~~earliest comparative~~COVID-19 outbreak 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 and related advisories and restrictions. These developments and the impact of COVID-19 on the global financial markets and the overall economy are highly uncertain and cannot be predicted. Achieving and maintaining normal operating capacity is also dependant on the continued availability of supplies, which is out of the Company’s control. If the financial markets and/or the overall economy are impacted for an extended period, ~~presented); first reporting~~the Company’s results of operations, financial position and cash flows may be further affected.

The Company is not able to estimate the duration of the pandemic and potential impact on its business if disruptions or delays in business developments and shipments of product occur. In addition, 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 potential impacts of COVID-19 on its business, including volatility in commodity prices, temporary disruptions and/or curtailments of operating activities (voluntary or involuntary).

Going Concern

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 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 reduction 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 access portal, flow-through spending requirements, and the disruptions to the Company’s operations caused by the COVID-19 pandemic, there is uncertainty about the Company’s ability to generate sufficient operating cash flow to both conduct further operation, exploration and development of its mineral properties and to remain in compliance with certain of its financial debt covenants, over the next 12 months. Non-compliance with these covenants would result in a breach under the ~~new standard was for the first quarter of 2019. Upon adoption of ASC 842,~~Company’s debt agreement.

In response to this uncertainty, the Company ~~recognized a cumulative-effect adjustment~~is evaluating all options, including accessing capital markets, sale of certain assets, and expenditure reductions across the Company. The Company’s ability to ~~the opening accumulated deficit balance.~~

Package of practical expedients – which permits an entity to (a) not reassess whether expired or existing contracts contain leases, (b) not reassess lease classification for existing or expired leases and (c) not consider whether previously capitalized initial direct costs would be appropriate under the new standard. The Company opted to elect the package of practical expedients.

~~Hindsight practical expedient – which permits an entity to use hindsight in determining the lease term. The Company opted to elect this provision.~~

Easements practical expedient – which permits an entity to elect an optional transitional practical expedient to not evaluate land easements that exist or expire before the entity’s adoption of ASC 842 that were not previously accounted for as leases under ASC 840. The Company opted to elect this transitional provision andcontinue as a ~~result did not evaluate any~~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 ~~land agreements.~~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

~~Short term election – which permits an entity to elect not to apply lease accounting to leases that~~MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2020

(tabular amounts are ~~not greater than 12 months. The~~in thousands of U.S. dollars, unless otherwise noted) (Continued)

Recently Adopted Accounting Pronouncements

Accounting for Government Assistance: In June 2020, the Company ~~elected this short term election.~~

~~Non-lease component election – which permits lessees to elect~~analogized guidance to account for ~~non-lease components as part~~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 ~~lease component to which they relate; an election made by class~~standard had a material impact on the financial statements as of ~~underlying asset. This election is not relevant for~~September 30, 2020. Under this policy, the Company ~~and therefore,~~has recognized the ~~Company did not make~~income from the ~~election.~~

~~The adoption resulted in an increase~~relief funds in the ~~Company’s recorded assets and liabilities and a nominal cumulative-effect adjustment to~~Statement of Operations, as the ~~opening accumulated deficit balance (~~~~note 9 Lease Liabilities).~~

~~Lease Accounting Policy:~~ Contracts entered into are analyzed to identify whether the contract contains an operating or financing lease according to ASC 842. If a contract is determined to contain a lease, the Company includes the lease payments (the lease liability) and the right-of-use asset representing the right to the underlying assetcriteria for ~~the lease term within the~~ ~~Consolidated Balance Sheets~~~~. Related depreciation and amortization expense, interest expense and rent expense for operating leases is recorded within the~~ ~~Consolidated Statements of Operations~~. For leases with a term of twelve months or less, an accounting policy election is made to not recognize lease assets and lease liabilities. The Company has not elected to account for non-lease components as partrecognition of the ~~lease component to which they relate.~~

Operating and right-of-use (“ROU”) asset balances and lease liabilities are recognized at the commencement date based on the present value of the future lease payments over the lease term. The Company utilizes the incremental borrowing rate (“IBR”) in determining the present value of the future lease payments. IBR represents the rate of interest that a lessee wouldfunds have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment. Each lease’s IBR is determined by using the average bond yield ratings for comparable companies.

~~Recently Issued Accounting Pronouncements~~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, ~~and~~the FASB issued ASU 2019-12 “Income Taxes (Topic 740).” ASU 2019-12 simplifies the accounting for income taxes by reducing existing complexity in accounting standards. The update to the accounting standards is effective for the Company for the fiscal years beginning after December 15, 2020, with early adoption is permitted. ~~Certain disclosures in the update will be applied retrospectively, while others will be applied prospectively.~~ The Company is currently evaluating the ~~potential~~effect of this amendment and the impact ~~of adopting this guidance~~it may have on ~~its~~the Company’s consolidated financial statements.

~~Table of Contents~~

~~MCEWEN MINING INC.~~

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

~~September 30, 2019~~

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

~~Reclassifications~~

Certain amounts in prior years have been reclassified to conform to the 2019 presentation. Reclassified amounts were not material to the financial statements and relate to the presentation of Other Operating Expenses. ~~Advanced projects~~ ~~in the~~ ~~Statement of Operations~~ ~~includes mine development costs, property holding and general and administrative costs associated with advanced stage projects.~~ ~~Exploration~~ ~~in the~~ ~~Statement of Operations~~ ~~includesexploration expenses, property holding and general and administrative costs associated with exploration stage projects.~~ ~~General and Administrative~~ ~~in the~~ ~~Statement of Operations~~ ~~include corporate (head office) general and administrative costs.~~

NOTE 23 OPERATING SEGMENT REPORTING

McEwen Mining Inc. is ~~a mining and minerals~~engaged in the exploration, development, production and sale of gold and silver and exploration ~~company focused on precious metals~~for copper, with operations located in ~~Argentina, Mexico, Canada, and~~ the United ~~States.~~States, Canada, Mexico, and Argentina. The Company’s chief operating decisions maker (“CODM”) reviews the operating results, assesses performance and makes decisions about 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.

~~Significant information relating~~Production costs applicable to sales for the ~~Company’s reportable operating segments is summarized~~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 ~~tables below:~~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.

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)

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)

Table of Contents

MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, ~~2019~~2020

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

Three months ended September 30, 2018

USA

Canada

Mexico

MSC

Los Azules

Total
Revenue from gold and silver sales

$
—

$
11,395

$
15,501

$
—

$
—

$
26,896
Production costs applicable to sales

—

(9,179)

(8,561)

—

—

(17,740)
Depreciation and depletion

—

(2,729)

(414)

—

—

(3,143)
Gross profit (loss)

—

(513)

6,526

—

—

6,013

Advanced projects

(2,538)

—

(2,692)

—

—

(5,230)
Exploration

(1,039)

(6,356)

(296)

—

(540)

(8,231)
Loss from investment in Minera Santa Cruz S.A.

—

—

—

(4,973)

—

(4,973)
Segment (loss) income

$
(3,577)

$
(6,869)

$
3,538

$
(4,973)

$
(540)

$
(12,421)
General and Administrative and other

(2,482)
Loss before income and mining taxes

$
(14,903)

Nine months ended September 30, 2018

USA

Canada

Mexico

MSC

Los Azules

Total
Revenue from gold and silver sales

$
—

$
46,444

$
55,299

$
—

$
—

$
101,743
Production costs applicable to sales

—

(31,711)

(30,367)

—

—

(62,078)
Depreciation and depletion

—

(8,513)

(1,819)

—

—

(10,332)
Gross profit

—

6,220

23,113

—

—

29,333

Advanced projects

(5,171)

—

(5,819)

—

—

(10,990)
Exploration

(4,190)

(17,523)

(1,596)

—

(6,406)

(29,715)
Loss from investment in Minera Santa Cruz S.A.

—

—

—

(7,450)

—

(7,450)
Segment (loss) income

$
(9,361)

$
(11,303)

$
15,698

$
(7,450)

$
(6,406)

$
(18,822)
General and Administrative and other

(9,950)
Loss before income and mining taxes

$
(28,772)

~~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,


2019

2018

2019

2018


2019

2018
Canada

$
78,770

$
84,119

$
11,147

$
11,395

$
36,139

$
46,444
Mexico

25,671

26,524

4,967

15,501

19,577

55,299
USA

137,400

127,617

16,577

—

28,941

—
Argentina⁽²⁾

308,484

319,305

—

—

—

—
Total consolidated

$
550,325

$
557,565

$
32,691

$
26,896

$
84,657

$
101,743

~~(1)~~

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

~~(2)~~

~~Includes Investment in MSC of $117.0 million as of September 30, 2019 (December 31, 2018~~ – ~~$127.8 million).~~

~~NOTE 3 OTHER INCOME~~

~~The following~~Significant information relating to the Company’s reportable operating segments is ~~a summary of other income (expense) for~~summarized in the ~~three and nine months ended September 30, 2019 and 2018:~~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)

—

(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

Three months ended September 30,

Nine months ended September 30,


2019

2018

2019

2018
Unrealized and realized gain (loss) on investments (note 4)

$
3,220

$
(24)

$
4,972

$
(3,293)
Foreign currency gain

1,616

1,159

1,242

3,568
Other income

71

—

203

617
Loss on sale of assets

(134)

—

(134)

(99)
Total other income

$
4,773

$
1,135

$
6,283

$
793

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, ~~2019~~2020

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

~~NOTE 4 INVESTMENTS~~

~~The following is a summary of the activity in investments for the nine months ended September 30, 2019 and 2018:~~

As at

Additions/

Net gain

Disposals/

Unrealized

Fair value

December 31,

transfers during

(loss) on

transfers during

gain (loss) on

September 30,


2018

period

securities sold

period

securities held

2019
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

gain (loss) on

September 30,


2017

period

securities sold

period

securities held

2018
Marketable equity securities

$
6,404

$
1,882

$
(767)

$
(2,895)

$
(1,795)

$
2,829
Warrants

1,567

201

—

(704)

(731)

333
Investments

$
7,971

$
2,083

$
(767)

$
(3,599)

$
(2,526)

$
3,162

~~The cost of marketable equity securities and warrants at September 30, 2019 was $2.4 million (December 31, 2018 – $2.9 million).~~

During the three months ended September 30, 2019, the Company exercised all 393,093 warrants of Great Bear Resources Ltd. for the same amount of shares for $0.5 million; the fair value of warrants at exercise date of $1.5 million was transferred to marketable equity securities.

During the three and nine months ended September 30, 2019, the Company sold marketable equity securities for $5.7 million ($0.9 million received subsequent to quarter end) and realized a gain of $3.4 million (nine months ended September 30, 2018 – sale proceeds of $3.7 million and realized a loss of $0.8 million; three months ended September 30, 2018 – $nil).

During the three months ended September 30, 2019, the Company recognized a $0.2 million unrealized loss on investments (same period in 2018 – $nil), which included a $0.9 million unrealized loss on equity securities and a $0.7 million gain on warrants.

~~NOTE 5 RECEIVABLES AND OTHER CURRENT ASSETS~~

~~The following is a breakdown of balances in receivables and other current assets as at September 30, 2019 and December 31, 2018:~~

September 30, 2019

December 31, 2018
Government sales tax receivable

$
2,457

$
2,079
Marketable equity securities receivable

939

—
Other current assets

2,872

1,686
Receivables and other current assets

$
6,268

$
3,765

~~Government sales tax receivable~~


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 ~~$1.2~~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 ~~of Mexican value added tax (“VAT”)~~ at ~~September 30, 2019 (December 31, 2018 – $1.1 million). The Company collected $1.3~~Gold Bar and $0.6 million ~~of VAT~~at Black Fox during the nine months ended September 30, ~~2019 (September 30, 2018 – $6.1 million).~~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, ~~2019~~2020

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

NOTE ~~6 INVENTORIES~~5 OTHER INCOME

~~Inventories~~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, ~~2019 and December 31, 2018 consisted~~2020, the full amount has been recognized as other income. The Company also secured $3.4 million of government relief in Canada through the ~~following:~~Canadian Emergency Wage Subsidy program all of which has been recognized in other income.

September 30, 2019

December 31, 2018
Material on leach pads

$
32,659

$
14,961
In-process inventory

3,370

3,446
Stockpiles

1,004

1,272
Precious metals

1,278

3,421
Materials and supplies

3,794

3,530
Inventories

$
42,105

$
26,630
Current portion

34,368

22,039
Long-term portion

$
7,737

$
4,591

NOTE 6 INVESTMENTS

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

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
	December 31,		transfers during		(loss) on		transfers during		gain on		September 30,
	2018		period		securities sold		period		securities held		2019
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

During the nine months ended September 30, 2020, the Company sold marketable equity securities for proceeds of $1.3 million (nine months ended September 30, 2019 - $5.7 million), and realized a loss of $0.6 million (nine months ended September 30, 2019 - realized a gain of $3.4 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 7 RECEIVABLES, PREPAIDS AND OTHER ASSETS

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


	September 30, 2020		December 31, 2019
Government sales tax receivable		1,453		2,658
Prepaids and other assets		3,702		2,607
Receivables and other current assets	$	5,155	$	5,265

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

NOTE 8 INVENTORIES

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


	September 30, 2020		December 31, 2019
Material on leach pads	$	29,069	$	37,328
In-process inventory		4,283		3,847
Stockpiles		586		1,384
Precious metals		945		1,038
Materials and supplies		4,818		4,382
Inventories	$	39,701	$	47,979
Less current portion		34,244		38,376
Long-term portion	$	5,457	$	9,603

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, the inventory of the Black Fox Mine was written down to its net realizable value. The write-down was $1.9 million, of which $1.5 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 million was included in production costs applicable to sales (three and nine months ended September 30, 2019 - $nil).

NOTE 79 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 ~~compliant~~estimated in accordance with SEC Industry Guide 7.

The Company ~~conducts a review of potential triggering events~~reviews and evaluates its long-lived assets for impairment on ~~all its mineral projects on~~ a quarterly ~~basis. When~~basis or when events or changes in circumstances indicate that the related carrying amounts may not be ~~recoverable,~~recoverable. Once it is determined that impairment exists, an impairment loss is measured as the ~~Company carries out a review and evaluation of these assets for impairment, in accordance with~~amount by which the asset carrying value exceeds its ~~accounting policy. During the nine months ended September 30, 2019, no such triggering events were identified with respect to the carrying values of the Company’s properties.~~

~~The following table summarizes mineral property interests and plant and equipment at September 30, 2019 and December 31, 2018:~~estimated fair value.

September 30, 2019

December 31, 2018
Mineral property interests

$
338,085

$
326,086
Land

8,745

8,699
Construction in progress

3,520

74,643
Plant and equipment

131,803

49,578
Subtotal

$
482,153

$
459,006
Less: accumulated depreciation

(57,316)

(35,127)
Net carrying value

$
424,837

$
423,879

~~Plant and equipment at September 30, 2019 includes $1.4 million~~As part of ~~capitalized interest related to~~ the ~~Gold Bar mine (December 31, 2018 – $0.8 million). As at February 16, 2019, first production occurred~~analysis conducted in Q1 2020, the Company determined that indicators of impairment existed for the long-lived assets at the Gold Bar mine and ~~related construction-in-progress costs were transferred into~~that the ~~appropriate category of plant and equipment and mineral property interests and amortized.~~

~~The Company’s leased assets include equipment, vehicles and office space; the assets are amortized on a straight-line basis over their estimated useful lives (see~~ ~~note 9 Leases~~~~). Leased~~long-lived assets at ~~September 30, 2019~~the Gold Bar mine were ~~as follows:~~

September 30, 2019

Operating lease

Finance leases
Leased assets, cost

$
1,167

$
8,048
Accumulated amortization

(441)

(864)
Net book value

$
726

$
7,184

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 were

1213

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MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, ~~2019~~2020

(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 810 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 ~~from~~for MSC for the three and nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 is as follows:


	Three months ended September 30,				Nine months ended September 30,				Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018		2020		2019		2020		2019
Minera Santa Cruz S.A. (100%)
Minera Santa Cruz S.A. (100%)
Revenue from gold and silver sales	$	70,908	$	47,814	$	179,708	$	150,748	$	70,195	$	74,530	$	154,666	$	189,348
Production costs applicable to sales		(51,238)		(48,193)		(140,474)		(135,007)		(41,512)		(43,345)		(100,230)		(119,392)
Other operating expenses		(8,221)		(5,164)		(27,064)		(12,776)
Depreciation and depletion										(7,107)		(18,158)		(22,084)		(50,083)
Gross profit										21,576		13,027		32,352		19,873
Exploration										(2,814)		(1,482)		(7,855)		(7,373)
Other expenses		(5,298)		(4,106)		(8,596)		(12,360)		(6,509)		(5,394)		(17,651)		(8,926)
Net income (loss) before tax	$	6,151	$	(9,649)	$	3,574	$	(9,395)
Net income before tax									$	12,253	$	6,151	$	6,846	$	3,574
Current and deferred tax expense		(4,512)		(889)		(8,350)		(7,965)		(4,922)		(4,512)		(2,989)		(8,350)
Net income (loss)	$	1,639	$	(10,538)	$	(4,776)	$	(17,360)	$	7,331	$	1,639	$	3,857	$	(4,776)

Portion attributable to McEwen Mining Inc. (49%)
Portion attributable to McEwen Mining Inc. (49%)
Net income (loss)	$	803	$	(5,164)	$	(2,339)	$	(8,506)	$	3,592	$	803	$	1,890	$	(2,340)
Amortization of fair value increments		(2,551)		(2,537)		(6,923)		(7,135)		(1,255)		(2,551)		(3,891)		(6,922)
Income tax recovery		1,420		2,728		2,487		8,191		245		1,420		862		2,487
Loss from investment in MSC, net of amortization	$	(328)	$	(4,973)	$	(6,775)	$	(7,450)
Income (loss) from investment in MSC, net of amortization									$	2,582	$	(328)	$	(1,139)	$	(6,775)

The loss from investment in MSC includes the amortization of the fair value increments arising from the purchase price allocation and related income tax recovery. Included in the income tax recovery is the impact of fluctuations in the exchange rate between the Argentina peso and the U.S. dollar on the peso-denominated deferred tax liability recognized in the purchase price allocation.

