NOTE 12 STOCK BASED COMPENSATION

Effective March 17, 1989, the Company's Board of Directors adopted the U.S. Gold Corporation Non-Qualified Stock Option and Stock Grant Plan, or the "Plan." On October 3, 2005, the Board of Directors amended the Plan to provide for an increase in the number of authorized shares from 3.5 million to 5 million. The stockholders approved this amendment on November 14, 2005.

On October 19, 2006, the Board of Directors approved the amendment and restatement to the Plan to:

(1)

provide for the grant of incentive options under Section 422 of the Internal Revenue Code (the "Code"), which provide potential tax benefits to the recipients compared to non-qualified options;

(2)

increase the number of shares of common stock reserved for issuance under the US Gold Plan by 4 million, for a total of 9 million shares;

(3)

specify that no more than 1 million shares may be subject to grants of options to an individual in a calendar year;

(4)

provide that awards under the US Gold Plan can be granted to employees, consultants, advisors, and directors as the Board of Directors or committee administering the plan determines in its discretion and to provide that the committee may delegate to certain officers the authority to grant awards to certain employees (other than such officers), consultants and advisors;

(5)

provide for the grant of restricted stock; and

(6)

change the name of the US Gold Plan to US Gold Equity Incentive Plan.

The amendment and restatement of the Plan was approved at the Company's annual meeting of shareholders on November 30, 2006.

Under the Plan, as amended by shareholders on November 30, 2006, a total of 9 million shares of common stock were reserved for issuance thereunder.

On January 19, 2012, at a special meeting of shareholders, the Company's shareholders approved amendments to the 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.

Stock options have been granted to key employees, directors and others under the Plan. Options to purchase shares under the Plan were granted at or above market value as of the date of the grant. During 2012, the Company granted stock options to one employee for aggregate of 0.3 million (2011—0.9 million, 2010—0.7 million) shares of common stock at an exercise price of $5.80 (2011—$7.10, 2010—$2.51) per share. All options vest equally over a three year period if the employee 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 fair value of the options granted under the Plan was estimated at the date of grant, using the Black-Scholes Option Valuation Model, with the following weighted-average assumptions:

	2012	2011	2010

Risk-free interest rate	0.97%	1.74% to 2.33%	2.18% to 2.97%
Dividend yield	n/a	n/a	n/a
Volatility factor of the expected market price of common stock	76%	90% to 100%	87% to 94%
Weighted-average expected life of option	6.0 years	6.6 years	6.4 years
Weighted-average grant date fair value	$3.80	$4.86	$2.84

During the year ended December 31, 2012, the Company recorded stock option expense of $3.4 million (2011—$2.7 million; 2010—$1.6 million). As previously discussed in Note 3, the Company issued replacement stock options in connection with the Minera Andes acquisition and stock option expense reported during the year ended December 31, 2012 included $1.3 million resulting from these stock options.

The following table summarizes information about stock options under the Plan outstanding at December 31, 2012:

	Shares			Weighted Average Exercise Price			Intrinsic Value

	(in thousands, except per share and year data)
Balance at December 31, 2009		2,632		$	2.13	8.1
Granted		726		$	2.51
Exercised		(109	)	$	1.86		$	225
Forfeited		(100	)	$	8.30
Expired		(63	)	$	2.71

Balance at December 31, 2010		3,086		$	2.02	7.6
Granted		947		$	7.10
Exercised		(163	)	$	2.52		$	864

Balance at December 31, 2011		3,870		$	3.24
Granted		300		$	5.80
Exercised		(445	)	$	1.84		$	596
Forfeited		(128	)	$	6.27
Expired		(36	)	$	7.96

Balance at December 31, 2012		3,561		$	3.47	6.6	$	4,887

Exercisable at December 31, 2012		2,503		$	2.47	6.0	$	4,619

At December 31, 2012, there was $1.1 million of unrecognized compensation expense related to 1.1 million unvested stock options outstanding. This cost is expected to be recognized over a weighted-average period of approximately 1.2 years.

The following tables summarize information about stock options outstanding and exercisable at December 31, 2012 for the Company's 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

Range of Exercise Price	Number Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Number Exercisable		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
$0.00 - $2.00		1,284,000	$	1.03		5.95		1,284,000	$	1.03		5.95
$2.01 - $4.00		1,027,133	$	2.57		5.80		823,800	$	2.59		5.47
$4.01 - $6.00		366,500	$	5.66		8.24		66,500	$	5.01		4.45
$6.01 - $8.31		883,000	$	7.17		7.93		328,331	$	7.29		7.48

Nevada Pacific Gold Ltd.

	Options Outstanding						Options Exercisable

Range of Exercise Price	Number Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Number Exercisable		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
C$0.00 - C$5.00		271,543	C$	4.54		3.26		271,543	C$	4.54		3.26
C$5.01 - C$6.70		123,050	C$	5.96		2.01		123,050	C$	5.96		2.01

Minera Andes

	Options Outstanding						Options Exercisable

Range of Exercise Price	Number Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Number Exercisable		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
C$0.00 - C$2.22		130,500	C$	1.63		1.18		130,500	C$	1.63		1.18
C$2.23 - C$3.02		495,150	C$	2.41		2.04		347,101	C$	2.46		1.90