Share capital

9 Months Ended

Aug. 31, 2015

Share capital [Text Block]

7 Share capital

Authorized:
          unlimited common shares, no par value

	in thousands of d ollars, except share amounts
	Number of shares	Ascribed value
		$
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	60,296,365	111,833
Issued pursuant to the Sunward Arrangement	43,116,312	22,851
Exercise of options	7,499	7
Restricted Share Units	795,368	819
Deferred Share Units	119,139	180
August 31, 2015, issued and outstanding	104,334,683	135,690

On April 30, 2012 (the “Effective Date”), under the NovaGold 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 NovaGold 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.

Refer to note 4 for a description of common shares issued pursuant to the Sunward Arrangement.

As of August 31, 2015, 20,685 NovaGold DSUs remain outstanding, which will settle upon certain directors retiring from NovaGold’s board.

(a) Stock options

During the period ended August 31, 2015, 1,728,350 options (August 31, 2014 nil options) at a weighted-average exercise price of CAD$0.61 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 the period was $0.21.

For the nine month period ended August 31, 2015, NovaCopper recognized a stock-based compensation charge of $0.43 million (August 31, 2014 - $0.01 million) for options granted to directors, employees and services providers, net of forfeitures.

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:

	August 31, 2015
Risk-free interest rates	0.41%
Exercise price	CAD $0.50 - 0.62
Expected life	3.0 years
Expected forfeiture rate	0%
Expected volatility	59.1 - 59.5%
Expected dividends	nil

As of August 31, 2015, there were 1,308,910 non-vested options outstanding with a weighted average exercise price of $0.69 ; the non-vested stock option expense not yet recognized was $0.1 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 period ended is as follows:

			August 31, 2015
			Weighted average
			exercise price
	Number of options		$
Balance – beginning of period	1,741,666		1.11
Granted	1,728,350		0.47
Exercised	(33,333	)	0.47
Forfeited	(200,000	)	0.92
Balance – end of period	3,236,683		0.71

The following table summarizes information about the stock options outstanding at August 31, 2015.

		Stock options - outstanding		Stock options - exercisable		Unvested
					Weighted
			Weighted		average
	Number of	Weighted	average exercise	Number of	exercise	Number of
	outstanding	average years	price	exercisable	price	unvested
Range of price	options	to expiry	$	options	$	options
$0.38 to $0.99	3,181,683	4.17	0.69	1,882,773	0.70	1,298,910
$1.00 to $1.51	55,000	2.67	1.51	45,000	1.51	10,000
	3,236,683	4.14	0.71	1,927,773	0.72	1,308,910

The aggregate intrinsic value of vested share options (the market value less the exercise price) at August 31, 2015 was $0.07 million (August 31, 2014 – $nil). The aggregate intrinsic value of options exercised during the nine month period ended August 31, 2015 was $nil.

(b) NovaGold Arrangement Options

Under the NovaGold arrangement, holders of NovaGold stock options received one option in NovaCopper for every six options held in NovaGold (“NovaGold Arrangement Options”). No stock options granted by NovaGold after April 30, 2012 are subject to the NovaGold arrangement. All NovaGold Arrangement Options are vested.

For the nine month period ended August 31, 2015, NovaCopper recognized a stock-based compensation charge of $nil (August 31, 2014 - $0.01 million) for NovaGold Arrangement Options, net of forfeitures.

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

			August 31, 2015
			Weighted average
			exercise price
	Number of options		$
Balance – beginning of period	721,415		5.06
Forfeited	(4,356	)	4.48
Expired	(186,954	)	2.97
Balance – end of period	530,105		4.89

The following table summarizes information about the NovaGold Arrangement Options outstanding at August 31, 2015:

		Out standing and exercisable
			Weighted average
	Number of outstanding	Weighted average	exercise price
Range of price	options	years to expiry	$
$2.82 to $3.99	49,998	1.58	2.97
$4.00 to $5.99	295,071	0.91	4.99
$6.00 to $6.59	185,036	0.90	6.29
	530,105	0.97	4.89

The aggregate intrinsic value of vested NovaGold Arrangement Options (the market value less the exercise price) at August 31, 2015 was $0.04 million (August 31, 2014 - $0.11 million).

(c) Sunward Arrangement Options

Under the Sunward Arrangement, each Sunward stock option outstanding was exchanged for a fully-vested Sunward Arrangement Option to purchase NovaCopper common shares for a period of 90 days, such number and exercise price adjusted based on an exchange ratio of 0.3 NovaCopper options for each Sunward option. All Sunward Arrangement Options are vested and additional expenses have been recognized as of August 31, 2015.

For the three nine month period ended August 31, 2015, NovaCopper recognized a stock-based compensation charge of $0.03 million for Sunward Arrangement Options, net of forfeitures. The stock-based compensation charge represents the excess of fair value of the Sunward Arrangement Options over the fair value of the Sunward options immediately before the consummation of the arrangement. The fair value of the Sunward Arrangement Options recognized in the period has been estimated using an option pricing model. Refer to note 4 for assumptions used in the pricing model for the period.

A summary of the Sunward Arrangement Options and changes during the period ended is as follows:

		August 31, 2015
		Weighted average
		exercise price
	Number of options	$
Balance – beginning of period	-	-
Options exchanged pursuant to Sunward Arrangement	2,505,000	0.82
Balance – end of period	2,505,000	0.82

The following table summarizes information about the Sunward Arrangement Options outstanding at August 31, 2015.

	Out standing and exercisable
			Weighted average
	Number of outstanding	Weighted average	exercise price
Range of price	options	years to expiry	$
$0.54 to $0.99	1,998,000	0.05	0.49
$1.00 to $1.99	67,500	0.05	1.20
$2.00 to $6.27	439,500	0.05	2.24
	2,505,000	0.05	0.82

The Sunward Arrangement Options expire on September 17, 2015. Subsequent to quarter end, 347,999 Sunward Arrangement Options were exercised for proceeds of approximately CDN$188,000, and 2,022,001 expired. On September 16, 2015, the Compensation Committee of the Board of Directors approved the amendment of the expiry date of 135,000 Sunward Arrangement Options granted to Mr. Ricardo Duarte from September 17, 2015 to November 16, 2015 (the “Duarte Amendment”) in order to allow Mr. Duarte’s estate time to complete certain administrative matters associated with winding up Mr. Duarte’s estate following his death in late July.

The aggregate intrinsic value of vested Sunward Arrangement Options (the market value less the exercise price) at August 31, 2015 was $0.19 million.

(d) Restricted Share Units (“RSUs”) and Deferred Share Units (“DSUs”)

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

	Number of RSUs		Number of DSUs
Balance – beginning of period	337,336		838,350
Granted	458,032		263,952
Vested/paid	(795,368	)	(119,139	)
Balance – end of period	-		983,163

On July 28, 2015, 458,032 RSUs were granted to officers vesting immediately to settle obligations previously accrued, refer to note 6.

For the nine months ended August 31, 2015, NovaCopper recognized a stock-based compensation charge of $0.12 million (August 31, 2014 - $0.30 million), net of forfeitures, for RSUs and DSUs.

(e) Share Purchase Warrants

A summary of the Company’s warrants and changes during the period ended is as follows:

			Weighted average
	Number of	Weighted average	exercise price
	Warrants	years to expiry	$
Balance – beginning of period	6,521,740	3.85	1.60
Balance – end of period	6,521,740	3.85	1.60