NOTE 15 OPERATING SEGMENT REPORTING

McEwen Mining is a mining and minerals production and 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 (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 costs, 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 2017, the Company completed the acquisition of Lexam, which included a portfolio of exploration projects, and certain assets and liabilities of the Black Fox Complex, all of which are located in Timmins, Ontario, Canada. These assets are managed together as a single operating segment by the CODM. Accordingly, the Company separately reported segment (loss) income attributable to Canada beginning in 2017. 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:


Year ended December 31, 2018	Mexico		MSC		Los Azules		USA			Canada	Total
Gold and silver sales	$	66,151	$	—	$	—	$	—	$	62,024	$	128,175
Other revenue		—		—		—		30		617		647
Production costs applicable to sales		(37,429)		—		—		—		(55,900)		(93,329)
Mine development costs		(3,667)		—		—		—		—		(3,667)
Exploration costs		(2,241)		—		(6,015)		(5,174)		(21,372)		(34,802)
Property holding costs		(2,264)		—		(68)		(1,397)		(167)		(3,896)
General and administrative costs		(3,770)		—		(1,046)		(6,562)		(665)		(12,043)
(Loss) from investment in Minera Santa Cruz S.A. (net of amortization)		—		(11,865)		—		—		—		(11,865)
Segment (loss) income	$	16,780	$	(11,865)	$	(7,129)	$	(13,103)	$	(15,463)	$	(30,780)
Corporate and other
General and administrative costs											$	(11,120)
Depreciation												(1,178)
Revision of estimates and accretion of reclamation obligations												(3,464)
Interest and other expense												(1,619)
Gain on sale of assets												(77)
(Loss) gain on investments												(3,324)
Foreign currency gain												3,922
Net (loss) before income and mining taxes											$	(47,640)


Year ended December 31, 2017	Mexico		MSC		Los Azules		USA		Canada		Total
Gold and silver sales	$	55,845	$	—	$	—	$	—	$	11,620	$	67,465
Other revenue		—		—		—		—		259		259
Production costs applicable to sales		(35,292)		—		—		—		(9,888)		(45,180)
Mine development costs		(745)		—		—		(3,092)		—		(3,837)
Exploration costs		(5,610)		—		(7,923)		(2,132)		(1,544)		(17,209)
Property holding costs		(2,131)		—		(56)		(1,667)		(25)		(3,879)
Impairment of mineral property interests and property and equipment		(711)		—		—		—		—		(711)
General and administrative costs		(3,772)		—		(1,242)		(1,927)		(92)		(7,033)
(Loss) from investment in Minera Santa Cruz S.A. (net of amortization)		—		(44)		—		—		—		(44)
Segment income (loss)	$	7,584	$	(44)	$	(9,221)	$	(8,818)	$	330	$	(10,169)
Corporate and other
Other exploration costs											$	(505)
General and administrative costs												(11,839)
Depreciation												(1,453)
Revision of estimates and accretion of reclamation obligations												(2,061)
Interest and other income												(938)
Gain on sale of assets												11
(Loss) gain on investments												257
Foreign currency gain												694
Net (loss) before income and mining taxes											$	(26,003)


Year ended December 31, 2016	Mexico		MSC		Los Azules		USA		Canada		Total
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 costs		(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 costs											$	(237)
General and administrative costs												(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
(Loss) gain on investments												519
Foreign currency gain												581
Net income before income and mining taxes											$	17,306

Geographic information

Geographic information includes the long-lived assets balance and revenues presented for the Company’s operating segments.


	Long-lived Assets				Revenue(1)
	Year ended December 31,				Year ended December 31,
	2018		2017		2018		2017		2016
Canada	$	84,119	$	85,179	$	62,641	$	11,879	$	—
Mexico		26,524		35,446		66,151		55,845		60,388
USA		127,617		43,086		30		—		—
Argentina(2)		319,305		341,554		—		—		—
Total consolidated	$	557,565	$	505,265	$	128,822	$	67,724	$	60,388

(1)

Presented based on the location from which the product originated.

(2)

Includes Investment in MSC of $127.8 million as of December 31, 2018 (December 31, 2017 - $151.0 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 2018, 2017 and 2016, sales to Bank of Nova Scotia were $123.5 million (96%), $65.9 million (94%), and $58.1 million (96%), 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 and amortization. The following table summarizes capital expenditures by the Company by segment.


	Capital Expenditures
	Year ended December 31,
	2018		2017		2016
Mexico	$	(3,107)	$	939	$	5,401
Los Azules		—		—		—
Canada		(1,110)		4,301		—
USA		83,613		6,271		764
Consolidated total for capital expenditures	$	79,396	$	11,511	$	6,165