McEwen Inc.

Good morning, ladies and gentlemen, and welcome to McEwen's second quarter 2026 operating and financial results conference call. Present from the company today are Rob McEwen, chairman and chief owner, Ian Ball, executive vice chairman, William Shaver, chief operating officer, Perry Ng, chief financial officer, Jeff Chan, Vice President of Finance, Stefan Spears, Vice President of Corporate Development, Michael Meding, Managing Director of McEwen Copper, and Carmen Diaz, General Counsel and Secretary. Other management of the company will also be available to answer questions during the call. Please note, this event is being recorded. For the question and answer session after the speaker's presentation, if you would like to ask a question, press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I will now turn the conference over to Mr. Rob McEwen, chief owner. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and thank you for joining us. I'd like to do something a little different today. You've already seen our financial statements. You've had an opportunity to read our press release. You know our production numbers, our revenue, our costs. Rather than simply repeating those numbers, I'd like to step back and talk about what they really mean. Because I've learned something over my career. Markets are very good at measuring what happened last quarter. They're much less effective at recognizing the value that's being created for the future. So today, I'd like to focus on one question. What really matters? Before I entered the mining business, I spent 18 years in the investment industry as an analyst, portfolio manager, a mutual fund manager, and later controlling a member firm of the Toronto Stock Exchange. Every day, my responsibility was to decide where capital should be invested. And just as importantly, where it shouldn't. Eventually, I made a decision that surprised many people. I stopped looking for companies that created value and decided to build one instead. That perspective has never left me. I still think like an investor.

I still ask the same question I asked 40 years ago.

Is this company becoming more valuable? That question I want to answer today. Let's begin with the hard part. This was not a quarter we wanted. Operationally, we fell short of our own expectations. Production was lower than we had planned. Costs remained higher than we consider acceptable. Those results were disappointing to you and to me. We could point to inflation, labor shortages, or industry-wide cost pressures, but those explanations don't create shareholder value. Execution does. And our execution wasn't consistently where it needs to be. The most significant operational issue during the quarter was a gold bar. We encountered more carbonaceous material than expected in portions of the ore body. Carbonaceous ore presents a metallurgical challenge because it can absorb dissolved gold during leaching, thus reducing recoveries. Simply put, we recovered fewer ounces than we should have. That's on management. The important question today isn't We're modifying mine sequencing and blending strategies. and we're evaluating additional processing improvements to reduce the impact of preg robbing. These are not overnight solutions, but they're practical, measurable actions that should improve recoveries over time. I've learned something more after four years, 40 years in the mining industry. Nature always has another lesson to teach. Great companies aren't defined by whether they encounter problems. They're defined by how honestly they acknowledge them and how effectively they solve them. And that is what we're doing. Now, having said all of that, I don't want anyone to conclude that one difficult quarter defines this company. It doesn't. What really matters isn't whether every quarter is perfect. What really matters is whether every quarter leaves us stronger, smarter, and better positioned for the future. And that's where my optimism comes from. Unlike many companies in our industry, our biggest challenge isn't finding metal. It's unlocking more of the value we already own. Our exploration programs continue to demonstrate that our assets have significant room to grow. At the Fox Complex, I don't simply see a mine. I see the emergence of a mining district. Gray Fox, Stock, Whiskey Jack, and our other targets continue to strengthen our confidence that we can replace depletion and continue building long-term value through discovery. I've always believed that exploration is one of the highest return investments a mining company can make. Every important discovery begins with a drill hole that challenges yesterday's assumptions. Those discoveries don't simply add ounces. They extend mine life, improve economics, create optionality, and ultimately create shareholder value. That philosophy has guided me throughout my career, and it's one of the reasons I remain so excited about our future. And then there's Los Azules. I've spent much of my professional life looking for assets capable of changing the future of a company. Those opportunities are rare. I believe Los Azules is one of them. We're entering a world where artificial intelligence, data centers, electrification, modern power grid, and energy security are driving unprecedented demand for copper. At the same time, and very few world-class copper projects are advancing towards production. That creates an opportunity for projects with the right scale, the right economics and the right environmental profile. Los Azules has the potential to be one of those projects. The progress we've made over the past year has reduced technical risk, strengthened engineering, advanced permitting and expanded financing discussions. There is still much work ahead, but every milestone moves us closer to unlocking what I believe is one of the most valuable assets in our portfolio. One thing that has remained constant throughout my career is my approach to capital allocation. Shareholders entrust us with their capital. Our responsibility is to treat every dollar as if it were our own. because in my case it is. I've invested a substantial portion of my own wealth in this company because I believe our best years remain ahead of us. That doesn't mean we'll never have disappointing quarters. We will. Mining doesn't work that way. What it does mean is that we will continue confronting problems honestly, investing in opportunities that offer the greatest long-term returns, and making decisions based on intrinsic value rather than short-term market sentiments. As I look ahead, I see four priorities. First, improve operational execution and recoveries. Second, continue expanding our resource base through disciplined exploration. Third, advance Los Azules towards becoming one of the world's premier copper projects. And finally, allocate capital with the same discipline that has guided me throughout my career. Those priorities won't necessarily produce the perfect quarter, but I believe they will produce a much stronger company. I'll leave you with one final thought. When I entered the investment business many years ago, I learned that markets eventually recognize value. When I entered the mining business, I learned something equally important. Value has to be created before it can be recognized. That is our job. We still have work to do. We still have challenges to overcome. But I believe we're building a company whose future will be considerably stronger than its recent past. And in the end, that's what really matters. Thank you. Now open it for questions.

