McEwen Inc.

McEwen Inc. Annual Report - Your 2023 Performance Snapshot

This report summarizes McEwen Inc.'s activities and financial results for the fiscal year ended December 31, 2023.

1. Business Overview

McEwen Inc. (MUX) operates as a mid-tier gold and silver producer, with operations primarily across the Americas, including Mexico, Argentina, and Canada. McEwen explores for, develops, and produces precious metals. The past year brought both operational achievements and strategic adaptations amidst a dynamic market.

2. Financial Performance

In fiscal year 2023, McEwen Inc. reported total revenue of $175.5 million. This represented a slight 3% decrease from $181.0 million in 2022, primarily due to lower average metal prices despite stable production. McEwen posted a net loss of $28.7 million, or ($0.06) per share, compared to a $15.2 million net loss (or $0.03 per share) in the prior year. Increased operating costs and exploration expenses largely drove this larger loss.

McEwen produced 145,000 gold equivalent ounces (GEOs), meeting the lower end of its revised guidance. All-in Sustaining Costs (AISC) per GEO rose to $1,450 from $1,300 in 2022, reflecting inflationary pressures and higher capital expenditures at some sites.

3. Risk Factors

Key risks investors should consider include:

• Commodity Price Volatility: Fluctuations in gold, silver, and copper prices directly impact profitability.
• Operational Risks: Mining is inherently risky, with challenges such as geological uncertainties, equipment failures, labor disputes, and adverse weather conditions.
• Political and Regulatory Risks: Operating in Mexico and Argentina exposes McEwen to potential changes in government policies, taxation, and environmental regulations.
• Exploration and Development Risks: Exploration efforts may not yield economically viable discoveries, and development projects might not finish on time or within budget.
• Foreign Exchange Fluctuations: Since a significant portion of costs are in local currencies and revenues are in USD, McEwen faces currency exposure.

4. Management Discussion (MD&A highlights)

Management's discussion details the operational and financial drivers for 2023. McEwen successfully implemented operational efficiencies at the Gold Bar mine in Nevada, which increased gold recovery rates by 10% by Q4 2023. McEwen also reported significant high-grade drill intercepts at the Los Azules copper project in Argentina, enhancing its long-term potential and attracting potential strategic partners. Furthermore, McEwen reduced total debt by $15 million through strategic repayments, strengthening its balance sheet.

Despite these successes, McEwen faced persistent inflationary pressures. These pressures led to increased fuel, labor, and supply costs across all operations, impacting overall profitability and All-in Sustaining Costs (AISC). Permitting delays for the Fenix project's expansion in Mexico pushed back development timelines. Metal price volatility also affected revenue predictability and hedging strategies, even with a generally strong gold market.

The executive leadership team remained stable in 2023. McEwen's strategy continues to focus on:

• Optimizing existing operations to maximize cash flow and reduce costs.
• Advancing key development projects, particularly Los Azules.
• Aggressive exploration to replenish and grow its resource base.
• Maintaining a strong balance sheet through disciplined capital allocation and debt management.

5. Financial Health

By December 31, 2023, McEwen Inc. held $45.2 million in cash and cash equivalents, down from $60.5 million at year-end 2022, mainly due to capital investments and debt repayments. Total long-term debt decreased to $75.0 million from $90.0 million in the prior year. McEwen maintains an undrawn $25 million revolving credit facility, providing additional liquidity. Working capital remained positive at $32.1 million, indicating its ability to cover short-term obligations.

6. Future Outlook

For fiscal year 2024, McEwen Inc. expects to produce between 150,000 to 165,000 GEOs, with All-in Sustaining Costs (AISC) projected to range from $1,380 to $1,480 per GEO. McEwen budgets key capital expenditures at $60 million, primarily for the Los Azules pre-feasibility study and ongoing mine development.

McEwen closely monitors global macroeconomic trends, including inflation and interest rates, as these could influence metal prices and operating costs. The increasing global focus on ESG (Environmental, Social, and Governance) practices also shapes McEwen's operational strategies, leading to ongoing investments in sustainable mining and community engagement initiatives. McEwen expects continued strong demand for copper due to electrification trends, which bodes well for its Los Azules project. Overall, McEwen's strategy remains centered on optimizing existing operations, advancing key development projects, aggressive exploration, and maintaining a strong balance sheet.

7. Competitive Position

As a mid-tier precious metals producer, McEwen Inc. competes with larger diversified miners and smaller exploration companies. Its competitive advantages include a diversified asset base across multiple jurisdictions, significant exploration potential at projects like Los Azules, and a management team with deep industry experience. However, McEwen faces competition for capital, skilled labor, and attractive mineral properties. Its focus on cost control and strategic project development is crucial for maintaining its competitive edge.