6. STOCK BASED COMPENSATION

Stock options

The Company adopted a stock option plan which was amended in June 2007, 2008 and 2009 (the "Company Option Plan"), under which 18,700,000 Company shares were reserved for issuance upon exercise of options granted under the Company Option Plan. The Company Option Plan is intended to provide a means whereby the Company and its subsidiaries can attract, motivate and retain key employees, consultants, and service providers who can contribute materially to the Company's growth and success, and to facilitate the acquisition of shares of the Company's common stock. The Company Option Plan provides for incentive stock options meeting the requirements of Section 422 of the Internal Revenue Code and nonqualified stock options that do not meet the requirements for incentive stock options. The Company Option Plan requires the option exercise price per share purchasable under the option to be equal to the greater of the closing price of the Company's common shares on the Toronto Stock Exchange the day before or date of grant for all nonqualified stock options and incentive stock options. The Company has historically issued new shares when share-based awards are exercised.

The following table and related information summarizes the Company's stock options and the stock option activity for the three years ended December 31, 2011, 2010 and 2009:


	Options Outstanding								Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (000's)
	Options Available for Grant			Number Outstanding			Weighted Average Exercise Price per Share*				Aggregate Intrinsic Value (000's)
Available and outstanding at December 31, 2008		4,913,082			13,786,918			0.76
Granted		(1,525,000	)		1,525,000			0.58
Exercised		130,600			(130,600	)		0.05
Forfeited		36,000			(36,000	)		1.31
Expired		72,000			(72,000	)		1.81

Available and outstanding at December 31, 2009		3,626,682			15,073,318			0.74
Granted		(1,725,000	)		1,725,000			0.84
Exercised		1,079,366			(1,079,366	)		0.07
Expired		14,000			(14,000	)		1.68

Available and outstanding at December 31, 2010		2,995,048			15,704,952			0.80
Granted		(1,720,000	)		1,720,000			0.70
Exercised		1,855,342			(1,855,342	)		0.07
Forfeited		1,200,000			(1,200,000	)		1.33
Expired		800,000			(800,000	)		1.30

Available and outstanding at December 31, 2011		5,130,390			13,569,610		$	0.81		5.73	$	256

Exercisable at December 31, 2011					11,970,110		$	0.82		5.32	$	256
Vested or expected to vest at December 31, 2011					13,055,904		$	0.81		5.60	$	256

*	Some of the options are granted with Canadian dollar exercise prices, and the weighted average prices reflect the U.S. dollar equivalent prices.

The following stock option grants were issued by the Company during the three years ended December 31, 2011, 2010 and 2009 respectively:

•

The Company granted 1,720,000 options under the Company Option Plan [2010—1,725,000, 2009—1,525,000]. The Company recorded compensation expense of $491 relating to vesting of the grants [2010—$784, 2009—$972]. The options vest 40% upon grant and 30% on each of the first and second anniversaries of the date of grant. As of December 31, 2011, there was $85 of total unrecognized compensation expense related to non-vested stock based compensation granted under the Company Option Plan which is expected to be recognized over a weighted average period of 0.9 years.

•

The weighted-average fair value per share of options granted under the Company's Options Plan during 2011 was $0.40 [2010—$0.47, 2009—$0.35]. The total intrinsic value of share options exercised was $348 [2010—$708, 2009—$56]. The total cash received from the exercise of stock options was $137 [2010—$77, 2009—$6].

The fair value of all stock options granted was estimated at the date of grant using a Black-Scholes option pricing model with the following assumptions for the years ended December 31:


	2011		2010		2009
Expected dividend		0.00%		0.00%		0.00%
Risk-free interest rate		1.9% - 2.6%		2.1% - 2.6%		0.9% - 2.8%
Expected volatility*		67.0% - 67.7%		68.6% - 69.7%		63.4% - 69.4%
Expected life (in years)		5.5		5.5		1.7 - 5.5

*	For the years ended December 31, 2011, 2010, and 2009 volatility was estimated based on combining the Company's historical volatility with the historical volatilities of certain other comparable exploration stage mining companies.

The company estimates expected forfeitures at the grant date and compensation expense is recorded only for those awards expected to vest. The estimate of expected forfeitures is reevaluated at the balance sheet date.

Option pricing models require the input of highly subjective assumptions, particularly as to the expected price volatility of the market value of the underlying stock. Changes in these assumptions can materially affect the fair value estimate and therefore it is management's view that the existing models do not necessarily provide a single reliable measure of the fair value of the Company's equity instruments.

Stock awards

The Company adopted the 2010 Company Stock Award Plan (the "Stock Award Plan") that was approved in June 2010. The Common Stock that may be issued pursuant to Stock Awards shall not exceed 2,000,000 shares of Common Stock. The Common Stock subject to the Stock Award Plan shall be authorized and unissued stock. Stock Awards may be granted to Employees, Directors, Officers and Consultants. Stock Awards may be granted as Restricted Stock Awards or Restricted Stock Units. The fair value of restricted stock is calculated by multiplying the number of restricted shares by the closing price of our common stock on grant date. During the year ended December 31, 2011, we granted 210,000 Restricted Stock Awards to certain members of the executive management team and the Board of Directors. The Restricted Stock Awards vest 40% on the grant date (January 21, 2011), 30% on the 1st anniversary of the grant date, and 30% on the 2nd anniversary of the grant date. For the year ended December 31, 2011, the Company recognized compensation expense of $120 related to the Restricted Stock Awards. Also during the year ended December 31, 2011, we issued 180,000 Restricted Stock Units to certain members of the Board of Directors. The Restricted Stock Units will vest on the first anniversary of the grant date. The shares will be issued to the recipient on the earlier of their termination date or on the third anniversary of the grant date. For the year ended December 31, 2011, the Company recognized compensation expense of $118 related to the Restricted Stock Units. We issued no restricted stock awards or units prior to 2011.

The following table summarizes our restricted stock grant activity for the year ended December 31, 2011:


	Restricted Stock Awards			Restricted Stock Units
Outstanding, beginning of period		—			—
Granted		210			180
Vested		(173	)		(170	)
Forfeited and expired		—			—

Outstanding, end of period		37			10

Outstanding and expected to vest as of December 31, 2011		37			10

As of December 31, 2011, total unrecognized compensation expense related to Restricted Stock Awards is $25. This expense is expected to be recognized over a weighted-average period of 0.96 years. As of December 31, 2011, total unrecognized compensation expense related to Restricted Stock Units is $7. This expense is expected to be recognized over a weighted-average period of 0.05 years. The aggregate intrinsic value of Restricted Stock Awards and Restricted Stock Units outstanding and expected to vest is $6 and $2, respectively, at December 31, 2011. The weighted-average grant date fair value for both Restricted Stock Awards and Restricted Stock Units was $0.69.