~~Changes in the Company’s investment in MSC for the nine months ended September 30, 2019 and year ended December 31, 2018 are as follows:~~

September 30, 2019

December 31, 2018
Investment in MSC, beginning of period

$
127,814

$
150,064
Attributable net loss from MSC

(2,339)

(10,065)
Amortization of fair value increments

(6,923)

(9,730)
Income tax recovery

2,487

7,930
Dividend distribution received

(4,045)

(10,385)
Investment in MSC, end of period

$
116,994

$
127,814

During the three and nine months ended September 30, 2019, the Company received $2.0 and $4.0 million, respectively, in dividends from MSC (three and nine months ended September 30, 2018 – $2.1 million and $9.4 million, respectively).

1314

Table of Contents

MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, ~~2019~~2020

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

A summary of the key assets and liabilities of MSC as at September 30, 2019, 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, 2019

Balance excluding FV increments

Adjustments

Balance including FV increments
Current assets

$
72,664

$
113

$
72,777
Total assets

185,522

124,112

309,634

Current liabilities

$
(45,881)

$
10,114

$
(35,767)
Total liabilities

(74,128)

3,257

(70,871)

~~NOTE 9 LEASE LIABILITIES~~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.

~~On January 1, 2019,~~The income or loss from investment in MSC attributable to the Company ~~adopted ASC 842, “Lease Accounting,”~~includes the amortization of the fair value increments arising from the initial purchase price allocation and ~~recorded a nominal cumulative-effect adjustment to~~related income tax recovery. The income tax recovery reflects the ~~opening accumulated deficit balance. The Company’s lease obligations include equipment, vehicles and office space. Leased assets are included in plant and equipment (See~~ ~~note 7~~ ~~for details). The terms and conditions contained~~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 ~~leases do not contain variable components.~~

~~Lease liabilities as at~~investment in MSC for the nine months ended September 30, ~~2019~~2020 and year ended December 31, ~~2018~~2019 are as follows:

Total discounted lease liabilities

September 30, 2019

December 31, 2018
Finance leases

$
6,588

6,429
Operating lease

922

$
—
Lease liabilities

$
7,510

$
6,429
Current portion

(2,045)

(1,511)
Long-term portion

$
5,465

$
4,918


	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

Lease liabilities at September 30, 2019 are recorded using a weighted average discount rate of 8.73% and 7.32%, respectively, for operating and finance leases and have average remaining lease terms of five years and three years, respectively.

~~Lease related costs for~~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, 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:

Three months ended September 30, 2019

Nine months ended September 30, 2019
Finance leases:

Amortization of ROU assets

$
353

$
829
Interest expense

156

444
Total

$
509

$
1,273

Operating lease:

Rent expense

$
49

$
145


As at September 30, 2020	Balance excluding FV increments		Adjustments		Balance including FV increments
Current assets	$	95,364	$	854	$	96,218
Total assets	$	190,746	$	110,885	$	301,631

Current liabilities	$	(44,761)	$	—	$	(44,761)
Total liabilities	$	(75,190)	$	(4,478)	$	(79,668)

~~Future minimum lease payments (undiscounted) as at September 30, 2019 are as follows:~~

Payments due by period


2019

2020

2021

2022

2023

Thereafter

Total
Operating lease obligation

$
56

$
226

$
230

$
232

$
237

$
158

$
1,139
Finance lease obligations

579

2,318

2,362

2,058

105

—

7,422
Total future minimum lease payments

$
635

$
2,544

$
2,592

$
2,290

$
342

$
158

$
8,561
Less: Imputed interest

(1,051)
Total

7,510

~~Table of Contents~~

~~MCEWEN MINING INC.~~

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

~~September 30, 2019~~

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

NOTE ~~10 LONG-TERM~~11 DEBT

On August 10, 2018, the Company finalized a $50.0 million senior secured three year term loan facility with Royal Capital Management Corp., anas administrative agent, and the lenders party ~~thereto (“Lenders”). The~~thereto. Interest on the loan ~~bears interest~~accrued at the rate of 9.75% per annum with interest due monthly and iswas secured by a lien on certain of the Company’s and its subsidiaries’ assets. ~~Scheduled payments on~~

On June 25, 2020, the ~~loan are as follows: $2.0 million monthly payments starting in August 2020 for 12 months~~Company entered into an Amended and ~~a final $26.0 million payment on August 10, 2021.~~

~~The Company incurred and paid $1.2~~Restated Credit Agreement (“ARCA”) which refinanced the outstanding $50 million and ~~$3.6 million~~which terms differed in ~~interest during~~material respects from the ~~three~~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 extended by two years. Monthly repayments of principal in the amount of $2.0 million are due beginning on August 31, 2022 and continuing for 12 months, followed by a final principal payment of $26.0 million plus 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

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 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. 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.

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


	Nine months ended September 30, 2020		Year ended December 31, 2019
Balance, beginning of period	$	49,516	$	49,206
Interest expense		4,003		5,185
Interest payments		(3,650)		(4,875)
Debt amendment - Equity-based fees		(1,875)		—
Balance, end of period	$	47,994	$	49,516
Less current portion		—		10,000
Long-term portion	$	47,994	$	39,516

During the nine months ended September 30, ~~2018 – $0.7 million),~~2020, $nil of ~~which $0.6 million~~interest was capitalized in plant and equipment ~~for~~(nine months ended September 30, 2019 – $0.6 million, capitalized to Gold Bar ~~mine (~~~~note 7~~)construction). ~~The scheduled remaining minimum interest payments are $1.2 million in 2019, $4.7 million in 2020 and $2.0 million in 2021.~~

On October 28, 2019, the Company amended the terms of the three year term loan facility. The amendment reduces the minimum working capital covenant to $nil at December 31, 2019 and September 30, 2020. The remainder of the agreement remains in full force and effect.

NOTE 1112 ASSET RETIREMENT OBLIGATIONS

The Company is responsible for 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, and the Timmins properties in Canada.~~Mexico.

A reconciliation of the Company’s asset retirement obligations for the nine months ended September 30, ~~2019~~2020 and for the year ended December 31, ~~2018~~2019 are as follows:


	September 30, 2019		December 31, 2018		September 30, 2020		December 31, 2019
Asset retirement obligation liability, beginning balance	$	29,402	$	24,722	$	32,201	$	29,402
Settlements		(324)		(392)		(185)		(513)
Accretion of liability		1,295		1,205		1,389		1,680
Adjustment reflecting updated estimates		(1,053)		5,024		673		1,012
Foreign exchange revaluation		434		(1,157)		(286)		620
Asset retirement obligation liability, ending balance	$	29,754	$	29,402	$	33,792	$	32,201
Current portion		(1,435)		(734)
Less current portion						2,860		2,610
Long-term portion	$	28,319	$	28,668	$	30,932	$	29,591

The ~~adjustment reflecting updated estimates~~Company’s reclamation expenses for the ~~nine months ended~~ 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

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MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, ~~2019~~2020

(tabular amounts are in thousands of $1.1 million reflects a reduction of $5.3 million for the estimated environmental obligations for the Black Fox mine and an increase of $4.2 million for the Gold Bar mine. The reduction in the estimated liability for Black Fox mine reflects the approval obtained from the Ministry of Energy, Northern Development and Mines, of Ontario, Canada for the amended environmental closure plan filed during the period. The increase for the Gold Bar mine liability is the result of additional disturbances during the period (December 31, 2018 - an additional $3.6 million related to disturbances).U.S. dollars, unless otherwise noted) (Continued)

NOTE 1213 SHAREHOLDERS’ EQUITY

Equity Issuances

~~Registered Direct Offering (the “Offering”)~~

On March 29, 2019, the Company issued 14,193,548 Units under the Offering 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 common share and one-half of one warrant to

~~Table of Contents~~

~~MCEWEN MINING INC.~~

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

September ~~30, 2019~~

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

purchase 1 common share at a price of $2.00, expiring three years from the date of issuance. Warrants are exercisable at any time prior to March 29, 2022. The warrants are not listed for trading on an exchange.

Under the same Offering, the Company issued 1,935,484 Subscription Receipts at $1.55 per Unit to certain of its executive officers, directors, employees and consultants; each Subscription Receipt entitled the holder to receive 1 Unit upon necessary shareholder and NYSE approvals. Upon approval on May 23, 2019, the Company issued 1,935,484 Units for net proceeds of $2.6 million (net of issuance costs of $0.3 million). All Units issued under the Offering have consistent terms.

~~The Company concluded that both common shares 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 $22.9 million, $20.3 million was allocated to common stock and $2.6 million was allocated to warrants based on their relative fair value at issuance.

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

Issued on:
March 29, 2019

May 23, 2019

Risk-free interest rate

2.30
%

2.14
%
Dividend yield

0.00
%

0.00
%
Volatility factor of the expected market price of common stock

50
%

45
%
Weighted-average expected life

3 years

3 years

Weighted-average grant date fair value
$
0.43

$
0.22

~~All 8,064,516 warrants issued remain outstanding and unexercised as at September 30, 2019.~~

~~Shares issued for acquisition of mineral property interest~~

During the three months ended September 30, 2019, the Company issued a total of 353,570 shares of common stock in exchange for the acquisition of mineral interests adjacent to Gold Bar. On June 11, 2018, the Company issued 178,321 shares of common stock in exchange for the acquisition of mineral interests adjacent to the Black Fox Complex.

2020 Flow-through shares issuance and Restricted cash

On ~~December 20, 2018,~~September 10, 2020, the Company issued ~~6,634,000 flow-through common shares within the meaning of subsection 66(15) of the~~ ~~Income Tax Act (Canada)~~~~, priced at $2.24 per share for total proceeds of $14.9 million (C$20.0 million). On December 19, 2017, the Company issued 4,000,000~~6,298,166 flow-through common shares priced at ~~$2.50~~$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 ~~$10.0~~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, ~~(C$12.9 million).~~which are accounted for as a reduction to the common shares. The net proceeds of $9.8 million was 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

The Company is required to spend flow-through share proceeds on flow-through eligible Canadian exploration expenditures (“CEE”) as defined by subsection 66(15) of the Income Tax Act (Canada) and ~~as such~~accordingly recorded the proceeds as restricted ~~cash.~~ cash on the Consolidated Balance Sheets as at September 30, 2020. The ~~proceeds from~~Company expects to fulfill its CEE commitments in 2021.

Shares issued for acquisition of mineral property interest

During the ~~2018 issuance are required~~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 ~~be spent in 2019. The proceeds from~~officers, directors and certain employees at a weighted average exercise price of $1.25 per share.

Stock option expense for the ~~2017 issuance were spent in 2018.~~ 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, ~~2019,~~2020, the Company ~~incurred $11.0~~issued 60,000 shares of common stock for proceeds of $0.1 million ~~(C$14.7 million) in CEE (nine~~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 ended September 30, 2018 - $12.4 million (C$16.1 million)), with the remaining $3.9 million (C$5.3 million) to be incurred by December 31, 2019. Accounts payable and accrued liabilities at September 30, 2019 include $4.7 million (C$6.2 million) in CEE incurred expenditures.

~~Net proceeds from the 2018 issuance of $14.1 million were allocated as follows: $11.1 million to share capital and $3.0 million recorded as flow-through premium liability. As at~~ending September 30, 2019, the Company ~~reduced~~issued 405,000 shares of common stock for proceeds of $0.4 million upon the ~~flow-through premium liability by $2.1 million (September 30, 2018 - $1.6 million)~~exercise of the same number of stock options at a weighted average exercise price of $1.01 per share.

June 2020 Amended and Restated Credit Agreement

Pursuant to ~~amortize~~ the ~~flow-through premium~~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 ~~costs incurred to date. The reduction~~maintenance, continuation, and the extension of the ~~flow-through premium was recognized in income~~maturity date of the loan. The Company valued the shares at $1.9 million.

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 ~~mining tax recovery~~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~~Consolidated Statement of Operations~~.

1617

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MCEWEN MINING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, ~~2019~~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.

At-the-market (“ATM”) ~~offering~~Offering

Pursuant to an equity distribution agreement dated November 8, 2018, the Company was permitted to offer and sell from time to time shares of its common stock having an aggregate offering price of up to $90.0 million, with the net proceeds to fund working capital and general corporate purposes. During the three months ended March 31, 2019, the Company issued an aggregate of 1,010,545 shares of common ~~shares~~stock for gross and net proceeds of $1.9 million. The Company terminated the agreement on March 13, 2019.

~~Stock options~~

During the nine months ended September 30, 2019, the Company issued 405,000 common shares for proceeds of $0.4 million upon the exercise of same number of stock options at a weighted average exercise price of $1.01 per share. During the same period in 2018, the Company issued 57,199 commons shares for proceeds of $0.1 million upon the exercise of same number of stock options at a weighted average exercise price of $1.17 per share.

~~Stock-based compensation~~

~~During the nine months ended September 30, 2019, 3,050,000 stock options were granted to officers, directors and certain employees at a weighted average exercise price of $1.72 per share.~~

Stock option expense for the three and nine months ended September 30, 2019 was $0.3 million and $0.5 million, respectively (September 30, 2018 – $0.2 million recovery and $0.2 million expense, respectively).

Shareholders’ ~~distributions~~

~~During the nine months ended September 30, 2018, the Company paid shareholders’ distributions of $0.01 per share of common stock, for a total of $3.4 million.~~Distributions

Pursuant to the ~~term loan facility dated August 10, 2018~~ARCA (~~note 10~~Note 11), the Company is ~~limited~~prevented from paying any dividends on its common stock, so long as the ~~distributions it~~loan is authorized to declare and pay. The Company may declare and pay distributions in any fiscal year that do not exceed the amount of dividends per share made in the fiscal year ended December 31, 2017 ($0.01 per share).outstanding.

NOTE 1314 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, ~~2019~~2020 and ~~2018,~~2019, as they would be anti-dilutive.

For the nine months ended September 30, ~~2019, 5,672,944~~2020, all of the outstanding options (8,808,001) and ~~8,064,516~~all of the outstanding warrants (29,770,766) were excluded from the computation of diluted loss per share (September 30, ~~2018~~2019 – ~~4,402,830~~5,672,944 outstanding ~~options)~~options and 8,064,150 outstanding warrants).

Below is a reconciliation of the basic and diluted weighted average number of common shares outstanding and the computations for basic and diluted net loss per share for the three and nine months ended September 30, 2019 and 2018:

Three months ended September 30,

Nine months ended September 30,


2019

2018

2019

2018

(amounts in thousands, unless otherwise noted)
Net loss

$
(11,465)

$
(13,290)

$
(34,615)

$
(23,881)

Weighted average common shares outstanding:

362,175

337,278

356,218

337,083
Diluted shares outstanding:

362,175

337,278

356,218

337,083

Net loss per share - basic and diluted

$
(0.03)

$
(0.04)

$
(0.10)

$
(0.07)

~~Table of Contents~~

~~MCEWEN MINING INC.~~

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

~~September 30, 2019~~

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

NOTE 1415 RELATED PARTY TRANSACTIONS

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


	Three months ended September 30,				Nine months ended September 30,				Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018		2020		2019		2020		2019
Lexam L.P.	$	36	$	28	$	113	$	59	$	—	$	36	$	87	$	113
REVlaw		56		50		184		151		34		56		122		184

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


	September 30, 2019		December 31, 2018		September 30, 2020		December 31, 2019
Lexam L.P.					$	71	$	65
REVlaw	$	74	$	32		53		12

An aircraft owned by Lexam L.P. (which is 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 in order to expedite business travel. In his role 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 Carmen Diges, General Counsel of the Company. The legal services of Ms. Diges as General Counsel and one other member of the legal department are provided by REVlaw in the normal course of business and have been recorded at their exchange amount.

