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 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 operations, 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.

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


											Total
											Segment
Three months ended June 30, 2018	Mexico		MSC		Los Azules		USA			Canada	Income (Loss)
Gold and silver sales	$	14,381	$	—	$	—	$	—	$	19,425	$	33,806
Other revenue		—		—		—		—		373		373
Production costs applicable to sales		(8,821)		—		—		—		(15,435)		(24,256)
Mine development costs		(710)		—		—		—		—		(710)
Exploration costs		(329)		—		(1,871)		(1,151)		(5,756)		(9,107)
Property holding costs		(41)		—		—		(96)		(52)		(189)
General and administrative expenses		(800)		—		(470)		(1,495)		(52)		(2,817)
Loss from investment in Minera Santa Cruz S.A. (net of amortization)		—		(2,265)		—		—		—		(2,265)
Segment income (loss)	$	3,680	$	(2,265)	$	(2,341)	$	(2,742)	$	(1,497)	$	(5,165)
Corporate and other
General and administrative expenses											$	(2,997)
Depreciation												(273)
Revision of estimates and accretion of reclamation obligations												(288)
Interest and other expense												354
(Loss) on sale of assets												(99)
(Loss) on sale of marketable equity securities												(33)
Unrealized fair value (loss) on marketable equity securities												(500)
Unrealized (loss) on derivatives												(1)
Foreign currency gain												1,482
Net loss before income taxes											$	(7,520)


Six months ended June 30, 2018	Mexico		MSC		Los Azules		USA			Canada	Total
Gold and silver sales	$	39,798	$	—	$	—	$	—	$	35,049	$	74,847
Other revenue		—		—		—		—		617		617
Production costs applicable to sales		(22,429)		—		—		—		(28,221)		(50,650)
Mine development costs		(1,090)		—		—		—		—		(1,090)
Exploration costs		(1,300)		—		(5,078)		(3,151)		(11,032)		(20,561)
Property holding costs		(1,190)		—		(40)		(275)		(95)		(1,600)
General and administrative costs		(1,629)		—		(748)		(2,358)		(140)		(4,875)
(Loss) from investment in Minera Santa Cruz S.A. (net of amortization)		—		(2,477)		—		—		—		(2,477)
Segment income (loss)	$	12,160	$	(2,477)	$	(5,866)	$	(5,784)	$	(3,822)	$	(5,789)
Corporate and other
General and administrative costs											$	(6,126)
Revision of estimates and accretion of reclamation obligations												(582)
Depreciation												(633)
Interest and other expense												220
(Loss) on sale of assets												(99)
(Loss) on sale of marketable equity securities												(767)
Unrealized fair value (loss) on marketable equity securities												(1,637)
Unrealized gain on derivatives												(865)
Foreign currency gain												2,409
Net loss before income taxes											$	(13,869)


Three months ended June 30, 2017	Mexico		MSC		Los Azules		USA		Canada		Total
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 costs		(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 costs											$	(155)
General and administrative costs												(2,232)
Depreciation												(482)
Revision of estimates and accretion of reclamation obligations												(116)
Interest and other income												(109)
Gain on sale of marketable securities												840
Unrealized gain on derivatives												(722)
Foreign currency gain												1,050
Net loss before income taxes											$	(1,559)


Six months ended June 30, 2017	Mexico		MSC		Los Azules		USA		Canada		Total
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 costs		(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 costs											$	(275)
General and administrative costs												(5,052)
Depreciation												(809)
Revision of estimates and accretion of reclamation obligations												(221)
Interest and other income												(175)
Gain on sale of assets												11
Gain on sale of marketable securities												840
Unrealized gain on derivatives												1,069
Foreign currency gain												1,075
Net loss before income taxes											$	(7,231)

Geographic information


	Long-lived Assets as at
	June 30,		December 31,
	2018		2017
Canada	$	87,051	$	85,179
Mexico		32,515		35,446
USA(2)		75,378		43,086
Argentina(3)		331,846		341,554
Total consolidated	$	526,790	$	505,265


	Revenue(1)
	Three months ended June 30,				Six months ended June 30,
	2018		2017			2018		2017
Canada	$	19,798	$	—	$	35,666	$	—
Mexico	$	14,381	$	15,110	$	39,798	$	29,943
Total consolidated	$	34,179	$	15,110	$	75,464	$	29,943

(1)

Presented based on the location from which the product originated.

(2)

The USA segment includes construction in progress of $33.0 million related to the Gold Bar mine construction. Of the $33.0 million, $18.2 million and $27.0 million were incurred in the three and six months ended June 30, 2018. The balance of the construction in progress is expected to increase throughout the year 2018, until the Gold Bar mine is placed into operation.

(3)

Includes Investment in MSC of $140 million as of June 30, 2018 (December 31, 2017 - $151.0 million).