Equity Based Compensation

3 Months Ended

Jun. 30, 2013

Equity Based Compensation

Equity Based Compensation

Note 11 — Equity Based Compensation

Stock Options

Effective August 22, 2011, the Board and the stockholders approved both the 2011 Employee Equity Incentive Plan (“Employee Plan”) and 2011 Director and Consultant Equity Incentive Plan (“Director Plan”). Amendments to increase the allowable shares to be issued under both Plans were approved by stockholders of the Company on August 27, 2012. The amended Employee Plan authorizes the Board, or its designated committee, to issue up to an aggregate of 13,500,000 shares, of which 9,470,000 remained available for issuance at June 30, 2013. The amended Director Plan authorizes the Board, or its designated committee, to issue up to an aggregate of 8,200,000 shares, of which 3,725,000 remained available for issuance at June 30, 2013. Awards issued under the Plans may include stock options, stock appreciation rights, bonus stock and/or restricted stock. Awards may be settled in cash, stock or a combination thereof, at the discretion of the Board. New amendments to the Plans are currently being sought, which if approved at our Annual Meeting of Stockholders to be held on August 30, 2013, would increase the number of authorized shares available under the Plan to 96.7 million initially and thereafter be equal to 10% of the Company’s outstanding shares of capital stock from time to time.

Compensation expense for employees is recognized based on the estimated fair value of the awards on their grant date.  The fair value of options issued to non-employees is measured on the earlier of the date the performance is complete or the date the non-employee is committed to perform. In the event the non-employee measurement date occurs after an interim reporting date, the options are measured at their then-current fair value at each interim reporting date.  For employee and non-employee options, fair value is estimated using the Black-Scholes option pricing model. Compensation expense is recognized on a straight-line basis over each grant’s respective vesting period for employees and service period for non-employees. Key inputs and assumptions used in estimating the fair value include our stock price, the grant price, expected term, volatility and the risk-free rate. Other assumptions used in estimating the fair value of awards granted through June 30, 2013 included the following:

Expected Term	.11 to 9.76 years
Volatility*	113.4% to 181.5%	*
Risk-Free Rate	0.04% to 2.00	%
Dividend Yield	—

* The Company’s estimates of expected volatility are based on the historic volatility of the Company’s common stock as well as the historic volatility of the Company’s peers due to the limited availability of historical trading information on the Company itself.

A summary of stock option activity under the Plans as of June 30, 2013 and changes during the three months then ended is presented below.

Stock Options	Shares (000)	Weighted- Average Exercise Price	Aggregate Intrinsic Value ($000)	Weighted- Average Remaining Term (Years)
Outstanding at March 31, 2013	9,608	3.20	—	9.20
Granted	100	0.30	—	.11
Exercised	—	—	—	—
Forfeited or expired	1,203	3.01	—	—
Outstanding at June 30, 2013	8,505	3.19	—	8.90
Vested at June 30, 2013	6,573	3.70	—	8.70

The weighted average grant date fair value of the stock options granted for the three months ended June 30, 2013 and 2012  $0.30 and was nil, respectively.

A summary of the status of the non-vested stock options as of June 30, 2013, and changes during the three months ended June 30, 2013 is presented below.

Non-vested Stock Options	Shares (000)		Weighted Average Grant Date Fair Value
Non-vested at March 31, 2013	2,994		$	2.06
Granted	100		0.01
Vested	(162	)	0.24
Forfeited	(1,000	)	2.57
Non-vested at June 30, 2013	1,932		$	1.76

As of June 30, 2013, there was $0.7 million of total unrecognized compensation expense related to non-vested share based compensation arrangements granted under the Plans. That cost is expected to be recognized over a weighted average period of less than one year. The total expense for the fair value of vested grants during the three months ended June 30, 2013 and 2012 was $1.0 million and $0.4 million, respectively.  For the three months ended June 30, 2013 and June 30, 3012, $0.4 million and nil of stock compensation was capitalized and included in mineral properties as of June 30, 2013.  This amount represented the estimated portion attributable to development activities.

Warrants Issued for Services

The Company has issued 4,926,808 warrants to purchase shares of common stock to non-employees in exchange for services, with exercise prices ranging from $0.22 to $5.02.  For these awards, fair value is estimated using the binomial-lattice-based valuation model.  Expense is recognized on a straight-line basis over each grant’s respective service period. Key inputs and assumptions used in estimating the fair value include our stock price, the grant price, expected term, volatility and the risk-free rate. Other assumptions used in estimating the fair value of awards granted through June 30, 2013 included the following:

Expected Term	0.6 to 4.9 years
Volatility*	141.2% to 162.3%	*
Risk-Free Rate	0.11% to 1.38%
Dividend Yield	—

*The Company’s estimates of expected volatility are based on the historic volatility of the Company’s common stock as well as the historic volatility of the Company’s peers due to the limited availability of historical trading information on the Company itself.

The expense recognized within G&A related to these awards amounts to $3.3 million and nil for the three months ended June 30, 2013 and June 30, 2012, respectively.  For the three months and cumulative period ended June 30, 2013, $0.4 million associated with warrants issued for services was capitalized and included in mineral properties as of June 30, 2013.  This amount represented the estimated portion attributable to development activities.

The Company is currently committed to issuing an additional 50,000 warrants for services in the next twelve months under existing consulting contracts.