Operator? We will now begin the question and answer session. As a reminder, to ask a question, you will need to press star followed by the number one on your telephone. To withdraw your question, press star, then one again. Our first question comes from Jake Sikelski from Alliance Global Partners. Your line is now open.

Jake Sikelski, Alliance Global Partners Hey, Robin, thanks for taking the question. So just looking at the Gold Bar production target, the multi-year target of 90 to 100,000 ounces a year, can you just touch on the permitting processes for the surrounding deposits that are going to drive this hub and spoke model? How should we think about the timeline there for tonnage starting to come in from the spokes?

Permitting is about two years away. We have to have some water well studies done. and during that period we'll be coming forward with our production. As you looked at the exploration results coming out of our Eureka properties, we can see that making a large contribution to that production number you spoke of.

Okay, that's helpful.

And just switching gears to Los Azules and the NSR, That seems like a hidden gem in the portfolio a bit. Can you just comment on how you view this asset going forward? I mean, is it something that you expect to keep in the MUX portfolio, or are there other avenues to unlock value with the NSR that you're looking at over the medium term?

Hi, Jake. It's Ian Ball speaking. So just on your point, we've looked at it. We've been doing a lot of work on the tax implications of whether you keep that inside of McEwen or whether you give that to shareholders in a spin-out. Right now, it is in a U.S. corporation. And one of the things that we've looked at is, does it make sense for McEwen to hang on to it until lawsuits are actually paying? Right now, to make it on a tax-free basis, it would have to go into a U.S. corporation, which has additional corporate governance surrounding it, versus going into a Canadian corporation, which would be taxable to shareholders. So the thought right now is keep it inside of McEwen so there's no extra G&A costs associated with running that company, and then sort of evaluate it when Los Azules is entering production, because then it could obviously incur that extra cost of being a U.S. company. We also announced yesterday that we have created a small royalty on this agreement. We have with Paragon. We have other royalties within the company. And the thought is we could probably build up that royalty portfolio alongside Los Angeles, as you mentioned, being the key royalty. And at some point, it probably does make some sense to look at giving that to shareholders in the way of an IPO, because it should create a higher valuation relative to the operating company.

Make sense. Okay. So maybe over the medium term, kind of build up a bit of a royalty portfolio and potentially spin it out down the road when the timing makes sense.

Yeah. I think that's something you would have to consider. Yeah.

Okay. Very good. That's all on my end. Thanks again. Thanks, Jay.

The next question comes from Mike Kozak from Cantor Fitzgerald. Your line is now open.

Good morning, Rob and team. A few questions from me. First, how much cash was in the San Jose JV at exit Q2, and do you expect any more distributions over the remainder of this year? I know you're already through guidance, but just some color there would be helpful.

Sounds good, Mike. This is Perry speaking. So, at the end of the second quarter, I believe San Jose had roughly $130 million in Ewen Inc., Sharon Giraudel, Jeffrey Chan, William Shaver, Carmen Diges, Stefan Spears Honored at Surplus Earnings. But we're in regular discussions with our partner, Haas Shields, and the team at San Jose. So if there's an opportunity to, certainly we would discuss it. But at this point, we would expect dividends to resume next year.

Got it. Helpful. Thank you. And then my second one, if I can. In year 10Q, there was disclosure around I think what you're calling an enhanced financing proposal from Finland's export credit agency. Could you give a bit more color there? How did Finland of all places come to get potentially involved in Los Azules? What are the next milestones for that proposal to maybe convert into something more definitive? What's the size as it stands right now? Anything you could give there would be helpful.

