Share capital

12 Months Ended

Nov. 30, 2014

Share capital [Text Block]

6 Share capital

Authorized:
     unlimited common shares, no par value

in thousands of dollars, except share amounts
	Number of shares	Ascribed value
		$
November 30, 2011	200	27,280
Issued pursuant to Plan of Arrangement	46,577,878	64,496
Issued pursuant to employment agreement	76,005	316
Exercise of NovaGold Arrangement Options	10,986	76
November 30, 2012	46,665,069	92,168
Exercise of NovaGold Warrants	6,088,262	11,996
Exercise of NovaGold Arrangement Options	52,243	254
NovaGold Performance and Deferred Share Units	16,586	32
Restricted Share Units	244,496	445
November 30, 2013	53,066,656	104,895
Exercise of NovaGold Arrangement options	46,929	631
NovaGold Performance Share Units	14,166	28
Private placement	6,521,740	5,068
Restricted Share Units	492,501	929
Deferred Share Units	154,373	282
November 30, 2014, issued and outstanding	60,296,365	111,833

On July 7, 2014, the Company completed a non-brokered private placement of Units for gross proceeds of $7.5 million. Each Unit was priced at $1.15 per Unit and consisted of one common share of the Company and one common share purchase warrant. Each common share purchase warrant entitles the holder to purchase one common share of the Company at a price of $1.60 per share for a period of five years from the closing date. Total net proceeds from the private placement were $7.2 million. Use of proceeds raised are restricted for 12 months following closing to a maximum of $4.0 million on general and administrative expenses, $2.7 million on program expenditures, and $0.8 million on additional expenses incurred in reducing annual general and administrative expenses.

On April 30, 2012 (the “Effective Date”), under the Plan of Arrangement, NovaGold distributed its interest in NovaCopper to the shareholders of NovaGold on the basis that each shareholder received one share in NovaCopper for every six shares of NovaGold held on the record date. NovaCopper committed to issue up to 6,181,352 common shares to satisfy holders of NovaGold warrants (“NovaGold Warrants”), performance share units (“NovaGold PSUs”) and deferred share units (“NovaGold DSUs”) on record as of the close of business April 27, 2012 on the same basis as NovaGold shareholders under the Plan of Arrangement. When a warrant is exercised or a unit becomes vested, NovaCopper has committed to deliver one common share to the holder for every six shares of NovaGold the holder is entitled to receive, rounded down to the nearest whole number. An amount of $12.2 million was recorded in contributed surplus representing a pro-rated amount of the historical NovaGold investment based on the fully diluted number of common shares at the Effective Date.

During the year ended November 30, 2014, the Company issued 14,166 common shares in settlement of NovaGold PSUs which vested on January 29, 2014 (November 30, 2013 – 16,586 common shares). As of November 30, 2014, no NovaGold PSUs remain outstanding.

As of November 30, 2014, 20,685 NovaGold DSUs remain outstanding, which will settle upon the NovaGold directors’ retirement.

(a)      Stock options

The Company has a stock option plan providing for the issuance of options with a rolling maximum number equal to 10% of the issued and outstanding common shares of the Company at any given time. The Company may grant options to its directors, officers, employees and service providers. The exercise price of each option cannot be lower than the greater of Market Price or Fair Market Value of the shares (as such terms are defined in the plan) at the date of the option grant. The number of shares optioned to any single optionee may not exceed 10% of the issued and outstanding shares at the date of grant. The options are exercisable for a maximum of five years from the date of grant, and may be subject to vesting provisions.

During the year ended November 30, 2014, 1,620,000 options (2013 – 65,000 options) at a weighted-average exercise price of CAD$1.22 (2013 - CAD$1.98) were granted to employees, consultants and directors exercisable for a period of five years with various vesting terms between nil and two years. The weighted-average fair value attributable to options granted in 2014 was of $0.44 (2013 - $0.73) .

The fair value of the stock options recognized in the period has been estimated using an option pricing model.

Assumptions used in the pricing model for the period are as provided below.

	November 30, 2014	November 30, 2013	November 30, 2012
Risk-free interest rates	1.16%	1.11 - 1.46%	1.02 - 1.59%
Exercise price	CAD$1.22	CAD$1.97 - 1.98	CAD$1.77 - 3.11
Expected life	3.0 years	3.0 years	3.0 – 5.0 years
Expected volatility	60.2%	56.2 - 58.8%	59.0 - 101.3%
Expected dividends	nil	nil	nil

The Black-Scholes and other option pricing models require the input of highly subjective assumptions. As NovaCopper has no history of granting stock options prior to April 30, 2012, the Company considered historical information from NovaGold in estimating the expected life of the options granted during the period. Further, volatility considered both the Company’s historical price observations available and the historical price observations of NovaGold over the expected term of the options.

The Company recognized a share-based payments charge of $0.5 million for the year ended November 30, 2014, net of forfeitures. For the year ended November 30, 2013, a charge of $4.7 million was recognized with the majority of the expense recognized for options granted in the previous year with an additional expense of $0.8 million for options cancelled in 2013, net of forfeitures. For the year ended November 30, 2012 a charge of $9.2 million was recognized.

On November 22, 2013, the Company cancelled 5,710,000 stock options at an exercise price of CAD$3.11 which were granted in 2012. The remaining expense of $0.8 million relating to unvested options at the time of cancellation was accelerated and recognized in the year.

