Share-Based Compensation

12 Months Ended

Dec. 31, 2011

Share-Based Compensation [Abstract]

Share-Based Compensation

12. Share-Based Compensation

     We grant shares of nonvested stock of common stock and options to purchase common stock to employees, members of the board of directors and consultants under our shareholder-approved 2005 Stock Incentive Plan (the "2005 Plan"). Options granted under the 2005 Plan must carry an exercise price equal to or above the market value of the stock at the grant date, and a term of no greater than ten years. The 2005 Plan provides that, unless otherwise agreed, shares of nonvested stock granted under the 2005 Plan must be forfeited upon termination of service. We issue new shares when options are exercised or shares are granted. Our option grants under the 2005 Plan to date have generally utilized these terms: exercise price above or equal to average market price on the date of the grant; vesting periods up to four years from date of grant; term of up to ten years; and forfeiture of unexercised vested options after 60-90 days after termination of employment with the Company. Our shares of nonvested stock granted under the 2005 Plan to date have utilized vesting periods of up to three years.

     Grants prior to the adoption of the 2005 Plan and inducement grants associated with hiring of new employees and appointment of new directors are issued outside of the 2005 Plan. These grants of options included varying terms, some differing from the above.

     During the first half of 2011, we awarded options to purchase up to 1,785,000 shares of our common stock and 1,669,800 nonvested shares under the 2005 Plan to employees and members of the board of directors; and options to purchase up to 250,000 shares of our common stock and 190,000 nonvested shares outside the 2005 Plan to a new employee and a consultant.

     At the annual meeting of stockholders of the Company held on October 11, 2011, the Company's stockholders approved an amendment to the 2005 Plan which increased the number of shares of common stock issuable from 12,500,000 shares to 22,000,000 shares and increased the number of shares of common stock that may be granted as restricted stock (nonvested shares), restricted stock units or any other stock-based awards from 3,900,000 to 8,000,000 shares. As of December 31, 2011, we had 16,509,199 shares available for awards under the 2005 Plan, of which 4,206,699 shares could be issued as nonvested shares or other full-valued stock-based awards.

     The following table summarizes share based compensation costs recognized under ASC 718 for 2011, 2010 and 2009 (in thousands):

		2011		2010		2009
General and administrative	$	691	$	532	$	930
Exploration costs		171		127		235
Tax benefit		-		-		-
Total share-based compensation costs, net of tax	$	862	$	659	$	1,165

     We utilized certain assumptions in determining the fair value of options using the Black-Scholes option pricing model. Expected volatility is based upon historical volatility. The risk-free interest rate is based on observed U.S. Treasury rates at date of grant, appropriate for the expected lives of the options.

     No stock options were granted during 2010. Compensation expenses for the stock option grants determined under ASC 718 for 2011 and 2009 were calculated using the Black-Scholes option pricing model with the following assumptions:

		2011			2009
Dividend yield		0	%		0	%
Expected volatility		92	%		85 - 89	%
Risk-free interest rate		2.3	%		1.5 - 1.7	%
Expected life of options (years)		6			5.5 - 6
Weighted average fair value
per share at grant date	$	0.44		$	0.17

     The total intrinsic value of options exercised during 2010 was $12,000. Approximately $31,000 of cash was received from the exercise of options during 2010. No options were exercised during 2011 or 2009.

     The aggregate intrinsic value for options outstanding at December 31, 2011 is zero. The weighted average remaining life for the outstanding options is 5.21 years. A summary of options outstanding as of December 31, 2011 is as follows:

	Options Outstanding				Options Exercisable
		Weighted
		Average		Weighted			Weighted
		Remaining		Average			Average
Range of	Number	Contractual		Exercise	Number		Exercise
Exercise Prices	Outstanding	Life (Years)		Price	Exercisable		Price
$0.28 to $0.45	1,259,333	7.21	$	0.28	1,375,667	$	0.37
$0.46 to $0.70	4,786,500	6.63		0.63	2,389,833		0.67
$0.71 to $0.99	683,000	5.37		0.81	683,000		0.81
$1.00 to $1.99	850,000	3.33		1.21	850,000		1.21
$2.00 to $2.37	2,945,000	2.57		2.01	2,945,000		2.01
	10,523,833	5.21		1.04	8,243,500		1.17

The following table summarizes activity in shares of nonvested stock for 2011:

				Weighted
				Average
	Shares of			Grant Date
	Nonvested Stock			Fair Value
Outstanding at beginning of year	779,083		$	0.37
Granted	1,859,800			0.58
Vested	(380,686	)		0.41
Forfeited	(106,666	)		0.53
Withheld for Taxes	(49,232	)		0.56
Outstanding at end of year	2,102,299			0.54

     The fair value of restricted stock that vested during the years ended December 31, 2011, 2010 and 2009 was approximately $169,000, $379,000, and $82,000, respectively, based on the closing prices on the dates of vesting. At December 31, 2011, we had approximately $1.3 million in total unrecognized compensation cost related to share-based compensation, of which $0.7 million was related to shares of nonvested stock grants and was recorded in unearned compensation on our consolidated balance sheets. This cost is expected to be recognized over a weighted average period of 2.0 years at December 31, 2011.