An affiliate of Mr. McEwen participated as a lender in the $50.0 million ~~senior secured three-year~~ term loan ~~facility (“Term Loan”),~~ by providing $25.0 million of the total $50.0 million ~~Term Loan.~~funding and continued as such under the ARCA. During the three and nine months ended September 30, ~~2019,~~2020, the Company paid ~~interest of~~ $0.6 million and $1.8 million, respectively, (three and nine months ended September 30, ~~2018~~2019 – ~~$0.4 million)~~$0.6 million and $1.8 million, respectively) in interest to this ~~affiliate (n~~affiliate.~~ote 10).~~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.~~lender (Note 11).

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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)

NOTE 1516 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).~~

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.

~~Table of Contents~~

~~MCEWEN MINING INC.~~

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

~~September 30, 2019~~

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

Assets and liabilities measured at fair value on a recurring basis.

The following table identifies the ~~fair value of the~~ Company’s ~~financial~~ 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 and December 31, 2019, as reported in the Consolidated Balance Sheets ~~at September 30, 2019 and December 31, 2018 by level within the fair value hierarchy.~~:


	Fair value as at September 30, 2019						Fair value as at December 31, 2018						Fair value as at September 30, 2020						Fair value as at December 31, 2019
	Level 1		Level 2		Total		Level 1		Level 2		Total		Level 1		Level 2		Total		Level 1		Level 2		Total
Marketable equity securities	$	3,224	$	—	$	3,224	$	2,718	$	—	$	2,718	$	—	$	—	$	—	$	1,885	$	—	$	1,885
Warrants		—		—		—		—		413		413
Total investments	$	3,224	$	—	$	3,224	$	2,718	$	413	$	3,131

The ~~Company does not have any Level 3 financial assets or liabilities.~~

~~Marketable~~Company’s investments consisted of marketable equity securities ~~are exchange traded,~~which were exchange-traded and ~~are~~ valued ~~based on their~~using quoted market ~~price at each period end. The warrants are not traded on an~~prices in active ~~market, but are valued using the Black-Scholes option pricing model,~~markets and as such were classified within Level 21 of the fair value hierarchy. The ~~main inputs used in the valuation~~fair value of the ~~warrants are volatility, interest rate, dividend yield and exercise~~investments was calculated as the quoted market price of the ~~instruments.~~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 were assumed to approximate their carrying values due to their ~~short-term nature and~~ historically negligible credit losses.

~~Long-term debt is recorded at a carrying value of $49.4 million (December 31, 2018 – $49.2 million) and is assumed to approximate its fair value due to the Company having recently acquired the debt.~~

NOTE 1617 COMMITMENTS AND CONTINGENCIES

In addition to the commitments ~~disclosed in~~ ~~note 9~~ ~~related to~~for payments on operating and finance leases ~~note 10~~ ~~related to~~ and the repayment of long-term debt ~~and~~ (~~note 12~~Note 11), ~~related to CEE to be incurred by December 31, 2019,~~as at September 30, 2020, 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 ~~(Nevada, United States)~~in Nevada pertaining primarily to the Tonkin and the Gold Bar properties and ~~$11.3~~$11.2 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 ~~in Other assets~~ (~~note 17~~Note 18)).

Surety Bonds

As at September 30, ~~2019,~~2020, the Company has a surety facility in place to cover all its bonding obligations, which include $20.1 million of bonding in Nevada and ~~$11.3~~$11.2 million (C$14.9 million) of bonding in Canada. The terms of the facility carry an average annual financing fee of 2%2.3% and 0require a deposit ~~requirements.~~of 11%. The surety bonds are available for 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 the Company held $3.6 million in restricted cash as 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 ~~claims at Black Fox.~~land claims. The Company is obligated to sell 8% of gold production from the Black Fox mine and 6.3% from the adjoining Pike River property (Black Fox ~~Extension)~~extension) to Sandstorm Gold Ltd. at the lesser of market price or ~~$550~~$561 per ounce (with inflation adjustments of up to 2% per year) until 2090.

~~Table of Contents~~

~~MCEWEN MINING INC.~~

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

~~September 30, 2019~~

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

The Company records the revenue from ~~the gold stream sales~~these shipments based on the contract price at the time of delivery to the customer. During the three and nine months ended September 30, ~~2019,~~2020, the Company recorded revenue of $0.2 million and $0.9 million, respectively, (for the three and nine months ended September 30, 2019 – $0.4 million and $1.2 ~~million, respectively (September 30, 2018 – $0.5 million and $1.8~~ million, respectively) related to the gold stream sales.

NOTE 1718 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, 2019		December 31, 2018		September 30, 2020		December 31, 2019
Cash and cash equivalents	$	4,262	$	15,756	$	7,954	$	46,452
Restricted cash (note 12)		8,764		14,685
Restricted cash included in other assets		48		48
Restricted cash - current (Note 13)						10,193		-
Restricted cash - non-current (Note 17)						3,595		48
Total cash, cash equivalents, and restricted cash	$	13,074	$	30,489	$	21,742	$	46,500

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).

Table of Contents

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 ~~as of September 30, 2019,~~ for the foreseeable future. It also analyzes our financial condition at September 30, ~~2019~~2020 and compares it to our financial condition at December 31, ~~2018.~~2019. Finally, the discussion analyzes our results of operations for the three and nine months ended September 30, ~~2019~~2020 and compares those to the results for the three and nine months ended September 30, ~~2018.~~2019. 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, ~~2018.~~2019.

The discussion ~~also presents certain non-GAAP~~contains financial performance measures ~~such as earnings from mining operations,~~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 that are important to management in its evaluation of our operating results and financial condition and which~~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 ~~compare~~evaluate our performance, our ability to ~~what we perceive~~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 ~~be our peer group mining companies~~Sales and ~~relied on as part of management’s decision-making process. Management believes these measures may also be important to investors in evaluating our performance.~~ is used interchangeably throughout the document.

For a ~~detailed description~~reconciliation of ~~each~~these non-GAAP measures to the amounts included in our Statements of Operations for the ~~non-GAAP financial performance measures~~three and nine months ended September 30, 2020 and 2019 and to our Balance Sheets as of September 30, 2020 and December 31, 2019 and certain limitations inherent in such measures, please see the discussion under “~~Non-GAAP~~“Non-GAAP Financial Performance ~~Measures~~~~” below,~~Measures”, on page ~~35.~~38.

~~Reliability~~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 ~~Information: Minera Santa Cruz S.A. (“MSC”),~~mineralized material or proven and probable reserves, or that have obtained or are in the ~~owner~~process of obtaining the ~~San José Mine, is responsible for and has supplied to us all reported results from~~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 San José Mine. The financial and technical information contained herein is, with few exceptions as noted, based entirely on information provided to us by 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 information.Guide 7.

OVERVIEW

We were organized under the laws of the State of Colorado on July 24, 1979. ~~Since inception, we have been~~We are engaged in the exploration, ~~for,~~ development, ~~of,~~ production and sale of gold and silver and ~~since 2012,~~ exploration for copper. ~~Robert R. McEwen, our Chairman~~
We operate in the United States, Canada, Mexico and ~~CEO, made his initial investment in our company in July 2005 and became our Chief Executive Officer at that time.~~Argentina. We own a 100% interest in the Gold Bar ~~gold~~ 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, ~~the Fenix silver-gold project in Sinaloa, Mexico,~~ 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; ~~“km” represents kilometer;~~ “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~~Management’s Discussion and Analysis (“MDA”), the reporting periods for the three months ended ~~March 31, 2019, June 30, 2019,~~ September 30, ~~2019~~2020 and ~~September 30, 2018~~2019 are abbreviated as ~~Q1/19, Q2~~/~~19,~~ Q3/1920 and Q3/1819, respectively, and the reporting periods for the nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 are abbreviated as 9M/1920 and 9M/1819, respectively.

In addition, ~~Cash Costs, a Non-GAAP financial performance measure defined and reconciled to GAAP financial measures under the section “Non-GAAP Financial Performance Measures”~~ in this ~~MDA,~~report, gold equivalent ounces (“Au Eq. oz”) includes gold and silver ounces calculated based on a 94:1 silver to gold ratio for ~~our 100% owned operations equals Production Costs Applicable~~the first quarter of 2020, 104:1 silver to ~~Sales (excluding depreciation and depletion), and is used interchangeably throughout~~gold ratio for the ~~document for these operations.~~
second quarter of 2020, 79:1 silver to gold

Table of Contents

~~Further, in this report,~~ ~~gold equivalent ounces (“Au Eq. oz”)~~ ~~includes gold and silver ounces calculated based on a~~ ratio for the third quarter of 2020, 75:1 silver to gold ratio for ~~periods up to and including~~ the first quarter of 2019, 88:1 for the second quarter of 2019, and 87:1 for the third quarter of 2019. ~~Going forward,~~Beginning with the second quarter of 2019, we ~~have~~ 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. ~~Where comparative results for mining operations are presented for prior periods, we continue to use the term “El Gallo Mine.”~~ We use the term “El Gallo Project” to refer to the ongoing reclamation and residual heap-leaching that is taking place at ~~the~~this 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.

COVID-19 Pandemic

On March 11, 2020, the World Health Organization (“WHO”) declared the COVID-19 virus a global pandemic. During late March and early April, our operations were disrupted by temporary shutdowns to protect our workforce from 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, 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 capacity is also dependent on the continued availability and logistical delivery of supplies, which remains out of our control. The long-term impact of the COVID-19 outbreak on our results of operations, financial position and cash flows will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions. Management is actively monitoring the global situation on our financial condition, liquidity, operations, suppliers, industry and workforce.

The governments of the United States, Canada, Mexico and Argentina have enacted or proposed legislation to provide 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 Emergency Wage Subsidy (“CEWS”) program.

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Index to Management’s Discussion and Analysis:



Operating and Financial Highlights	2223
Selected Consolidated Financial and Operating Results	2425
Consolidated Performance	2425
Consolidated Financial Review	2526
Liquidity and Capital Resources	2628
Operations Review	2830
U.S.A Segment	30
Gold Bar mine operating results	30
Exploration Activities – Nevada	31
Canada Segment	32
Black Fox mine operating results	32
Advanced-Stage Properties – Froome Project	33
Exploration Activities – Timmins	33
Mexico Segment	2834
El Gallo Project operating results	2834
Advanced-Stage Properties – Fenix Project	29
~~Canada Segment~~	29
~~Black Fox mine operating results~~	29
~~Exploration Activities – Timmins~~	30
~~U.S.A Segment~~	31
~~Gold Bar mine operating results~~	31
~~Exploration Activities – Nevada~~	3134
MSC Segment, Argentina	3335
MSC operating results	3335
Los Azules Segment, Argentina	3437
Los Azules Project	3437
Non-GAAP Financial Performance Measures	35
~~Off – Balance Sheet Arrangements~~	4038
Critical Accounting Policies	4142
Forward-Looking Statements	4142
Risk Factors Impacting Forward-Looking Statements	4143

OPERATING AND FINANCIAL HIGHLIGHTS

Highlights for ~~Q3 2019~~Q3/20 are included below and discussed further inunder Consolidated Financial Performance:

COVID-19 shutdowns

● ~~Liquid assets~~⁽¹⁾During Q3/20, production rebounded after the successful restart of ~~$18.5 million~~all operations at ~~September 30, 2019, including $13.0 million~~our operating mines and the El Gallo Project. As previously disclosed, operations were temporary suspended during the second quarter, mainly due to actions taken to prevent the spread of ~~cash~~COVID-19 among our workers, business partners, and ~~cash equivalents and restricted cash.~~communities.

● ~~Total production~~ ~~of 35,043 gold ounces and 947,146 silver ounces for 45,930~~The San José minecontinued to operate below normal capacity during Q3/20 due to continued government-imposed COVID-19 travel restrictions, which has created challenges in mobilizing personnel to the mine site.

Performance

● We produced 30,400 gold equivalent ounces, including ~~24,415~~15,900 attributable gold equivalent ounces from the San José mine⁽²⁾⁽¹⁾.
● ~~Gold Bar mine~~ which achieved commercial production on May 23, 2019, produced 11,029 gold ounces in Q3. Since reaching commercial production, the mine has been able to reach several operational benchmarks, with the gold output increasing during the second half of 2019.
● ~~Black Fox mine~~ ~~produced 7,421 gold ounces. Production was below our expectations, primarily because of insufficient working areas related to delays in advancing underground development.~~

~~Table of Contents~~

●~~El Gal~~~~lo project~~ continued to perform as expected on its gold production from the residual heap leaching activities and produced 3,018 gold ounces. Work continued to progress on the Fenix Project feasibility study and we received the environmental permits for the in-pit tailings storage and the process plant for phase 1, which would entail the construction of the Carbon-In-Leach (CIL) mill circuit for reprocessing the heap leach pile.

●

~~Total sales~~ ~~of 35,237 gold ounces and 916,080 silver ounces, or 45,767~~We sold 30,500 gold equivalent ounces, including ~~23,209~~16,000 attributable gold equivalent ounces from the San José ~~mine~~⁽²⁾.mine.

Results of Operations

●

~~Revenue~~We reported revenue of $27.4 million from ~~gold and silver sales~~the sale of ~~$32.7 million increased by 22% compared to Q3/18, representing 22,557~~14,500 gold equivalent ounces ~~sold~~ from our 100% owned properties at an average realized price⁽²⁾ of ~~$1,478~~⁽¹⁾ ~~(21% higher than the average realized price for Q3/18)~~$1,925 per gold equivalent ounce.

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●

~~Gross~~We reported cash gross profit⁽²⁾ of ~~$1.6~~$3.9 million ~~or $9.1 million net of depreciation and depletion of $7.5 million.~~

●

~~Net~~We reported gross loss of ~~$11.5~~$0.7 million ~~($0.03 per share), including $15.8~~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.

●

~~Strong commitment to exploration~~ ~~with $13.7~~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 ~~$23.7~~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 ~~spent~~for exploration activities in ~~Q3/19~~the Timmins region over the next one to two years. The initial focus is on two high-potential targets, Stock West and ~~9M/19 respectively.~~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.

● We continued the review of our Gold Bar mine reserve. A new reserve estimate and feasibility study update for Gold Bar are expected to be announced toward the end of 2020.
(1)
~~(1)~~~~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 35.~~
~~(2)~~At our 49% attributable interest.

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~~SELECTED CONSOLIDATED FINANCIAL AND OPERATING RESULTS~~

~~The following tables present selected financial and operating results of our company for the three and nine months ended September 30, 2019 and 2018:~~

Three months ended

Nine months ended

September 30,

September 30,

2019

2018

2019

2018

(in thousands, except per share)
Revenue from gold and silver sales

$
32,691

$
26,896

$
84,657

$
101,743
Production costs applicable to sales

$
(23,584)

$
(17,740)

$
(59,432)

$
(62,078)
Loss before income and mining taxes

$
(13,657)

$
(14,903)

$
(37,190)

$
(28,772)
Net loss

$
(11,465)

$
(13,290)

$
(34,615)

$
(23,881)
Net loss per share

$
(0.03)

$
(0.04)

$
(0.10)

$
(0.07)
Cash (used in) operating activities

$
(12,764)

$
(1,455)

$
(21,916)

$
(834)
Additions to mineral property interests and plant and equipment

$
(2,543)

$
(25,823)

$
(27,027)

$
(53,228)

Three months ended

Nine months ended

September 30,

September 30,

2019

2018

2019

2018

(in thousands, except per ounce)
Produced - gold equivalent ounces⁽¹⁾

45.9

43.7

128.1

135.3
100% owned operations

21.5

22.0

60.6

71.2
San José Mine (49% attributable)

24.4

21.7

67.5

64.1
Sold - gold equivalent ounces⁽¹⁾

45.8

45.0

129.3

144.9
100% owned operations

22.6

22.6

63.0

80.7
San José Mine (49% attributable)

23.2

22.4

66.3

64.2
Average realized price ($/Au Eq. oz)⁽²⁾⁽³⁾

$
1,478

$
1,217

$
1,372

$
1,292
P.M. Fix Gold ($/oz)

$
1,472

$
1,213

$
1,364

$
1,282
Cash cost ($/Au Eq. oz sold):⁽²⁾

100% owned operations

$
1,046

$
785

$
943

$
770
San José Mine (49% attributable)

$
915

$
856

$
883

$
864
AISC ($/Au Eq. oz sold):⁽²⁾

100% owned operations

$
1,272

$
945

$
1,215

$
941
San José Mine (49% attributable)

$
1,204

$
1,028

$
1,179

$
1,078
Silver : Gold ratio⁽¹⁾

87:1

75:1

84:1

75:1
~~(1)~~ ~~Silver production is presented as a gold equivalent. See Page 22 for more information.~~
(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 35.~~page 38.

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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 and 2019:

Three months ended September 30,

Nine months ended September 30,

2020

2019

2020

2019

(in thousands, except per share)
Revenue from gold and silver sales⁽¹⁾

$
27,395

$
32,691

$
77,086

$
84,657
Production costs applicable to sales

$
(23,526)

$
(23,584)

$
(74,267)

$
(59,432)
Loss before income and mining taxes

$
(9,930)

$
(13,657)

$
(130,059)

$
(37,190)
Net loss⁽²⁾

$
(9,778)

$
(11,465)

$
(128,783)

$
(34,615)
Net loss per share⁽²⁾

$
(0.02)

$
(0.03)

$
(0.32)

$
(0.10)
Cash (used in) operating activities

$
(5,174)

$
(12,764)

$
(25,273)

$
(21,916)
Cash additions to mineral property interests and plant and equipment

$
801

$
2,543

$
9,304

$
27,027
(1) Excludes revenue from the San José mine, which is accounted for under the equity method.
(2) Results for the nine months ended September 30, 2020 include an impairment charge of $83.8 million, or $0.21 per share.