I'll ask Mike to address that question.

Sure. So as part of our financing, we look into financings for export credit agencies. One of the export credit agencies in Europe that is very active is the Finnish one. And why is that? Yeah, because Metso is headquartered there. And Metso is one of the key suppliers for mining equipment, specifically crushing, conveying, asset plant, SXEW and so forth. So we have engaged with the authorities from the ECA actually some years ago already and we had received prior financing offers and that is just one part of our overall financing package. We have engaged also North American ECAs, we have engaged Japanese ECAs, we have engaged other European ECAs. We think that the financing through an ECA On top of giving you the financing itself, they typically come with good tenders, they typically come with good pricing, and they typically come with the political support of the project. While we have the RIGI in place, which gives us good protection in Argentina, this is just another layer to make this project much more robust as we go through the different decades ahead during which the project will be operating. With regards to the amounts, that is depending on the amount of equipment sourced Thank you very much. because those activities have been done mostly by myself and Stefan Spears in the past and they require quite some some bench strengths to do so we put on on the team SOCgen to support us in in in getting all this together in an overall project finance okay that that makes that makes a lot of sense i appreciate that caller thanks i'll jump back into you sure

As a reminder, to ask a question, you will need to press star followed by the number one on your telephone. To withdraw your question, press star, then one again. Our next question comes from Don DeMarco from National Bank. Your line is now open.

Hello, Don. Thank you, operator.

And hello, Rob.

Good morning to Rob and team. So, Rob, I'll start off with Gold Bar. My question is, Is the revised guidance based solely on the known reconciliation issues or does it include additional conservatism for areas that have not been kept in mind? I'm referring to the higher than expected carbonaceous material in certain zones that didn't reconcile with the resource model. I'm just wondering how localized that is and what assumptions you're making going forward.

Thanks. Thanks very much for the question, Bill Shaver. the models for this kind of operation are under continuous scrutiny by ourselves and by our consultants and much of the information about where the carbon is in the various benches comes from the blast hole drilling which is sampled on a routine basis so and those holes are approximately 12 or 14 feet apart. So those are all samples and those are used in the operation to understand where the ore is and where the carbonaceous material is and where the waste is. And so the model is basically in a state of educating itself on an ongoing basis. and you know so basically I don't think we've changed the conservatism of the of the overall model but it's just as it happens in this quarter we ended up with a significant amount of waste and you know so what we've done to alleviate that situation is to increase production overall Robert Ross McEwen, Which allows us to move more ways and, you know, hopefully the same amount of ore. And of course, you can imagine that when you're in a pit, if you have this carbonaceous material Robert Ross McEwen, in a phase, you have to mine that material to get at ore that will be encountered either behind it or beside it. So it's You know, it's unfortunate that these kind of things happen. You know, I think there is some unpredictability about it because the carbon doesn't necessarily show up in the drilling that was originally used to put the resource together. So it's a continuous process of having sampling, passing, you know marking up benches with geologists and so on so it and I you know that that's the routine that we have and you know that it normally works and you know and so we just didn't mine the right amount of ore during the period. Does that help you?

No that's very Yeah, that's very helpful. And I think with that, I think that kind of satisfies my questions on Gold Bar. I'll shift over to Los Azules then for my second and final question. With the FID work program expected to conclude in Q4, what are the remaining major work streams that we should focus on? And what milestone do you think is most likely to unlock value recognition? Thank you.

So I think that we go now through the vendor engineering. We have done the work required that was missing for the engineering in the first quarter with regards to drilling, condemnation, So the thing is that at June we had completed roughly 27% of the planned FID work program and as you said we're targeting completion of the program in the fourth quarter. That curve is by design. We had the plan ramped up beginning in the second quarter and the pieces that drive the second half are now in place. The major process packages are awarded, the SXCW plant, the sulfuric acid plant and the crushing system. They sit with Metso and with RenderData and HandDesign is advancing quickly. What is also interesting is that we had a very good geotechnical campaign. So that is going into our mine design. We had a zone. where in the feasibility we had certain restriction with regards to angles and the new data that we obtained in the beginning of this year now allows us to consolidate the pit design from eight sectors to four and to shrink the zone that had to have flatter angles in the pit by roughly 22%. This will increase the ore that we can mine and will also decrease The amount of stripping that we have to do. So those are all important milestones that we have to go through. Now the mine design, the final one, and the rest of the engineering. On another note, on exploration, I mean, the work that we did was, condemnation was... Geotech, Hydrology, but we used also a lot of the information that we obtained from that drilling for exploration purposes. We have done lots of prospecting and we now have our first integrated district model together, which defines the structural corridor of exploration targets beyond the current resource. three of them Franca, Lunita and Austral rank high in terms of priority and are planned for drill testing the 2026-2027 season which begins in September with we think maybe about 8,800 meters. So this is all very, very interesting. This additional exploration will not change our plans with regards to the feasibility and the final investment in the engineering. But it will open up future opportunities and add to this already very long life asset beyond the initial 22-year asset life, the potential to increase the 33 years either with the concentrator or with the new technology beyond that. So we are quite optimistic for the overall district for Los Azules.

