Share capital

3 Months Ended

Feb. 29, 2016

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, 2014	60,296,365	111,833
Issued pursuant to the Sunward Arrangement	43,116,312	22,851
Exercise of options	7,499	7
Exercise of Sunward Arrangement Options	347,999	177
Restricted Share Units	795,368	819
Deferred Share Units	232,878	353
November 30, 2015	104,796,421	136,040
Restricted Share Units	108,399	34
Deferred Share Units	75,000	29
February 29, 2016, issued and outstanding	104,979,820	136,103

On March 28, 2012, the shareholders of NovaGold approved the NovaGold Arrangement in which NovaGold would distribute its interest in NovaCopper to its shareholders on the basis that each shareholder would receive one Common Share in NovaCopper for every six shares of NovaGold. On April 30, 2012 (the “Effective Date”), NovaGold distributed 46,578,078 Common Shares in NovaCopper to the shareholders of NovaGold. NovaCopper also committed to issue up to 6,181,352 common shares, once vested and exercised, 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. When exercised or in the case of NovaGold PSU or NovaGold DSU 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 prorated amount of the historical NovaGold investment based on the fully diluted number of Common Shares at the Effective Date. Subsequent to the Effective Date, all NovaGold Warrants were exercised and all NovaGold PSUs were vested. As of February 29, 2016, 20,685 NovaGold DSUs remain outstanding, which will settle upon certain directors retiring from NovaGold’s board, and 391,486 NovaGold Arrangement Options remain outstanding as disclosed in note 6b.

(a) Stock options

During the period ended February 29, 2016, 1,785,000 options (February 28, 2015 – 1,620,000 options) at a weighted-average exercise price of CAD$0.44 (February 28, 2015 – CAD$0.62) 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 $0.13.

For the period ended February 29, 2016, NovaCopper recognized a stock-based compensation charge of $0.18 million (February 28, 2015 – $0.28 million) for options granted to directors, employees and service 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.

	February 29, 2016
Risk-free interest rates	0.52%
Exercise price	CAD$0.44
Expected life	3.0 years
Expected forfeiture rate	0% - 5%
Expected volatility	59.38%
Expected dividends	nil

The Black-Scholes model requires the input of highly subjective assumptions.

As of February 29, 2016, there were 2,382,249 non-vested options outstanding with a weighted average exercise price of $0.43 ; 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 period ended is as follows:

			February 29, 2016
			Weighted average
			exercise price
	Number of options		$
Balance – beginning of period	5,288,350		0.57
Granted	1,785,000		0.32
Forfeited	(300,000	)	0.68
Balance – end of period	6,773,350		0.49

The following table summarizes information about the stock options outstanding at February 29, 2016:

			Outstanding		Exercisable	Unvested
			Weighted		Weighted
		Weighted	average		average
	Number of	average	exercise	Number of	exercise	Number of
Range of	outstanding	years to	price	exercisable	price	unvested
price	options	expiry	$	options	$	options
$0.32 to $0.99	6,718,350	4.29	0.48	4,336,101	0.51	2,382,249
$1.00 to $1.46	55,000	2.17	1.46	55,000	1.46	-
	6,773,350	4.27	0.49	4,391,101	0.52	2,382,249

The aggregate intrinsic value of vested share options (the market value less the exercise price) at February 29, 2016 was $0.01 million (February 28, 2015 - $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”). All NovaGold Arrangement Options are vested and subject to NovaGold’s stock option plan.

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

			February 29, 2016
			Weighted average
			exercise price
	Number of options		$
Balance – beginning of period	509,272		4.77
Forfeited	(14,574	)	4.87
Expired	(103,212	)	5.63
Balance – end of period	391,486		4.45

The following table summarizes information about the NovaGold Arrangement Options outstanding February 29, 2016.

			Outstanding		Exercisable	Unvested
			Weighted		Weighted
		Weighted	average		average
	Number of	average	exercise	Number of	exercise	Number of
	outstanding	years to	price	exercisable	price	unvested
Range of price	options	expiry	$	options	$	options
$2.73 to $3.99	49,998	1.08	2.89	49,998	2.89	-
$4.00 to $5.99	324,822	0.62	4.60	324,822	4.60	-
$6.00 to $6.40	16,666	1.25	6.40	16,666	6.40	-
	391,486	0.70	4.45	391,486	4.45	-

The aggregate intrinsic value of vested NovaGold Arrangement Options (the market value less the exercise price) at February 29, 2016 was $nil (February 28, 2015 - $nil).

(c)   Restricted Share Units (“RSUs”) and Deferred Share Units (“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 period	-		904,603
Granted	600,000		50,147
Vested/paid	(199,999	)	(75,000	)
Balance – end of period	400,001		879,750

For the three months ended February 29, 2016, NovaCopper recognized a stock-based compensation charge of $0.1 million (February 28, 2015 - $3,000), net of forfeitures.

On December 23, 2015, 600,000 RSUs were granted to officers vesting one third immediately, one third on the first anniversary of the grant date, and one third on the second anniversary. The 199,999 RSUs vested were settled through the issuance of 108,399 shares and a cash payment of $29,000.

(d)   Share purchase warrants

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

			Weighted
	Number of	Weighted	average
	Warrants	average years to	exercise price
		expiry	$
Balance – beginning of period	6,521,740	3.60	1.60
Balance – end of period	6,521,740	3.35	1.60