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OPERATING SEGMENT REPORTING | 12 Months Ended
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Dec. 31, 2016
OPERATING SEGMENT REPORTING |
OPERATING SEGMENT REPORTING | NOTE 16 OPERATING SEGMENT REPORTING McEwen Mining is a mining and minerals exploration company focused on precious metals in Argentina, Mexico and the United States. The Company’s chief operating decisions maker (“CODM”) reviews the operating results, assesses performance and makes decisions about allocation of resources to these segments at the geographic region level or major mine/project where the economic characteristics of the individual mines or projects are not alike. As a result, these operating segments also represent the Company’s reportable segments. The Company’s business activities that are not considered operating segments and not provided to the CODM for review are included in Corporate and other and are provided in this note for reconciliation purposes. The CODM reviews segment income (loss), defined as gold and silver sales less production costs applicable to sales, mine development costs, exploration costs, property holding costs and general and administrative expenses for all segments except for the MSC segment which is evaluated based on the attributable equity income. Gold and silver sales and production costs applicable to sales for the reportable segments are reported net of intercompany transactions. In the fourth quarter of 2016, the Company changed the measurement methods used to determine segment profit or loss composition of its reportable segments as a result of the change in the way that the CODM assesses performance and allocates resources. As a result, the Company separately reported segment income (loss) attributable to Los Azules and MSC. The updated composition of segments reflects the distinct economic characteristic of each mine/project. Significant information relating to the Company’s reportable operating segments is summarized in the tables below:
|  |  |  |  |  |  |  |  |  |  |  |  |  | Total
|  |  |  |  |  |  |  |  |  |  |  |  |  | Segment
Year ended December 31, 2016 |  | Mexico |  | MSC |  | Los Azules |  | Nevada |  | Income (loss)
Gold and silver sales |  | $ | 60,388 |  | $ | — |  | $ | — |  | $ | — |  | $ | 60,388
Production costs applicable to sales |  |  | (28,133) |  |  | — |  |  | — |  |  | — |  |  | (28,133)
Mine development costs |  |  | (1,174) |  |  | — |  |  | — |  |  | (2,692) |  |  | (3,866)
Exploration costs |  |  | (4,100) |  |  | — |  |  | (1,649) |  |  | (1,973) |  |  | (7,722)
Property holding costs |  |  | (1,642) |  |  | — |  |  | (405) |  |  | (1,489) |  |  | (3,536)
General and administrative expenses |  |  | (2,688) |  |  | — |  |  | (646) |  |  | (228) |  |  | (3,562)
Income from investment in Minera Santa Cruz S.A. (net of amortization) |  |  | — |  |  | 12,951 |  |  | — |  |  | — |  |  | 12,951
Segment income (loss) |  | $ | 22,651 |  | $ | 12,951 |  | $ | (2,700) |  | $ | (6,382) |  | $ | 26,520
Corporate and other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other exploration |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (237)
General and administrative expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (9,172)
Depreciation |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (1,169)
Revision of estimates and accretion of reclamation obligations |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (595)
Interest and other income |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 835
Gain on sale of assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 24
Gain on sale of marketable equity securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 22
Other-than-temporary impairment on marketable equity securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (882)
Unrealized gain on derivatives |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,379
Foreign currency gain |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 581
Net income before income taxes |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 17,306
|  |  |  |  |  |  |  |  |  |  |  |  |  | Total
|  |  |  |  |  |  |  |  |  |  |  |  |  | Segment
Year ended December 31, 2015 |  | Mexico |  | MSC |  | Los Azules |  | Nevada |  | Income (loss)
Gold and silver sales |  | $ | 72,956 |  | $ | — |  | $ | — |  | $ | — |  | $ | 72,956
Production costs applicable to sales |  |  | (34,607) |  |  | — |  |  | — |  |  | — |  |  | (34,607)
Mine development costs |  |  | (761) |  |  | — |  |  | — |  |  | (408) |  |  | (1,169)
Exploration costs |  |  | (4,526) |  |  | — |  |  | (1,481) |  |  | (2,517) |  |  | (8,524)
Property holding costs |  |  | (2,471) |  |  | — |  |  | (356) |  |  | (1,509) |  |  | (4,336)
General and administrative expenses |  |  | (3,953) |  |  | — |  |  | (647) |  |  | (203) |  |  | (4,803)
Income from investment in Minera Santa Cruz S.A. (net of amortization) |  |  | — |  |  | 2,414 |  |  | — |  |  | — |  |  | 2,414
Segment income (loss) |  | $ | 26,638 |  |  | 2,414 |  | $ | (2,484) |  | $ | (4,637) |  | $ | 21,931
Corporate and other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other exploration |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (274)
General and administrative expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (7,242)
