SHAREHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2016

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY

NOTE 8   SHAREHOLDERS’ EQUITY

During the six months ended June 30, 2016, 3.6 million exchangeable shares were converted into common stock (June 30, 2015 – 1.4 million).  At June 30, 2016, outstanding exchangeable shares not exchanged and not owned by the Company or its subsidiaries totaled 20.6 million (June 30, 2015 – 27.1 million).

During the six months ended June 30, 2016, 811,334 shares of common stock were issued upon exercise of stock options under the Equity Incentive Plan, at a weighted average exercise price of $2.33 per share for proceeds of $1.9 million.  In comparison, there were no exercises of stock options during the same period of 2015.

On June 18, 2015, the Board of Directors declared an annual return of capital distribution of $0.01 per share of common stock, payable semi-annually.  The first semi-annual return of capital distribution payment of $0.005 was made on August 17, 2015 and the second payment of $0.005 was made on February 12, 2016, each for a total of $1.5 million. Return of capital distributions are paid to holders of the Company’s common stock and exchangeable shares. 

On October 1, 2015, the Board of Directors approved a share repurchase program authorizing the Company to purchase up to 15,000,000 shares of its common stock over a twelve month period, with an authorized maximum of $15.0 million to be spent on the repurchases. Under the program, purchases of common stock may be made from time-to-time in the open market, subject to compliance with applicable U.S. and Canadian laws. The timing and amounts of any purchase are based on market conditions and other factors including share price, regulatory requirements and capital availability.  Further, the repurchase program may be suspended, discontinued or modified at any time, at the discretion of the Board of Directors. During the six months ended June 30, 2016 the Company repurchased 557,991 shares of common stock (year-ended December 31, 2015 - 1,896,442) at a total cost of $0.6 million (December 31, 2015 - $1.8 million), all of which have been cancelled.

During the six months ended June 30, 2015, the Company issued 430,295 shares of common stock under an agreement with one of its mining contractors to settle parts of its accounts payable for services rendered. The fair value of the common stock at the time of issuance was $0.4 million. The agreement with this mining contractor expired and was renegotiated during 2015 and under the revised agreement, the Company can no longer make share payments and instead is required to pay in cash.

At the annual meeting held on May 31, 2016, the holders of exchangeable shares of McEwen Mining-Minera Andes Acquisition Corp., a wholly-owned subsidiary of the Company (“MAQ”), voted to amend its Articles of Incorporation to allow early redemption of all outstanding exchangeable shares for common stock of the Company.   On July 25, 2016, the Company announced that MAQ had established a redemption date of August 23, 2016 in respect of all of its outstanding exchangeable shares and that McEwen Mining (Alberta) ULC ("McEwen (Alberta)") elected to exercise its overriding redemption call right to acquire all of the outstanding exchangeable shares (other than exchangeable shares held by the Company and its subsidiaries) on the business day immediately prior to the redemption date, being August 22, 2016.  On August 22, 2016, it is anticipated that McEwen (Alberta) will acquire all of the exchangeable shares not yet redeemed for purchase consideration of one share of the Company’s common stock per exchangeable share. Following the redemption, it is expected that MAQ will apply to have the exchangeable shares delisted from the Toronto Stock Exchange (“TSX”). After August 22, 2016, former holders of exchangeable shares will not have any rights as holders thereof other than the right to receive shares of the Company’s common stock.