true00003142032022FYMcEwen Mining Inc. (the "Company") is filing this Amendment No. 1 on Form 10-K/A (this "Amendment") to its Annual Report on Form 10-K for the year ended December 31, 2022 filed with the U.S. Securities and Exchange Commission ("SEC") on March 13, 2023 (the "Original Filing") to amend Item 15 of Part IV of the Original Filing, pursuant to Rule 3-09 of Regulation S-X, to include the financial statements and related notes of Minera Santa Cruz S.A ("MSC"), a significant equity investee in which the Company holds a 49% equity ownership interest. In addition, the Company is filing the consent of the independent auditors of MSC and, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), new certifications by the Company's Chief Executive Officer and Chief Financial Officer.Rule 3-09 of Regulation S-X provides that if a 50%-or-less-owned person accounted for by the equity method meets the first or third condition of the significant subsidiary tests set forth in Rule 1-02(w) of Regulation S-X, substituting 20% for 10%, separate financial statements for such 50%-or-less-owned person shall be filed. These financial statements shall be prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") or International Financial Reporting Standards ("IFRS"). MSC met the significant subsidiary test described above for the Company's fiscal years ending December 31, 2022, 2021 and 2020 and accordingly, the Company has included in this Amendment the required Statements of Financial Position as of December 31, 2022 and 2021, and the related Statements of Profit (Loss) and Other Comprehensive Profit (Loss), Statements of Changes in Equity, and Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020, and the accompanying Notes to the Financial Statements of MSC, prepared in accordance with IFRS. We caution readers that the MSC financial results included in our Annual Report on Form 10-K are presented in accordance with US GAAP and may therefore differ from the MSC results presented as separate financial statements reported under IFRS. No attempt has been made in this Amendment to modify or update the disclosures in the Original Filing except as required to reflect the effect of the revisions discussed herein. Except as otherwise noted herein, this Amendment continues to describe conditions as of the date of the Original Filing and the disclosures contained herein have not been updated to reflect events, results or developments that occurred after the date of the Original Filing, or to modify or update those disclosures affected by subsequent events. Among other things, forward-looking statements made in the Original Filing and Prior Amendment have not been revised to reflect events, results or developments that occurred or facts that became known to us after the date of the Original Filing, and such forward-looking statements should be read in conjunction with our filings with the SEC subsequent to the filing of the Original Filing. Accordingly, this Amendment should be read in conjunction with the Original Filing and the Company's other filings with the SEC subsequent to March 13, 2023. Furthermore, readers are cautioned to review the reliability of information disclosure, contained in our Annual Report on Form 10-K, pertaining to the disclosure of MSC results.00003142032022-06-3000003142032023-03-1300003142032022-01-012022-12-31xbrli:sharesiso4217:USD

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

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

For the fiscal year ended December 31, 2022

TRANSITION REPORT UNDER 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 incorporation or organization)

(I.R.S. Employer Identification No.)

150 King Street West, Suite 2800, Toronto, Ontario Canada
(Address of principal executive offices)

M5H 1J9
(Zip Code)

(866) 441-0690

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, no par value

    

MUX

    

NYSE

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  No 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  No 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C 7262 (b)) by the registered public accounting firm that prepared or issued its audit report.

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b).

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

As of June 30, 2022 (the last business day of the registrant’s second fiscal quarter), the aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates of the registrant was $172,281,488 based on the closing price of $4.39 per share as reported on the NYSE. There were 47,427,584 shares of common stock outstanding on March 13, 2023.

DOCUMENTS INCORPORATED BY REFERENCE:  Portions of the registrant’s Proxy Statement for the 2023 Annual Meeting of Shareholders are incorporated into Part III, Items 10 through 14 of this report.

Auditor Name: Ernst & Young LLP      Auditor Location: Toronto, Canada          Auditor Firm ID: 1263

EXPLANATORY NOTE

McEwen Mining Inc. (the “Company”) is filing this Amendment No. 1 on Form 10-K/A (this “Amendment”) to its Annual Report on Form 10-K for the year ended December 31, 2022 filed with the U.S. Securities and Exchange Commission (“SEC”) on March 13, 2023 (the “Original Filing”) to amend Item 15 of Part IV of the Original Filing, pursuant to Rule 3-09 of Regulation S-X, to include the financial statements and related notes of Minera Santa Cruz S.A (“MSC”), a significant equity investee in which the Company holds a 49% equity ownership interest. In addition, the Company is filing the consent of the independent auditors of MSC and, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), new certifications by the Company’s Chief Executive Officer and Chief Financial Officer.

Rule 3-09 of Regulation S-X provides that if a 50%-or-less-owned person accounted for by the equity method meets the first or third condition of the significant subsidiary tests set forth in Rule 1-02(w) of Regulation S-X, substituting 20% for 10%, separate financial statements for such 50%-or-less-owned person shall be filed. These financial statements shall be prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) or International Financial Reporting Standards (“IFRS”). MSC met the significant subsidiary test described above for the Company’s fiscal years ending December 31, 2022, 2021 and 2020 and accordingly, the Company has included in this Amendment the required Statements of Financial Position as of December 31, 2022 and 2021, and the related Statements of Profit (Loss) and Other Comprehensive Profit (Loss), Statements of Changes in Equity, and Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020, and the accompanying Notes to the Financial Statements of MSC, prepared in accordance with IFRS. We caution readers that the MSC financial results included in our Annual Report on Form 10-K are presented in accordance with US GAAP and may therefore differ from the MSC results presented as separate financial statements reported under IFRS.

No attempt has been made in this Amendment to modify or update the disclosures in the Original Filing except as required to reflect the effect of the revisions discussed herein. Except as otherwise noted herein, this Amendment continues to describe conditions as of the date of the Original Filing and the disclosures contained herein have not been updated to reflect events, results or developments that occurred after the date of the Original Filing, or to modify or update those disclosures affected by subsequent events. Among other things, forward-looking statements made in the Original Filing and Prior Amendment have not been revised to reflect events, results or developments that occurred or facts that became known to us after the date of the Original Filing, and such forward-looking statements should be read in conjunction with our filings with the SEC subsequent to the filing of the Original Filing. Accordingly, this Amendment should be read in conjunction with the Original Filing and the Company’s other filings with the SEC subsequent to March 13, 2023. Furthermore, readers are cautioned to review the reliability of information disclosure, contained in our Annual Report on Form 10-K, pertaining to the disclosure of MSC results.