Depreciation |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (942)
Revision of estimates and accretion of reclamation obligations |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (429)
Impairment of mineral property interests and property and equipment |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (50,600)
Impairment of investment in Minera Santa Cruz S.A. |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (11,777)
Interest and other income |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2,404
Gain on sale of assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 13
Foreign currency gain |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,906
Net loss before income taxes |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | (45,010)
|  |  |  |  |  |  |  |  |  |  |  |  |  | Total
|  |  |  |  |  |  |  |  |  |  |  |  |  | Segment
Year ended December 31, 2014 |  | Mexico |  | MSC |  | Los Azules |  | Nevada |  | Income (loss)
Gold and silver sales |  | $ | 45,303 |  |  | — |  | $ | — |  | $ | — |  | $ | 45,303
Production costs applicable to sales |  |  | (40,608) |  |  | — |  |  | — |  |  | — |  |  | (40,608)
Mine construction costs |  |  | (1,723) |  |  | — |  |  | — |  |  | — |  |  | (1,723)
Mine development costs |  |  | (1,829) |  |  | — |  |  | — |  |  | — |  |  | (1,829)
Exploration costs |  |  | (5,468) |  |  | — |  |  | (2,453) |  |  | (3,060) |  |  | (10,981)
Property holding costs |  |  | (1,829) |  |  | — |  |  | (610) |  |  | (3,926) |  |  | (6,365)
General and administrative expenses |  |  | (3,194) |  |  | — |  |  | (969) |  |  | (211) |  |  | (4,374)
Loss from investment in Minera Santa Cruz S.A. (net of amortization) |  |  | — |  |  | (5,284) |  |  | — |  |  | — |  |  | (5,284)
Segment income (loss) |  |  | (9,348) |  |  | (5,284) |  |  | (4,032) |  |  | (7,197) |  |  | (25,861)
Corporate and other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other exploration |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (351)
General and administrative expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (7,695)
Depreciation |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (979)
Revision of estimates and accretion of reclamation obligations |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (407)
Impairment of mineral property interests and property and equipment |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (353,736)
Impairment of investment in Minera Santa Cruz S.A. |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (21,162)
Interest and other expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 259
Gain on sale of assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 26
Registration taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (6,788)
Foreign currency loss |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (2,419)
Net loss before income taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (419,113)
Geographic information
|  | Long-lived Assets |  | Revenue(1)
|  | Year ended December 31, |  | Year ended December 31,
|  | 2016 |  | 2015 |  | 2016 |  | 2015 |  | 2014
Canada |  | $ | 663 |  | $ | 763 |  | $ | — |  | $ | — |  | $ | —
Mexico |  |  | 27,582 |  |  | 24,067 |  |  | 60,388 |  |  | 72,956 |  |  | 45,303
USA |  |  | 37,620 |  |  | 36,967 |  |  | — |  |  | — |  |  | —
Argentina(2) |  |  | 353,879 |  |  | 358,845 |  |  | — |  |  | — |  |  | —
Total consolidated |  | $ | 419,744 |  | $ | 420,642 |  | $ | 60,388 |  | $ | 72,956 |  | $ | 45,303
| (1) |  | Presented based on the location from which the product originated.
| (2) |  | Includes Investment in MSC of $162.0 million as of December 31, 2016 (December 31, 2015 - $167.1 million).
As gold and silver can be sold through numerous gold and silver market traders worldwide, the Company is not economically dependent on a limited number of customers for the sale of its product. In 2016, 2015 and 2014, sales to Bank of Nova Scotia were $58.1 million (96%), $67.2 million (92%) and $43.2 million (95%), respectively, of total gold and silver sales. Capital Expenditures information Capital expenditures includes acquisitions of Property and Equipment and Mineral Property Interests, net of dispositions.
|  | Capital Expenditures
|  | Year ended December 31,
|  | 2016 |  | 2015 |  | 2014
Mexico |  | $ | 5,401 |  | $ | 700 |  | $ | 1,843
Los Azules |  |  | — |  |  | 2 |  |  | (3)
Nevada |  |  | 764 |  |  | 62 |  |  | 2
Total segment capital expenditures |  | $ | 6,165 |  | $ | 764 |  | $ | 1,842
Corporate and other |  |  | — |  |  | — |  |  | 908
Consolidated total for capital expenditures |  | $ | 6,165 |  | $ | 764 |  | $ | 2,750

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8981-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9038-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8971-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8595-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8984-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9031-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8538-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8864-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8924-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8906-108599 + Details
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