That's a tough one...but Ill go with damage. Although the time period of the coin a lot of lamination issues were or are found. The nature of the area not a clean cut just screams to me damage.
Interesting. But when I look at the area above the issue you can see how the upraised rim was pushed inward. I say damage.
I wonder what type of damage would make the missing piece area look like the metal was torn from the coin. We will never know. Just an interesting coin even if it is PMD.
Judging from the wear, it would appear that damage was done a long time ago, so interesting that it remained in circulation. Thanks for the post.