2

PART IV

ITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES

The exhibits listed in the accompanying exhibit index are filed (except where otherwise indicated) as part of this report:

1.1

    

Agency Agreement between the Company and Cantor Fitzgerald Corporation dated March 2, 2022 (incorporated by reference from the Current Report on Form 8-K filed with the SEC on March 3, 2022, Exhibit 1.1, File No. 001-33190)

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)

3.1.3

Articles of Amendment to the Second Amended and Restated Articles of Incorporation as filed with the Colorado Secretary of State on July 25, 2022 (incorporated by reference from the Current Report on the Form 8-K filed with the SEC on July 28, 2022, Exhibit 3.1, 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).

4.1

Description of Capital Stock (incorporated by reference from the Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on March 16, 2020, Exhibit 4.1, File No. 001-33190)

4.2

Form of Warrant issued by the Company in connection with November 2019 financing (incorporated by reference from the Current Report on Form 8-K filed with the SEC on November 22, 2019, Exhibit 4.1, File No. 001-33190)

10.1*

Amended and Restated Equity Incentive Plan dated as of March 17, 2015 (incorporated by reference from the Current Report on Form 8-K filed with the SEC on May 29, 2015, Exhibit 4.1, File No. 001-33190)

10.2

First Amendment to the Amended and Restated Equity Incentive Plan dated April 16, 2021 (incorporated by reference from the Current Report on Form 8-K filed with the SEC on June 30, 2021, Exhibit 10.1, File No. 001-33190)

10.3*

Form of Indemnification Agreement between the Company and its officers and directors (incorporated by reference from the Current Report on Form 8-K dated December 7, 2005, Exhibit 10.1, File No. 000-09137)

10.4

Second Amended and Restated Credit Agreement among the Company, as Borrower, the Lenders party to the Agreement and Sprott Private Resource Lending II (Collector), LP, as Administrative Agent, dated April 1, 2022 (incorporated by reference from the Current Report on Form 8-K filed with the SEC on April 6, 2022, Exhibit 10.2, File No. 001-33190)

10.5

Subordinated Promissory Note executed by the Company in favor of Evanachan Limited, dated March 31, 2022 (incorporated by reference from the Current Report on Form 8-K filed with the SEC on April 6, 2022, Exhibit 10.1, File No. 001-33190)

10.6*

Consulting Agreement between the Company and Perry Ing, executed on June 8, 2022 (incorporated by reference from the Current Report on Form 8-K/A filed with the SEC on June 8, 2022, Exhibit 10.1, File No. 001-33190)

10.7

Form of Subscription Agreement between McEwen Copper Inc. and non-U.S. residents (incorporated by reference from the Current Report on Form 8-K as filed with the SEC on June 23, 2022, Exhibit 10.1, File No. 001-33190).

10.8

Form of Subscription Agreement between McEwen Copper Inc. and U.S. residents (incorporated by reference from the Current Report on Form 8-K as filed with the SEC on June 23, 2022, Exhibit 10.2, File No. 001-33190).

10.9

Form of Subscription Agreement between McEwenb Copper Inc. and an institutional investor (incorporated by reference from the Current Report on Form 8-K as filed with the SEC on June 23, 2022, Exhibit 10.3, File No. 001-33190)

10.10

Unanimous Shareholder Agreement between Minera Andes Inc., Evanachan Limited, McEwen Copper Inc. and other parties dated August 20, 2021 (incorporated by reference from the Current Report on Form 8-K as filed with the SEC on August 25, 2021, Exhibit 10.2, File No. 001-33190)

3

10.11

Collaboration Agreement by and among McEwen Copper Inc., McEwen Mining Inc., Robert McEwen and Nuton LLC dated August 30, 2022 (incorporated by reference from the Current Report on Form 8-K as filed with the SEC on September 6, 2022, Exhibit 10.3, File No. 001-33190).

10.12.1

Option and Joint Venture Agreement, by and among Minera Andes Inc., Minera Andes S.A., and Mauricio Hochschild & CIA. LTDA., dated March 15, 2001 (the “OJVA”) (incorporated by reference from the Annual Report on Form 10-K filed with the SEC on March 1, 2017, Exhibit 10.12, File No. 001-33190)

10.12.2

First Amendment to OJVA, dated May 14, 2002 (incorporated by reference from the Annual Report on Form 10-K filed with the SEC on March 1, 2017, Exhibit 10.12.1, File No. 001-33190)

10.12.3

Second Amendment to OJVA, dated August 27, 2002 (incorporated by reference from the Annual Report on Form 10-K filed with the SEC on March 1, 2017, Exhibit 10.12.2, File No. 001-33190)

10.12.4

Third Amendment to OJVA, dated September 10, 2004 (incorporated by reference from the Annual Report on Form 10-K filed with the SEC on March 1, 2017, Exhibit 10.12.3, File No. 001-33190)

10.12.5

Fourth Amendment to OJVA, dated September 17, 2010 (incorporated by reference from the Annual Report on Form 10-K filed with the SEC on March 1, 2017, Exhibit 10.12.4, File No. 001-33190)

10.13

Subscription Agreement between McEwen Copper Inc. and Evanachan Limited dated August 20, 2021 (incorporated by reference from the Current Report on Form 8-K as filed with the SEC on August 25, 2021, Exhibit 10.1, File No. 001-33190)

10.14

Nuton Collaboration Agreement among McEwen Copper Inc., McEwen Mining Inc., Robert McEwen and Nuton LLC dated August 30, 2022 (incorporated by reference from the Current Report on Form 8-K as filed with the SEC on September 6, 2022, Exhibit 10.3, File No. 001-33190)

10.15

Private Placement Subscription Agreement between McEwen Copper Inc. and FCA Argentina S.A. dated as of February 23, 2023 (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March  13, 2023, Exhibit 10.15, File No. 001-33190)

10.16

Offer Agreement among Andes Corporacion S.A., McEwen Copper Inc., Minera Andes Inc., McEwen Mining Inc. and FCA Argentina S.A. dated as of February 23, 2023 (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March 13, 2023, Exhibit 10.16, File No. 001-33190)

10.17

Investor Rights Agreement among McEwen Copper Inc., Minera Andes Inc., McEwen Mining Inc., Robert McEwen and FCA Argentina S.A. dated as of February 23, 2023 (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March 13, 2023, Exhibit 10.17, File No. 001-33190)

10.18

Binding Term Sheet for Subscription between Nuton LLC and McEwen Copper Inc. effective as of February 23, 2023 (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March 13, 2023, Exhibit 10.18, File No. 001-33190)

