Stock-Based Compensation

Long-Term Incentive Plan

On May 6, 2010, TCM's shareholders approved the 2010 Long-Term Incentive Plan ("LTIP"). The LTIP allows TCM to grant stock options, share appreciation rights, restricted shares, restricted share units ("RSUs"), performance share units ("PSUs") or shares granted as bonus compensation. As of September 30, 2013, TCM has granted stock options, PSUs and RSUs under the LTIP, as discussed below.

TCM does not realize a tax benefit for stock-based awards granted to Canadian employees under the current Canadian tax law.

i) Stock Options

The expiration date and vesting provisions of stock options granted are established at the time an award is made. Stock options generally vest over three years and are exercisable over a period of time not to exceed 10 years from the grant date but generally expire five years from the grant date. When an option is exercised, TCM issues the requisite shares from authorized but unissued common stock. The exercise price of options granted prior to March 1, 2011 is equal to the greater of: (i) the volume weighted-average trading price of the underlying shares on the Toronto Stock Exchange over the five consecutive trading days immediately before the grant date and (ii) if the grant date occurs in a trading black-out period, the weighted-average trading price over the five consecutive trading days immediately after the black-out period has been lifted. The exercise price of options granted after March 1, 2011 is equal to the volume weighted-average trading price of the underlying shares over the five consecutive trading days immediately before the grant date.

The following table summarizes stock option activity during the nine months ended September 30, 2013:



(options in thousands)	Options		Weighted-Average Exercise Price
	(000's)		(a)
Stock options outstanding at January 1, 2013	2,459		$	11.50
Granted	366		3.43
Exercised	—		—
Canceled/expired/forfeited	(564	)	12.99
Stock options outstanding at September 30, 2013	2,261		$	9.83


(a)	The weighted-average exercise price of options outstanding is shown in US dollars as the majority of the options granted starting in 2011 have an exercise price denominated in US dollars. Options with a Canadian dollar strike price have been converted to US dollars for disclosure purposes using the exchange rates on the respective date of grant.

For the three and nine months ended September 30, 2013, TCM recorded compensation expense related to stock options of $0.1 million and $0.5 million, respectively.

For the three and nine months ended September 30, 2012, TCM recorded compensation expense related to stock options of $0.2 million and $0.8 million, respectively.

ii) Performance Share Units

The following table summarizes the PSU activity during the nine months ended September 30, 2013:



(units in thousands)	Units		Weighted-Average Fair Value
	(000's)
Outstanding at January 1, 2013	845		$	11.95
PSUs granted	933		4.21
Canceled/expired/forfeited	(242	)	11.89
Outstanding at September 30, 2013	1,536		$	7.26

The vesting of the PSUs granted prior to January 1, 2012 is contingent upon the performance of TCM's share price relative to the established award price. At each anniversary date during the vesting period, if the per share closing price of TCM's common stock on such date is at or higher than the award price, then the awards will vest one-third on each anniversary date, and the requisite shares will be issued from authorized but unissued common stock. If the closing price is less than the award price, and therefore, the market condition is not achieved, then those PSUs do not vest and are carried forward to the following anniversary date. PSUs not vested at the end of the three-year vesting period will expire.

The vesting of the PSUs granted during 2013 and 2012 is contingent upon two performance metrics: 1) TCM's Total Shareholder Return (TSR) relative to the Russell 2000 Index during the three-year performance period and 2) the proven and probable mine reserves replaced by TCM during the three-year performance period. The PSUs cliff vest three years from the date of issuance upon achievement of the above metrics.

All PSUs granted are accounted for at fair value using a Monte Carlo simulation valuation model on the date of grant. The Monte Carlo model is based on random projections of stock price paths. Expected volatility is calculated using a weighted average of historical daily volatilities and implied volatility and represents the extent to which TCM's stock price performance is expected to fluctuate during each of the three calendar-year periods of the award's anticipated term.

For the three and nine months ended September 30, 2013, TCM recorded compensation expense related to the PSUs of $0.7 million and $2.0 million, respectively.

For the three and nine months ended September 30, 2012, TCM recorded compensation expense related to the PSUs of $0.7 million and $2.0 million, respectively.

iii) Restricted Stock Units

The following table summarizes RSU activity during the nine months ended September 30, 2013:



(units in thousands)	Units		Weighted-Average Fair Value
	(000's)
Outstanding at January 1, 2013	534		$	9.30
RSUs granted	965		3.31
RSUs vested and common shares issued	(259	)	9.35
Canceled/expired/forfeited	(60	)	6.62
Outstanding at September 30, 2013	1,180		$	4.52

TCM accounts for RSUs at fair value, which is based on the market value of TCM's common shares on the day of grant and recognized over the vesting period of three years. Upon vesting, TCM will issue the requisite shares from authorized but unissued common stock.

For the three and nine months ended September 30, 2013, TCM recorded compensation expense related to the RSUs of $0.6 million and $1.9 million, respectively.

For the three and nine months ended September 30, 2012, TCM recorded compensation expense related to the RSUs of $0.7 million and $1.8 million, respectively.