NOTE 12 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 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 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 or loss. Gold and silver sales and production costs applicable to sales for the reportable segments are reported net of intercompany transactions.

In the second quarter of 2017, the Company completed the acquisition of Lexam. which included a portfolio of exploration projects located in Timmins, Ontario. The performance and allocation of resources to these assets is done separately by the CODM. As a result, for the three and six months ended June 2017, the Company separately reported segment (loss) income attributable to Timmins. 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
Three months ended June 30, 2017	Mexico		MSC		Los Azules		Nevada			Timmins	Income (loss)
Gold and silver sales	$	15,110	$	—	$	—	$	—	$	—	$	15,110
Production costs applicable to sales		(8,560)		—		—		—		—		(8,560)
Mine development costs		(177)		—		—		(543)		—		(720)
Exploration costs		(1,513)		—		(841)		(447)		(130)		(2,931)
Property holding costs		(63)		—		(47)		(313)		—		(423)
General and administrative expenses		(1,040)		—		(421)		(359)		(26)		(1,846)
Loss from investment in Minera Santa Cruz S.A. (net of amortization)		—		(263)		—		—		—		(263)
Segment income (loss)	$	3,757	$	(263)	$	(1,309)	$	(1,662)	$	(156)	$	367
Corporate and other
Other exploration												(155)
General and administrative expenses												(2,232)
Depreciation												(482)
Revision of estimates and accretion of reclamation obligations												(116)
Interest and other expense												(109)
Gain on sale of marketable equity securities												840
Unrealized gain on derivatives												(722)
Foreign currency gain												1,050
Net loss before income taxes											$	(1,559)


											Total
											Segment
Six months ended June 30, 2017	Mexico		MSC		Los Azules		Nevada			Timmins	Income (loss)
Gold and silver sales	$	29,943	$	—	$	—	$	—	$	—	$	29,943
Production costs applicable to sales		(15,544)		—		—		—		—		(15,544)
Mine development costs		(332)		—		—		(1,503)		—		(1,835)
Exploration costs		(3,052)		—		(7,142)		(931)		(130)		(11,255)
Property holding costs		(1,045)		—		(48)		(518)		—		(1,611)
General and administrative expenses		(1,879)		—		(629)		(785)		(26)		(3,319)
Loss from investment in Minera Santa Cruz S.A. (net of amortization)		—		(73)		—		—		—		(73)
Segment income (loss)	$	8,091	$	(73)	$	(7,819)	$	(3,737)	$	(156)	$	(3,694)
Corporate and other
Other exploration												(275)
General and administrative expenses												(5,052)
Depreciation												(809)
Revision of estimates and accretion of reclamation obligations												(221)
Interest and other expense												(175)
Gain on sale of assets												11
Gain on sale of marketable equity securities												840
Unrealized gain on derivatives												1,069
Foreign currency gain												1,075
Net loss before income taxes											$	(7,231)


											Total
											Segment
Three months ended June 30, 2016	Mexico		MSC		Los Azules		Nevada			Timmins	Income (loss)
Gold and silver sales	$	14,613	$	—	$	—	$	—	$	—	$	14,613
Production costs applicable to sales		(5,763)		—		—		—		—		(5,763)
Mine development costs		(619)		—		—		(697)		—		(1,316)
Exploration costs		(860)		—		(193)		(599)		—		(1,652)
Property holding costs		—		—		(82)		(176)				(258)
General and administrative expenses		(770)		—		(146)		(52)		—		(968)
Income from investment in Minera Santa Cruz S.A. (net of amortization)		—		4,133		—		—		—		4,133
Segment income (loss)	$	6,601	$	4,133	$	(421)	$	(1,524)	$	—	$	8,789
Corporate and other
Other exploration												(37)
General and administrative expenses												(1,632)
Depreciation												(258)
Revision of estimates and accretion of reclamation obligations												(133)
Interest and other expense												(73)
Other-than-temporary impairment on marketable equity securities												(597)
Unrealized gain on derivatives												1,719
Foreign currency gain												(281)
Net income before income taxes											$	7,497


											Total
											Segment
Six months ended June 30, 2016	Mexico		MSC		Los Azules		Nevada			Timmins	Income (loss)
Gold and silver sales	$	35,803	$	—	$	—	$	—	$	—	$	35,803
Production costs applicable to sales		(14,830)		—		—		—		—		(14,830)
Mine development costs		(697)		—		—		(1,317)		—		(2,014)
Exploration costs		(1,645)		—		(503)		(1,187)		—		(3,335)
Property holding costs		(831)		—		(174)		(400)		—		(1,405)
General and administrative expenses		(1,489)		—		(185)		(107)		—		(1,781)
Income from investment in Minera Santa Cruz S.A. (net of amortization)		—		9,096		—		—		—		9,096
Segment income (loss)	$	16,311	$	9,096	$	(862)	$	(3,011)	$	—	$	21,534
Corporate and other
Other exploration												(94)
General and administrative expenses												(3,587)
Depreciation												(497)
Revision of estimates and accretion of reclamation obligations												(257)
Interest and other income												155
Other-than-temporary impairment on marketable equity securities												(882)
Gain on sale of marketable securities												22
Unrealized gain on derivatives												1,719
Foreign currency gain												502
Net income before income taxes											$	18,615

Geographic information


	Revenue(1)
	Three months ended June 30,				Six months ended June 30,
	2017		2016			2017		2016
Mexico		15,110		14,613		29,943		35,803
Total consolidated	$	15,110	$	14,613	$	29,943	$	35,803


	Long-lived Assets as at
	June 30,		December 31
	2017		2016
Canada	$	42,587	$	663
Mexico		36,684		27,582
USA		37,114		37,620
Argentina(2)		348,813		353,879
Total consolidated	$	465,198	$	419,744

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

(2)Includes Investment in MSC of $157.3 million as of June 30, 2017 (December 31, 2016 - $162.3 million).