10.19

Binding Term Sheet for Subscription for Seconary Offering of Shares amonbg Nuton LLC, McEwen Copper Inc. and McEwen Mining Inc. dated as of February 23, 2023 (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March 13, 2023, Exhibit 10.19, File No. 001-33190)

21

List of subsidiaries of the Company (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March 13, 2023, Exhibit 21, File No. 001-33190)

23.1

Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March 13, 2023, Exhibit 23.1, File No. 001-33190)

23.3

Consent of Mining Plus US Corporation (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March 13, 2023, Exhibit 23.3, File No. 001-33190)

23.5

Consent of Michael C. Bauman (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March 13, 2023, Exhibit 23.5, File No. 001-33190)

23.6

Consent of P&E Mining Consultants Inc. (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March 13, 2023, Exhibit 23.6, File No. 001-33190)

23.7

Consent of Eric Sellars (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March 13, 2023, Exhibit 23.7, File No. 001-33190)

23.8

Consent of Aleksandr Mitrofanov (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March 13, 2023, Exhibit 23.8, File No. 001-33190)

23.9

Consent of Daniel D. Downton (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March 13, 2023, Exhibit 23.9, File No. 001-33190)

23.10

Consent of Dave Tyler (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March 13, 2023, Exhibit 23.10, File No. 001-33190)

4

23.11

Consent of Kenneth Tylee (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March 13, 2023, Exhibit 23.11, File No. 001-33190)

23.12

Consent of Benjamin Bermudez (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March 13, 2023, Exhibit 23.12, File No. 001-33190)

23.13

Consent of Kevin W. Kunkel (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March 13, 2023, Exhibit 23.13, File No. 001-33190)

23.14

Consent of Independent Mining Consultants Inc. (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March 13, 2023, Exhibit 23.14, File No. 001-33190)

23.15

Consent of Forte Dynamics (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March 13, 2023, Exhibit 23.15, File No. 001-33190)

23.16

Consent of Channa Kumarage (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March 13, 2023, Exhibit 23.16, File No. 001-33190)

23.17

Consent of SLR Consulting Ltd. (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March 13, 2023, Exhibit 23.17, File No. 001-33190)

23.18

Consent of Wood Canada Ltd. (incorporated by reference from the Annual Report Form 10-K filed with the SEC on March 13, 2023, Exhibit 23.18, File No. 001-33190)

23.19+

Consent of Independent Auditors

31.1+

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

31.2+

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Perry Ing, interim chief financial officer.

32+

Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Robert R. McEwen and Perry Ing.

95**

Mine safety disclosure (incorporated by reference from the Annual Report on Form 10-K filed with the SEC on March 7, 2022, Exhibit 95, File No. 001-33190)

99.1+

MSC Financials 2022

101**

The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 are filed herewith, formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Audited Consolidated Statements of Operations and Other Comprehensive (Loss) for the years ended December 31, 2022, 2021 and 2020, (ii) the Audited Consolidated Balance Sheets as of December 31, 2022 and 2021, (iii) the Audited Consolidated Statement of Changes in Shareholders’ Equity for the years ended December 31, 2022, 2021 and 2020, (iv) the Audited Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020, and (v) the Notes to the Audited Consolidated Financial Statements

104**

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*

Management contract or compensatory plan or arrangement.

**

Previously filed with or incorporated by reference in the original filing filed on March 7, 2022.

+

Filed or furnished with this report.

5

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Company caused this amended report to be signed on its behalf by the undersigned, thereunto duly authorized.

MCEWEN MINING INC.

By:

/s/ Perry Y. Ing

Dated: June 29, 2023

Perry Y. Ing, Interim Chief Financial Officer

ITEM 1.

6

Exhibit 23.19

Consent of Independent Auditors

We consent to the incorporation by reference in the following Registration Statements:

(1)Registration Statements on Form S-3 (No. 333-234612) of McEwen Mining Inc.,
(2)Registration Statement on Form S-4 (No. 333-226858) of McEwen Mining Inc., and
(3)Registration Statements on Forms S-8 (Nos. 333-144563, 333-144569, 333-112269, 333-179143, 333-179144, 333-204693, and 333-222609) of McEwen Mining Inc.;

of our report dated June 29, 2023, with respect to the financial statements of Minera Santa Cruz S.A. included in the Amendment to Annual Report (Form 10-K/A) of McEwen Mining Inc. for the year ended December 31, 2022.

City of Buenos Aires, Argentina
June 29, 2023

/s/ PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L.

Pistrelli,

Henry Martin y Asociados S.R.L.

Member of Ernst & Young Global

A member firm of Ernst & Young Global Limited


Exhibit 31.1

CERTIFICATE

Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002

I, ROBERT R. MCEWEN, certify that:

1.I have reviewed this Amendment to Annual Report on Form 10-K/A (Amendment No. 1) of McEwen Mining Inc.;
2.Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
3.Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
d.Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: June 29, 2023

/s/ Robert R. McEwen

Robert R. McEwen, Chairman of the Board of Directors and
Chief Executive Officer


Exhibit 31.2

CERTIFICATE

Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002

I, PERRY Y. ING, certify that:

1.I have reviewed this Amendment to Annual Report on Form 10-K/A (Amendment No. 1) of McEwen Mining Inc.;
2.Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
3.Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
d.Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: June 29, 2023

/s/ Perry Y.Ing

Perry Y. Ing , Chief Financial Officer


Exhibit 32

CERTIFICATION

Pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

In connection with the Amendment to Annual Report on Form 10-K/A of McEwen Mining Inc., a Colorado corporation (the “Company”) for the year ended December 31, 2022 as filed with the Securities and Exchange Commission (the “Report”), each of the undersigned officers of the Company does hereby certify pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that to the best of our knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: June 29, 2023

MCEWEN MINING INC.

By:

/s/ Robert R. McEwen

Robert R. McEwen, Chairman of the Board of Directors
and Chief Executive Officer

By:

/s/ Perry Y. Ing

Perry Y. Ing, Chief Financial Officer


Exhibit 99.1

Report of Independent Auditors

To the Board of Directors of Minera Santa Cruz S.A.:

Opinion

We have audited the financial statements of Minera Santa Cruz S.A. (the Company) which comprise statements of financial position as of December 31, 2022 and 2021, and the related statements of profit (loss) and other comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes to the financial statements (collectively referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (“GAAS”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users made on the basis of these financial statements.

In performing an audit in accordance with GAAS, we:

Exercise professional judgment and maintain professional skepticism throughout the audit.

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

1


Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.

Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters identified during the audit.

