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OPERATING SEGMENT REPORTING

12 Months Ended

Dec. 31, 2020

NOTE 3 OPERATING SEGMENT REPORTING

McEwen Mining is a mining and minerals production and exploration company focused on precious metals in the United States, Canada, Mexico, and Argentina. The Company’s chief operating decision 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 within a geographic region 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 income or 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 pickup. Gold and silver sales and production costs applicable to sales for the reportable segments are reported net of intercompany transactions.

Production costs applicable to sales for the El Gallo project were $15.7 million for the year ended December 31, 2020 (in the year ended December 31, 2019 - $18.5 million) and included $8.4 million of residual leaching spending in the year, net of $3.0 million capitalized in inventory (in the year ended December 31, 2019 - $8.2 million, net of $3.4 million capitalized in inventory) with the remaining balance of production costs applicable to sales of $7.3 million (in the year ended December 31, 2019 - $10.3 million) corresponds to opening leach pad inventory costs that are included as production costs applicable to sales.

Capital expenditures include costs capitalized in mineral property interests and plant and equipment in the respective periods.

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

Year ended December 31, 2020

USA

Canada

Mexico

MSC

Los Azules

Total

Revenue from gold and silver sales

48,884

41,452

14,453

—

104,789

Production costs applicable to sales

(58,465)

(34,639)

(15,723)

—

(108,827)

Depreciation and depletion

(11,785)

(10,883)

(242)

—

(22,910)

Gross (loss)

(21,366)

(4,070)

(1,512)

—

(26,948)

Advanced projects

(1,071)

(6,088)

(4,522)

—

(11,681)

Exploration

(6,777)

(6,450)

(513)

—

(2,121)

(15,861)

Impairment of mineral property interests and plant and equipment (Note 9)

(83,805)

—

(83,805)

Loss from investment in Minera Santa Cruz S.A.

—

(1,517)

—

(1,517)

Other operating

(1,390)

(578)

—

(1,968)

Segment loss

(114,409)

(17,186)

(6,547)

(1,517)

(2,121)

(141,780)

General and Administrative and other

(11,935)

Loss before income and mining taxes

(153,715)

Capital expenditures

4,821

9,104

—

13,925


Year ended December 31, 2019	USA		Canada		Mexico		MSC		Los Azules		Total
Revenue from gold and silver sales	$	43,847	$	50,058	$	23,114	$	—	$	—	$	117,019
Production costs applicable to sales		(33,614)		(31,121)		(18,545)		—		—		(83,280)
Depreciation and depletion		(10,934)		(13,271)		(548)		—		—		(24,753)
Gross (loss) profit		(701)		5,666		4,021		—		—		8,986

Advanced projects		(649)		(1,636)		(7,235)		—		—		(9,520)
Exploration		(8,554)		(25,779)		—		—		(3,411)		(37,744)
Loss from investment in Minera Santa Cruz S.A.		—		—		—		(8,754)		—		(8,754)
Segment loss	$	(9,904)	$	(21,749)	$	(3,214)	$	(8,754)	$	(3,411)	$	(47,032)
General and Administrative and other												(16,559)
Loss before income and mining taxes											$	(63,591)

Capital expenditures	$	18,806	$	11,464	$	—	$	—	$	—	$	30,270


Year ended December 31, 2018	USA		Canada		Mexico		MSC		Los Azules		Total
Revenue from gold and silver sales	$	—	$	62,024	$	66,151	$	—	$	—	$	128,175
Production costs applicable to sales		—		(43,095)		(37,919)		—		—		(81,014)
Depreciation and depletion		—		(12,972)		(2,107)		—		—		(15,079)
Gross profit		—		5,957		26,125		—		—		32,082

Advanced projects		(7,959)		—		(7,104)		—		—		(15,063)
Exploration		(5,174)		(22,032)		(2,241)		—		(7,129)		(36,576)
Loss from investment in Minera Santa Cruz S.A.		—		—		—		(11,865)		—		(11,865)
Segment (loss) income	$	(13,133)	$	(16,075)	$	16,780	$	(11,865)	$	(7,129)	$	(31,422)
General and Administrative and other												(16,218)
Loss before income and mining taxes											$	(47,640)

Capital expenditures	$	84,713	$	12,584	$	171	$	—	$	—	$	97,468

Geographic information

Geographic information includes the following long-lived assets balances and revenues presented for the Company’s operating segments:


	Long-lived Assets				Revenue ⁽¹⁾
	December 31,		December 31,		Year ended December 31,
	2020		2019		2020		2019		2018
USA	$	46,801	$	135,854	$	48,884	$	43,847	$	—
Canada		78,986		77,147		41,452		50,058		62,024
Mexico		20,021		23,551		14,453		23,114		66,151
Argentina ⁽²⁾		299,816		302,598		—		—		—
Total consolidated ⁽³⁾	$	445,624	$	539,150	$	104,789	$	117,019	$	128,175

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

(2)	Includes Investment in MSC of $108.3 million as of December 31, 2020 (December 31, 2019 - $110.2 million).

(3)	Total excludes $0.8 million related to the Company’s ROU office lease asset as the business activities related to corporate are not considered to be a part of the operating segments.

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 2020, 2019 and 2018, sales to Bank of Nova Scotia and Asahi Refining Inc. were $33.0 million (32%) and $67.0 million (64%), $103.6 million (89%) and $4.9 million (4%), and $123.5 million (96%) and $nil, respectively, of the total gold and silver sales.

- 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

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