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 level 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 nine months ended September 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 September 30, 2017	Mexico		MSC		Los Azules		USA			Timmins	Income (Loss)
Gold and silver sales	$	13,430	$	—	$	—	$	—	$	—	$	13,430
Production costs applicable to sales		(8,649)		—		—		—		—		(8,649)
Mine development costs		(273)		—		—		(1,109)		—		(1,382)
Exploration costs		(1,149)		—		(365)		(556)		(137)		(2,207)
Property holding costs		(1,044)		—		—		(935)		—		(1,979)
General and administrative expenses		(715)		—		(320)		(441)		(32)		(1,508)
Loss from investment in Minera Santa Cruz S.A. (net of amortization)		—		(462)		—		—		—		(462)
Segment income (loss)	$	1,600	$	(462)	$	(685)	$	(3,041)	$	(169)	$	(2,757)
Corporate and other
Other exploration											$	(149)
General and administrative expenses												(3,226)
Depreciation												(316)
Revision of estimates and accretion of reclamation obligations												(320)
Interest and other expense												(303)
Other-than-temporary impairment on marketable equity securities												(356)
Unrealized gain on derivatives												(933)
Foreign currency gain												(276)
Net loss before income taxes											$	(8,636)


											Total
											Segment
Nine months ended September 30, 2017	Mexico		MSC		Los Azules		USA			Timmins	Income (Loss)
Gold and silver sales	$	43,373	$	—	$	—	$	—	$	—	$	43,373
Production costs applicable to sales		(24,193)		—		—		—		—		(24,193)
Mine development costs		(605)		—		—		(2,612)		—		(3,217)
Exploration costs		(4,201)		—		(7,507)		(1,487)		(267)		(13,462)
Property holding costs		(2,089)		—		(48)		(1,453)		—		(3,590)
General and administrative expenses		(2,594)		—		(949)		(1,226)		(58)		(4,827)
Loss from investment in Minera Santa Cruz S.A. (net of amortization)		—		(535)		—		—		—		(535)
Segment income (loss)	$	9,691	$	(535)	$	(8,504)	$	(6,778)	$	(325)	$	(6,451)
Corporate and other
Other exploration											$	(424)
General and administrative expenses												(8,278)
Depreciation												(1,125)
Revision of estimates and accretion of reclamation obligations												(541)
Interest and other expense												(478)
Gain on sale of assets												11
Gain on sale of marketable equity securities												840
Other-than-temporary impairment on marketable equity securities												(356)
Unrealized gain on derivatives												136
Foreign currency gain												799
Net loss before income taxes											$	(15,867)


											Total
											Segment
Three months ended September 30, 2016	Mexico		MSC		Los Azules		USA			Timmins	Income (Loss)
Gold and silver sales	$	13,423	$	—	$	—	$	—	$	—	$	13,423
Production costs applicable to sales		(6,409)		—		—		—		—		(6,409)
Mine development costs		(341)		—		—		(593)		—		(934)
Exploration costs		(1,094)		—		(543)		(506)		—		(2,143)
Property holding costs		(812)		—		(192)		(888)		—		(1,892)
General and administrative expenses		(474)		—		(234)		(69)		—		(777)
Income from investment in Minera Santa Cruz S.A. (net of amortization)		—		4,693		—		—		—		4,693
Segment income (loss)	$	4,293	$	4,693	$	(969)	$	(2,056)	$	—	$	5,961
Corporate and other
Other exploration											$	(23)
General and administrative expenses												(2,456)
Depreciation												(312)
Revision of estimates and accretion of reclamation obligations												(125)
Interest and other expense												599
Gain on sale of assets												24
Unrealized gain on derivatives												(197)
Foreign currency gain												130
Net income before income taxes											$	3,601


											Total
											Segment
Nine months ended September 30, 2016	Mexico		MSC		Los Azules		USA			Timmins	Income (Loss)
Gold and silver sales	$	49,226	$	—	$	—	$	—	$	—	$	49,226
Production costs applicable to sales		(21,239)		—		—		—		—		(21,239)
Mine development costs		(1,038)		—		—		(1,910)		—		(2,948)
Exploration costs		(2,739)		—		(1,046)		(1,692)		—		(5,477)
Property holding costs		(1,642)		—		(367)		(1,288)		—		(3,297)
General and administrative expenses		(1,963)		—		(419)		(176)		—		(2,558)
Income from investment in Minera Santa Cruz S.A. (net of amortization)		—		13,789		—		—		—		13,789
Segment income (loss)	$	20,605	$	13,789	$	(1,832)	$	(5,066)	$	—	$	27,496
Corporate and other
Other exploration											$	(118)
General and administrative expenses												(6,043)
Depreciation												(809)
Revision of estimates and accretion of reclamation obligations												(382)
Interest and other income												754
Other-than-temporary impairment on marketable equity securities												(882)
Gain on sale of assets												24
Gain on sale of marketable securities												22
Unrealized gain on derivatives												1,522
Foreign currency gain												632
Net income before income taxes											$	22,216

Geographic information


	Revenue(1)
	Three months ended September 30,				Nine months ended September 30,
	2017		2016			2017		2016
Mexico	$	13,430	$	13,423	$	43,373	$	49,226
Total consolidated	$	13,430	$	13,423	$	43,373	$	49,226


	Long-lived Assets as at
	September 30,		December 31,
	2017		2016
Canada	$	42,555	$	663
Mexico		36,879		27,582
USA		37,071		37,620
Argentina(2)		346,082		353,879
Total consolidated	$	462,587	$	419,744

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

(2)Includes Investment in MSC of $154.6 million as of September 30, 2017 (December 31, 2016 - $162.3 million).