10-Q: McEwen Inc. Q2 Sees Profit Turnaround, Boosted Liquidity

McEwen Inc. reported a net income of $3.0 million in Q2 2025, reversing a prior-year loss, driven by reduced losses from McEwen Copper and strategic financing, despite lower gold equivalent production.

Summary

• Net income was $3.0 million ($0.06 per share) in Q2 2025, a significant improvement from a net loss of $13.0 million ($0.26 per share) in Q2 2024.
• Adjusted EBITDA increased to $17.3 million in Q2 2025 from $7.2 million in Q2 2024.
• Cash and cash equivalents increased to $53.6 million as of June 30, 2025, from $13.7 million at December 31, 2024, primarily due to $110.0 million in proceeds from new convertible senior notes.
• Working capital improved significantly to $61.8 million as of June 30, 2025, from a negative $6.5 million at December 31, 2024.
• Consolidated gold equivalent ounces (GEOs) produced decreased by 22% to 27,554 GEOs in Q2 2025 compared to 35,265 GEOs in Q2 2024.
• Production costs applicable to sales decreased by 14% to $27.7 million in Q2 2025, primarily due to lower GEOs sold, but unit costs increased.
• Loss from investment in McEwen Copper Inc. reduced to $7.0 million in Q2 2025 from $16.8 million in Q2 2024.
• New high-grade gold mineralization discovered at Froome West (36.0 g/t gold over 10 meters), expected to extend mine life.
• $18.8 million invested to date in the Stock project, targeting commercial production in 2026.
• Feasibility study for Los Azules copper project expected in Q3 2025, with $33.5 million invested in H1 2025.
• The company name changed from McEwen Mining Inc. to McEwen Inc. effective July 7, 2025.
• Entered into a binding letter of intent to acquire Canadian Gold Corp. on July 27, 2025.

Sentiment

Score: 6

Explanation: The company achieved net income and significantly improved liquidity through a capital raise and reduced losses from its copper investment. However, core mining operations experienced lower production and higher unit costs across all key mines compared to the prior year, indicating operational challenges. Strategic project advancements and new discoveries provide future potential, but a material weakness in internal controls remains a concern.

Positives

• Achieved net income of $3.0 million ($0.06 per share) in Q2 2025, a substantial turnaround from a $13.0 million net loss ($0.26 per share) in Q2 2024.
• Adjusted EBITDA more than doubled to $17.3 million in Q2 2025 from $7.2 million in Q2 2024, reflecting improved operational earnings.
• Cash and cash equivalents significantly increased to $53.6 million by June 30, 2025, from $13.7 million at December 31, 2024, bolstering liquidity.
• Working capital improved to $61.8 million from a negative $6.5 million, indicating a stronger short-term financial position.
• Loss from investment in McEwen Copper Inc. decreased by over 58% to $7.0 million in Q2 2025, contributing positively to overall results.
• Realized a $4.7 million gain on marketable securities and a $2.2 million foreign exchange gain in Q2 2025, boosting other income.
• Discovery of new high-grade gold mineralization at Froome West (36.0 g/t gold over 10 meters) is expected to extend the Froome mine's life.
• Progress on the Stock project with $18.8 million invested to date, targeting commercial production in 2026.
• Reiterated 2025 production guidance of 120,000 to 140,000 GEOs, anticipating higher production in H2 2025.
• Los Azules copper project feasibility study is on track for Q3 2025 publication, with a $2.7 billion investment proposal submitted for Argentina's RIGI.
• No lost-time incidents reported at the Fox Complex or Gold Bar Mine in Q2 2025, indicating strong safety performance.

Negatives

• Consolidated gold equivalent ounces (GEOs) produced decreased by 22% to 27,554 GEOs in Q2 2025 compared to 35,265 GEOs in Q2 2024.
• Revenue from 100%-owned operations decreased by 2% to $46.7 million in Q2 2025, primarily due to lower GEOs sold, despite higher realized prices.
• Fox Complex production decreased by 35% to 5,429 GEOs in Q2 2025, and unit costs (Cash costs $2,212/GEO, AISC $2,563/GEO) exceeded annual guidance ranges.
• Gold Bar Mine production decreased by 32% to 8,405 GEOs in Q2 2025 due to lower mined/stacked tonnes and higher strip ratios.
• San José Mine attributable production decreased by 6% to 13,719 GEOs in Q2 2025 due to lower processed grades and reduced recovery rates, and unit costs (Cash costs $2,310/GEO, AISC $2,842/GEO) exceeded full-year guidance.
• Long-term debt increased to $125.8 million as of June 30, 2025, from $40.0 million at December 31, 2024, due to the issuance of $110.0 million in convertible senior notes.
• Income from investment in Minera Santa Cruz S.A. (MSC) decreased to $3.6 million in Q2 2025 from $4.7 million in Q2 2024.
• A material weakness in internal control over financial reporting persists, impacting the effectiveness of disclosure controls and procedures.
• The Fenix Project remains on care and maintenance, awaiting key permits for a construction decision.

