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OPERATING SEGMENT REPORTING

3 Months Ended

Mar. 31, 2020

NOTE 3 OPERATING SEGMENT REPORTING

McEwen Mining Inc. is engaged in the exploration, development, production and sale of gold and silver and exploration for copper, with operations located in the United States, Canada, Mexico and Argentina. 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 are included in General and Administrative 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, depreciation and depletion, advanced projects and exploration 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.

Production costs applicable to sales for the El Gallo project of $4.2 million for the three months ended March 31, 2020 (same period in 2019 - $4.5 million) include $1.7 million of residual leaching spending in the period, net of $1.1 million capitalized on inventory (same period in 2019 - $1.8 million, net of $1.1 million capitalized on inventory) with the rest representing costs recorded in the leach pad inventory balances in prior periods.

Capital expenditures include costs capitalized in mineral property interests and plant and equipment in the respective periods.

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

Three months ended March 31, 2020

USA

Canada

Mexico

MSC

Los Azules

Total

Revenue from gold and silver sales

14,317

12,739

4,344

—

31,400

Production costs applicable to sales

(17,032)

(7,207)

(4,148)

—

(28,387)

Depreciation and depletion

(3,862)

(2,748)

(88)

—

(6,698)

Gross (loss) profit

(6,577)

2,784

108

—

(3,685)

Advanced projects

(366)

(1,066)

(1,118)

—

(2,550)

Exploration

(809)

(2,405)

—

(576)

(3,790)

Loss from investment in Minera Santa Cruz S.A.

—

(2,676)

—

(2,676)

Impairment of mineral property interests and plant and equipment (note 8)

(83,805)

—

(83,805)

Segment loss

(91,557)

(687)

(1,010)

(2,676)

(576)

(96,506)

General and Administrative and other

(3,779)

Loss before income and mining taxes

(100,285)

Capital expenditures

1,807

3,729

—

5,536


Three months ended March 31, 2019	USA		Canada		Mexico		MSC		Los Azules		Total
Revenue from gold and silver sales	$	842	$	8,943	$	5,798	$	—	$	—	$	15,583
Production costs applicable to sales		(808)		(5,835)		(4,505)		—		—		(11,148)
Depreciation and depletion		(152)		(2,710)		(144)		—		—		(3,006)
Gross (loss) profit		(118)		398		1,149		—		—		1,429

Advanced projects		(195)		—		(2,452)		—		—		(2,647)
Exploration		(613)		(2,420)		—		—		(1,117)		(4,150)
Loss from investment in Minera Santa Cruz S.A.		—		—		—		(2,310)		—		(2,310)
Segment (loss)	$	(926)	$	(2,022)	$	(1,303)	$	(2,310)	$	(1,117)	$	(7,678)
General and Administrative and other												(2,340)
Loss before income and mining taxes											$	(10,018)

Capital expenditures	$	13,008	$	3,343	$	—	$	—	$	—	$	16,351

Geographic information

Geographic information includes the long-lived assets balance and revenues presented for the Company’s operating segments, as follows:


	Long-lived Assets				Revenue ⁽¹⁾
	March 31,		December 31,		Three months ended March 31,
	2020		2019		2020		2019
USA	$	50,599	$	135,854	$	14,317	$	842
Canada		78,505		77,147		12,739		8,943
Mexico		21,457		23,551		4,344		5,798
Argentina ⁽²⁾		298,997		302,598		—		—
Total consolidated ⁽³⁾	$	449,558	$	539,150	$	31,400	$	15,583

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

(2)	Includes Investment in MSC of $107.5 million as of March 31, 2020 (December 31, 2019 – $110.2 million).

(3)	Total excludes $0.9 million related to the Company's office lease asset as the business activities related to corporate are not considered to be a part of the operating segments.