McEwen Mining Inc. filed SEC Form 8-K: Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation, Unregistered Sales of Equity Securities, Other Events, Financial Statements and Exhibits
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 7, 2025
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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(Address of principal executive offices) (Zip Code)
Registrant’s telephone number including area code: (866 ) 441-0690
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following
provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2
of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
| Item 1.01. |
Entry into a Material Definitive Agreement.
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Indenture and Notes
On February 11, 2025, McEwen Mining Inc. (the “Company”) issued $110.0 million in aggregate principal amount of its 5.25% convertible
senior notes due 2030 (the “Notes”), which amount includes the exercise in full of the $15.0 million option granted to the Initial Purchasers (as defined below) of the Notes, in a private offering to persons reasonably believed to be qualified
institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The Notes bear interest at a fixed rate of 5.25% per year, payable semi-annually in arrears on February 15 and August 15 of each year,
beginning on August 15, 2025. The Notes are convertible into cash, shares of the Company’s common stock, no par value per share (“Common Stock”), or a combination thereof, at the Company’s election, and may be settled as described in the Indenture
(as defined below). The Notes will mature on August 15, 2030 (the “Maturity Date”), unless earlier repurchased, redeemed or converted.
The net proceeds from the offering of the Notes were approximately $105.9
million, after deducting fees and estimated expenses payable by the Company. The Company used approximately $15.1 million of the net proceeds from the Notes to pay the cost of the Capped Call Transactions (as defined below) entered into in
connection with the offering. The Company intends to use approximately $20.0 million of the net proceeds to partially repay the outstanding amount under the Third
Amended and Restated Credit Agreement, as amended (the “Third Amended and Restated Credit Agreement”), between the Company, as borrower, the lenders from time to time party thereto and Evanachan Limited as administrative agent), and the remainder
of the net proceeds for general corporate purposes.
The Company issued the Notes pursuant to an indenture, dated as of February 11, 2025 (the “Indenture”), between the Company and U.S. Bank
National Association, as trustee (the “Trustee”).
Prior to the close of business on the business day immediately preceding May 15, 2030, the Notes will be convertible at the option of the
holders only under certain conditions and during certain periods. On or after May 15, 2030, until the close of business on the second scheduled trading day immediately preceding the Maturity Date, holders may convert their Notes, at their option,
irrespective of these conditions.
The conversion rate for the Notes will initially be 88.9284 shares of Common Stock per $1,000 principal amount of Notes (equivalent to an
initial conversion price of approximately $11.25 per share of Common Stock). The conversion rate and the corresponding conversion price will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. The
Company may redeem for cash all or part of the Notes (subject to the partial redemption limitation described in the Indenture), at its option, on or after August 21, 2028 and prior to the 46th scheduled trading day immediately prior to the Maturity
Date, if the last reported sale price of the Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading
day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and
unpaid interest to, but excluding, the redemption date.
If the Company undergoes a fundamental change (as defined in the Indenture), holders may require the Company to repurchase for cash all
or part of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be purchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date (as defined in the Indenture). In addition,
following certain corporate events that occur prior to the maturity date of the Notes or if the Company delivers a notice of redemption in respect of the Notes, the Company will, in certain circumstances, increase the conversion rate of the Notes for
a holder who elects to convert its Notes in connection with such a corporate event or convert its notes called (or deemed called) for redemption during the related redemption period.
The Indenture provides for customary events of default, which include (subject in certain cases to grace and cure periods), among others:
nonpayment of principal or interest; breach of covenants or other agreements in the Indenture; defaults with respect to certain other indebtedness; and certain events of bankruptcy, insolvency or reorganization. Generally, if an event of default
occurs and is continuing under the Indenture, either the Trustee or the holders of at least 25% in aggregate principal amount of the Notes then outstanding may declare the principal amount plus accrued and unpaid interest on such Notes to be
immediately due and payable.
The Notes will be the Company’s general unsecured obligations and will rank senior in right of payment to all of the Company’s future
indebtedness that is expressly subordinated in right of payment to the notes, equal in right of payment with all of the Company’s current and future liabilities that are not so subordinated, effectively junior to all of the Company’s current and
future secured indebtedness to the extent of the value of the assets securing such indebtedness (including any indebtedness outstanding under the Company’s Third Amended and Restated Credit Agreement, and structurally junior to all indebtedness and
other liabilities (including trade payables) of the Company’s subsidiaries.
The description of the Indenture and the Notes above is qualified in its entirety by reference to the text of the Indenture and the Form
of Note, copies of which are attached as Exhibits 4.1 and 4.2, respectively, to this Current Report on Form 8-K.
Capped Call Transactions
In connection with the pricing of the Notes on February 7, 2025, the Company entered into privately
negotiated capped call transactions (the “Base Capped Call Transactions”) with certain financial institutions (the “Option Counterparties”), and in connection with the exercise in full of the option granted to the Initial Purchasers of the Notes, on
February 7, 2025, the Company entered into additional capped call transactions (such additional capped call transactions, together with the Base Capped Call Transactions, the “Capped Call Transactions”) with the Option Counterparties. The Company
used approximately $15.1 million of the net proceeds from the offering of the Notes to pay the cost of the Capped Call Transactions.
