NOTE 11 STOCK BASED COMPENSATION

Stock Options

The Company has an equity incentive plan, under which equity awards may be granted to employees, consultants, advisors, and directors (the “Plan”). The Plan is administered by the Board of Directors, which determines the terms pursuant to which any award is granted. The Board of Directors may delegate to certain officers the authority to grant awards to certain employees (other than such officers), consultants and advisors. The number of shares of common stock reserved for issuance thereunder is 17.5 million shares, with no more than 1 million shares subject to grants of options to an individual in a calendar year. The plan also provides 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.

The following table summarizes information about stock options under the Plan outstanding at December 31, 2015:


				Weighted
		Weighted		Average
		Average		Remaining
	Number of	Exercise		Contractual	Intrinsic
	Shares	Price		Life (Years)	Value
	(in thousands, except per share and year data)
Balance at December 31, 2012	3,561		3.47	6.6		—
Granted	1,728		2.26	—		—
Exercised	(48)		1.97	—	$	47
Forfeited	(400)		4.57	—		—
Balance at December 31, 2013	4,841		2.96	5.2		—
Granted	1,731		2.90	—		—
Exercised	(1,499)		1.29	—	$	438
Forfeited	(422)		4.39	—		—
Balance at December 31, 2014	4,651		3.35	4.4		—
Granted	2,733		1.03	—		—
Forfeited	(272)		2.82	—		—
Expired	(158)		2.12	—		—
Balance at December 31, 2015	6,954		2.49	4.1	$	98
Exercisable at December 31, 2015	2,772		3.80	3.7	$	8

Stock options have been granted to key employees, directors and consultants 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 the year ended December 31, 2015, the Company granted stock options to certain employees and directors for an aggregate of 2.7 million shares of common stock (2014 - 1.7 million, 2013 - 1.7 million) at a weighted average exercise price of $1.03 per share (2014 – $2.90, 2013 - $2.26). 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 5 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:



	2015							2014		2013
Risk-free interest rate		1.10	%	to	1.79	%		1.01	%		0.5% to 0.86%
Dividend yield		0	%	to	1.15	%		0	%		0	%
Volatility factor of the expected market price of common stock		73	%	to	74	%		70	%		66% to 69%
Weighted-average expected life of option		3.5 years						3.5 years			3.5 years
Weighted-average grant date fair value	$	0.49					$	1.45		$	1.02

During the year ended December 31, 2015, the Company recorded stock option expense of $1.3 million (2014 -$1.3 million, 2013 - $1.4 million).

At December 31, 2015, there was $1.6 million (2014 - $1.8 million, 2013 - $1.1 million) of unrecognized compensation expense related to 4.2 million (2014 - 2.7 million, 2013 - 2.0 million) unvested stock options outstanding. This cost is expected to be recognized over a weighted-average period of approximately 1.6 years (2014 - 1.6 years, 2013 – 1.4 years).

The following tables summarize information about stock options outstanding and exercisable at December 31, 2015 for the Company’s Plan and the replacement options from the acquisition of Nevada Pacific Gold Ltd. in 2007. The replacement options from the acquisition of Minera Andes in 2012 were fully expired as of December 31, 2015. C$ refers to Canadian dollars.

McEwen Mining Inc.


					Options Outstanding				Options Exercisable
								Weighted				Weighted
						Weighted		Average		Weighted		Average
						Average		Remaining		Average		Remaining
					Number	Exercise		Contractual	Number	Exercise		Contractual
Range of Exercise Price					Outstanding	Price		Life (Years)	Exercisable	Price		Life (Years)
$	0.91	-	$	1.04	2,298,667	$	1.02	4.9	55,667	$	0.91	3.0
$	1.05	-	$	2.38	1,745,000	$	1.92	3.1	850,669	$	2.24	2.4
$	2.39	-	$	2.71	306,800	$	2.51	4.1	306,800	$	2.51	4.1
$	2.72	-	$	3.09	1,567,500	$	2.90	3.6	522,498	$	2.90	3.6
$	3.10	-	$	8.30	1,036,000	$	6.09	4.7	1,036,000	$	6.09	4.7
	Total				6,953,967	$	2.49	4.1	2,771,634	$	3.80	3.7

Nevada Pacific Gold Ltd.


					Options Outstanding				Options Exercisable
								Weighted				Weighted
						Weighted		Average		Weighted		Average
						Average		Remaining		Average		Remaining
					Number	Exercise		Contractual	Number	Exercise		Contractual
Range of Exercise Price					Outstanding	Price		Life (Years)	Exercisable	Price		Life (Years)
C$	4.30	-	C$	4.52	40,500	C$	4.30	0.2	40,500	C$	4.30	0.2
C$	4.53	-	C$	4.83	110,343	C$	4.74	0.9	110,343	C$	4.74	0.9
C$	4.84	-	C$	5.81	2,300	C$	4.91	1.1	2,300	C$	4.91	1.1
C$	5.82	-	C$	6.70	46,000	C$	6.70	0.4	46,000	C$	6.70	0.4
Total					199,143	C$	5.11	0.7	199,143	C$	5.11	0.7