Risks

• Ability to raise funds required for business strategy execution.
• Acquisitions may not achieve intended results.
• Ability to secure permits or other regulatory and government approvals needed to operate, develop, or explore mineral properties and projects.
• Maintaining an ongoing listing of common stock on the New York Stock Exchange or another national securities exchange in the United States.
• Decisions of foreign countries, banks, and courts within those countries.
• National and international geopolitical events and conflicts, and unexpected changes in business, economic, and political conditions.
• Operating results of Minera Santa Cruz S.A. (MSC) and McEwen Copper Inc., over which the company does not exercise decision-making power.
• Fluctuations in interest rates, inflation rates, currency exchange rates, or commodity prices.
• Timing and amount of mine production.
• 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, 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 business strategy.
• Interpretation of drill hole results and the geology, grade, and continuity of mineralization.
• Uncertainty of reserve estimates and timing of development expenditures.
• Litigation or regulatory investigations and procedures affecting the company.
• Changes in federal, state, provincial, and local laws and regulations.
• Local, indigenous, and community impacts and issues, including criminal activity and violent crimes.
• Accidents, public health issues, and labor disputes.
• Uncertainty relating to title to mineral properties.
• Changes in relationships with the local communities in the areas of operation.
• Decisions by third parties over which the company has no control.
• Exposure to foreign currency risks, particularly the Mexican peso, Canadian dollar, and Argentine peso.
• Equity price risk from investments in other mining sector entities, which may be highly volatile and lack liquidity.
• Credit risk from precious metals and doré sales agreements with financial institutions and refineries.
• Risk that surety bonds for reclamation obligations may no longer be accepted by governmental agencies, requiring replacement with cash.
• Persistence of a material weakness in internal control over financial reporting.

Future Outlook

Annual production guidance of 120,000 to 140,000 GEOs for 2025 is reiterated, with higher production expected in the latter half of the year across operations. Fox Complex unit costs are expected to decrease through the year as production increases in H2 2025. Gold Bar Mine unit costs are expected to move toward the lower end of guidance beginning in mid-Q3 2025, upon completion of the high-stripping phase at Pick III. San José Mine unit costs are expected to decrease as higher planned production is achieved through the remainder of 2025. Commercial production at the Stock project is targeted for 2026. The feasibility study for the Los Azules copper project is expected to be published in Q3 2025. Remaining flow-through eligible expenditures are expected to be fulfilled by the end of 2025. Exploration efforts at Grey Fox will continue to delineate near-term resources and identify longer-term targets in Q3 2025 and beyond. A deep penetration induced polarization survey and ground magnetics campaign covering all defined exploration targets at Los Azules is scheduled for Q4 2025.

Management Comments

• Our annual plans include higher production across our operations through the remainder of the year, and we remain on track to deliver 2025 production guidance of 120,000 to 140,000 GEOs.
• While Froome production has been planned to increase in the latter half of the year, we are assessing early opportunities for ore at Froome West and Stock as well to derisk the mine plan.
• Higher production is expected in the second half of 2025 as planned stripping activities reduce and the operation shifts to ore extraction. As a result, the Gold Bar Mine remains on track to achieve its annual production guidance of 40,000 to 45,000 GEOs.
• With 24,643 attributable GEOs produced in H1/25, the Company reiterates its full-year production guidance of 50,000 to 60,000 attributable GEOs for San Jos.
• Unit costs are expected to decrease through the year as production increases as planned during H2/25.
• The Company expects unit costs to move toward the lower end of the guidance range beginning in mid-Q3/25, when the high-stripping phase at Pick III is anticipated to be completed and more ounces are recovered.
• As higher planned production is achieved through the remainder of 2025, we expect San Jos to decrease its unit costs.
• We believe that we have sufficient liquidity along with funds generated from ongoing operations to fund anticipated cash requirements for operations, capital expenditures and working capital purposes for the next 12 months.
• We are in the process of remediating the material weakness in internal control over financial reporting... The newly designed control procedures and additional remediation efforts will be tested over a sufficient number of instances to be considered effective.
• Management, including the Chief Executive Officer and Chief Financial Officer, believes that the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations, and cash flows as of and for the periods presented, in accordance with U.S. GAAP.