/S/ PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L

Member of Ernst & Young Global

City of Buenos Aires, Argentina

June 29, 2023

2


Minera Santa Cruz S.A.

Statements of Profit (Loss) and Other Comprehensive Income

For the years ended December 31, 2022, 2021 and 2020

    

Notes

    

2022
US$000

    

2021
US$000

    

2020
US$000

Revenue

3

243,469

258,971

206,098

Cost of sales

4

(198,753)

(192,163)

(147,103)

Gross profit

44,716

66,808

58,995

Administrative expenses

5

(6,252)

(6,400)

(5,963)

Exploration expenses

6

(8,946)

(10,602)

(10,445)

Selling expenses

7

(12,616)

(14,195)

(11,704)

Other income

9

265

438

9,779

Other expenses

9

(10,121)

(14,281)

(4,757)

Profit before net finance income (costs), foreign exchange loss and income tax

7.046

21,768

35,905

Finance income

10

1,277

1,997

1,272

Finance costs

10

(11,012)

(19,581)

(16,746)

Foreign exchange loss

(1,007)

(2,506)

(2,964)

Profit (loss) before income tax

(3,696)

1,678

17,467

Current and deferred income tax recovery (expense)

21

4,787

(10,323)

(6,542)

Net profit (loss)

1,091

(8,645)

10,925

Other comprehensive income

-

-

-

Net profit (loss) and comprehensive Income for the year

1,091

(8,645)

10,925

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

3


Minera Santa Cruz S.A.

Statements of financial position

As at December 31, 2022 and 2021

    

Notes 

    

As at
31 December
2022
US$000

    

As at
31 December
 2021
 US$000

ASSETS

Non-current assets

162,701

157,512

Property, plant and equipment

11

151,002

147,886

Evaluation and exploration assets

12

4,393

4,703

Intangible assets

13

3,772

4,470

Trade and other receivables

14

3,534

453

Current assets

96,963

89,927

Inventories

15

34,910

23,822

Trade and other receivables

14

46,580

40,163

Cash and cash equivalents

16

15,473

25,942

Total assets

259,664

247,439

EQUITY AND LIABILITIES

Capital and reserves

131,157

130,649

Equity share capital

20

110,132

110,132

Other reserves

146,544

158,603

Retained earnings

(125,519)

(138,086)

Non-current liabilities

67,922

68,260

Trade and other payables

17

856

944

Provisions

19

33,480

28,942

Deferred income tax liabilities

21

33,586

38,374

Current liabilities

60,585

48,530

Trade and other payables

17

43,717

48,530

Borrowings

18

16,662

-

Provisions

19

206

-

Total liabilities

128,507

116,790

Total equity and liabilities

259,664

247,439

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

4


Minera Santa Cruz S.A.

Statements of cash flows

For the years ended December 31, 2022, 2021 and 2020

Year ended December 31,

   

Notes

    

2022
US$000

    

2021
US$000

    

2020
US$000

Cash flows from operating activities

(Loss)/Profit before tax

(3,696)

1,678

17,467

Non-cash adjustment to reconcile profit for the year to net cash flows

Depreciation of property, plant and equipment

11

50,022

50,841

31,262

Amortization and depreciation of intangible assets

13

703

826

562

Impairment reversal

-

-

(8,304)

Disposal of property, plant and equipment

11

-

354

552

Other non-cash

152

185

(882)

Impact of change of estimated discount rate for Value Added Tax (“VAT”) and other receivables

10

780

632

(214)

Working capital adjustments

(Increase)/Decrease in trade and other receivables

(9,676)

(4,528)

2,145

(Increase)/Decrease in inventories

(11,088)

(2,638)

5,921

(Decrease)/Increase in trade payables

(5,052)

16,551

(13,576)

Increase in other payables

4,740

658

2,427

Income tax paid

(602)

(2,153)

(1,817)

Net cash flows generated from operating activities

26,283

62,406

35,543

Investing activities

Purchase of property, plant and equipment, evaluation and exploration and intangible assets

11,12,13

(52,833)

(43,667)

(24,973)

Short term investments

-

2,382

(2,382)

Net cash flows used in investing activities

(52,833)

(41,285)

(27,355)

Financing activities

Increase/(Decrease) of borrowings, net

18

19,384

(8,154)

12,732

Cash interest paid

18

(2,723)

(2,474)

(2,139)

Dividends paid

22

(580)

(20,065)

(701)

Net cash flows generated from (used in) financing activities

16,081

(30,693)

9,892

Net (decrease) increase in cash and cash equivalents during the year

(10,469)

(9,572)

18,080

Cash and cash equivalents at beginning of year

25,942

35,514

17,434

Cash and cash equivalents at end of year

16

15,473

25,942

35,514

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

5


Minera Santa Cruz S.A.

Statement of changes in equity

For the years ended December 31, 2022, 2021 and 2020

    

Notes

    

Equity share
capital
US$000

    

Legal
reserve
US$000

    

Other
reserves
US$000

    

Currency
translation
adjustment
US$000

    

Total
other
reserves
US$000

    

Retained
earnings
US$000

    

Total
equity
US$000

Balance at 1 January 2020

110,132

12,513

121,037

2,685

136,235

(97,231)

149,136

Dividends

22

-

-

(702)

(702)

(702)

Legal reserve

-

1,749

-

1,749

(1,749)

Other reserves (*)

-

-

33,224

33,224

(33,224)

Profit for the year

-

-

-

10,925

10,925

Balance at 31 December 2020

110,132

14,262

153,559

2,685

170,506

(121,279)

159,359

Dividends

22

-

-

(20,065)

(20,065)

(20,065)

Legal reserve

-

408

-

408

(408)

Other reserves (*)

-

-

7,754

7,754

(7,754)

Loss for the year

-

-

-

(8,645)

(8,645)

Balance at 31 December 2021

110,132

14,670

141,248

2,685

158,603

(138,086)

130,649

Dividends

22

-

-

(583)

-

(583)

-

(583)

Other reserves (*)

-

-

(11,476)

-

(11,476)

11,476

-

Profit for the year

-

-

-

-

-

1,091

1,091

Balance at 31 December 2022

110,132

14,670

129,189

2,685

146,544

(125,519)

131,157

(*)

In accordance with Shareholders meeting as of May 21, 2020, May 21, 2021 and , May 9, 2022 based on statutory purposes financial statements.

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

6


Minera Santa Cruz S.A.

Notes to the financial statements

For the years ended December 31, 2022, 2021 and 2020

1. Company information

Minera Santa Cruz S.A. (the “Company” or “MSC”) was incorporated in 2001. The Company is a limited company incorporated and domiciled in Sargento Cabral 124, Comodoro Rivadavia, Chubut, Argentina.

