CAPITAL STOCK AND ADDITIONAL PAID-IN-CAPITAL

3 Months Ended

Oct. 31, 2019

Capital Stock And Additional Paid-in-capital

CAPITAL STOCK AND ADDITIONAL PAID-IN-CAPITAL

10. CAPITAL STOCK AND ADDITIONAL PAID-IN-CAPITAL

Private Placements

On August 30, 2018, the Company completed a first tranche of a non-brokered private placement, issuing an aggregate of 288,125 units at a price of $0.60 (C$0.80) per unit for gross proceeds of $177,580 (C$230,500). Each unit consists of one share of common stock and one share purchase warrant exercisable into one share of common stock at a price of $0.90 (C$1.20) for a period of three years from the date of issuance until August 30, 2021.

On September 17, 2018, the Company completed a second tranche of a non-brokered private placement, issuing an aggregate of 200,313 units at a price of $0.60 (C$0.80) per unit for gross proceeds of $123,089 (C$160,250). Each unit consists of one share of common stock and one share purchase warrant exercisable into one share of common stock at a price of $0.90 (C$1.20) for a period of three years from the date of issuance until September 17, 2021.

On October 16, 2018, the Company completed a strategic initial investment in a financing of $1,352,605 (C$1,750,000) by issuing 1,750,000 units to Meridian Jerritt Canyon Corp. (“Meridian”), a wholly owned subsidiary of Yamana Gold Inc. (“Yamana”). Each unit consists of one share of common stock at a price of $0.80 (C$1.00) per unit and one-half of one share purchase warrant at a price of $1.00 (C$1.30) exercisable until October 16, 2020. As a result of the investment, the investor owned approximately 12.6% of the Company’s issued and outstanding shares on a non-diluted basis. In conjunction with the investment, the Company issued 87,500 share purchase warrants valued at $37,630 (discount rate – 1.65%, volatility – 139.09%, expected life – 2 years, dividend yield – 0%) as a finder’s fee to Southern Arc Minerals Inc. (“Southern Arc”), which will be exercisable into one share of common stock at a price of $1.00 (C$1.30) until October 16, 2020.

On November 5, 2018, the Company raised $572,694 (C$750,000) through the sale of 750,000 units at $0.80 (C$1.00) per unit where each unit consists of one share of common stock and one half of one share purchase warrant exercisable into one share of common stock at a price of $1.00 (C$1.30) until November 5, 2020. All 750,000 units issued in the final tranche were acquired by Southern Arc.

On March 1, 2019, the Company completed a non-brokered private placement for a total of $1,378,184 (C$1,827,472) through the sale of 1,827,472 units at a price of $0.80 (C$1.00) per unit where each unit consists of one share of common stock and one-half of one share purchase warrant. Each whole warrant is exercisable into one share of common stock at a price of $1.00 (C$1.30) until March 1, 2021. Out of the 1,827,472 units issued as part of this private placement, 1,004,972 units were issued to Meridian to settle a convertible debt balance of $757,897 (C$1,004,972). In connection with the private placement, the Company incurred finders’ fees and share issuance costs of $80,919 (C$107,299), and issued a total of 19,950 finders’ warrants valued at $8,371 (C$11,100) (discount rate – 1.65%, volatility – 139.09%, expected life – 2 years, dividend yield – 0%), exercisable into one share of common stock at a price of $1.00 (C$1.30) for a period of two years from the date of issuance.

On July 3, 2019, the Company completed the first tranche of a non-brokered private placement. The Company raised a total of $552,000 (C$725,769) through the sale of 1,036,813 units at a price of $0.50 (C$0.70) per unit where each unit consists of one share of common stock and one-half of one share purchase warrant. Each whole warrant entitles the holder to acquire one additional share at an exercise price of $0.80 (C$1.00) until July 3, 2022.

