OPERATING SEGMENT REPORTING

12 Months Ended

Dec. 31, 2021

OPERATING SEGMENT REPORTING

OPERATING SEGMENT REPORTING

NOTE 3 OPERATING SEGMENT REPORTING

McEwen Mining is a mining and minerals production and exploration company focused on precious metals in the United States, Canada, Mexico, and Argentina. 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 within a geographic region 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 or 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 pickup. Gold and silver sales and production costs applicable to sales for the reportable segments are reported net of intercompany transactions.

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 for the periods presented is summarized in the tables below:

Year ended December 31, 2021	USA			Canada	Mexico		MSC		Los Azules		Total
Revenue from gold and silver sales	$	79,205	$	50,704	$	6,632	$	—	$	—	$	136,541
Production costs applicable to sales		(73,991)		(32,961)		(12,272)		—		—		(119,224)
Depreciation and depletion		(8,502)		(15,296)		—		—		—		(23,798)
Gross profit (loss)		(3,288)		2,447		(5,640)		—		—		(6,481)
Advanced projects		(440)		(2,635)		(4,345)		—	$	(5,019)		(12,439)
Exploration		(5,875)		(15,017)		(14)		—		(1,698)		(22,604)
Impairment of mineral property interests and plant and equipment (Note 8)		—		—		—		—		—		—
Loss from investment in Minera Santa Cruz S.A.		—		—		—		(7,533)		—		(7,533)
Other operating		—		—		—		—		—		—
Segment loss	$	(9,603)	$	(15,205)	$	(9,999)	$	(7,533)	$	(6,717)	$	(49,056)
General and Administrative and other		—		—		—		—		—		(15,143)
Loss before income and mining taxes		—		—		—		—		—	$	(64,199)
Capital expenditures	$	2,416	$	33,617	$	—	$	—	$	—	$	36,033

Year ended December 31, 2020	USA		Canada		Mexico		MSC		Los Azules		Total
Revenue from gold and silver sales	$	48,884	$	41,452	$	14,453	$	—	$	—	$	104,789
Production costs applicable to sales		(58,465)		(34,639)		(15,723)		—		—		(108,827)
Depreciation and depletion		(11,785)		(10,883)		(242)		—		—		(22,910)
Gross (loss) profit		(21,366)		(4,070)		(1,512)		—		—		(26,948)
Advanced projects		(1,071)		(6,088)		(4,522)		—		—		(11,681)
Exploration		(6,777)		(6,450)		(513)		—		(2,121)		(15,861)
Impairment of mineral property interests and plant and equipment (Note 8)		(83,805)		—		—		—		—		(83,805)
Loss from investment in Minera Santa Cruz S.A.		—		—		—		(1,517)		—		(1,517)
Other operating		(1,390)		(578)		—		—		—		(1,968)
Segment loss	$	(114,409)	$	(17,186)	$	(6,547)	$	(1,517)	$	(2,121)	$	(141,780)
General and Administrative and other		—		—		—		—		—		(11,935)
Loss before income and mining taxes		—		—		—		—		—	$	(153,715)
Capital expenditures	$	4,821	$	9,104	$	—	$	—	$	—	$	13,925

Year ended December 31, 2019	USA		Canada		Mexico		MSC		Los Azules		Total
Revenue from gold and silver sales	$	43,847	$	50,058	$	23,114	$	—	$	—	$	117,019
Production costs applicable to sales		(33,614)		(31,121)		(18,545)		—		—		(83,280)
Depreciation and depletion		(10,934)		(13,271)		(548)		—		—		(24,753)
Gross profit		(701)		5,666		4,021		—		—		8,986
Advanced projects		(649)		(1,636)		(7,235)		—		—		(9,520)
Exploration		(8,554)		(25,779)		—		—		(3,411)		(37,744)
Loss from investment in Minera Santa Cruz S.A.		—		—		—		(8,754)		—		(8,754)
Segment (loss) income	$	(9,904)	$	(21,749)	$	(3,214)	$	(8,754)	$	(3,411)	$	(47,032)
General and Administrative and other												(16,559)
Loss before income and mining taxes											$	(63,591)
Capital expenditures	$	18,806	$	11,464	$	—	$	—	$	—	$	30,270

Geographic information

Geographic information includes the following long-lived assets balances and revenues presented for the Company’s operating segments:

	Long-lived Assets				Revenue (1)
	December 31,		December 31,		Year ended December 31,
	2021		2020		2021		2020		2019
USA	$	37,878	$	46,801	$	79,205	$	48,884	$	43,847
Canada		93,294		78,986		50,704		41,452		50,058
Mexico		26,561		20,021		6,632		14,453		23,114
Argentina (2)		282,583		299,816		—		—		—
Total consolidated	$	440,316	$	445,624	$	136,541	$	104,789	$	117,019

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

(2) Includes Investment in MSC of $90.9 million as of December 31, 2021 (December 31, 2020 - $108.3 million).

(3) Total excludes $0.4 million (December 31, 2020 - $0.6 million) related to the Company’s ROU office lease asset as the business activities related to corporate are not considered to be a part of the operating segments.

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 2021, 2020 and 2019, sales to Bank of Nova Scotia and Asahi Refining Inc. were $nil and $134.7 million (98.8%), $33.0 million (32%) and $67.0 million (64%), and $103.6 million (89%) and $4.9 million (4%), respectively, of the total gold and silver sales.