Three months ended September 30,

Nine months ended September 30,

2020

2019

2020

2019

(in thousands, except per ounce)
Produced - gold equivalent ounces⁽¹⁾

30.4

45.9

84.6

128.1
100% owned operations

14.5

21.5

44.9

60.6
San José mine (49% attributable)

15.9

24.4

39.7

67.5
Sold - gold equivalent ounces⁽¹⁾

30.5

45.8

85.5

129.3
100% owned operations

14.5

22.6

45.6

63.0
San José mine (49% attributable)

16.0

23.2

39.9

66.3
Average realized price ($/Au Eq. oz)⁽²⁾⁽³⁾

$
1,925

$
1,478

$
1,732

$
1,372
P.M. Fix Gold ($/oz)

$
1,909

$
1,472

$
1,735

$
1,364
Cash cost per ounce ($/Au Eq. oz sold):⁽²⁾

100% owned operations

$
1,583

$
1,027

$
1,622

$
924
San José mine (49% attributable)

$
1,269

$
915

$
1,232

$
883
AISC per ounce ($/Au Eq. oz sold):⁽²⁾

100% owned operations

$
1,713

$
1,289

$
1,967

$
1,272
San José mine (49% attributable)

$
1,538

$
1,204

$
1,536

$
1,179
Cash gross profit⁽²⁾

$
3,869

$
9,107

$
2,819

25,225
Silver : Gold ratio⁽¹⁾

79 : 1

87:1

86 : 1

84:1
(1) Silver production is presented as a gold equivalent; silver:gold ratio of 79:1 for Q3/20 and 87:1 for Q3/19. 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.
(3) On sales from 100% owned operations only, excluding sales from our stream. ~~As used here and elsewhere in this report, “Average Realized Price” is a Non-GAAP financial performance measure. See "Non-GAAP Financial Performance Measures" beginning on Page 35~~.

CONSOLIDATED PERFORMANCE

~~The decrease~~For Q3/20, we reported a net loss of $9.8 million (or $0.02 per share) compared to a $11.5 million loss in Q3/19 (or $0.03 per share). Exploration expenses decreased $9.3 million in the ~~net loss and loss per share for Q3/19 compared~~2020 period, as we tried to ~~the same period in 2018 reflects an increase in revenues of $5.8~~conserve capital. The $2.6 million ~~as a result of 22% higher average realized gold price, while number of ounces sold was same in both periods, and a significant smaller loss~~income from our investment in MSC ~~($0.3~~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 ~~or $4.7~~was also due to flow-through exploration commitments that needed to be expended in 2019. 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 lower depreciation and depletion expenses due to lower mineralized material mined and processed.

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Lower gross 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 ~~lower than the same period~~gain in ~~2018)~~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).

~~Starting in~~In Q2/19, we adopted a variable silver:gold ratio for reporting gold equivalent ounces produced and ~~/ or~~ sold, which approximates the average market ~~ratio;~~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 ~~ounces~~ as well as cash cost and all-in sustaining cost per gold equivalent ounce for the San ~~Jose Mine.~~José mine.

At the El Gallo mine, mining and crushing activities ceased during the second quarter of 2018, with production activities since that time limited to residual leaching. The Gold Bar Mine achieved commercial production in the last week of May 2019, with the first gold ingot produced in mid February 2019.

~~Table of Contents~~

Production for Q3/19 of 45,930 Au Eq. oz is slightly higher than production in Q3/18, reflecting higher production from the San Jose Mine; the change in the silver:gold ratio resulted in a decrease of 1,730 attributable San Jose mine produced ounces for Q3/19 (3,405 Au Eq. oz decrease for 9M/19). Production from ~~the~~our 100% owned ~~operations~~mines were 14,500 gold equivalent ounces in Q3/~~19 is comparable~~20, which decreased by 7,000 gold equivalent ounces, or 33%, compared to ~~the same period in 2018, with lower production from El Gallo in~~ Q3/19 (7,400 fewer Au Eq. oz) more than replaced by Gold Bar mine production (11,000 Au Eq. oz in Q3/19), partially offset by lower ounces produced at the Black Fox Mine (4,200 fewer Au Eq. oz produced in Q3/19).

Q3/19 gross profit of $1.6 million, or $9.1 million before depreciation and depletion of $7.5 million, was comparable to Q3/18, with the impact of higher average realized price on revenues in Q3/19 offset by higher production costs applicable to sales due to higher costs per ounce.19. The ~~higher cost per ounce in Q3/19~~decline reflects the ~~partial replacement of lower cost per ounces from El Gallo mine with ounces from~~ramp-up to normal capacity being phased over the quarter at the Gold Bar mine ~~which entered commercial production in late May 2019; in addition,~~(4,200 fewer ounces), where day and night shifts only resumed during September, and the Black Fox mine ~~per ounce costs~~(1,700 fewer ounces). In addition, there was lower expected production from residual leaching at the El Gallo Project (1,100 fewer ounces).

Our share of the San José mine production was 15,900 gold equivalent ounces in Q3/~~19 were higher compared~~20, which was 8,500 ounces, or 35%, lower than 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 ~~same period in 2018 as a result of operational challenges during 2019.~~mine site.

CONSOLIDATED FINANCIAL REVIEW

Revenue from gold and silver sales in Q3/~~19 increased~~20 decreased by ~~22%~~16% to ~~$32.7~~$27.4 million compared to Q3/~~18,~~ 19,reflecting ~~a higher average realized price per~~8,100, or 36%, fewer gold equivalent ~~ounce sold in Q3/19 compared to same period in 2018 ($1,478/oz in Q3/19 or $261/oz higher) over a similar number of~~ ounces sold ~~in both periods.~~

~~Revenue~~ from gold and silver sales in 9M/19 decreased by 17% to $84.7 million compared to the same period in 2018. The decrease reflects 17.6 thousand fewer ounces sold in 9M/19 compared to same period in 2018, partiallyour 100% owned mines, partly offset by a higher average realized price per ounce compared to same period in 2019 ($~~1,372/~~1,925/oz in Q3/20 or ~~$80/~~$447/oz ~~higher than~~higher).The decrease in gold equivalent ounces sold in Q3/20 is due to lower production reflecting the phased ramp-up to normal capacity at the Gold Bar and Black Fox mines noted above.

Revenue from gold and silver sales in 9M/~~18)~~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). The decrease in gold equivalent ounces sold ~~includes 28.3 thousand fewer Au Eq. oz sold from the El Gallo Project as the operation transitioned to residual leaching~~ in ~~mid 2018, 9.8 thousand fewer ounces sold from the Black Fox mine~~9M/20 is mainly due to ~~operational issues~~lower production in ~~2019, both~~the second and third quarters of 2020 as result of the temporary shutdown and phased ramp-up of operations due to the COVID-19 pandemic; partially offset by ~~20.5 thousand ounces sold from~~increased production at the Gold Bar mine ~~(none~~ in ~~9M/18)~~the first quarter of 2020 compared to the same period of 2019, when the Gold Bar mine was in pre commercial production.

Production Costs applicable to sales in Q3/20remained consistent at $23.5 million, compared to Q3/19, despite 36% less gold equivalent ounces sold, which was almost totally offset by a significantly higher cost per ounce at all our operations (details in the “Operations Review” section).

Production Costs applicable to sales in ~~Q3/19~~9M/20 increased by ~~33%~~25% to ~~$23.6~~$74.3 million compared to ~~Q3/18, reflecting~~9M/19, despite 28% less gold equivalent ounces sold, which was more than offset by a significantly higher cost per ounce ~~sold~~at all our operations (details in the various operations. Production costs applicable to sales in 9M/19 decreased by 4% to $59.4 million compared to the same period in 2018; gold equivalent ounces sold in 9M/19 were 22% fewer than in 9M/18 but at a higher cash cost per ounce sold as explained in the “Selected Consolidated Financial Performance and Operating Results” section above.“Operations Review” section).

Depreciation and depletion for Q3/~~19 and 9M/19 of $7.5 million and $17.5 million, respectively, increased~~20 decreased by ~~$4.3 million and $7.2~~39% to $4.6 million compared to Q3/19, reflecting fewer gold ounces sold from all our sites and a lower depreciable and depletable asset base after the ~~same periods~~Gold Bar impairment in ~~2018, primarily reflecting~~ the ~~higher depreciation~~first quarter.

Depreciation and depletion ~~per ounce~~ 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 ~~which more then offset the impact of fewer ounces sold from El Gallo and Black Fox, both at a lower depreciation and depletion per ounce.~~in 9M/20.

Advanced projects costs ~~of $2.1~~for Q3/20 and 9M/20 increased to $4.0 million and ~~$6.9~~$9.5 million, or 88% and 38% higher, respectively, ~~for Q3/19 and 9M/19, decreased by $3.1 million and $4.1 million, respectively, from~~compared to the same periods ~~in 2018.~~of 2019. Advanced projects in ~~2019~~Q3/20 and 9M/20 included spending ~~on the Fenix project in Mexico and pre-production spending at the Gold Bar mine up to February 16, 2019.~~

~~Exploration costs~~ ~~of $13.7 million and $23.7 million, respectively~~ for Q3/19 and 9M/19, increased by $5.5 million and decreased by $6.0 million from the same periods in 2018. Exploration significantly ramped up during Q3/19 as we increased our efforts in Timmins and Nevada; 9M/19 spending includes $11.0 million of flow-through qualifying exploration expenditures.

~~General and administrative~~ ~~expenses of $2.6 million and $8.1 million, respectively in Q3/19 and 9M/19 were comparable to expenditures in the same periods in 2018.~~

~~Loss from investment in MSC~~ of $0.3 million and $6.8 million, respectively in Q3/19 and 9M/19, decreased by $4.7 million and $0.7 million, from the same periods in 2018, reflecting primarily higher revenues (48% and 19% higher, respectively in Q3/19 and 9M/19 compared to same periods in 2018), offset by slightly higher operating costs, including the impact of export taxes introduced in 2018 by the Argentina government, higher exploration expenditures and deferred income taxes

2526

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~~payable. The increase~~advancing the Froome project in ~~revenue primarily~~Timmins, Ontario, expenditures related to property holding payments and other spending for the Fenix project in Mexico and engineering and permit work at the Gold Bar South property in Nevada.

Exploration costs of $4.4 million and $11.8 million, respectively for Q3/20 and 9M/20, decreased by 68% and 50%, compared to the same periods of 2019.Exploration activities decreased since we did not have any flow-through spending requirements to satisfy during the first eight months in 2020. During 9M/19, $11.0 million of flow-through qualifying exploration expenditures were incurred compared to $0.4 million during 9M/20.

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

Income from investment in MSC of $2.6 million in Q3/20 compared to a loss 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 higher gross profit of $21.6 million and $32.4 million, respectively, on a ~~higher gold~~100% basis, compared to $13.0 million and ~~silver price realized~~$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 ~~same periods~~$8.4 million in 9M/19. Higher gross profit in Q3/20 was partially offset by higher exploration expenses ($2.8 million compared to $1.5 million in Q3/19). Higher gross profit and lower current and deferred income and mining tax expense in 9M/20 were partially offset by $7.2 million of ~~2018.~~other expenses incurred during the shutdown of operations in 2020 ($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.

Revision of estimates and accretion of asset retirement obligations of ~~$0.5~~$0.9 million and ~~$1.4~~$2.0 million in Q3/20 and 9M/20 increased by 79% and 45% respectively, incompared to Q3/19 and 9M/19, ~~increased slightly by $0.2~~due primarily to reclamation adjustments reflecting updated estimates of $0.4 million and ~~$0.5~~$0.6 million ~~from~~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 ~~same periods in 2018, primarily reflecting an increased estimate~~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 ~~closure obligation~~long-lived assets for the Gold Bar mine aswas impaired based on a ~~result~~ reduction in preliminary estimated resources and expected future production.

Other operating of ~~additional disturbances during~~$nil and $2.0 million in Q3/20 and 9M/20 compared to $nil in the ~~period, partially offset by~~same periods of 2019. Other operating relate to the ~~reduction~~expenses of the temporary suspension or curtailment of our operations at the Gold Bar and Black Fox ~~mine estimated closure obligation by $5.5 million. The decrease in~~mines resulting from the ~~closure obligation for the Black Fox mine reflects the approval by the relevant Canadian authorities of an amended closure plan for the mine.~~pandemic.

Interest and other finance expense, net ofwas $2.0 million and $5.6 million in Q3/20 and 9M/20 compared to $0.7 million and $3.9 million ~~respectively~~ in Q3/19 and 9M/~~19 compares~~19. The increase in Q3/20 was mainly due to ~~$0.8~~$0.3 million higher interest expense for the debt facility and ~~$0.6 million expense~~other finance expense. The increase in ~~Q3/18 and~~ 9M/~~18, respectively. The change~~20 is due primarily to the capitalization of $0.6 million of interest expense onfor the ~~long-term~~ debt facility ~~finalized on August 10, 2018. Included~~which were capitalized to the Gold Bar mine construction in ~~interest~~2019, while $nil was capitalized in 2020 as the mine is in full production, and other finance expense, net, are interest and other charges associated with the final ruling against us in relation to our lawsuit filed in respect of the constitutional validity of the Mexican Tax Reform issued on October 31, 2013. The Tax Reform included a 0.5% precious metals royalty applicable to mining companies such as ours.expense.

Other income of ~~$4.8~~$2.1 million and ~~$6.3~~$6.1 million for Q3/20 and 9M/20, respectively, decreased by $2.7 and $0.2 million when compared to Q3/19 and 9M/~~19, respectively, compares to $1.1 million and $0.8 million in the same periods of 2018. The increase in other~~19. Other income in ~~2019 is primarily~~Q3/20 decreased mainly due to ~~realized gains~~$nil gain on investments ($~~3.4 million) on the sale of certain marketable securities, as well as unrealized~~3.2 million gain in Q3/19) and ~~realized~~a $0.1 million foreign currency ~~gains~~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 ~~fluctuations of C$, Mexico and Argentina pesos against the U.S. dollar.~~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).

Income and mining tax recovery of $0.2 million and $1.3 million, respectively, for Q3/20 and 9M/20, compared to $2.2 million and $2.6 million ~~respectively for Q3/19~~in the same periods of 2019. The changes in the income and ~~9M/19, increased by $0.6 and decreased by $2.3 million, respectively from Q3/18 and 9M/18. The~~mining tax recovery ~~for both years resulted from~~primarily reflect the ~~devaluation~~fluctuations of the Argentine ~~peso~~and Mexican pesos against the U.S. dollar, oncausing fluctuations to the Company’s ~~peso-denominated~~ deferred tax ~~liability as well as~~liabilities denominated in the ~~amortization of the flow-through premium as we incur eligible flow through Canadian exploration expenditures.~~respective foreign currency.

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LIQUIDITY AND CAPITAL RESOURCES

Our cash balance at September 30, ~~2019~~2020 of ~~$13.0~~$18.1 million, which includes cash and cash ~~equivalent~~equivalents of ~~$4.2~~$7.9 million and current restricted cash of ~~$8.8~~$10.2 million, decreased from ~~the $30.4~~$46.5 million at December 31, ~~2018~~2019 ($~~15.7~~46.5 million cash and cash ~~equivalents and $14.7 million of restricted cash)~~equivalents). The decrease in cash and cash equivalents at September 30, ~~2019~~2020 is mainly due to ~~operational challenges faced at the Black Fox mine during 9M/19 as well as the startup challenges at the Gold Bar mine during the first six months of the year.~~$25.3 million cash used in operations, including a $5.2 million reduction in accounts payable and accrued liabilities, and $9.3 million invested in mineral property interests and plant and equipment. Restricted cash represents ~~proceeds~~remaining exploration commitments of $10.2 million from the flow-through ~~shares issued in December 2018 and is committed to be spent~~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.

We are required to spend the flow-through proceeds on flow-through eligible Canadian exploration ~~programs~~expenditures (“CEE”) as defined by subsection 66(15) of the Income Tax Act (Canada). We expect to fulfill our CEE commitments in ~~Ontario no later than December 31, 2019.~~2021.

Working capital at September 30, ~~2019~~2020 of ~~$16.5~~$21.6 million decreased by ~~$6.9~~$21.6 million from December 31, ~~2018,~~2019, reflecting the decrease in cash and cash equivalents and current restricted cash of $28.4 million and 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 ~~$4.0 million~~the two-year extension of the ~~term loan coming due in~~principal repayments under the ~~next 12 months as well as~~Amended and Restated Credit Agreement (“ARCA”) closed on June 25, 2020. For more details on the ~~declining cash balance, partially offset by~~ARCA, please refer to Note 11 to the ~~build up of the in-process and precious metals inventory at the Gold Bar heap leach operations.~~Consolidated Financial Statements, Debt.