On August 19, 2019, the Company completed the second tranche of a non-brokered private placement for a total of $2,412,281 (C$3,207,850) through the sale of 4,582,644 units at a price of $0.50 (C$0.70) per unit where each unit consists of one share of common stock and one-half of one share purchase warrant. Each whole warrant is exercisable into one share of common stock at a price of $0.80 (C$1.00) until August 19, 2022. The Company has paid finders’ fees and associated legal fees of $8,710 and issued a total of 11,196 finder’s warrants entitling the holder to acquire one share at a price of $0.80 (C$1.00) until August 19, 2022.

Stock Options

On November 30, 2018, the Company granted 290,000 stock options with a fair value of $131,300 to employees and directors of the Company. The options are exercisable at $0.80 (C$1.00) per share for a period of five years and expire on November 29, 2023.

On August 21, 2019, the Company granted 751,284 stock options to employees and directors of the Company pursuant to the terms of the Company’s Stock Option Plan. The options are exercisable at $0.50 (C$0.70) per share for a period of five years and expire on August 21, 2024. During the period ended October 31, 2019, the Company recorded $331,966 in share-based compensation (October 31, 2018 - $Nil)

The following incentive stock options were outstanding and exercisable at October 31, 2019:

Number of Options		Exercise Price ($C)		Expiry Date
	110,000	$	1.50	March 22, 2021
	58,660		2.00	August 8, 2021
	214,254		2.40	December 27, 2021
	90,000		2.80	April 20, 2020
	613,100		1.20	April 19, 2023
	280,000		1.00	November 29, 2023
	751,284		0.70	August 21, 2024
	2,117,298	$	1.22

Stock option transactions are summarized as follows:

	Number of Options			Weighted Average Exercise Price ($C)		Aggregate Intrinsic Value
Balance outstanding and exercisable, July 31, 2018		1,161,014		$	1.70	Nil
Options granted		290,000			1.00	Nil
Balance outstanding and exercisable, July 31, 2019		1,451,014			1.50	Nil
Options granted		751,284			0.70	Nil
Options expired		(85,000	)		2.06	Nil
Balance outstanding and exercisable, October 31, 2019		2,117,298		$	1.22	Nil

The following weighted average assumptions were used for the Black-Scholes pricing model valuation of stock options issued during the period ended October 31, 2019 and year ended July 31, 2019:

	October 31, 2019	July 31, 2019
Risk-free interest rate	1.52%	2.12%
Expected life of warrants	5.0 years	5.0 years
Expected annualized volatility	136.38%	136.38%
Dividend	Nil	Nil
Forfeiture rate	0%	0%

Warrants

The following warrants were outstanding at October 31, 2019:

Number of Warrants		Exercise Price ($C)		Expiry Date
	678,886	$	2.50	December 27, 2019
	13,333		2.50	January 3, 2020
	2,100		1.50	April 18, 2020
	3,516,100		1.50	April 18, 2021
	288,125		1.20	August 30, 2021
	200,313		1.20	September 17, 2021
	962,500		1.30	October 16, 2020
	375,000		1.30	November 5, 2020
	933,686		1.30	March 1, 2021
	518,407		1.00	July 3, 2022
	2,302,518		1.00	August 19, 2022
	1,150,000		1.00	September 3, 2022
	10,940,968	$	1.30

During the period ended October 31, 2019, a total of 708,074 warrants with an exercise price of C$2.50 expired unexercised.

Warrant transactions are summarized as follows:

	Number of Warrants			Weighted Average Exercise Price ($C)
Balance, July 31, 2018		8,394,882		$	2.70
Warrants issued		3,278,030			1.2
Warrants expired		(3,476,388	)		4.00
Balance, July 31, 2019		8,196,524		$	1.60
Warrants issued		3,452,518			1.00
Warrants expired		(708,074	)		(2.50	)
Balance, October 31, 2019		10,940,968		$	1.30

Share-Based Payments

The Company has a stock option plan under which it is authorized to grant options to executive officers and directors, employees and consultants enabling them to acquire up to 10% of the issued and outstanding common stock of the Company. Under the plan the exercise price of each option equals the market price of the Company’s stock, less any applicable discount, as calculated on the date of grant. The options can be granted for a maximum term of 5 years with vesting determined by the board of directors.