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OPERATING SEGMENT REPORTING | 12 Months Ended
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Dec. 31, 2017
OPERATING SEGMENT REPORTING |
OPERATING SEGMENT REPORTING | NOTE 15 OPERATING SEGMENT REPORTING McEwen Mining is a mining and minerals exploration company focused on precious metals in Argentina, Mexico, Canada, 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 (loss) income, 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 2017, the Company completed the acquisition of Lexam, which included a portfolio of exploration projects, and certain assets and liabilities of the Black Fox Complex, all of which are located in Timmins, Ontario, Canada. These assets are managed together as a single operating segment by the CODM. Accordingly, the Company separately reported segment (loss) income attributable to Canada beginning in 2017. 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:
Year ended December 31, 2017 |  | Mexico |  | MSC |  | Los Azules |  | USA |  |  | Canada |  | Total
Gold and silver sales |  | $ | 55,845 |  | $ | — |  | $ | — |  | $ | — |  | $ | 11,620 |  | $ | 67,465
Other revenue |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 259 |  |  | 259
Production costs applicable to sales |  |  | (35,292) |  |  | — |  |  | — |  |  | — |  |  | (9,888) |  |  | (45,180)
Revision of estimates and accretion of reclamation obligations |  |  | (326) |  |  | — |  |  | — |  |  | (300) |  |  | (1,435) |  |  | (2,061)
Mine development costs |  |  | (745) |  |  | — |  |  | — |  |  | (3,092) |  |  | — |  |  | (3,837)
Exploration costs |  |  | (5,610) |  |  | — |  |  | (7,923) |  |  | (2,132) |  |  | (1,544) |  |  | (17,209)
Property holding costs |  |  | (2,131) |  |  | — |  |  | (56) |  |  | (1,667) |  |  | (25) |  |  | (3,879)
Impairment of mineral property interests and property and equipment |  |  | (711) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (711)
General and administrative costs |  |  | (3,772) |  |  | — |  |  | (1,242) |  |  | (1,927) |  |  | (92) |  |  | (7,033)
Income (loss) from investment in Minera Santa Cruz S.A. (net of amortization) |  |  | — |  |  | (44) |  |  | — |  |  | — |  |  | — |  |  | (44)
Segment income (loss) |  | $ | 7,258 |  | $ | (44) |  | $ | (9,221) |  | $ | (9,118) |  | $ | (1,105) |  | $ | (12,230)
Corporate and other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other exploration costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | (505)
General and administrative costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (11,839)
Depreciation |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (1,453)
Interest and other expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (938)
Gain on sale of assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 11
Gain on sale of marketable equity securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 840
Other-than-temporary impairment on marketable equity securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (356)
Unrealized (loss) gain on derivatives |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (227)
Foreign currency gain |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 694
Net (loss) before income and mining taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | (26,003)
Year ended December 31, 2016 |  | Mexico |  | MSC |  | Los Azules |  | USA |  | Canada |  | Total
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 costs |  |  | (2,688) |  |  | — |  |  | (646) |  |  | (228) |  |  | — |  |  | (3,562)
Income (loss) 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 costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | (237)
General and administrative costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (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 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 and mining taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 17,306
Year ended December 31, 2015 |  | Mexico |  | MSC |  | Los Azules |  | USA |  | Canada |  | Total
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 costs |  |  | (3,953) |  |  | — |  |  | (647) |  |  | (203) |  |  | — |  |  | (4,803)
Income (loss) 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 costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | (274)
General and administrative costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (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 and mining taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | (45,010)
Geographic information
|  | Long-lived Assets |  | Revenue(1)
|  | Year ended December 31, |  | Year ended December 31,
|  | 2017 |  | 2016 |  | 2017 |  | 2016 |  | 2015
Canada |  | $ | 85,179 |  | $ | 663 |  | $ | 11,879 |  | $ | — |  | $ | —
Mexico |  |  | 35,446 |  |  | 27,582 |  |  | 55,845 |  |  | 60,388 |  |  | 72,956
USA |  |  | 43,086 |  |  | 37,620 |  |  | — |  |  | — |  |  | —
Argentina(2) |  |  | 341,554 |  |  | 353,879 |  |  | — |  |  | — |  |  | —
Total consolidated |  | $ | 505,265 |  | $ | 419,744 |  | $ | 67,724 |  | $ | 60,388 |  | $ | 72,956
| (1) |  | Presented based on the location from which the product originated.
| (2) |  | Includes Investment in MSC of $151.0 million as of December 31, 2017 (December 31, 2016 - $162.0 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 2017, 2016 and 2015, sales to Bank of Nova Scotia were $65.9 million (94%), $58.1 million (96%), and $67.2 million (92%), 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 and amortization.
|  | Capital Expenditures
|  | Year ended December 31,
|  | 2017 |  | 2016 |  | 2015
Mexico |  | $ | 939 |  | $ | 5,401 |  | $ | 700
Los Azules |  |  | - |  |  | — |  |  | 2
Canada |  |  | 4,301 |  |  | — |  |  | —
USA |  |  | 6,271 |  |  | 764 |  |  | 62
Total segment capital expenditures |  | $ | 11,511 |  | $ | 6,165 |  | $ | 764
Corporate and other |  |  |  |  |  | — |  |  | —
Consolidated total for capital expenditures |  | $ | 11,511 |  | $ | 6,165 |  | $ | 764

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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 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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