~~On October 28, 2019, the Company amended the terms of the three year term loan facility. The amendment reduces the minimum working capital covenant~~Cash used in operations during 9M/20 was $25.3 million compared to ~~$nil at December 31, 2019 and September 30, 2020. The remainder of the agreement remains in full force and effect.~~

~~A total of~~ $21.9 million of cash ~~was~~ used in operations in 9M/19, ~~compared to $0.8 million in same period in 2018, reflecting lower revenues (17% lower in 9M/19 compared to 9M/18 as explained in~~ the ~~“Consolidated Financial Review” section) resulting in $17.7 million lower proceeds from gold and silver sales, as well as $3.9 million interest related~~change was due to the ~~term loan paid~~lower revenue from the sale of 28% fewer ounces and higher production costs applicable to sales in ~~9M/19 ($0.7 million~~2020. Both lower revenue and higher production costs applicable to sales in ~~9M/18). Cash used~~2020 were 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 in ~~operating activities in 9M/19 includes $102.7 million paid to suppliers and employees (same amount in 9M/18).~~
other income as a result of COVID-19 relief funds.
Cash used in investing activities of ~~18.8~~$7.8 million in 9M/20 decreased significantly compared to $18.8 million in 9M/19, ~~compared to $41.6 million in the same period in 2018,~~ with the ~~difference~~reduction primarily due to ~~$26.2~~$17.7 million less spending for mineral property ~~interest~~interests and plant and equipment as the construction of the Gold Bar mine was completed in May ~~2019,~~2019. This decrease was partially offset by ~~less~~lower proceeds from sale of investments ($1.3 million in 2020 compared to $4.2 million in 2019) and lower dividends received from MSC in 9M/~~19.~~20 ($0.3 million in 2020 compared to $4.0 million in 2019).

During 9M/20, we spent $9.3 million on mineral property and plant and equipment, predominately for capital development at the Black Fox mine and infill drilling at the Gold Bar mine.
Financing activities provided $8.3 million in cash in 9M/20, with $9.8 million coming from the flow-through financing completed in September 2020 (less the issuance costs); compared to $23.6 million generated in 9M/19, with $22.9 million coming from the March 2019 Registered Offering.

Going concern

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 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 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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~~During 9M/19, we spent $27.0 million~~also in full compliance with its debt covenants as at September 30, 2020. However, based on ~~mineral property and plant and equipment, with~~ the ~~spending primarily related to underground development~~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 ~~construction and pre-stripping prior to first production at Gold Bar. We also received $4.0 million in dividends from MSC and net proceeds of $4.7 million from~~ the ~~sale of marketable securities, primarily shares of Great Bear Resources Ltd. (“Great Bear”) in Q3/19. Subsequent to Q3/19, we collected $0.9 million of the proceeds related~~disruptions to the ~~Q3/19 sale~~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 ~~Great Bear shares~~our mineral properties and ~~sold~~to remain in compliance with certain of our ~~remaining shares for gross proceeds of $1.2 million.~~

Financing activities provided $23.6 million in cash in 9M/19 compared to $45.4 million in 9M/18; the 9M/19 financing activities included net proceeds of $24.8 million from an equity offering and at the market share issuances, partially offset by $1.6 million on lease obligations payments.

~~Management believes that our working capital at September 30, 2019, combined with forecasted cash to be generated~~debt covenants over the next 12 ~~months, will be sufficient to satisfy our non-discretionary obligations related to our existing mining operations and corporate activities due~~months. Non-compliance with these covenants would result in a breach under the ~~next 12 months.~~Company’s debt agreement.

~~Management continues~~In response to ~~evaluate~~this uncertainty, we are evaluating all options, including accessing capital markets, sale of certain assets, and ~~development~~ expenditure ~~requirements to advance Los Azules, Black Fox, other Timmins projects, Gold Bar and~~reductions across the ~~Project Fenix in Mexico. If the working capital is not sufficient~~Company. Our ability to continue ~~advancing these projects, we will defer~~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 ~~other non-discretionary expenditures~~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 ~~will consider raising capital through various financing methods which~~include internally generated cash flow forecasts. Accordingly, actual results could differ from these estimates and resulting variances may ~~include incurring debt, issuing additional equity, and other forms of financing.~~be material to management’s assessment.

~~Furthermore, if we make a positive decision to develop one or more of these initiatives, we will require additional financing.~~

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OPERATIONS REVIEW

U.S.A. Segment

The U.S.A. segment is comprised of the Gold Bar mine and certain 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 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:

Three months ended September 30,

Nine months ended September 30,


2020


2019

2020

2019
Operating Results

(in thousands, unless otherwise indicated)
Mined mineralized material (t)

222

631

715

1,302
Average grade (gpt Au)

0.73

0.88

0.70

0.93
Processed mineralized material (t)

229

867

812

1,690
Average grade (gpt Au)

0.73

0.92

0.68

0.91
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
Sold

6.8

11.2

22.1

20.5
Revenue from gold and silver sales

$
13,042

$
16,577

$
38,129

$
28,941
Cash costs⁽¹⁾

$
10,791

$
12,156

$
38,863

$
20,798
Cash cost per ounce ($/Au Eq. oz sold)⁽¹⁾

$
1,585

$
1,088

$
1,762

$
1,014
All‑in sustaining costs⁽¹⁾

$
12,043

$
13,795

$
47,031

$
24,613
AISC per ounce ($/Au Eq. oz sold)⁽¹⁾

$
1,769

$
1,235

$
2,132

$
1,200
Silver : gold ratio

79 : 1

87 : 1

86 : 1

83 : 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 38 for additional information.

In Q3/20, Gold Bar produced 6,800 gold equivalent ounces. Full operations with day and night shifts resumed in September. The slower ramp up 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 intended to support the turnaround of our operations, which include mining optimization evaluations, improving contractor mining efficiencies, assessing material handling and processing alternatives, and further definition 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.

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

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 million in Q3/20, compared to $12.2 million in Q3/19, reflecting 39% fewer gold ounces sold in Q3/20, partly offset by higher costs 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.

Cash cost and AISC per gold equivalent ounce of $1,585 and $1,769 in Q3/20 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 AISC per gold equivalent ounce of $1,762 and $2,132 in 9M/20 were also significantly 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.

Gold Bar mine impairment

In Q1/20, we recorded an impairment charge of $83.8 million based on the preliminary revised mine plan, which indicated a significant reduction in contained ounces relative to the 2018 reserve estimate. The impairment charge reduced the carrying value of the Gold Bar mine mineral property interests and plant and equipment.

Evaluation of the resource estimate continued in the third quarter of 2020 and a new reserve estimate and feasibility study update for Gold Bar are expected to be announced towards 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 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 at the Gold Bar South satellite deposit continued in Q3/20. We verified and extended mineralization toward the north and south of the deposit. Permitting for development and production from Gold Bar South is also in progress and we expect to start mining this satellite deposit in the second half of 2021.

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~~OPERATIONS REVIEW~~Canada Segment

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

Black Fox Mine

The Black Fox mine currently has less than one year remaining in its expected mine life. We plan to continue our near-mine exploration efforts, even when operations commence at Froome, with the goal of increasing resources, converting resources to reserves and extending the mine life.

The following table sets out certain operating results for the Black Fox mine 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
Operating Results

(in thousands, unless otherwise indicated)
Mined mineralized material (t)

67

48

139

145
Average grade (gpt Au)

3.00

4.82

3.28

5.05
Processed mineralized material (t)

70

58

167

164
Average grade (gpt Au)

2.96

4.02

2.95

4.99
Gold equivalent ounces:

Produced

5.8

7.4

16.3

25.8
Sold

5.6

8.0

16.8

28.0
Revenue from gold and silver sales

$
10,352

$
11,147

$
27,257

$
36,139
Cash costs

$
8,874

$
7,550

$
24,231

$
24,025
Cash cost per ounce ($/Au Eq. oz sold)

$
1,581

$
941

$
1,440

$
859
All‑in sustaining costs

$
9,230

$
10,939

$
29,450

$
37,097
AISC per ounce ($/Au Eq. oz sold)

$
1,644

$
1,363

$
1,750

$
1,326
Silver : gold ratio

79 : 1

87 : 1

86 : 1

83 : 1

Production in Q3/20 and 9M/20 were 5,800 and 16,300 gold equivalent ounces, respectively, or 22% and 37% fewer ounces compared to the same periods of 2019. Production decreased mainly due to lower gold grades of processed mineralized material 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.

Revenue from gold and silver sales decreased in Q3/20 and 9M/20 by $0.8 million and $8.9 million, respectively, compared to Q3/19 and 9M/19, reflecting the decrease in gold equivalent ounces produced and sold, which was partially offset by higher average realized gold prices in 2020.

Production costs applicable to sales increased by $1.3 million or 18% in Q3/20, compared to Q3/19, despite fewer gold ounces produced and sold. The 68% increase in cash cost per gold equivalent ounce in Q3/20 reflects the impact of 26% lower average grade of the mineralized material processed in Q3/20 compared to Q3/19. In addition, production costs applicable to sales included underground development costs that were not capitalized given the 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.

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

Advanced-Stage Properties – Froome Project

Part of the Black Fox Complex located in Ontario, Canada, the Froome deposit is located approximately one-half mile west of the Black Fox mine and approximately 20 miles from the Black Fox (Stock Mine) mill, where we expect the ore will be processed.

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 development of the underground access to the Froome deposit in late February 2020 and as of September 30, 2020 have advanced 47% of the way. The plan is to reach the main deposit in the second quarter of 2021 and begin production in the fourth quarter of 2021. Production from the Froome deposit will strategically supplement Black Fox production while we assess potential additional resources at the Black Fox, Grey Fox and Stock projects for future development and production.

The estimated mine life of Froome is two years once production begins following a one-year ramp-up construction phase. We expect that operational synergies through shared resources and infrastructure with the ongoing production of the Black Fox Complex would improve cash flow for both sites.

Exploration Activities – Timmins

In 2020, we continued to focus on growing the resources and reserves adjacent to our existing operations in order to contribute to near-term gold production. We incurred $1.2 million and $4.4 million in Q3/20 and 9M/20, respectively, for exploration initiatives, compared to $8.7 million 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.

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 2018-2019 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 adjacent to the existing Black Fox ore body.

Black 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, Stock and Timmins resources utilizing our existing central milling capacity. The PEA is expected to be completed in fourth quarter of 2020. 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

~~Mining and crushing~~Current activities ~~ceased during~~at the ~~second quarter of 2018. Prior to cessation,~~ El Gallo ~~1 was a mature operation, at which we mined and depleted various pits during its operating life. Current activities~~Project are limited to residual leaching ~~production that will continue until the end~~as part of ~~2020, as well as additional~~ closure and reclamation ~~activities.~~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 ~~sets out total production and sales, revenue from gold and silver sales, total cash cost, cash cost per ounce, all-in sustaining costs and all-in sustaining costs per ounce of gold equivalent sold~~summarizes certain operating results at the El Gallo Project for the three and nine months ended September 30, ~~2019~~2020 and ~~2018:~~2019:

Three months ended

Nine months ended

September 30,

September 30,


2019

2018

2019

2018
Operating Results

(in thousands, unless otherwise indicated)
Mined mineralized material (t)

—

—

—

823
Average grade (gpt Au)

—

—

—

1.43
Processed mineralized material (t)

—

—

—

830
Average grade (gpt Au)

—

—

—

1.51
Gold ounces:

Produced

3.0

10.4

13.8

33.4
Sold

3.3

12.8

14.5

42.7
Silver ounces:

Produced

3.4

1.5

6.0

6.6
Sold

6.6

—

6.8

8.7
Gold equivalent ounces:

Produced

3.1

10.4

13.8

33.5
Sold

3.4

12.8

14.5

42.9
Revenue from gold and silver sales

$
4,967

$
15,501

$
19,577

$
55,299
Cash costs⁽¹⁾

$
3,878

$
8,561

$
14,609

$
30,367
Cash cost ($/Au Eq. oz sold)⁽¹⁾

$
1,153

$
671

$
1,005

$
709
All‑in sustaining costs⁽¹⁾

$
3,959

$
8,708

$
14,870

$
32,072
AISC ($/Au Eq. oz sold)⁽¹⁾

$
1,177

$
683

$
1,023

$
748
Silver : gold ratio

87 : 1

75 : 1

83 : 1

75 : 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 35 for additional information.

Three months ended September 30,

Nine months ended September 30,


2020

2019

2020

2019
Operating Results

(in thousands, unless otherwise indicated)
Gold ounces:

Produced

1.9

3.0

6.5

13.8
Sold

2.0

3.3

6.6

14.5
Silver ounces:

Produced

3.5

3.4

4.7

6.0
Sold

3.1

6.6

5.0

6.8
Gold equivalent ounces:

Produced

2.0

3.1

6.6

13.8
Sold

2.1

3.4

6.7

14.5
Revenue from gold and silver sales

$
4,001

$
4,967

$
11,700

$
19,577
Silver : gold ratio

79 : 1

87 : 1

86 : 1

83 : 1

Productionand revenue decreased in Q3/20 and 9M/20, compared to Q3/19 and 9M/19, reflecting ~~the cessation of active mining~~decreasing recoveries, as expected, as the ~~operation moved into~~El Gallo Project has been in residual ~~heap~~ leaching ~~in mid 2018.~~ since mid-2018.

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

~~Production costs applicable to sales~~ ~~and~~ ~~All-in sustaining costs~~ for Q3/19 and 9M/19 decreased as expected compared to same periods in 2018 due to reduced production and sales as noted above - $4.7 million and $15.8 million decrease in production costs and $4.7 million and $17.2 million decrease in all-in sustaining costs. All-in sustaining costs in 9M/18 included $1.4 million of in mine exploration spending ($nil in 9M/19). Cash cost and AISC per Au Eq. oz sold in Q3/19 and 9M/19 increased from same period in 2018 as certain fixed costs are spread over fewer ounces produced and sold.

~~Table of Contents~~

~~Advanced-stage~~Advanced-Stage Properties – Fenix Project

The Fenix Project is located adjacent to the El Gallo Project and is similarly accessible. The Fenix Project contemplates a two-phase development process. Phase 1 includes the reprocessing of material on the gold heap leach pad from the existing El Gallo Project, and Phase 2 includes the processing of open pitStrengthening gold and silver ~~mineralization from El Gallo Silver, Palmarito, El Encuentro~~prices have renewed our focus on advancing the Fenix Project and ~~Carrisalejo.~~
the Feasibility Study is expected to be published in the fourth quarter of 2020.
Mine permitting ~~is progressing as expected and~~continued to progress during ~~Q3/19 we received~~2020, building upon the environmental permit approval for in-pit tailings storage in the Samaniego pit and the additional approval for the process plant for phase 1 ~~which entails the construction of the Carbon-In-Leach (CIL) mill circuit.~~
received in September 2019.
We incurred ~~$0.5~~$0.7 million and ~~$2.1~~$1.9 million ~~during~~in Q3/1920 and 9M/~~19,~~20, respectively, on activities required to advance the ~~project.~~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 is available for review on our website and SEDAR (www.sedar.com).

~~Potential Sale~~

In Q1/19, the Board of Directors approved the evaluation of the potential sale of our Mexican business. At that time, the Fenix Project feasibility study and permitting effort was in progress. The permits for in-pit tailings storage and phase 1 development were received in Q3/19, and work on the feasibility study continues to advance. It has not been determined what, if any, action will be taken with respect to the sale of the Mexican business once the feasibility study is completed.

~~Canada Segment~~

The Canada segment is comprised of the Black Fox Complex, which includes the fully operational Black Fox gold mine and the Grey Fox, Stock, Tamarack and Froome advanced-stage exploration projects, the Black Fox Stock Mill, and other gold exploration properties located in Timmins, Ontario, Canada.

~~Black Fox mine~~

The following table sets out total production and sales in gold equivalent ounces, revenue from gold and silver sales, total cash cost, cash cost per ounce, all-in sustaining costs and all-in sustaining costs per ounce of gold equivalent sold at the Black Fox mine for the three and nine months ended September 30, 2019 and 2018:

Three months ended

Nine months ended

September 30,

September 30,


2019

2018

2019

2018
Operating Results

(in thousands, unless otherwise indicated)
Mined mineralized material (t)

48

66

145

200
Average grade (gpt Au)

4.82

4.97

5.05

5.80
Processed mineralized material (t)

58

71

164

209
Average grade (gpt Au)

4.02

4.76

4.99

5.45
Gold equivalent ounces:

Produced

7.4

11.6

25.8

37.8
Sold

8.0

9.8

28.0

37.8
Revenue from gold and silver sales

$
11,147

$
11,395

$
36,139

$
46,444
Cash costs

$
7,550

$
9,179

$
24,025

$
31,711
Cash cost ($/Au Eq. oz sold)

$
941

$
932

$
859

$
839
All‑in sustaining costs

$
10,939

$
12,650

$
37,097

$
43,823
AISC ($/Au Eq. oz sold)

$
1,363

$
1,285

$
1,326

$
1,159
Silver : gold ratio

87 : 1

75 : 1

83 : 1

75 : 1

~~Production~~ decreased by 4.2 thousand and 12.0 thousand gold equivalent ounces, respectively, in Q3/19 and 9M/19 from the same periods in 2018, with production in Q3/19 affected primarily by insufficient working areas related to delays in advancing underground development. Production for 9M/19 was also impacted by some temporary operational challenges at the mine during the first half of the year, including a surface fire at the crushing plant operated by a local contracting company and water infiltration into the mine due to an unusually heavy spring run-off.