Okay. Thank you very much for that. Again, that's all from me. Thank you for taking my questions.

Thank you. The next question comes from Jeremy Hoy with Canaccord Genuity. Your line is open.

Hi, Jeremy.

Hi, Robin. Thanks for taking my question. Just to follow up on Los Azules, on financing, Societe Generale is now an exclusive debt advisor. I feel preparations have begun and there's an enhanced enveraposal. I realize that this is an evolving discussion, but I guess I'm looking for an update on how you view the likely financing stack for the project. and could you also remind us what McEwen's expected funding obligation and dilution tolerance at the McEwen Copper level are?

There are no obligations. Sorry Rob, apologies.

Please go ahead. Maybe I take the... The part of the financing package, Rob, and then you can talk about the overall strategy. The overall financing package that we're looking for is about $4 billion.

We had in the feasibility a capex of about $3.2 billion.

And with working capital, with some interest payments and with some room for an overrun facility, we're looking around $4 billion. We think that reasonably we can finance, I would say 60% debt, 40% equity for a project in Argentina of that size. And we think that the majority of the debt financing will come from ECAs. I had mentioned before that the ECAs, beyond having interesting terms, They come with a lot of other benefits for projects of our side. They come with long terms, typically 10 to 15 years. And they make the overall project much more robust. On that side, we think that that should cover maybe 80, 85 or more percent of the overall debt financing package. and the rest would be then a traditional project finance setup. On the traditional project finance setup, we have an agreement in place with IFC. They are working with us together to audit us and support us on the IFC performance standard compliance that is quite advanced. They also wanted to have the ROFO as being one of the leader ranges for project finance, which is another international organism that comes with lots of support over the project life, the initial financing and then overall the project life. So we think we can put that package together on one hand with the ECAs, on the other hand with With IFC and other DFIs and then maybe some commercial banks, whatever is remaining. On the equity side, we are looking for about 1.6 and we try obviously to maximize the debt financing as long as it generates additional value for our shareholders. On the 1.6, we think that 600 could be coming from one of our existing partners, 600 from another partner. Then we have our IPO in the mix, and then we have specialized mining funds. That would be the breakdown. Now, this is just one scenario in terms of sources for the financing. We are looking at a couple of others, but that's the general direction that we're pushing for at the moment. Rob, you wanted to add something with the overall strategy?

Sure. Jeremy, you were asking about how much dilution is acceptable. As small as possible. We think we have a rare asset that can contribute significant value. So we're not keen to issue a lot of stock on that. We'll see how the market behaves. There's been a couple of issues recently. We're looking to do an IPO in the latter part of this year to address Peter Haslund, A component of that equity requirement and, as Mike said, there are some partners are looking at put other equity in. Peter Haslund, But retaining as large a piece as possible. Peter Haslund, Hope that addresses your question.

James Meeker, yeah that was an excellent review and summary Thank you very much i'll step back in the queue. Thanks Jeremy.

Our next question comes from online user Terry DeVries. The first question is, why is all-in sustaining cost rising so high? And the second question, how does a $10 move in crude affect AISC?

Sure, I'll take that question, operator. It's Perry. So in terms of our... ASIC are all in sustaining costs. I think you'll see that consistent with our news release. The main driver of that was the shortfall in production in ounces at Gold Bar. It's a fairly fixed cost operation, so with the decrease in the denominator, obviously, there's an overall impact in ASIC. We do see that trending down as we increase ounce recovery in the second half of the year. Thank you for joining us today. Thank you for joining us today. has about $100 cost per ounce impact on our overall ASIC costs. So again, if diesel were to rise another further dollar to $575 a gallon, then you'd see close to another $100 impact. That addresses that question, operator.

There are no further questions at this time. I would now like to turn the call back over to Mr. Rob McEwen. Please go ahead, sir.

Thank you, operator. I just want to conclude saying we see the future looking very bright. Thank you.

This concludes today's call. You may now disconnect.