The Company’s principal business is the mining, processing and sale of silver and gold.  Information on the parent is presented in Note 23.

For management purposes, the Company is organized into one business unit; therefore, there is only one reporting segment according to IFRS 8, ‘Operating Segments’.

The financial statements of Minera Santa Cruz S.A. for the years ended December 31, 2022, 2021 and 2020 were authorized for issue in accordance with a resolution of the directors on June 29, 2023.

2. Basis of preparation and significant accounting policies

2.A Basis of preparation

2.A.1 Overview

The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

The basis of preparation and accounting policies used in preparing the financial statements for the years ended December 31, 2022, 2021 and 2020 are set out below. The financial statements have been prepared on a historical cost basis, except for derivative financial instruments which have been measured at fair value.

The financial statements are presented in US dollars and all values are rounded to the nearest thousand (US$ thousand), except where otherwise indicated.

Tha Company has prepared the financial statements on the basis that it will continue to operate as a going concern.

2.A.2 Foreign currencies

The Company’s financial information is presented in US dollars, which is the Company’s functional currency. The functional currency for the Company is determined by the currency of the primary economic environment in which it operates.

Transactions denominated in currencies other than the functional currency of the entity are recorded in the functional currency using the exchange rate prevailing at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are remeasured at the exchange rate prevailing at the statement of financial position date. Exchange gains and losses on settlement of foreign currency transactions which are translated at the rate prevailing at the date of the transactions, or on the translation of monetary assets and liabilities which are translated at period-end exchange rates, are recorded in the Statements of profit (loss) and other comprehensive income.

Non-monetary assets and liabilities denominated in foreign currencies that are stated at historical cost are translated to the functional currency at the foreign exchange rate prevailing at the date of the transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

7


Minera Santa Cruz S.A.

Notes to the financial statements (continued)

For the years ended December 31, 2022, 2021 and 2020

2.B Significant accounting judgments, estimates and assumptions

The preparation of the Company´s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Estimates and assumptions are continually evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.  The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on information available at the time of financial statements preparations. These assumptions may change in the future due to market changes or circumstances arising beyond the control of the Company and the impact on the financial statements could be material.

Significant areas of estimation uncertainty and critical judgments made by management in preparing the financial statements include:

Significant estimates:

Ore reserves and resources – Note 2.E (g)

There are numerous uncertainties inherent in estimating ore reserves and resources. Assumptions that are valid at the time of estimation may change significantly when new information becomes available. Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of reserves and resources and may, ultimately, result in changes to reserves and resources. This estimate is important for (i) the depreciation and amortization of PP&E and intangibles, (ii) the recoverable value of mining assets and (iii) mine closure.

Recoverable values of mining assets – Notes 2.E (e), (f), (h) and Notes 11, 12 and 13

The company assesses, at each reporting date, whether there is an indication that an asset or cash-generating unit (“CGU”) may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s or CGU’s recoverable amount. The recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal (“FVLCD”) and its value in use (“VIU”).

The assessment of asset carrying values requires the use of estimates and assumptions such as long-term commodity prices, discount rates, future capital requirements, exploration potential and operating performance. Changes in these assumptions will affect the recoverable amount of the property, plant and equipment and evaluation and exploration assets and intangibles assets. See Note 30.

Mine closure costs – Note 2.E (m)

The Company assesses its mine closure costs provision annually. Significant estimates and assumptions are made in determining the provision for mine closure cost as there are numerous factors that will affect the ultimate liability payable. These factors include estimates of the extent and costs of rehabilitation activities, technological changes, regulatory changes, cost increases, mine life and changes in discount rates. Those uncertainties may result in future actual expenditures differing from the amounts currently provided. The provision at the balance sheet date represents management’s best estimate of the present value of the future closure costs required. Changes to estimated future costs are recognized in the balance sheet by adjusting the mine closure cost liability and the related asset originally recognized.

Critical Judgements:

Determination of functional currency.

The determination of functional currency requires management judgement, particularly where there may be several currencies in which transactions are undertaken and which impact the economic environment in which the entity operates.

8


Minera Santa Cruz S.A.

Notes to the financial statements (continued)

For the years ended December 31, 2022, 2021 and 2020

Income tax – Notes 2.E (b), 21 and 25.

Judgement is required in determining whether deferred tax assets are recognized on the balance sheet. Deferred tax is provided using the balance sheet method on temporary differences between the tax basis of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets, including those arising from unutilized tax losses require management to assess the likelihood that the Company will generate taxable earnings in future periods, in order to utilize recognized deferred tax assets. Estimates of future taxable income are based on forecasted cash flows from operations and the application of existing tax laws. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to realize the net deferred tax assets recorded at the balance sheet date could be impacted.

Recognition of evaluation and exploration assets and transfer to development costs – Note 2.E (f)

The application of the Company´s accounting policy for Exploration and Evaluation (“E&E”) expenditure requires judgement to determine whether future economic benefits are likely from either future exploitation or sale, or whether activities have not reached a stage that permits a reasonable assessment of the existence of reserves and resources.

In addition to applying judgement to determine whether future economic benefits are likely to arise from the Company E&E assets (reserves and resources), the Company has to apply numerous other estimates and assumptions. The determination of a resource is itself an estimation process that involves varying degrees of uncertainty depending on how the resources are classified (i.e., measured, indicated or inferred). These estimates directly impact the deferral (capitalization or not) of E&E expenditures.

2.C Changes in accounting policies and disclosures

The accounting policies adopted in the preparation of the financial statements are consistent with those applied in the preparation of the financial statement for the year ended December 31, 2021.

Certain amendments and interpretations apply for the first time in 2022, but do not have an impact on the financial statements. The Company has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

2.D Standards, interpretations and amendments to existing standards that are not yet effective

Certain new standards, amendments and interpretations to existing standards have been published and are mandatory for accounting periods beginning on or after January 1, 2023 or later periods but which the Company has not previously adopted. These have not been listed as they are not expected to impact the Company.

2.E Summary of significant accounting policies

(a) Revenue recognition

The Company is involved in the production and sale of gold and silver from doré and concentrate containing both gold and silver. Concentrate and doré bars are sold directly to customers.

Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

Revenue value is determined net of refining and treatment charges but exclude selling expenses and any applicable sales taxes.

The revenue is subject to adjustments based on inspection of the product by the customer. Revenue is initially recognised on a provisional basis using the Company’s best estimate of contained gold and silver. Any subsequent adjustments to the initial estimate of metal content are recorded in revenue once they have been determined.