As of November 30, 2014, there were 698,338 non-vested options outstanding with a weighted average exercise price of $1.09 ; the non-vested stock option expense not yet recognized was $0.2 million, and this expense is expected to be recognized over the next two years.

A summary of the Company’s stock option plan and changes during the year ended is as follows:

	November 30, 2014
			Weighted average exercise
			price
	Number of options		$
Balance – beginning of year	168,332		1.79
Granted	1,620,000		1.07
Forfeited	(46,666	)	1.74
Balance – end of year	1,741,666		1.11

The following table summarizes information about the stock options outstanding at November 30, 2014.

			Outstanding		Exercisable	Unvested
			Weighted		Weighted
	Number of	Weighted	average exercise	Number of	average exercise
	outstanding	average years to	price	exercisable	price	Number of
Range of price	options	expiry	$	options	$	unvested options
$1.07 to $1.73	1,741,666	4.65	1.11	1,043,328	1.12	698,338
	1,741,666	4.65	1.11	1,043,328	1.12	698,338

The aggregate intrinsic value of vested share options (the market value less the exercise price) at November 30, 2014 was $nil (2013 - $0.01 million, 2012 - $nil).

(b)      NovaGold Arrangement Options

Under the Plan of Arrangement, holders of NovaGold stock options received one option in NovaCopper for every six options held in NovaGold (“NovaGold Arrangement Options”). The exercise price of the options in NovaCopper was determined based on the relative fair values of NovaCopper and NovaGold based on the volume weighted-average trading prices on the Toronto Stock Exchange for the five trading days commencing on the sixth trading day following the Effective Date. All other terms of the options remained the same. A total of 2,189,040 options to acquire NovaCopper shares were granted under the Plan of Arrangement on April 30, 2012. No stock options granted by NovaGold after the Effective Date are subject to the Plan of Arrangement. The fair value of the NovaGold Arrangement Options was estimated using an option pricing model at a weighted average fair value of $1.74 in 2012.

The Company recognized a stock based compensation recovery of $(0.02) million for the year ended November 30, 2014, expense of $0.07 million for the year ended November 30, 2013, and expense of $0.2 million for the year ended November 30, 2012.

A summary of the NovaGold Arrangement Options and changes during the year ended is as follows:

			November 30, 2014
			Weighted average exercise
			price
	Number of options		$
Balance – beginning of year	1,709,503		4.08
Exercised	(212,075	)	1.15
Forfeited	(301,416	)	4.56
Expired	(474,597	)	2.58
Balance – end of year	721,415		5.06

The following table summarizes information about the NovaGold Arrangement Options outstanding at November 30, 2014.

			Outstanding		Exercisable	Unvested
			Weighted		Weighted
	Number of	Weighted	average exercise	Number of	average exercise	Number of
	outstanding	average years to	price	exercisable	price	unvested
Range of price	options	expiry	$	options	$	options
$2.98 to $3.99	169,444	0.83	3.13	163,888	3.11	5,556
$4.00 to $5.99	345,036	1.63	5.00	345,036	5.00	-
$6.00 to $7.99	206,935	1.21	6.74	206,935	6.74	-
	721,415	1.32	5.06	715,859	5.07	5,556

The aggregate intrinsic value of vested NovaGold Arrangement Options (the market value less the exercise price) at November 30, 2014 was $nil (2013 - $0.02 million, 2012 – $0.02 million) and the aggregate intrinsic value of exercised options in 2014 was $0.02 million (2013 - $0.07 million, 2012 - $0.03 million).

As of November 30, 2014, there were 5,556 non-vested NovaGold Arrangement Options outstanding with a weighted average exercise price of CAD$3.69 ; the non-vested stock option expense not yet recognized was $0.01 million; and this expense is expected to be recognized over the first quarter of 2015.

(c)      Restricted Share Units and Deferred Share Units

On November 29, 2012, the Board of Directors approved a Restricted Share Unit Plan (“RSU Plan”) and a Non-Executive Director Deferred Share Unit Plan (“DSU Plan”) to provide long-term incentives to employees, officers and directors. The RSU and DSU Plans may be settled in cash and/or common shares at the Company’s election with each Restricted Share Unit (“RSU”) and Deferred Share Unit (“DSU”) entitling the holder to receive one common share or equivalent value.

On December 5, 2012, 1,295,500 RSUs were granted to employees and officers vesting equally in thirds on June 5, 2013, December 5, 2013, and December 5, 2014. 750,000 DSUs that were granted to directors vested immediately and are to be paid out at the time of retirement from NovaCopper.

On September 9, 2014, 186,650 DSUs were granted to directors vesting upon the commencement of the Company's annual shareholder meeting in Spring 2015. Also in early September, cash payments owing to directors for fees of $207,000 were cancelled.

The remaining 56,073 DSUs were granted to directors throughout the year ended November 30, 2014 based on their election to receive 50% of their annual retainer in DSUs.

A summary of the Company’s unit plans and changes during the year ended is as follows:

	Number of RSUs		Number of DSUs
Balance – beginning of year	851,673		750,000
Granted	-		242,723
Vested/paid	(492,501	)	(154,373	)
Forfeited	(21,836	)	-
Balance – end of year	337,336		838,350

For the year ended November 30, 2014, NovaCopper recognized a stock-based compensation charge of $0.4 million (2013 - $3.4 million), net of forfeitures.

Subsequent to fiscal year end, on December 5, 2014, 337,336 RSUs vested to employees and officers and were settled through the issuance of 337,336 common shares. Following the vesting on December 5, 2014, no RSUs remain outstanding.