~~Table of Contents~~

~~Revenue from gold and silver sales~~ ~~decreased in Q3/19 and 9M/19 reflecting fewer ounce sold, a consequence of the operational challenges noted above, partially offset by an increase in average gold price realized in Q3 and 9M/19.~~

~~Production costs applicable to sales~~ ~~and~~ ~~All-in sustaining costs~~ in Q3/19 and 9M/19 decreased from same periods in 2018 following lower production and sales as discussed above - $1.6 million and $7.7 million decrease in production costs applicable to sales and $1.7 million and $6.7 million decrease in all-in sustaining costs. Cash cost and AISC per Au Eq. oz were higher in Q3/19 and 9M/19 compared to same periods in 2018 (1% and 2% higher cash costs/Au Eq. oz and 6% and 14% respectively higher AISC/Au Eq.oz) reflecting lower grade mined and milled as well as the impact of certain costs being spread over fewer ounces

~~Exploration Activities – Timmins~~

~~Black Fox mine and Stock Mine Properties~~

We remain focused on our exploration goal to cost-effectively grow adjacent gold deposits to contribute to near-term gold production. We incurred $8.7 million and $15.2 million, respectively in Q3/19 and 9M/19 for exploration initiatives.

~~Grey Fox~~

The Grey Fox deposit resources are contained in three zones that are referred to as: 147, Contact, and South. On July 25, 2019, we announced the growth of our Grey Fox resource estimates as a result of new geological and structural interpretation of the 147 Zone and an initial resource estimate for 147NE. Drilling is currently testing the 147NE shoot at depth and upcoming drilling is planned in target areas with potential for similar mineralization. New drill results announced on September 10, 2019, confirmed the continuity of high grade mineralisation and indicated an extension of the main zone at 147NE (mineralized shoot) down plunge by approximately 100 meters.

~~Stock~~

The Stock Property is the site of our Stock Mill, which currently processes ore from our Black Fox Mine. Previously the mill processed ore from the historical underground Stock Mine, which was in intermittent production from the early 1980s until 2004.

On September 4 and 30, 2019, we announced high grade intersections from drilling at our Stock East deposit and from exploration drilling below the workings of the Stock Mine. Drilling continues at Stock East with a planned resource update in the fourth quarter of 2019.

At Stock West, drilling also took place 1.1 km (0.7 miles) along strike to the west of the Stock Mine and intersected encouraging alteration and mineralization. Drilling continues on this target in the fourth quarter of 2019.

~~Table of Contents~~

~~U.S.A. Segment~~

The U.S.A. segment is comprised of the Gold Bar mine (“Gold Bar”) and certain exploration properties. We poured our first gold ingot from Gold Bar on February 16, 2019 and achieved commercial production at the mine on May 23, 2019.

~~Gold Bar mine~~

The following table sets out total production and sales in gold equivalent ounces, revenue from gold and silver sales, total cash cost, cash cost per ounce, all-in sustaining costs and all-in sustaining costs per ounce of gold equivalent sold at the Gold Bar mine for the three and nine months ended September 30, 2019

Three months ended

Nine months ended

September 30, 2019
Operating Results

(in thousands, unless otherwise indicated)
Mined mineralized material (t)

631

1,302
Average grade (gpt Au)

0.88

0.93
Processed mineralized material (t)

867

1,690
Average grade (gpt Au)

0.92

0.91
Gold equivalent ounces:

Produced

11.0

21.0
Sold

11.2

20.5
Revenue from gold and silver sales

$
16,577

$
28,941
Cash costs

$
12,156

$
20,798
Cash cost ($/Au Eq. oz sold)

$
1,088

$
1,014
All‑in sustaining costs

$
13,795

$
24,613
AISC ($/Au Eq. oz sold)

$
1,235

$
1,200
Silver : gold ratio

87 : 1

83 : 1

~~There are no comparatives to Q3/18 and 9M/18 as the first gold ingot at Gold Bar was poured on February 16, 2019.~~

The ramp-up to full production saw delays in the first quarter which adversely impacted our gold production in the second quarter and our guidance for 2019. Less ore was placed onto the heap leach pad than planned, which in turn delayed the application of solution to the ore, and the recovery of gold as a result. Gold Bar saw improvements during the third quarter, achieving several key performance benchmarks for ore production, crushing throughput, and gold production. Production in September 2019 was in line with our plan and the designed capacity of the process plant.

~~Production costs applicable to sales~~ were $12.2 million and $20.8 million, respectively for Q3/19 and 9M/19. Production costs mainly include contractor mining costs, processing costs related to tonnes placed on the heap leach, and site general and administrative costs.

~~Exploration Activities – Nevada~~

~~In Q3/19 and 9M/19, we spent $4.3 million and $6.2 million, respectively, on target-generating exploration activities. In Q3/19, a program of 174 drill holes was completed.~~

Drilling started in May at Gold Bar South with three primary objectives: collect material for required permit, mine design, and environmental testing programs, complete infill drilling for portions of the deposit in order to support reserve estimate conversion and continue to explore lateral and vertical ore extensions of the deposit.

25% of the new drill intersections were higher grade than the current resource average. In addition, several drill holes encountered significant mineralization outside the existing resource. These results suggest that there is potential to increase the size of the Gold Bar South resource. Economic studies and permitting are on schedule. Gold Bar South will be included into the Gold Bar mine plan this year, and we are expecting approval for development by year-end in 2020.

~~Table of Contents~~

36 reverse circulation (RC) holes have been drilled to test the lateral and vertical extent of a near-surface target at Pot Canyon where extensive alteration (silicification) and brecciation occurs at surface, and where several historical holes returned significant mineralization. In addition, a deep core hole drilled through multiple target zones, returning near-surface gold mineralization and Carlin-type alteration and pathfinder elements at several stratigraphic horizons at depth. This mineralization occurs near the Wall Fault, a regional structure interpreted to play an important role in the control of gold mineralization at Gold Bar.

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Table of Contents

MSC Segment, Argentina

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

MSC – Operating Results

The following table sets out ~~total production and sales, revenue from gold and silver sales, average realized prices, total cash costs and total all-in sustaining costs~~certain operating results for the San ~~Jose~~José mine for the three and nine months ended September 30, ~~2019~~2020 and ~~2018. Also, included at the bottom of the table are certain production, cash costs and all-in sustaining costs figures~~2019 on a ~~49% attributable basis, representing our interest on the San Jose mine.~~100% basis:

Three months ended

Nine months ended

Three months ended September 30,

Nine months ended September 30,

September 30,

September 30,

2020

2019

2020

2019


2019

2018

2019

2018
Operating Results

(in thousands, except otherwise indicated)

(in thousands, except otherwise indicated)
San José Mine—100% basis

Mined mineralized material (t)

140

136

400

383

126

140

305

400
Average grade (gpt)

Average grade mined (gpt)

Gold

6.9

6.5

6.8

6.9

4.6

6.9

5.8

6.8
Silver

498

449

476

468

336

498

403

476
Processed mineralized material (t)

147

145

399

409

129

147

291

399
Average grade (gpt)

Average grade processed (gpt)

Gold

6.6

5.9

6.8

6.2

4.7

6.6

5.6

6.8
Silver

456

376

450

396

313

456

362

450
Average recovery (%):

Gold

89.2

86.9

88.5

86.9

90.2

89.2

89.5

88.5
Silver

89.4

86.6

88.2

86.4

89.9

89.4

89.2

88.2
Gold ounces:

Produced

27.7

24.0

76.8

70.9

17.6

27.7

47.2

76.8
Sold

26.1

24.7

75.0

70.7

17.6

26.1

47.3

75.0
Silver ounces:

Produced

1,925

1,517

5,087

4,499

1,165

1,925

3,024

5,087
Sold

1,852

1,573

5,041

4,527

1,192

1,852

3,060

5,041
Gold equivalent ounces:

Produced

49.8

44.2

137.7

130.9

32.4

49.8

81.0

137.7
Sold

47.4

45.6

135.3

131.0

32.7

47.4

81.3

135.3
Revenue from gold and silver sales

$
70,908

$
47,814

$
179,708

$
150,748

$
70,195

$
74,530

$
154,666

$
189,348
Average realized price:

Gold ($/Au oz)

$
1,542

$
1,151

$
1,424

$
1,236

$
2,002

$
1,542

$
1,873

$
1,424
Silver ($/Ag oz)

$
18.53

$
13.62

$
16.39

$
15.23

$
29.30

$
18.54

$
21.59

$
16.39
Cash costs

$
43,344

$
39,046

$
119,392

$
113,168

$
41,512

$
43,345

$
100,230

$
119,392
Cash cost per ounce ($/Au Eq. oz sold)

$
1,269

$
915

$
1,232

$
883
All‑in sustaining costs

$
57,015

$
46,894

$
159,449

$
141,304

$
50,311

$
57,016

$
124,968

$
159,449
McEwen Mining—49% basis

Ounces produced:

Gold

13.6

11.8

37.7

34.7
Silver

943

743

2,493

2,204
Gold equivalent

24.4

21.7

67.5

64.1
Cash costs

$
21,239

$
19,132

$
58,501

$
55,451
Cash cost ($/Au Eq. oz sold)

$
915

$
856

$
883

$
864
All‑in sustaining costs

$
27,938

$
22,977

$
78,129

$
69,238
AISC ($/Au Eq. oz sold)

$
1,204

$
1,028

$
1,179

$
1,078
AISC per ounce ($/Au Eq. oz sold)

$
1,538

$
1,204

$
1,536

$
1,179
Silver : gold ratio

87 : 1

75 : 1

84 : 1

75 : 1

79 : 1

87 : 1

90 : 1

84 : 1

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

Q3/20 compared to Q3/19

Gold ~~Productionincreased by 15% and 8%~~ and silver production decreased by ~~27%~~36% and ~~13%~~39%, respectively, in Q3/20 compared to Q3/19 as a result of a 12% decrease in processed mineralized material, coupled with 28% and ~~9M/19 from~~31% decreases in the ~~same periods in 2018, reflecting higher~~ average ~~grade~~grades of gold and silver, respectively, of the mineralized material processed in Q3/20. The decrease in processed mineralized material ~~and higher recovery.~~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% 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.

3335

Table of Contents

Revenue from gold and silver sales ~~increased~~decreased by ~~48%~~6% and ~~19%,~~18% in Q3/20 and 9M/20 respectively, incompared 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 ~~in 2018, reflecting more gold~~of 2019) and silver ~~ounces sold~~(58% and 32% higher ~~average realized gold and silver prices (34% and 15% higher gold price and 36% and 8% higher silver price, respectively~~ in Q3/1920 and 9M/~~19,~~20, respectively, compared to ~~same periods in 2018)~~2019).

Cash costs~~increased~~ in Q3/20 and 9M/20 decreased by ~~$4.3 million and $6.2~~$1.8 million, or ~~11%~~4%, and 5%$19.2 million, or 16%, respectively, incompared 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 million or 12% and $34.5 million or 22%, compared to the same periods ~~in 2018, despite similar tonnes~~ of mineralized material processed. The increase was due primarily to the impact of the export taxes introduced in 2018. All-in sustaining costs for Q3/19 and 9M/19 increased by $10.1 million and $18.1 million, respectively, compared to same periods in 2018,2019, mainly due to ~~increased~~lower cash costs, ~~as well as higher spending in~~coupled with lower capitalized underground mine ~~capital~~ development and sustaining capital investment in plant and equipment.

Cash cost and All-in sustaining cost per ~~Au Eq. oz~~gold equivalent ounce sold were higher for Q3/1920 and 9M/1920 compared to the same periods in ~~2018, reflecting higher~~2019, as lower aggregate cash costs and AISC ~~as noted above, partially offset by higher grade mined~~were spread over 31% and ~~processed.~~

~~Cash cost~~ ~~and~~ ~~All-in sustaining cost~~~~per Au Eq. oz~~~~sold~~ in 2019 were also impacted by the change in the silver:gold ratio starting in the second quarter of 2019 – the change from a fixed silver:gold ratio of 75:1, used up to and including March 31, 2019, to the actual average market price, reduced the number of40% fewer gold equivalent ounces sold, byrespectively, as noted above.

Investment in MSC ~~by 3.4 thousand~~

Our 49% attributable share of operations from our investment in MSC was income of $2.6 million and ~~6.9 thousand ounces, respectively~~a loss of $1.1 million in Q3Q3/20 and 9M/~~19. Using the fixed silver:gold ratio~~20, respectively, compared to a loss of ~~75:1, the cash cost per Au Eq. oz~~$0.3 million and $6.8 million 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 ~~would be $854~~ and ~~$840, respectively or nominally~~ lower current and 3%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 offset by higher exploration expenses ($2.8 million compared to $1.5 million in Q3/19). Higher gross profit and lower ~~respectively, than~~current and deferred income and mining tax expense in 9M/20 were partially offset by $7.2 million of other expenses incurred during the ~~same periods~~shutdown of operations in ~~2018; AISC per Au Eq. oz would be $1,123~~2020 ($nil in 2019).

Higher gross profit in 2020 was due primarily to higher average realized gold and ~~$1,121, respectively for Q3~~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/~~19, compared~~20, respectively. The additional costs include labor costs for idle employees, additional transportation and accommodation costs to ~~$1,028~~maintain social distancing and ~~$1,078, respectively for~~additional personal protective equipment.

In Q3/1820, on a 100% basis, MSC generated a cash gross profit of $28.7 million and incurred $6.1 million of development and other capital expenditures, $2.8 million of exploration spending and $6.5 million of other expenditures. Other expenditures primarily included $5.2 million of financial expenses and foreign exchange losses.

In 9M/~~18.~~20, on a 100% basis, MSC generated a cash gross profit 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 activities in connection with the COVID-19 pandemic, $6.6 million of financial expenses, as noted above, and foreign exchange losses.

MSC Dividend Distribution (49%)

~~During the three~~We received $nil and ~~nine months ended September 30, 2019, we received $2.0 million and $4.0~~$0.3 million in dividends from MSC in Q3/20 and 9M/20, compared to ~~$2.1~~$2.0 million and ~~$9.4~~$4.0 million in dividends received during the same periods in ~~2018.~~2019. For more details on our Investment in MSC, refer to Note 810 to the Consolidated Financial Statements, Investment in Minera Santa Cruz S.A. (“MSC”) — San José mine.

Table of Contents

Los Azules Segment, Argentina

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

Los Azules Project

During Q3/~~19, work continued on preliminary engineering and developing cost estimates to advance~~20, the ~~proposed low altitude all year access route (northern access route). We are also advancing the Los Azules water management plan to evaluate the project operating as a zero discharge development.~~

~~The~~ environmental baseline monitoring work continued as ~~well as other works, which were identified as~~planned. We expect to continue environmental studies the rest of the year to gather further information necessary ~~to develop a conforming~~for the Environmental Impact Assessment ~~(“EIA”) submission. The environmental work included~~for the ~~geological mapping of the tailings dam design.~~next development phase.

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

3437

Table of Contents

NON-GAAP FINANCIAL PERFORMANCE MEASURES

InWe have included in this report ~~we have provided information prepared or calculated according to U.S. GAAP, as well as some~~certain non-GAAP financial performance ~~measures. Because~~measures as detailed below. In the ~~non-GAAP~~gold mining industry, these are common performance measures but do not have any standardized meaning ~~prescribed by U.S.~~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 ~~may not be comparable~~are intended to ~~similar measures presented by other companies. These measures~~provide additional information and should not be considered in isolation or as ~~substitutes~~a substitute for measures of performance prepared in accordance with GAAP. There are limitations associated with the use of such non-GAAP measures. ~~Since~~We compensate for these limitations by relying primarily on our U.S. GAAP results and using the non-GAAP measures do not incorporate revenues, changes in working capital and non-operating cash costs, they are not necessarily indicative of operating profit or loss or cash flow from operations as determined in accordance with U.S. GAAP.
supplementally.
The non-GAAP measures ~~earnings from mining operations, total cash costs, total cash costs per ounce, all-in sustaining costs, all-in sustaining costs per ounce, average realized price per ounce, and liquid assets~~ are ~~not, and are not intended to be, presentations in accordance with U.S. GAAP. These measures represent, respectively,~~presented for our earnings from mining operations, total cash costs, total cash costs per ounce, all-in sustaining costs, all-in sustaining costs per ounce and average realized prices per ounce related to our wholly-owned El Gallo Project, Black Fox and Gold Barwholly owned mines and ~~our minority interest in~~the San José mine. The GAAP information used for the reconciliation to the non-GAAP measures for the San José mine ~~owned by MSC. The portions of the costs and prices related to the minority interest~~ may be found in ~~Item 1. Financial Statements,~~ Note 8,10, Investment in Minera Santa Cruz S.A. (“MSC”) – San José Mine. The amounts in the tables labeled “49% basis” were derived by applying to each financial statement line item the ownership percentage interest used to arrive at our share of net income or loss during the period when applying the equity method of accounting. 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 ~~joint venture operating agreement~~Option and Joint Venture Agreement (“OJVA”) and varies depending on factors including the profitability of the operations.

