OPERATING SEGMENT REPORTING

12 Months Ended

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)
	Yearended 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