Industry Context

The mining industry, particularly gold, silver, and copper, is subject to commodity price fluctuations; the company benefited from higher realized gold and silver prices in Q2 2025, which partially offset lower production volumes. The focus on advancing the Los Azules copper project aligns with the growing global demand for copper, driven by electrification and renewable energy trends. The acquisition of Canadian Gold Corp and investments in other junior miners indicate a strategy of consolidating assets or gaining exposure to early-stage exploration potential within the broader precious metals sector. Operational challenges like labor shortages are common across the mining industry, impacting production costs. The application for Argentina's RIGI highlights the importance of government incentives and regulatory stability for large-scale mining projects in certain jurisdictions.

Comparison to Industry Standards

• The Los Azules project is described as one of the world's largest undeveloped copper deposits, implying a significant scale relative to global copper projects.
• The company's unit costs (Cash costs, AISC) for its operating mines (Fox Complex, Gold Bar, San José) are provided, but without specific industry benchmarks or competitor data within the filing, a detailed assessment against global standards is limited.
• The filing notes that Fox Complex and San José unit costs exceeded their own annual guidance ranges, suggesting they are currently performing below internal expectations for cost efficiency.

Corporate Governance

Related Party Transactions

• Legal services provided by REVlaw (owned by Carmen Diges, General Counsel & Secretary) for $0.1 million in Q2 2025 and $0.2 million in H1 2025.
• Interest payments of $0.5 million in Q2 2025 and $1.1 million in H1 2025 to an affiliate of Robert R. McEwen (Chairman and CEO) related to the term loan.
• Issued 53,160 common shares (valued at $0.4 million) to an affiliate of Robert R. McEwen for the extension of the term loan maturity date.
• Receivables of $7.2 million from McEwen Copper Inc. (46.4% owned) for management, technical, legal, financial, administrative, geological, and engineering services.
• Participation in private placement offerings of Canadian Gold Corp (an affiliate of Robert R. McEwen and Ian Ball, a director).
• Exercise of warrants in Inventus Mining Corp. (an affiliate of Robert R. McEwen, Perry Ing, and Stefan M. Spears).

Stakeholder Impact

• Shareholders: Potential for increased value from strategic acquisitions and project developments (Los Azules, Stock, Froome West). Improved liquidity from convertible notes reduces immediate dilution risk but increases long-term debt. Operational challenges (lower production, higher costs) could impact profitability and share price. Material weakness in internal controls is a a governance concern.
• Employees: Continued operations at mines, development at Stock project, and exploration activities suggest stable employment. Labor shortages mentioned at San José could indicate demand for workforce.
• Customers: Continued supply of gold and silver.
• Suppliers/Creditors: Improved liquidity from capital raise strengthens ability to meet obligations. Refinancing of term loan and issuance of convertible notes impacts creditor structure.
• Local Communities: Ongoing mining and exploration activities, with commitment to environmental compliance and no lost-time incidents, suggest positive community relations. Potential for job creation from project developments (e.g., Stock, Los Azules).

Next Steps

• Higher production across operations expected through the remainder of 2025.
• Fox Complex unit costs expected to decrease through the year as production increases in H2 2025.
• Gold Bar Mine unit costs expected to move toward the lower end of guidance beginning in mid-Q3 2025.
• San José Mine unit costs expected to decrease as higher planned production is achieved through the remainder of 2025.
• Feasibility study for the Los Azules copper project expected to be published in Q3 2025.
• Remaining flow-through eligible expenditures expected to be fulfilled by the end of 2025.
• Technical planning continues for infill drilling and test stoping at Stock project in late 2025.
• Deep penetration induced polarization survey and ground magnetics campaign at Los Azules scheduled for Q4 2025.
• Ongoing review and reinterpretation of drill data at Los Azules to enhance geological understanding and define new drilling targets.
• Refinement of geological mapping and surface sampling across Los Azules target areas will continue into the next field season.
• Remediation efforts for the material weakness in internal control over financial reporting will be tested over a sufficient number of instances.

Key Dates

Recommendation

The company's financial position has significantly improved due to a successful capital raise and reduced losses from its copper investment, providing much-needed liquidity. Strategic advancements at Los Azules and the Stock project, along with new high-grade discoveries, offer long-term growth potential. However, current operational performance shows a decline in production and an increase in unit costs across all key mines, which is a significant concern. The persistence of a material weakness in internal controls also adds a layer of risk. While the higher metal price environment is currently favorable, the underlying operational efficiency needs to demonstrate sustained improvement to warrant a stronger recommendation. The stock is a 'hold' as investors should monitor the execution of operational improvements and the progress of key development projects.

Keywords

Gold mining, Silver mining, Copper exploration, SEC filing, Quarterly report, Financial results, Production, Operating costs, Gold Bar Mine, Fox Complex, San José Mine, Los Azules Project, McEwen Copper, Mineral exploration, Convertible notes, Capital raise, Corporate governance, Risk management