9


Minera Santa Cruz S.A.

Notes to the financial statements (continued)

For the years ended December 31, 2022, 2021 and 2020

In addition, certain sales are ‘provisionally priced’ where the selling price is subject to final adjustment at the end of a period, normally ranging from 15 to 120 days after the start of the delivery process to the customer, based on the market price at the relevant quotation point stipulated in the contract. Revenue is initially recognised when the conditions set out above have been met, using market prices at that date. The provisionally priced metal is revalued based on the forward selling price for the quotational period stipulated in the contract until the quotational period ends. The selling price of gold and silver can be measured reliably as these metals are actively traded on international exchanges. The revaluation of provisionally priced contracts is recorded as revenue.

Doré Sale

The terms that apply for doré sales is Carriage and Insurance Paid To (“CIP”), which indicate the moment in which the property and the risk of the MSC good is transferred to the client.

Concentrate Sale

For gold and silver concentrate, there are sales under Cost, Insurance and Freight (“CIF”) or CIP terms. Revenue is recognized at a point in time when the control passes to the customer.

The Sales under CIF or CIP terms requires the Company to be responsible for providing freight/shipping services (as principal) after the date that the Company transfers control of the metal in concentrate to its customers. The Company, therefore, has separate performance obligations for freight/shipping services which are provided solely to facilitate sale of the commodities it produces.

For CIF arrangements, the transaction price (as determined above) is allocated to the metal in concentrate and freight/shipping services using the relative stand-alone selling price method. Under these arrangements, a portion of consideration may be received from the customer in cash at, or around, the date of shipment under a provisional invoice. It is then recognized as revenue over time using an output method (being days of shipping/transportation elapsed) to measure progress towards complete satisfaction of the service as this best represents the Company´s performance. This is on the basis that the customer simultaneously receives and consumes the benefits provided by the Company as the services are being provided. The costs associated with these reight/shipping services are also recognized over the same period of time as incurred.

(b) Income tax

Income tax for the year comprises of current and deferred tax. Income tax is recognized in the income statement except to the extent that it relates to items charged or credited directly to equity, in which case it is recognized in equity.

Current income tax expense includes the expected tax payable for the year, using tax rates enacted at the statement of financial position date, and any adjustment to tax payable in respect of previous years.

 

Deferred income tax is estimated using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax assets and liabilities are measured using tax rates that are expected to apply to the period when the asset is realized or the liability is settled based on tax rates (and tax laws) that have been enacted or substantively enacted at the statement of financial position date.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

10


Minera Santa Cruz S.A.

Notes to the financial statements (continued)

For the years ended December 31, 2022, 2021 and 2020

(c) Tax contingencies

An estimate tax liability is recognized when the Company has a present obligation because of a past event, it is probable that the Company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. The liability is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account risks and uncertainties surrounding the obligation. Separate liabilities for interest and penalties are also recorded if appropriate.

Tax liabilities are based on management´s interpretation of tax law and the likelihood of settlement. This involves a significant amount of judgment as tax legislation can be complex and open to different interpretation. Management uses in-house tax experts, external professional service firms and previous experience when assessing tax risks.

(d) Leases

Right-of-use assets

The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. Right-of-use assets are subject to impairment.

Lease liabilities

At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating a lease, if the lease term reflects the Company exercising the option to terminate. The variable lease payments are recognised as expense in the period on which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Company uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that have a lease term of twelve months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value (i.e., below $5,000). Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

(e) Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. Cost comprises its purchase price and directly attributable costs of acquisition or construction required to bring the asset to the condition necessary for the asset to be capable of operating in the manner intended by management. Economical and physical conditions of assets have not changed substantially over this period.

11


Minera Santa Cruz S.A.

Notes to the financial statements (continued)

For the years ended December 31, 2022, 2021 and 2020

The cost less residual value of each item of property, plant and equipment is depreciated over its useful life. Each item’s
estimated useful life has been assessed with regard to both its own physical life limitations and the present assessment of economically recoverable reserves and resources of the mine property at which the item is located. Estimates of remaining useful lives are made on a regular basis for all mine buildings, machinery and equipment, with annual reassessments for major items. Depreciation is charged to cost of production on a units of production basis for mine buildings and installations and plant and equipment used in the mining production process or charged directly to the income statement over the estimated useful life of the individual asset on a straight-line basis when not related to the mining production process. Changes in estimates, which mainly affect units of production calculations, are accounted for prospectively. Depreciation commences when assets are available for use. Land is not depreciated.

An asset’s carrying amount is written-down to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized within other income/expenses, in the income statement.

The expected useful lives under the straight-line method are as follows:

    

Years

Buildings

3 to end of mine life

Plant and equipment

4 to end of mine life

Vehicles

5

Borrowing costs directly attributable to the acquisition or construction of an asset that takes a substantial time to be ready for its intended use are capitalized as part of the cost of the asset. All other borrowing costs are expensed when incurred.

Mining properties and development costs

Purchased mining properties are recognized as assets at their cost of acquisition. Costs associated with developing of mining properties are capitalized and are depreciated upon commencement of commercial production, using the UOP method.

When a mine construction project moves into the production stage, the capitalization of mine construction costs ceases and costs are either included in the cost of inventory or expensed, except for costs which qualify for capitalization.

Construction in progress

Assets in the course of construction are capitalized as a separate component of property, plant and equipment. On completion, the cost of construction is transferred to the appropriate category. Construction in progress is not depreciated.

Subsequent expenditures

Expenditures incurred to replace a component of an item of property, plant and equipment are capitalized to replace the carrying amount of the component being written-off. Other subsequent expenditures are capitalized if future economic benefits will arise from the expenditure, otherwise are expensed in the income statement as incurred.

(f) Evaluation and exploration assets

Evaluation and exploration expenses are capitalized when the future economic benefit of the project can reasonably be regarded as assured, and / or from the date that the Board of Directors authorizes management to conduct a feasibility study.

Expenditures are transferred to mining properties and development costs once the work is completed.

Costs incurred in converting inferred resources to indicated and measured resources (of which reserves are a component) are capitalized as incurred. Costs incurred in identifying inferred resources are expensed as incurred.

12


Minera Santa Cruz S.A.

Notes to the financial statements (continued)

For the years ended December 31, 2022, 2021 and 2020

(g) Determination of ore reserves and resources

The Company estimates its ore reserves and mineral resources based on information compiled by internal competent persons. Reports to support these estimates are prepared each year. It is the Company’s policy to have the report audited by a Qualified Person on an annually basis.

