Share capital

9 Months Ended

Aug. 31, 2016

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, 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
Exercise of options	143,889	56
Restricted Share Units	108,399	34
Deferred Share Units	218,795	218
August 31, 2016, issued and outstanding	105,267,504	136,348

On March 28, 2012, the shareholders of NovaGold approved the NovaGold Arrangement in which NovaGold would distribute its interest in Trilogy to its shareholders on the basis that each shareholder would receive one Common Share in Trilogy for every six shares of NovaGold. On April 30, 2012 (the “Effective Date”), NovaGold distributed 46,578,078 Common Shares in Trilogy to the shareholders of NovaGold. Trilogy 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 PSUs or NovaGold DSUs vested, Trilogy 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. Subsequent to the Effective Date, all NovaGold Warrants were exercised and all NovaGold PSUs vested. As of August 31, 2016, 20,685 NovaGold DSUs remain outstanding, which will settle upon certain directors retiring from NovaGold’s board, and 324,820 NovaGold Arrangement Options remain outstanding as disclosed in note 7b.

(a) Stock options

During the period ended August 31, 2016, 1,785,000 options (August 31, 2015 – 1,728,350 options) at a weighted-average exercise price of CAD$0.44 (August 31, 2015 – 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 $0.13.

For the nine month period ended August 31, 2016, the Company recognized a stock-based compensation charge of $0.33 million (August 31, 2015–$0.43 million) for options previously 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, 2016
Risk-free interest rates	0.52%
Exercise price	CAD$0.44
Expected life	3.0years
Expected forfeiture rate	0-5%
Expected volatility	59.38%
Expected dividends	nil

As of August 31, 2016, there were 2,346,133 non-vested options outstanding with a weighted average exercise price of $0.45 ; 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, 2016
			Weighted average
			exercise price
	Number of options		$
Balance – beginning of period	5,288,350		0.58
Granted	1,785,000		0.34
Exercise of options	(364,969	)	0.39
Forfeited	(300,000	)	0.70
Balance – end of period	6,408,381		0.52

The following table summarizes information about the stock options outstanding at August 31, 2016.

	Outstanding			Exercisable		Unvested
			Weighted		Weighted
	Number of	Weighted	average	Number of	average	Number of
	outstanding	average years	exercise price	exercisable	exercise price	unvested
Range of price	options	to expiry	$	options	$	options
$0.34 to $0.99	6,353,381	3.77	0.51	4,007,248	3.67	2,346,133
$1.00 to $1.51	55,000	1.67	1.51	55,000	1.51	-
	6,408,381	3.75	0.52	4,062,248	3.64	2,346,133

The aggregate intrinsic value of vested share options (the market value less the exercise price) at August 31, 2016 was $0.49 million (August 31, 2015 - $0.07 million). The aggregate intrinsic value of options exercised during the nine month period ended August 31, 2016 was $0.09 million.

(b) NovaGold Arrangement Options

Under the NovaGold arrangement, holders of NovaGold stock options received one option in the Company 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:

			August 31, 2016
			Weighted average
			exercise price
	Number of options		$
Balance – beginning of period	509,272		4.77
Forfeited	(14,574	)	5.04
Expired	(169,878	)	5.75
Balance – end of period	324,820		4.39

The following table summarizes information about the NovaGold Arrangement Options outstanding at August 31, 2016.

	Outstanding and exercisable
			Weighted average
	Number of outstanding	Weighted average years	exercise price
Range of price	and exercisable options	to expiry	$
$2.82 to $3.99	49,998	0.58	2.98
$4.00 to $5.99	258,156	0.27	4.52
$6.00 to $6.61	16,666	0.75	6.61
	324,820	0.34	4.39

The aggregate intrinsic value of vested NovaGold Arrangement Options (the market value less the exercise price) at August 31, 2016 was $nil (August 31, 2015 - $nil).

(c) Restricted Share Units and Deferred Share Units

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		212,768
Vested/paid	(199,999	)	(218,795	)
Balance – end of period	400,001		898,576

For the nine months ended August 31, 2016, Trilogy recognized a stock-based compensation charge of $0.22 million (August 31, 2015 - $0.12 million), 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 vested RSUs 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 average
	Number of	Weighted average	exercise price
	Warrants	years to expiry	$
Balance – beginning of period	6,521,740	3.60	1.60
Balance – end of period	6,521,740	2.85	1.60