We provide the Non-GAAP measures because we believe they assist investors and analysts in evaluating our revenue, production costs applicable to sales and sales revenue, including both our wholly-owned properties and our interest in the San José mine, when read in conjunction with our reported results under U.S. GAAP. The presentation of these measures, including ~~the minority interest~~those for MSC, has limitations as an analytical tool. Some of these limitations include:

● The amounts shown on ~~the~~MSC’s individual line items ~~were derived by applying our overall economic ownership interest percentage determined when applying the equity method of accounting and~~ do not ~~necessarily~~ represent our legal claim to ~~the~~its assets and liabilities, or the revenues and expenses; and

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

Because of these limitations, these non-GAAP measures should not be considered in isolation or as a substitute for our financial statements as reported under U.S. GAAP. We compensate for these limitations by relying primarily on our U.S. GAAP results and using the non-GAAP measures supplementally.

~~Earnings (loss) from Mining Operations~~Cash Gross Profit

~~The term earnings (loss) from mining operations used in this report~~Cash gross profit is a non-GAAP financial ~~measure.~~measure and does not have any standardized meaning under GAAP. We use cash gross profit to evaluate our operating performance and ~~report this metric because~~ability to generate cash flow; we disclose cash gross profit as we believe itthis 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 ~~useful~~reconciliation of cash gross profit to the most directly comparable GAAP measure, ~~of the underlying operating mines.~~gross profit or loss:

We define earnings (loss) from mining operations as revenue from gold and silver sales from our El Gallo Project, Black Fox and Gold Bar mines, and our 49% attributable share of the San José mine’s revenue from gold and silver sales, less their respective production costs applicable to sales and depreciation and depletion. To the extent that depreciation and depletion may include depreciation and amortization expense related to the fair value increments on historical business acquisitions (fair value paid in excess of the carrying value of the underlying assets and liabilities assumed on the date of acquisition), we exclude this expense in order to arrive at depreciation and depletion that only includes depreciation and amortization expense incurred at the mine site level. The San José mine revenue from gold and silver sales and production costs applicable to sales are presented, on a 100% basis, in Note 8 of the accompanying financial statements.

Three months ended September 30, 2020

Nine months ended September 30, 2020

Gold Bar

Black Fox

El Gallo

Total (100% owned)

Gold Bar

Black Fox

El Gallo

Total (100% owned)

(in thousands)

(in thousands)
Gross profit (loss)

$
152

$
(926)

$
73

$
(701)

$
(9,261)

$
(4,310)

$
310

$
(13,261)
Add: Depreciation and depletion

2,099

2,404

67

4,570

8,527

7,336

217

16,080
Cash gross profit (loss)

$
2,251

$
1,478

$
140

$
3,869

$
(734)

$
3,026

$
527

$
2,819

3538

Table of Contents

The following table presents a reconciliation of earnings (loss) from mining operations to revenue from gold and silver sales and production costs applicable to sales and depreciation and depletion, which are GAAP financial measures:

Three months ended September 30, 2019

Nine months ended September 30, 2019

Gold Bar

Black Fox

El Gallo

Total (100% owned)

Gold Bar

Black Fox

El Gallo

Total (100% owned)

(in thousands)

(in thousands)
Gross profit

$
631

$
8

$
980

$
1,619

$
1,633

$
1,594

$
4,497

$
7,724
Add: Depreciation and depletion

3,790

3,589

109

7,488

6,510

10,520

471

17,501
Cash gross profit

$
4,421

$
3,597

$
1,089

$
9,107

$
8,143

$
12,114

$
4,968

$
25,225

Three months ended

Nine months ended

September 30,

September 30,


2019

2018

2019

2018

(in thousands)
Gold Bar earnings from mining operations

Revenue from gold and silver sales

$
16,577

$
—

$
28,941

$
—
Production costs applicable to sales

(12,156)

—

(20,798)

—
Depreciation and depletion

(3,790)

—

(6,510)

—
Add: Amortization related to fair value increments on historical acquisitions included in depreciation applicable to sales

1,194

—

2,248

—
Gold Bar earnings from mining operations

$
1,825

$
—

$
3,881

$
—

Black Fox earnings (loss) from mining operations

Revenue from gold and silver sales

$
11,147

$
11,395

$
36,139

$
46,444
Production costs applicable to sales

(7,550)

(9,179)

(24,025)

(31,711)
Depreciation and depletion

(3,589)

(2,729)

(10,520)

(8,513)
Add: Amortization related to fair value increments on historical acquisitions included in depreciation applicable to sales

93

211

294

712
Black Fox earnings (loss) from mining operations

$
101

$
(302)

$
1,888

$
6,932

El Gallo earnings from mining operations

Revenue from gold and silver sales

$
4,967

$
15,501

$
19,577

$
55,299
Production costs applicable to sales

(3,878)

(8,561)

(14,609)

(30,367)
Depreciation and depletion

(109)

(414)

(471)

(1,819)
Depreciation of mining related assets

(6)

(101)

(32)

(406)
Add: Amortization related to fair value increments on historical acquisitions included in production costs applicable to sales

109

414

471

1,819
El Gallo earnings from mining operations

$
1,083

$
6,839

$
4,936

$
24,526

San José earnings (loss) from mining operations (49% basis)

Revenue from gold and silver sales

$
34,745

$
23,429

$
88,057

$
73,867
Production costs applicable to sales

(25,107)

(23,614)

(68,832)

(66,153)
Third party smelting, refining and transportation costs and export taxes

(2,485)

(725)

(7,162)

(1,416)
On-site general and administrative costs

(817)

(818)

(2,487)

(2,635)
San José earnings (loss) from mining operations

$
6,336

$
(1,728)

$
9,576

$
3,663

Three months ended September 30,

Nine months ended September 30,

2020

2019

2020

2019
San José mine cash gross profit (100% basis)

(in thousands)
Gross profit

$
21,576

$
13,027

$
32,352

$
19,873
Add: Depreciation and depletion

7,107

18,158

22,084

50,083
Cash gross profit

$
28,683

$
31,185

$
54,436

$
69,956

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. ~~For the San José mine, we exclude the share of gold or silver production attributable to the controlling interest.~~

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 ~~depletion.~~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 ~~environmental rehabilitation costs~~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:

36

~~Table of Contents~~

●

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) ~~or any other activity not directly linked to the existing mine-site~~ 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.

3739

Table of Contents

The following tables reconcile these non-GAAP measures to the most directly comparable GAAP measure, production costs applicable to ~~sales. Cash~~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 ~~all-in sustaining costs,~~for Q3/20 and ~~ounces~~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 ~~gold and silver sold for the San José mine are provided to us by MSC.~~2019.

Three months ended September 30, 2019

Nine months ended September 30, 2019

Three months ended September 30, 2020

Nine months ended September 30, 2020

Gold Bar

Black Fox

El Gallo

Total (100% owned)

Gold Bar

Black Fox

El Gallo

Total (100% owned)

Gold Bar

Black Fox

Total

Gold Bar

Black Fox

Total

(in thousands, except ounces and per ounce)

(in thousands, except ounces and per ounce)

(in thousands, except per ounce)

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

$
12,156

$
7,550

$
3,878

$
23,584

$
20,798

$
24,025

$
14,609

$
59,432
Production costs applicable to sales - Cash costs (100% owned)

$
10,791

$
8,874

$
19,665

$
38,863

$
24,231

$
63,094
Mine site reclamation, accretion and amortization

489

155

81

725

860

475

244

1,579

230

101

331

738

295

1,033
In‑mine exploration

—

955

—

955

—

3,430

—

3,430

474

90

564

1,315

707

2,022
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

17

3,160

75

61

136

4,663

322

4,985
Sustaining leases

487

98

—

585

1,422

271

—

1,693

473

104

577

1,452

249

1,701
All‑in sustaining costs

$
13,795

$
10,939

$
3,959

$
28,693

$
24,613

$
37,097

$
14,870

$
76,580

$
12,043

$
9,230

$
21,273

$
47,031

$
29,450

$
76,481
Ounces sold, including stream (Au Eq. oz)

11,168

8,025

3,364

22,557

20,518

27,978

14,534

63,030
Cash cost ($/Au Eq. oz sold)

$
1,088

$
941

$
1,153

$
1,046

$
1,014

$
859

$
1,005

$
943
AISC ($/Au Eq. oz sold)

$
1,235

$
1,363

$
1,177

$
1,272

$
1,200

$
1,326

$
1,023

$
1,215
Ounces sold, including stream (Au Eq. oz)⁽¹⁾

6.8

5.6

12.4

22.1

16.8

38.9
Cash cost per ounce ($/Au Eq. oz sold)

$
1,585

$
1,581

$
1,583

$
1,762

$
1,440

$
1,622
AISC per ounce ($/Au Eq. oz sold)

$
1,769

$
1,644

$
1,713

$
2,132

$
1,750

$
1,967
(1) Total gold equivalent ounces sold for Q3/20 and 9M/20 is 14,500 and 45,600, respectively, 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 gold equivalent ounces sold from the El Gallo Project for Q3/20 and 9M/20, respectively.

Three months ended September 30, 2018

Nine months ended September 30, 2018

Gold Bar

Black Fox

El Gallo

Total (100% owned)

Gold Bar

Black Fox

El Gallo

Total (100% owned)

(in thousands, except ounces and per ounce)

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

$
—

$
9,179

$
8,561

$
17,740

$
—

$
31,711

$
30,367

$
62,078
Mine site reclamation, accretion and amortization

—

175

87

262

—

481

260

741
In‑mine exploration

—

701

189

890

—

1,951

1,445

3,396
Capitalized underground mine development (sustaining)

—

1,640

—

1,640

—

8,362

—

8,362
Capital expenditures on plant and equipment (sustaining)

—

955

(129)

826

—

1,318

—

1,318
Sustaining leases

—

—

—

—

—

—

—

—
All‑in sustaining costs

$
—

$
12,650

$
8,708

$
21,358

$
—

$
43,823

$
32,072

$
75,895
Ounces sold, including stream (Au Eq. oz)

—

9,845

12,750

22,595

—

37,811

42,851

80,662
Cash cost ($/Au Eq. oz sold)

$
—

$
932

$
671

$
785

$
—

$
839

$
709

$
770
AISC ($/Au Eq. oz sold)

$
—

$
1,285

$
683

$
945

$
—

$
1,159

$
748

$
941

Three months ended September 30, 2019

Nine months ended September 30, 2019

Gold Bar

Black Fox

Total

Gold Bar

Black Fox

Total

(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
Mine site reclamation, accretion and amortization

489

155

644

860

475

1,335
In‑mine exploration

—

955

955

—

3,430

3,430
Capitalized underground mine development (sustaining)

—

1,711

1,711

—

7,286

7,286
Capital expenditures on plant and equipment (sustaining)

663

470

1,133

1,533

1,610

3,143
Sustaining leases

487

98

585

1,422

271

1,693
All‑in sustaining costs

$
13,795

$
10,939

$
24,734

$
24,613

$
37,097

$
61,710
Ounces sold, including stream (Au Eq. oz)⁽¹⁾

11.2

8.0

19.2

20.5

28.0

48.5
Cash cost per ounce ($/Au Eq. oz sold)

$
1,088

$
941

$
1,027

$
1,014

$
859

$
924
AISC per ounce ($/Au Eq. oz sold)

$
1,235

$
1,363

$
1,289

$
1,200

$
1,326

$
1,272
(1) Total gold equivalent ounces sold for Q3/19 and 9M/19 is 22,600 and 63,000, respectively, and includes gold equivalent ounces sold from the operating mines of 19,200 and 48,500 as disclosed above, and 3,400 and 14,500 gold equivalent ounces sold from the El Gallo Project for Q3/19 and 9M/19, respectively.

3840

Table of Contents

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

Three months ended

Nine months ended

September 30,

September 30,


2019

2018

2019

2018
San José mine cash and all-in sustaining costs (49% basis)

(in thousands, except ounces and per ounce)
Production costs applicable to sales

$
25,107

$
23,614

$
68,832

$
66,153
Less: Mine site reclamation, accretion and amortization

(147)

(157)

(421)

(441)
Depreciation

(8,750)

(7,157)

(24,120)

(18,044)
Mine‑site general and administrative expenses

761

803

2,309

2,560
Refining, smelting, and transportation

2,485

725

7,162

1,416
Commercial discounts

1,727

1,289

4,562

3,733
Community costs related to current operations

56

15

177

74
San José mine cash costs (49% basis)

$
21,239

$
19,132

$
58,501

$
55,451
Mine site reclamation, accretion and amortization

147

157

421

441
Site exploration expenses

726

987

3,613

2,209
Capitalized underground mine development (sustaining)

3,994

2,556

9,830

8,238
Less: Depreciation

(329)

(190)

(849)

(616)
Capital expenditures (sustaining)

2,161

335

6,613

3,515
San José mine all-in sustaining costs (49% basis)

$
27,938

$
22,977

$
78,129

$
69,238
Ounces sold (49% basis) (Au Eq. oz)

23,209

22,357

66,281

64,200
Cash cost ($/Au Eq. oz sold)

$
915

$
856

$
883

$
864
AISC ($/Au Eq. oz sold)

$
1,204

$
1,028

$
1,179

$
1,078

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

Nine months ended

Three months ended September 30,

Nine months ended September 30,

September 30,

September 30,

2020

2019

2020

2019

2019

2018

2019

2018

(in thousands, except ounces and per ounce)
Average realized price - 100% owned

(in thousands, except per ounce)
Revenue from gold and silver sales

$
32,691

$
26,896

$
84,657

$
101,743

$
27,395

$
32,691

$
77,086

$
84,657
Less: revenue from gold sales, stream

380

479

1,231

1,742

202

380

883

1,231
Revenue from gold and silver sales, excluding stream

$
32,311

$
26,417

$
83,426

$
100,001

$
27,193

$
32,311

$
76,203

$
83,426
Gold equivalent ounces sold

22,557

22,595

63,030

80,662

14.5

22.6

45.6

63.0
Less: gold ounces sold, stream

690

895

2,244

3,244

0.4

0.7

1.6

2.2
Gold equivalent ounces sold, excluding stream

21,867

21,700

60,786

77,418

14.1

21.9

44.0

60.8
Average realized price per Au Eq. oz sold, excluding stream

$
1,478

$
1,217

$
1,372

$
1,292

$
1,925

$
1,478

$
1,732

$
1,372

Three months ended September 30,

Nine months ended September 30,


2020

2019

2020

2019
Average realized price - San José mine (100% basis)

(in thousands, except per ounce)
Gold sales

$
35,265

$
40,203

$
88,602

$
106,728
Silver sales

34,930

34,327

66,064

82,620
Gold and silver sales

$
70,195

$
74,530

$
154,666

$
189,348
Gold ounces sold

17.6

26.1

47.3

75.0
Silver ounces sold

1,192

1,852

3,060

5,041
Gold equivalent ounces sold

32.7

47.4

81.3

135.3
Average realized price per gold ounce sold

$
2,002

$
1,542

$
1,873

$
1,424
Average realized price per silver ounce sold

$
29.30

$
18.54

$
21.59

$
16.39
Average realized price per gold equivalent ounce sold

$
2,146

$
1,574

$
1,901

$
1,400

3941

Table of Contents

Three months ended

Nine months ended

September 30,

September 30,


2019

2018

2019

2018

(in thousands, except ounces and per ounce)
Average realized price - San José (49% basis)

Gold sales

$
19,699

$
13,912

$
52,297

$
42,777
Silver sales

16,820

10,497

40,484

33,796
Gold and silver sales

$
36,519

$
24,409

$
92,781

$
76,573
Gold ounces sold

12,778

12,083

36,735

34,622
Silver ounces sold

907,478

770,571

2,470,319

2,218,392
Gold equivalent ounces sold

23,209

22,357

66,281

64,200
Average realized price per gold ounce sold

$
1,542

$
1,151

$
1,424

$
1,236
Average realized price per silver ounce sold

$
18.53

$
13.62

$
16.39

$
15.23
Average realized price per gold equivalent ounce sold

$
1,573

$
1,092

$
1,400

$
1,193

Liquid assets

The term liquid assets ~~used in this report~~ 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, ~~receivables from marketable securities sales and~~plus ounces of doré held in precious metals inventories ~~with precious metals~~ valued at the London PM Fix spot price at the corresponding period. The following table summarizes the calculation of ~~cash and cash equivalents, restricted cash, investments, receivable from the sale of marketable securities and precious metals amounts~~liquid assets as at September 30, ~~2019~~2020 and ~~2018:~~2019:

September 30,


2019

2018

(in thousands)
Cash and cash equivalents

$
4,262

$
40,839
Restricted cash

8,764

—
Investments

3,224

3,162
Receivables from marketable securities sales

928

—
Precious Metals valued at market value

1,284

9,999
Total liquid assets

$
18,462

$
54,000

~~A reconciliation between precious metals valued at cost and precious metals valued at market value at the same dates is provided in the following table:~~

September 30,


2019

2018

(in thousands, except ounces and per ounce)
Precious metals (note 6 of the Consolidated Financial Statements)

$
1,278

$
8,520
Reconciliation of precious metals to precious metals valued at market value

Number of ounces of doré in inventory, net of streaming agreement

864

8,424
London P.M. Fix, per ounce

$
1,485

$
1,187
Precious metals valued at market value

$
1,284

$
9,999

September 30,


2020

2019

(in thousands)
Cash and cash equivalents

$
7,954

$
4,262
Restricted cash

10,193

8,764
Investments

-

3,224
Receivables from marketable securities sales

-

928
Precious Metals valued at market value ⁽¹⁾⁽²⁾

676

1,284
Total liquid assets

$
18,823

$
18,462
(1) As at September 30, 2020 and 2019 we held 358 and 864 gold equivalent ounces in inventory, respectively, net of our streaming agreement, valued at $1,887 and $1,485 per ounce, respectively.
(2) Precious metals valued at cost, inclusive of ounces to be delivered under the streaming agreement, equals $945 and $1,278, respectively.

