Equity

9 Months Ended

Sep. 30, 2011

Equity

Equity

15.   Equity

Issuance of Common Stock Related to Merger

On September 2, 2011, per the terms of the Arrangement, the Company issued 16,004,111 shares of its common stock to the former shareholders of ECU.  The value of the shares was approximately $223.1 million based on the $13.94 closing price of the Company’s common stock on September 2, 2011.  See Note 3 for a discussion of the allocation of the purchase price of the transaction.

In addition, on September 2, 2011 the Company issued 113,208 shares of its common stock to one of the ECU officers in settlement of a change of control bonus required to be paid by ECU. The value of the shares was approximately $1.6 million based on the $13.94 closing price of the Company’s common stock on September 2, 2011.

Replacement Options and Warrants

Per the terms of the Arrangement, the Company has issued to former ECU stock option and warrant holders Replacement Options and Replacement Warrants to purchase shares of the Company’s common stock. The Company issued 653,000 Replacement Options with exercise prices ranging between $16.00 and $60.00 and expiration dates ranging between September 24, 2011 and October 22, 2014.  In addition the Company has issued 2,218,292 Replacement Warrants.  The Replacement Warrants include 386,363 warrants with an exercise price of $18.00 expiring on December 9, 2011, and 1,831,929 warrants with an exercise price of $19.00 expiring on February 20, 2014.  The Replacement Options had a fair value of approximately $1.1 million and the Replacement Warrants had a fair value of approximately $8.8 million as determined through the use of a Black-Scholes model.  The $9.9 million fair value of the Replacement Options and Replacement Warrants was included in the purchase price as discussed in Note 3.

Equity Incentive Plans

In April 2009, the Company adopted the 2009 Equity Incentive Plan (the “Equity Plan”) pursuant to which awards of the Company’s common stock may be made to officers, directors, employees, consultants and agents of the Company and its subsidiaries.  The Company recognizes stock-based compensation costs using a graded vesting attribution method whereby costs are recognized over the requisite service period for each separately vesting portion of the award.

The merger with ECU on September 2, 2011 (see Note 3) was determined to constitute a change in control pursuant to the terms of the equity plan which resulted in the vesting of all outstanding stock-based compensation grants on that date. The Company recognized stock compensation expense of approximately $1.3 million as a result of the accelerated vesting of the grants.

The following table summarizes the status of the Company’s restricted stock grants issued under the Equity Plan at September 30, 2011 and changes during the nine months then ended:

Restricted Stock Grants	Number of Shares		Weighted Average Grant Date Fair Value Per Share
Outstanding at December 31, 2010	461,650		$	13.45
Granted during the period	218,000		11.66
Restrictions lifted during the period	(454,916	)	13.52
Forfeited during the period	(6,734	)	9.08
Outstanding at September 30, 2011	218,000		$	11.66

The restricted stock shown as granted during the period in the table above consisted of 215,900 shares granted on September 15, 2011 following completion of the ECU transaction and 2,100 shares granted to a new employee.  One third of the stock granted will vest on each of the first, second and third anniversaries of the grant date, provided the officer or employee continues to serve the Company at that time.

In conjunction with the lifting of the restrictions during the period, certain officers and employees of the Company relinquished an aggregate of 106,056 shares in lieu of taxes.  The shares had an approximate aggregate value of $1.8 million and were recorded as treasury shares which were subsequently canceled.

For the three months and nine months ended September 30, 2011 the Company recognized approximately $2.9 million and $4.7 million, respectively, of compensation expense related to the restricted stock grants, including approximately $1.1 million for both periods related to the accelerated vesting discussed above.  The Company expects to recognize additional compensation expense related to these awards of approximately $1.2 million over the next 36 months.

The following table summarizes the status of the Company’s stock option grants issued under the Equity Plan at September 30, 2011 and changes during the nine months then ended:

Equity Plan Options	Number of Shares	Weighted Average Exercise Price Per Share
Outstanding at December 31, 2010	136,810	$	8.01
Granted during period	—	—
Forfeited or expired during period	—	—
Exercised during period	—	—
Outstanding at September 30, 2011	136,810	8.01
Exercisable at end of period	136,800	8.01
Granted and vested	136,800	8.01

For the three months and nine months ended September 30, 2011 the Company recognized approximately $0.1 million and $0.3 million, respectively of compensation expense related to the option grants, including approximately $0.1 million for both periods related to the accelerated vesting discussed above.  As a result of the accelerated vesting the awards have been fully expensed at September 30, 2011.

Also, pursuant to the Equity Plan, the Company’s board of directors adopted the Non-Employee Director’s Deferred Compensation and Equity Award Plan (the “Deferred Compensation Plan”).  Pursuant to the Deferred Compensation Plan the non-employee directors receive a portion of their compensation in the form of Restricted Stock Units (“RSUs”) issued under the Equity Plan. The RSUs vest on the first anniversary of the grant and each vested RSU entitles the director to receive one unrestricted share of common stock upon the termination of the director’s board service.

The following table summarizes the status of the RSU grants issued under the Deferred Compensation Plan at September 30, 2011 and changes during the nine months then ended:

Restricted Stock Units	Number of Underlying Shares	Weighted Average Grant Date Fair Value Per Share
Outstanding at December 31, 2010	46,555	$	9.62
Granted during the period	17,226	16.79
Restrictions lifted during the period	—	—
Forfeited during the period	—	—
Outstanding at September 30, 2011	63,781	$	11.57

For the three months and nine months ended September 30, 2011 the Company recognized approximately $0.2 million and $0.3 million, respectively of compensation expense related to the RSU grants, including approximately $0.1 million for both periods related to the accelerated vesting discussed above.  As a result of the accelerated vesting the awards have been fully expensed at September 30, 2011.

Exercise of warrants

As previously disclosed, during January 2010 the Company acquired Hochschild Mining Group’s (“Hochschild”) 35% interest in Minera El Quevar S.A. in exchange for 400,000 shares of its common stock and a Common Stock Purchase Warrant (the “Warrant’) to acquire 300,000 shares of its common stock exercisable for three years at an exercise price of $15.00 per share.  On April 13, 2011, Hochschild exercised the Warrant on a cashless exercise basis as permitted by the terms of the Warrant, which resulted in the issuance to Hochschild of 104,889 net shares of the Company’s common stock on April 15, 2011.