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STOCK-BASED COMPENSATION | 9 Months Ended
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Sep. 30, 2012
STOCK-BASED COMPENSATION |
STOCK-BASED COMPENSATION |
NOTE 10 STOCK-BASED COMPENSATION On January 19, 2012, at a special meeting of shareholders, the Company’s shareholders approved amendments to the Equity Incentive Plan to, among other things, increase the number of shares of common stock reserved for issuance thereunder from 9 million to 13.5 million shares. During the first nine months of 2012, the Company granted 0.3 million of stock options to the Company’s Chief Operating Officer, as part of his employment contract, at an exercise price of $5.80 per share. During the same period in 2011, the Company granted stock options to certain employees, directors and consultants for an aggregate of 0.9 million shares of common stock at an exercise price of $7.10 per share. The options vest equally over a three year period if the individual remains affiliated with the Company (subject to acceleration of vesting in certain events) and are exercisable for a period of 10 years from the date of issue. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model. During the three and nine months ended September 30, 2012, the Company recorded stock option expense of $0.7 million and $2.8 million, respectively. The stock option expense reported during the three and nine months ended September 30, 2012 also included $0.1 million and $1.1 million, respectively, resulting from stock options assumed by the Company in the acquisition of Minera Andes. During the three and nine months ended September 30, 2011, the Company recorded stock option expense of $0.7 million and $1.9 million, respectively. The principal assumptions used in applying the Black-Scholes option pricing model for the awards for the three and nine months ended September 30, 2012 and 2011 were as follows:
|  | Three Months Ended |  | Nine Months Ended |
|  | September 30, 2012 |  | September 30, 2011 |  | September 30, 2012 |  | September 30, 2011 |
Risk-free interest rate |  | — |  | — |  | 0.97% |  | 1.82% to 2.33% |
Dividend yield |  | — |  | — |  | n/a |  | n/a |
Volatility factor of the expected market price of common stock |  | — |  | — |  | 75% |  | 90% to 100% |
Weighted-average expected life of option |  | — |  | — |  | 6.0 years |  | 6.6 years |
Weighted-average grant date fair value |  | — |  | — |  | $3.80 |  | $4.97 |
The following tables summarize information about stock options outstanding and exercisable at September 30, 2012 for the Company’s Option Plan, the replacement options from the acquisition of Nevada Pacific Gold Ltd. in 2007, and the replacement options from the acquisition of Minera Andes in 2012. C$ refers to Canadian dollars. McEwen Mining
|  | Options Outstanding |  | Options Exercisable |
|  |  |  |  |  | Weighted |  |  |  |  |  | Weighted |
|  |  |  | Weighted |  | Average |  |  |  | Weighted |  | Average |
|  |  |  | Average |  | Remaining |  |  |  | Average |  | Remaining |
Range of |  | Number |  | Exercise |  | Contractual |  | Number |  | Exercise |  | Contractual |
Exercise Price |  | Outstanding |  | Price |  | Life (Years) |  | Exercisable |  | Price |  | Life (Years) |
$0.00-$2.00 |  | 1,339,000 |  | $ | 1.05 |  | 6.19 |  | 1,339,000 |  | $ | 1.05 |  | 6.19 |
$2.01-$4.00 |  | 1,030,800 |  | $ | 2.57 |  | 6.05 |  | 827,467 |  | $ | 2.59 |  | 5.73 |
$4.01-$6.00 |  | 366,500 |  | $ | 5.66 |  | 8.49 |  | 66,500 |  | $ | 5.01 |  | 4.70 |
$6.01-$8.31 |  | 886,333 |  | $ | 7.17 |  | 8.19 |  | 331,664 |  | $ | 7.28 |  | 7.74 |
Nevada Pacific Gold Ltd.
|  | Options Outstanding |  | Options Exercisable |
|  |  |  |  |  | Weighted |  |  |  |  |  | Weighted |
|  |  |  | Weighted |  | Average |  |  |  | Weighted |  | Average |
|  |  |  | Average |  | Remaining |  |  |  | Average |  | Remaining |
Range of |  | Number |  | Exercise |  | Contractual |  | Number |  | Exercise |  | Contractual |
Exercise Price |  | Outstanding |  | Price |  | Life (Years) |  | Exercisable |  | Price |  | Life (Years) |
C$0.00-C$5.00 |  | 271,543 |  | C$ | 4.54 |  | 3.51 |  | 271,543 |  | C$ | 4.54 |  | 3.51 |
C$5.01-C$6.70 |  | 123,050 |  | C$ | 5.96 |  | 2.26 |  | 123,050 |  | C$ | 5.96 |  | 2.26 |
Minera Andes
|  | Options Outstanding |  | Options Exercisable |
|  |  |  |  |  | Weighted |  |  |  |  |  | Weighted |
|  |  |  | Weighted |  | Average |  |  |  | Weighted |  | Average |
|  |  |  | Average |  | Remaining |  |  |  | Average |  | Remaining |
Range of |  | Number |  | Exercise |  | Contractual |  | Number |  | Exercise |  | Contractual |
Exercise Price |  | Outstanding |  | Price |  | Life (Years) |  | Exercisable |  | Price |  | Life (Years) |
C$0.00-C$2.22 |  | 220,500 |  | C$ | 1.67 |  | 1.33 |  | 220,500 |  | C$ | 1.67 |  | 1.33 |
C$2.23-C$3.02 |  | 525,150 |  | C$ | 2.40 |  | 2.31 |  | 377,101 |  | C$ | 2.45 |  | 2.19 |

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