~~OFF-BALANCE SHEET ARRANGEMENTS~~

As of September 30, 2019, we did not have any off-balance sheet arrangements (as that phrase is defined by SEC rules applicable to this report) which have or are reasonably likely to have a material adverse effect on our financial condition, results of operations or liquidity.

~~Table of Contents~~

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.

~~Significant~~The were no significant changes in our Critical Accounting Policies since December 31, ~~2018 correspond to the adoption on January 1,~~ 2019 ~~of ASC 842 - Leases, as described in Note 1 to the Consolidated Financial Statements,~~ ~~“Nature of Operations and Recent Accounting Pronouncements”~~.

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 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.

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.

Table of Contents

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

~~The important~~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, 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;

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●

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

●

timing ~~quality of mineralized material processed~~ 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;

●

the uncertainty of reserve estimates and timing of development expenditures;

●

litigation or regulatory investigations and procedures affecting us;

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●

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.

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 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 months ended September 30, ~~2019,~~2020, the Argentine peso devalued ~~52%~~21% compared to a devaluation of ~~121%~~52% in the same period of ~~2018.~~2019.

During the nine months ended September 30, ~~2019,~~2020, the Mexican peso ~~was~~devalued 15%, compared to it staying relatively flat against the ~~U.S. dollar, compared to the 5% appreciation~~U.S Dollar in the same period ~~of 2018.~~in 2019.

The Canadian dollar experienced a 3% ~~appreciation~~depreciation against the U.S. dollar for the nine months ended September 30, ~~2019,~~2020, compared to ~~the~~a 3% ~~devaluation~~appreciation in the comparable period of ~~2018.~~2019.

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 ~~$1.1~~$7.4 million (C$~~0.8~~9.8 million) at September 30, ~~2019,~~2020, 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, ~~2019,~~2020, our VAT receivable balance was Mexican peso ~~22,963,142,~~15,350,664, equivalent to approximately ~~$1.2~~$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 in the future.~~flows. Change in the price of gold and silver could materially affect our revenues. Based on our revenues from gold and silver sales of ~~$84.7~~$77.1 million for the nine months ended September 30, ~~2019,~~2020, a 10% change in the price of gold and silver would have had an impact of approximately ~~$8.5~~$7.7 million on our revenues. Changes in the price of gold and silver can also affect the provisionally-priced sales that we make under agreements with refiners and other purchasers of our products. At September 30, ~~2019,~~2020, 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 towill default on their obligation. As of September 30, ~~2019,~~2020, 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 ~~$1.2~~$0.7 million as at September 30, ~~2019.~~2020.

In Nevada and Ontario, Canada we are required to provide security to cover our projected reclamation costs. As at September 30, ~~2019,~~2020, we have surety bonds of ~~$31.4~~$31.3 million in place to satisfy bonding requirements for this purpose. The bonds have an annual fee of 2%2.3% of their ~~value.~~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 years and has ~~now~~ 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, ~~2019,~~2020, 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, ~~2019~~2020 that materially affected or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART IIII OTHER INFORMATION

~~Item 1A. RISK FACTOR~~S

~~There have been no material changes from the risk factors disclosed in Part I, Item 1A, of our Form 10-K.~~

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
~~During the quarterly period ended~~
On September ~~30, 2019,~~10, 2020, we ~~issued a total~~sold 6,298,166 shares of ~~353,570 shares of~~our common stock in ~~transactions~~a transaction that ~~were~~was not registered under the Securities Act of 1933, as amended (the “Securities Act”). ~~On July 29, 2019, we issued 53,570 shares to Ivy Minerals Inc., a private Idaho corporation, in exchange for mining claims in proximity to Gold Bar gold mine in Nevada.~~ The shares were ~~valued at $1.87 per share, or a total of $100,000 for the transaction. On August 27, 2019, we issued 300,000 additional shares~~sold to ~~Fremont Gold Ltd., a private British Columbia corporation, in exchange for additional mining claims near Gold Bar. These shares were valued at $2.08 per share, or $624,000 for the transaction.~~
~~In each~~institutional investors pursuant to an Underwriting Agreement with Cantor Fitzgerald Canada Corporation, as representative of the ~~transactions,~~underwriters listed therein, for gross proceeds of $10.4 million, before deducting underwriting discounts and commissions and other estimated offering expenses payable by us. We paid the ~~shares were issued directly by us to~~underwriters discounts and commissions of $0.4 million in connection with the ~~recipient without participation of an underwriter or placement agent.~~ sale.

The ~~shares were issued pursuant to~~common stock sold in the transaction was not registered under the Securities Act in reliance on the exemption ~~from registration~~ provided by ~~Section 4(a)(2)~~Rule 903 of Regulation S promulgated under the Securities Act. ~~Each recipient~~The sale of the common stock was ~~able~~made in an offshore transaction, was not offered or sold to ~~fend for itself in~~a “U.S. Person” within the ~~transaction~~meaning of Regulation S and ~~the shares were offered and issued with no form of public solicitation. Further, resale~~offering restrictions were ~~placed on certificates representing the shares.~~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
~~The description~~
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 ~~Amendment to~~terms of the Credit Agreement between the Company, Royal Capital Management Corp., as administrative agent, and Evanachan Limited, an Ontario corporation, Mark Shoom and Stephen Rider, as lenders in Management’s Discussion and Analysis of Financial Condition and Results of Operation – Liquidity and Capital ResourcesOffer Letter is ~~hereby incorporated~~provided in lieu of ~~what would be required by Item 1.01 of~~an amendment to the Form ~~8-K. Evanachan Limited is owned by Robert R. McEwen, our Chairman and Chief Executive Officer. Mr. McEwen also beneficially owns approximately 22% of our common stock.~~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

~~Amendment dated October 28, 2019 to Credit~~Employment Agreement ~~dated August 10, 2018~~ between the Company ~~Royal Capital Management Corp., as administrative agent,~~ and ~~the Lenders party thereto.~~Anna Ladd-Kruger dated October 2, 2020.
31.1

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Robert R. ~~McEwen.~~McEwen, principal executive officer.
31.2

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for ~~Dr. Merushe (Meri) Verli.~~Anna Ladd-Kruger, principal financial officer.
32

Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Robert R. McEwen and ~~Dr. Merushe (Meri) Verli.~~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, ~~2019~~2020 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, ~~2019~~2020 and ~~2018,~~2019, (ii) the Unaudited Consolidated Balance Sheets as of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, (iii) the Unaudited Consolidated Statement of Changes in Shareholders’ Equity for the three months and nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, (iv) the Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2019~~2020 and ~~2018,~~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, ~~2019,~~2020, 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, ~~2019~~2020
By: Robert R. McEwen,

Chairman and Chief Executive Officer

/s/ ~~Meri Verli~~Anna Ladd-Kruger
Date: October 29, ~~2019~~2020
By: ~~Meri Verli,~~Anna Ladd-Kruger,

Chief Financial Officer

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Three months ended September 30, 2018	USA		Canada		Mexico		MSC		Los Azules		Total
Revenue from gold and silver sales	$	—	$	11,395	$	15,501	$	—	$	—	$	26,896
Production costs applicable to sales		—		(9,179)		(8,561)		—		—		(17,740)
Depreciation and depletion		—		(2,729)		(414)		—		—		(3,143)
Gross profit (loss)		—		(513)		6,526		—		—		6,013

Advanced projects		(2,538)		—		(2,692)		—		—		(5,230)
Exploration		(1,039)		(6,356)		(296)		—		(540)		(8,231)
Loss from investment in Minera Santa Cruz S.A.		—		—		—		(4,973)		—		(4,973)
Segment (loss) income	$	(3,577)	$	(6,869)	$	3,538	$	(4,973)	$	(540)	$	(12,421)
General and Administrative and other												(2,482)
Loss before income and mining taxes											$	(14,903)


Nine months ended September 30, 2018	USA		Canada		Mexico		MSC		Los Azules		Total
Revenue from gold and silver sales	$	—	$	46,444	$	55,299	$	—	$	—	$	101,743
Production costs applicable to sales		—		(31,711)		(30,367)		—		—		(62,078)
Depreciation and depletion		—		(8,513)		(1,819)		—		—		(10,332)
Gross profit		—		6,220		23,113		—		—		29,333

Advanced projects		(5,171)		—		(5,819)		—		—		(10,990)
Exploration		(4,190)		(17,523)		(1,596)		—		(6,406)		(29,715)
Loss from investment in Minera Santa Cruz S.A.		—		—		—		(7,450)		—		(7,450)
Segment (loss) income	$	(9,361)	$	(11,303)	$	15,698	$	(7,450)	$	(6,406)	$	(18,822)
General and Administrative and other												(9,950)
Loss before income and mining taxes											$	(28,772)


	Long-lived Assets				Revenue⁽¹⁾
	September 30,		December 31,		Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018		2019		2018
Canada	$	78,770	$	84,119	$	11,147	$	11,395	$	36,139	$	46,444
Mexico		25,671		26,524		4,967		15,501		19,577		55,299
USA		137,400		127,617		16,577		—		28,941		—
Argentina⁽²⁾		308,484		319,305		—		—		—		—
Total consolidated	$	550,325	$	557,565	$	32,691	$	26,896	$	84,657	$	101,743


	September 30, 2019		December 31, 2018
Mineral property interests	$	338,085	$	326,086
Land		8,745		8,699
Construction in progress		3,520		74,643
Plant and equipment		131,803		49,578
Subtotal	$	482,153	$	459,006
Less: accumulated depreciation		(57,316)		(35,127)
Net carrying value	$	424,837	$	423,879


	September 30, 2019
	Operating lease		Finance leases
Leased assets, cost	$	1,167	$	8,048
Accumulated amortization		(441)		(864)
Net book value	$	726	$	7,184


As at September 30, 2019	Balance excluding FV increments		Adjustments		Balance including FV increments
Current assets	$	72,664	$	113	$	72,777
Total assets		185,522		124,112		309,634

Current liabilities	$	(45,881)	$	10,114	$	(35,767)
Total liabilities		(74,128)		3,257		(70,871)


	Total discounted lease liabilities
	September 30, 2019		December 31, 2018
Finance leases	$	6,588		6,429
Operating lease		922	$	—
Lease liabilities	$	7,510	$	6,429
Current portion		(2,045)		(1,511)
Long-term portion	$	5,465	$	4,918


	Three months ended September 30, 2019		Nine months ended September 30, 2019
Finance leases:
Amortization of ROU assets	$	353	$	829
Interest expense		156		444
Total	$	509	$	1,273

Operating lease:
Rent expense	$	49	$	145


	Payments due by period
	2019		2020		2021		2022		2023		Thereafter		Total
Operating lease obligation	$	56	$	226	$	230	$	232	$	237	$	158	$	1,139
Finance lease obligations		579		2,318		2,362		2,058		105		—		7,422
Total future minimum lease payments	$	635	$	2,544	$	2,592	$	2,290	$	342	$	158	$	8,561
Less: Imputed interest														(1,051)
Total														7,510


Issued on:	March 29, 2019			May 23, 2019
Risk-free interest rate		2.30	%		2.14	%
Dividend yield		0.00	%		0.00	%
Volatility factor of the expected market price of common stock		50	%		45	%
Weighted-average expected life		3 years			3 years
Weighted-average grant date fair value	$	0.43		$	0.22


	Three months ended				Nine months ended
	September 30,				September 30,
	2019		2018		2019		2018
	(in thousands, except per share)
Revenue from gold and silver sales	$	32,691	$	26,896	$	84,657	$	101,743
Production costs applicable to sales	$	(23,584)	$	(17,740)	$	(59,432)	$	(62,078)
Loss before income and mining taxes	$	(13,657)	$	(14,903)	$	(37,190)	$	(28,772)
Net loss	$	(11,465)	$	(13,290)	$	(34,615)	$	(23,881)
Net loss per share	$	(0.03)	$	(0.04)	$	(0.10)	$	(0.07)
Cash (used in) operating activities	$	(12,764)	$	(1,455)	$	(21,916)	$	(834)
Additions to mineral property interests and plant and equipment	$	(2,543)	$	(25,823)	$	(27,027)	$	(53,228)


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

	(in thousands)								(in thousands)
Gross profit (loss)	$	152	$	(926)	$	73	$	(701)	$	(9,261)	$	(4,310)	$	310	$	(13,261)
Add: Depreciation and depletion		2,099		2,404		67		4,570		8,527		7,336		217		16,080
Cash gross profit (loss)	$	2,251	$	1,478	$	140	$	3,869	$	(734)	$	3,026	$	527	$	2,819


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

	(in thousands)								(in thousands)
Gross profit	$	631	$	8	$	980	$	1,619	$	1,633	$	1,594	$	4,497	$	7,724
Add: Depreciation and depletion		3,790		3,589		109		7,488		6,510		10,520		471		17,501
Cash gross profit	$	4,421	$	3,597	$	1,089	$	9,107	$	8,143	$	12,114	$	4,968	$	25,225


	Three months ended September 30, 2018								Nine months ended September 30, 2018
	Gold Bar		Black Fox		El Gallo		Total (100% owned)		Gold Bar		Black Fox		El Gallo		Total (100% owned)
	(in thousands, except ounces and per ounce)								(in thousands, except ounces and per ounce)
Production costs applicable to sales - Cash costs	$	—	$	9,179	$	8,561	$	17,740	$	—	$	31,711	$	30,367	$	62,078
Mine site reclamation, accretion and amortization		—		175		87		262		—		481		260		741
In‑mine exploration		—		701		189		890		—		1,951		1,445		3,396
Capitalized underground mine development (sustaining)		—		1,640		—		1,640		—		8,362		—		8,362
Capital expenditures on plant and equipment (sustaining)		—		955		(129)		826		—		1,318		—		1,318
Sustaining leases		—		—		—		—		—		—		—		—
All‑in sustaining costs	$	—	$	12,650	$	8,708	$	21,358	$	—	$	43,823	$	32,072	$	75,895
Ounces sold, including stream (Au Eq. oz)		—		9,845		12,750		22,595		—		37,811		42,851		80,662
Cash cost ($/Au Eq. oz sold)	$	—	$	932	$	671	$	785	$	—	$	839	$	709	$	770
AISC ($/Au Eq. oz sold)	$	—	$	1,285	$	683	$	945	$	—	$	1,159	$	748	$	941


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		~~Amendment dated October 28, 2019 to Credit~~Employment Agreement ~~dated August 10, 2018~~ between the Company ~~Royal Capital Management Corp., as administrative agent,~~ and ~~the Lenders party thereto.~~Anna Ladd-Kruger dated October 2, 2020.
31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Robert R. ~~McEwen.~~McEwen, principal executive officer.
31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for ~~Dr. Merushe (Meri) Verli.~~Anna Ladd-Kruger, principal financial officer.
32		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Robert R. McEwen and ~~Dr. Merushe (Meri) Verli.~~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, ~~2019~~2020 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, ~~2019~~2020 and ~~2018,~~2019, (ii) the Unaudited Consolidated Balance Sheets as of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, (iii) the Unaudited Consolidated Statement of Changes in Shareholders’ Equity for the three months and nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, (iv) the Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2019~~2020 and ~~2018,~~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, ~~2019,~~2020, formatted in Inline XBRL and contained in Exhibit 101.

	MCEWEN MINING INC.

	/s/ Robert R. McEwen
Date: October 29, ~~2019~~2020	By: Robert R. McEwen,
	Chairman and Chief Executive Officer

	/s/ ~~Meri Verli~~Anna Ladd-Kruger
Date: October 29, ~~2019~~2020	By: ~~Meri Verli,~~Anna Ladd-Kruger,
	Chief Financial Officer