The Capped Call Transactions are generally expected to reduce the potential dilution to the Common Stock upon any conversion of the Notes
or, at the Company’s election (subject to certain conditions), offset any cash payments the Company is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap. The
Capped Call Transactions have an initial cap price of $17.30 per share, which represents a premium of approximately 100% over the closing price of the Common Stock on the New York Stock Exchange on February 6, 2025, and is subject to certain
adjustments under the terms of the Capped Call Transactions. The Capped Call Transactions cover, subject to customary adjustments substantially similar to those applicable to the Notes, the number of shares of the Common Stock initially underlying
the Notes.
The Capped Call Transactions are separate transactions entered into by the Company with the Option Counterparties, are not part of the
terms of the Notes, and will not change the rights of the holders of the Notes under such Notes.
The description of the Capped Call Transactions above is qualified in its entirety by reference to the text of the form of capped call
confirmation, which is attached as Exhibit 10.1 to this Current Report on Form 8-K.
| Item 2.03. |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
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The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
| Item 3.02. |
Unregistered Sales of Equity Securities.
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The information set forth in Item 1.01 and Item 8.01 of this Current Report on Form 8-K is incorporated herein by reference. The Company offered and sold
the Notes to the Initial Purchasers in reliance on the exemption from the registration requirements provided by Section 4(a)(2) of the Securities Act for resale to persons reasonably believed to be qualified institutional buyers as defined in, and in
reliance on, Rule 144A of the Securities Act. The Company relied on these exemptions from registration based in part on representations made by the Initial Purchasers in the Purchase Agreement (as defined below) pursuant to which the Company sold the
Notes to the Initial Purchasers. The Notes and the underlying shares of the Common Stock issuable upon conversion of the Notes, if any, have not been and will not be registered under the Securities Act, and may not be offered or sold in the United
States absent registration or an applicable exemption from registration requirements.
To the extent that any shares of the Common Stock are issued upon conversion of the Notes, they will be issued in transactions
anticipated to be exempt from registration under the Securities Act by virtue of Section 3(a)(9) thereof, because no commission or other remuneration is expected to be paid in connection with conversion of the Notes and any resulting issuance of
shares of the Common Stock. The maximum number of shares of the Company’s Common Stock issuable upon conversion of the Notes, including pursuant to any increase in the conversion rate for any Notes converted in connection with a make-whole
fundamental change or a notice of redemption, is 12,716,759, based on the initial maximum conversion rate of 88.9284 shares of Common Stock per $1,000 principal amount of Notes, subject to the effect of customary antidilution provisions in the
Indenture.
| Item 8.01. |
Other Events.
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On February 7, 2025, the Company issued a press release announcing the pricing of the Offering. A copy of the press release is filed
as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.
Neither this Current Report on Form 8-K nor the press release filed as Exhibit 99.1 hereto constitutes an offer to sell or a
solicitation of an offer to buy the Notes, any shares of the Common Stock issuable upon conversion of the Notes, or any other securities, nor shall it constitute an offer, solicitation or sale in any jurisdiction in which such an offer,
solicitation or sale would be unlawful. Any offer of the Notes will be made only by means of a private offering memorandum.
| Item 9.01. |
Financial Statements and Exhibits.
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(d)
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Exhibits. The following exhibits are furnished or filed with this Report, as applicable:
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Indenture, dated February 11, 2025, between McEwen Mining Inc. and U.S. National Association, as trustee.
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Form of 5.25% Convertible Senior Note due 2030 (included in Exhibit 4.1).
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Form of Capped Call Confirmation.
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Press Release, dated February 7, 2025.
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104
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Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document
(contained in Exhibit 101)
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Cautionary Statement
With the exception of historical matters and certain contractual matters, certain matters discussed in the Current Report on Form 8-K
include forward-looking statements within the meaning of applicable securities laws that involve risks and uncertainties that could cause actual results to differ materially from projections or estimates contained therein. These forward-looking
statements include statements regarding the intended use of net proceeds from the Offering, and the effects of entering into the capped call transactions described in this Current Report on Form 8-K and the actions of the Option Counterparties and
their respective affiliates. Forward-looking statements and information are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic, and
competitive uncertainties, risks, and contingencies, and there can be no assurance that such statements and information will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such
statements and information. Among the important factors that the Company thinks could cause its actual results to differ materially from those expressed in or contemplated by the forward-looking statements include risks related to or associated
with whether the Company will consummate the Offering on the expected terms, or at all, whether the Company will enter into the capped call transactions, the terms thereof and whether the capped call transactions become effective, market
conditions, including market interest rates, the trading price and volatility of the Company’s common stock and risks relating to the Company’s business, including those described in the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2023 and in the Company’s subsequent filings under the Securities Exchange Act of 1934, as amended. All forward-looking statements and information made in this news release are qualified by this cautionary statement. Most of
these factors are beyond the Company’s ability to predict or control. The Company disclaims any obligation to update any forward-looking statement made in this Current Report on Form 8-K, whether as a result of new information, future events, or
otherwise. Readers are cautioned not to put undue reliance on forward-looking statements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
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McEWEN MINING INC.
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Date: February 11, 2025
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By:
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/s/ Carmen Diges
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Carmen Diges, General Counsel
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