Reserves and resources are used in the UOP calculation for depreciation as well as the determination of the timing of mine closure cost and impairment analysis.

(h) Intangible assets

Right to use energy of transmission line

Transmission line costs represent the investment made by the Company during the period of its use. This is an asset with a finite useful life equal to that of the mine life and amortized applying the UOP method for the mine.

Other intangible assets

Other intangible assets are primarily computer software, which are capitalized at cost and amortized on a straight-line basis over their useful life of three years.

(i) Impairment of non-financial assets

The carrying amounts of property, plant and equipment, intangible assets and evaluation and exploration assets are reviewed for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable. If there are indicators of impairment, an exercise is undertaken to determine whether the carrying values are in excess of their recoverable amount. Such review is undertaken on an asset by asset basis, except where such assets do not generate cash flow independent of other assets, and then the review is undertaken at the cash-generating unit level.

The assessment requires the use of estimates and assumptions such as long-term commodity prices, discount rates, future capital requirements, exploration potential and operating performance. Changes in these assumptions will affect the recoverable amount of this group of assets.

If the carrying amount of an asset or its cash-generating unit exceeds the recoverable amount, a provision is recorded to reflect the asset at the lower amount. Impairment losses are recognized in the income statement.

Calculation of recoverable amount

The recoverable amount of assets is the greater of their VIU and FVLCD. FVLCD is based on an estimate of the amount that the Company may obtain in a sale transaction on an arm’s length basis. VIU is based on estimated future cash flows discounted to present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs. The Company’s CGU is the smallest identifiable groups of assets that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The Company considers the mine site as a CGU.

Reversal of impairment

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(j) Inventories

Inventories are valued at the lower of cost or net realizable value. Cost is determined using the weighted average method. The cost of work in progress and finished goods (ore inventories) is based on the cost of production.

For this purpose, the cost of production includes:

costs, materials and contractor expenses which are directly attributable to the extraction and processing of doré;
depreciation of property, plant and equipment used in the extraction and processing of ore;

Net realizable value is the estimated selling price in the ordinary course of business, less applicable selling expenses.

13


Minera Santa Cruz S.A.

Notes to the financial statements (continued)

For the years ended December 31, 2022, 2021 and 2020

(k) Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

- Initial recognition and measurement

Financial assets are classified initially as assets at amortized cost and /or fair value through other comprehensive income or loss (“OCI”), and fair value through profit or loss. The classification of financial assets at initial recognition depends on the financial asset´s contractual cash flow characteristics and the Company´s business model for managing them.

Financial assets are measured on initial recognition at fair value, plus, in the case of financial instruments other than those classified as fair value through profit or loss ("FVPL"), the inclusion of directly attributable transaction costs. Trade receivable that do not contain a significant financing component are measured at the transaction price.

Financial liabilities are classified, at initial recognition as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings payables, net of directly attributable transaction costs.

Financial assets

- Subsequent measurement

- Financial assets at fair value through profit or loss

For the year ended December 31, 2022 and 2021, all the Company’s financial assets are classified as assets at FVPL. The Company considers whether a contract contains an embedded derivative when the entity first becomes a party to it. The embedded derivatives are no longer separated from the host and therefore the revaluation of provisionally priced contracts is disclosed within the receivable of the host contract in “Trade and other receivables. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required.

- Derecognition

A financial asset (or, where applicable, a part of a financial asset) is primarily derecognised (i.e., removed from the Company’s statement of financial position) when:

• The rights to receive cash flows from the asset have expired, or

• The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

14


Minera Santa Cruz S.A.

Notes to the financial statements (continued)

For the years ended December 31, 2022, 2021 and 2020

- Impairment of financial assets

The Company assesses at each statement of financial position date whether a financial asset or group of financial assets is impaired.

Financial liabilities

- Subsequent measurement – Loans and borrowings

Loans and borrowings are recognized initially at fair value. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate (“EIR”) method.

Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.

-Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.

(l) Trade and other receivables

Current trade receivables are carried at the original invoice amount less provision made for impairment of these receivables. Non-current receivables are stated at amortised cost. A provision for impairment of trade receivables is established using the expected credit loss impairment model according to IFRS 9. The amount of the provision is the difference between the carrying amount and the recoverable amount and this difference is recognised in the income statement.

(m) Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

Mine closure costs

Provisions for mine closure costs are made in respect of the estimated future costs of closure and restoration and for environmental rehabilitation costs (which include the dismantling and demolition of infrastructure, removal of residual materials and remediation of disturbed areas) in the accounting period when the related environmental disturbance occurs.

The rehabilitation provision represents the present value of rehabilitation costs relating to the mine site, and expected to be incurred at the expected end of the mine life. Rehabilitation costs are based on the management estimates using assumptions based on the current economic environment.

The provision is reviewed on an annual basis for changes in cost estimates, discount rates and the expected life of mine.

15


Minera Santa Cruz S.A.

Notes to the financial statements (continued)

For the years ended December 31, 2022, 2021 and 2020

Changes to estimated future costs are recognized in the statement of financial position by adjusting the mine closure cost liability and the related asset originally recognised. If, for mature mines, the related mine assets net of mine closure cost provisions exceeds the recoverable value, the portion of the increase is charged directly to the income statement. Similarly, for reductions to the estimated costs exceeding the carrying value of the mine asset, such portion of the decrease is credited directly to the income statement. For closed sites, changes to estimated costs are recognized immediately in the income statement.

Actual rehabilitation costs will ultimately depend upon future market prices for the necessary rehabilitation works required that will reflect market conditions at the relevant time. Furthermore, the timing of rehabilitation is likely to depend on when the mine ceases to produce at economically viable rates. This, in turn, will depend upon future gold and silver prices, which are inherently uncertain.

The discount rate used in the calculation of the provision as at December 31, 2022 was 1.49% (2021: -0.88%).

Other

Other provisions are accounted for when the Company has a legal or constructive obligation for which it is probable there will be an outflow of resources for which the amount can be reliably estimated.

(n) Cash-settled share-based payments

The fair value of cash-settled share plans is recognized as a liability over the vesting period of the awards. Movements in that liability between accounting dates are recognized as an expense. The fair value of the awards is taken to be the market value of the shares at the date of award adjusted by a factor for anticipated relative Total Shareholder Return (“TSR”) performance. Fair values are subsequently remeasured at each accounting date to reflect the number of awards expected to vest based on the current and anticipated TSR performance.

