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OPERATING SEGMENT REPORTING

9 Months Ended

Sep. 30, 2019

OPERATING SEGMENT REPORTING

OPERATING SEGMENT REPORTING

NOTE 2 OPERATING SEGMENT REPORTING

McEwen Mining is a mining and minerals production and 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 are included in General and Administrative and other and are provided in this note for reconciliation purposes.

The CODM reviews segment loss, defined as gold and silver sales less production costs applicable to sales, depreciation and depletion, advanced projects and exploration costs for all segments except for the MSC segment which is evaluated based on the attributable equity income or loss. Gold and silver sales and production costs applicable to sales for the reportable segments are reported net of intercompany transactions.

Significant information relating to the Company’s reportable operating segments is summarized in the tables below:

Three months ended September 30, 2019

USA

Canada

Mexico

MSC

Los Azules

Total

Revenue from gold and silver sales

$

16,577

$

11,147

$

4,967

$

—

$

—

$

32,691

Production costs applicable to sales

(12,156)

(7,550)

(3,878)

—

—

(23,584)

Depreciation and depletion

(3,790)

(3,589)

(109)

—

—

(7,488)

Gross profit

631

8

980

—

—

1,619

Advanced projects

(46)

(384)

(1,710)

—

—

(2,140)

Exploration

(4,253)

(8,691)

(2)

—

(749)

(13,695)

Loss from investment in Minera Santa Cruz S.A.

—

—

—

(328)

—

(328)

Segment loss

$

(3,668)

$

(9,067)

$

(732)

$

(328)

$

(749)

$

(14,544)

General and Administrative and other

887

Loss before income and mining taxes

$

(13,657)

Nine months ended September 30, 2019

USA

Canada

Mexico

MSC

Los Azules

Total

Revenue from gold and silver sales

$

28,941

$

36,139

$

19,577

$

—

$

—

$

84,657

Production costs applicable to sales

(20,798)

(24,025)

(14,609)

—

—

(59,432)

Depreciation and depletion

(6,510)

(10,520)

(471)

—

—

(17,501)

Gross profit

1,633

1,594

4,497

—

—

7,724

Advanced projects

(632)

(384)

(5,865)

—

—

(6,881)

Exploration

(6,155)

(15,174)

(2)

—

(2,386)

(23,717)

Loss from investment in Minera Santa Cruz S.A.

—

—

—

(6,775)

—

(6,775)

Segment loss

$

(5,154)

$

(13,964)

$

(1,370)

$

(6,775)

$

(2,386)

$

(29,649)

General and Administrative and other

(7,541)

Loss before income and mining taxes

$

(37,190)


Three months ended September 30, 2018		USA			Canada			Mexico			MSC			Los Azules			Total
Revenue from gold and silver sales		$	—		$	11,395		$	15,501		$	—		$	—		$	26,896
Production costs applicable to sales			—			(9,179)			(8,561)			—			—			(17,740)
Depreciation and depletion			—			(2,729)			(414)			—			—			(3,143)
Gross profit (loss)			—			(513)			6,526			—			—			6,013

Advanced projects			(2,538)			—			(2,692)			—			—			(5,230)
Exploration			(1,039)			(6,356)			(296)			—			(540)			(8,231)
Loss from investment in Minera Santa Cruz S.A.			—			—			—			(4,973)			—			(4,973)
Segment (loss) income		$	(3,577)		$	(6,869)		$	3,538		$	(4,973)		$	(540)		$	(12,421)
General and Administrative and other																		(2,482)
Loss before income and mining taxes																	$	(14,903)


Nine months ended September 30, 2018		USA			Canada			Mexico			MSC			Los Azules			Total
Revenue from gold and silver sales		$	—		$	46,444		$	55,299		$	—		$	—		$	101,743
Production costs applicable to sales			—			(31,711)			(30,367)			—			—			(62,078)
Depreciation and depletion			—			(8,513)			(1,819)			—			—			(10,332)
Gross profit			—			6,220			23,113			—			—			29,333

Advanced projects			(5,171)			—			(5,819)			—			—			(10,990)
Exploration			(4,190)			(17,523)			(1,596)			—			(6,406)			(29,715)
Loss from investment in Minera Santa Cruz S.A.			—			—			—			(7,450)			—			(7,450)
Segment (loss) income		$	(9,361)		$	(11,303)		$	15,698		$	(7,450)		$	(6,406)		$	(18,822)
General and Administrative and other																		(9,950)
Loss before income and mining taxes																	$	(28,772)

Geographic information

Geographic information includes the long-lived assets balance and revenues presented for the Company’s operating segments, as follows:


		Long-lived Assets						Revenue⁽¹⁾
		September 30,			December 31,			Three months ended September 30,							Nine months ended September 30,
		2019			2018			2019			2018				2019			2018
Canada		$	78,770		$	84,119		$	11,147		$	11,395			$	36,139		$	46,444
Mexico			25,671			26,524			4,967			15,501				19,577			55,299
USA			137,400			127,617			16,577			—				28,941			—
Argentina⁽²⁾			308,484			319,305			—			—				—			—
Total consolidated		$	550,325		$	557,565		$	32,691		$	26,896			$	84,657		$	101,743

(1)	Presented based on the location from which the product originated.

(2)	Includes Investment in MSC of $117.0 million as of September 30, 2019 (December 31, 2018 – $127.8 million).