Uncertainties in estimating the award include potential changes in the TSR, the number of participants in the plan, and levels of interest rates.

(o) Finance income and costs

Finance income and costs mainly include, among others, interest expense on borrowings, the accumulation of interest on provisions, interest income on funds invested and financial charges for the acquisition of dollars through the sales of bonds.

Interest income is recognized as it is incurred, taking into account the effective yield on the asset.

(p) Dividend distributions

Dividend distributions to the Company’s shareholders are recognized as a liability in the Company’s financial statements in the period in which the dividends are approved by the Company’s shareholders.

(q) Cash and cash equivalents

Cash and cash equivalents are carried in the statement of financial position at cost. For the purposes of the statement of financial position, cash and cash equivalents include cash on hand and deposits held with banks for varying periods of between one day and three months and which are subject to insignificant risk of changes in value.

Liquid investments are classified as cash equivalents if the amount of cash that will be received is known at the time of the initial investment and the risk of changes in value is considered insignificant.

(r) Short-term investments

Include deposits held with banks for periods higher than three months.

16


Minera Santa Cruz S.A.

Notes to the financial statements (continued)

For the years ended December 31, 2022, 2021 and 2020

3. Revenue

Year ended December 31

    

2022
US$000

    

2021
US$000

    

2020
US$000

Doré bars

Gold

61,081

57,334

25,110

Silver

46,509

50,454

16,826

Freight/shipping services (note 2.E(a))

1,365

1,363

662

Concentrate

Gold

72,177

81,882

91,668

Silver

58,746

64,704

69,051

Freight/shipping services (note 2.E(a))

3,591

3,234

2,781

Total

243,469

258,971

206,098

Revenue from the sale of doré and concentrate is recognized at a point in time when control is transferred and revenue from freight is recognized over time as services are provided. Included within revenue was a gain of $3,052 relating to provisional pricing adjustments (2021: loss of $115, 2020: gain of $1,947) arising on sales of concentrates and doré.

4. Cost of sales

Year ended December 31

    

2022
US$000

    

2021
US$000

    

2020
US$000

Personnel expenses

62,637

48,521

30,771

Depreciation and amortization

48,243

48,654

30,976

Third-party services

43,746

28,735

18,387

Supplies

38,875

35,414

23,539

Mining royalty (note 26)

6,317

7,171

5,208

Change in products in process and finished goods

(6,061)

728

2,309

Covid-19 expenses

2,059

20,334

34,011

Others

2,937

2,606

1,902

Total

198,753

192,163

147,103

5. Administrative expenses

Year ended December 31

    

2022
US$000

    

2021
US$000

    

2020
US$000

Personnel expenses

2,625

3,125

2,794

Indirect taxes

1,344

1,273

1,089

Professional fees

660

520

609

Depreciation and amortization

50

57

72

Other

1,573

1,425

1,399

Total

6,252

6,400

5,963

17


Minera Santa Cruz S.A.

Notes to the financial statements (continued)

For the years ended December 31, 2022, 2021 and 2020

6. Exploration expenses

Year ended December 31

    

2022
US$000

    

2021
US$000

    

2020
US$000

Mine site exploration(1)

Third-party services

7,110

9,425

9,024

Personnel expenses

993

914

681

Others

843

263

740

Total

8,946

10,602

10,445

(1)Mine-site exploration is performed with the purpose of identifying potential minerals within the existing mine-site as well as properties surrounding the mine site,  to maintain and extend the mine’s life.

7. Selling expenses

Year ended December 31

    

2022
US$000

    

2021
US$000

    

2020
US$000

Taxes

10,345

11,765

9,202

Warehouse services

1,075

1,136

1,082

Sales commissions

228

210

304

Other

968

1,084

1,116

Total

12,616

14,195

11,704

8. Personnel expenses

Year ended December 31

    

2022
US$000

    

2021
US$000

    

2020
US$000

Salaries and wages

56,950

53,006

46,467

Other legal contributions

15,816

14,199

12,559

Statutory holiday payments

3,974

3,740

2,976

Long Term Incentive Plan

(129)

149

139

Termination benefits

2,018

4,540

1,312

Other

306

295

164

Total

78,935

75,929

63,617

Personnel expenses are included in costs of sales, administrative, exploration and other expenses (Notes 4, 5, 6 and 9) or capitalised to plant and equipment, E&E assets and inventory as follows: year ended December 31, 2022 – $9,847 (2021: $7,468, 2020: $5,004). For year ended December 2022 $1,479, was classified as COVID-19 expenses in costs of sales (2021: $7,606).

Average number of employees for 2022, 2021 and 2020 was as follows:

Year ended December 31

    

2022

    

2021

    

2020

Average number of employees (*)

1,391

1,466

1,434

Total

1,391

1,466

1,434

(*)

Unaudited

18


Minera Santa Cruz S.A.

Notes to the financial statements (continued)

For the years ended December 31, 2022, 2021 and 2020

9. Other income and expenses

Year ended December 31

    

2022
US$000

    

2021
US$000

    

2020
US$000

Other income

Reversal of impairment

-

-

8,304

Reversal of supplies obsolescence

-

-

1,271

Other

265

438

204

Total

265

438

9,779

Other expenses

Corporate Social Responsibility

3,360

3,911

2,689

Voluntary retirement program and related salaries

1,742

8,295

1,149

Labor lawsuits

3,138

958

268

VAT write-off

152

185

98

Other

1,729

932

553

Total

10,121

14,281

4,757

Other income and expenses for the year ended December 31, 2022, included mainly non-cash expense of $418 (2021 and 2020 non-cash income and charges of $354 and $9,055, respectively).

10. Finance income and costs

Year ended December 31

    

2022
US$000

    

2021
US$000

    

2020
US$000

Finance income

Other finance income

632

300

509

Interest on deposits and liquidity funds

540

1,330

389

Unwinding mine closure

105

367

160

Non-cash gain on discount of VAT and other receivables

-

-

214

Total

1,277

1,997

1,272

Finance costs

Financial costs

4,956

15,345

12,770

Interest on bank loans (note 18)

2,871

1,982

2,705

Non- cash loss on discount of VAT assets and other receivables

780

632

-

Interest expense

255

245

189

Other

2,150

1,377

1,082

Total

11,012

19,581

16,746

Financial costs for the year ended December 31, 2022, 2021 and 2020 mainly represent charges for the acquisition of dollars through the sales of bonds.

19


Minera Santa Cruz S.A.

Notes to the financial statements (continued)

For the years ended December 31, 2022, 2021 and 2020

11. Property, plant and equipment