6Share capital

Authorized:

unlimited common shares, no par value


	in thousands of dollars, except share amounts
		Ascribed value
	Number of shares	$
November 30, 2017	105,684,523	136,525
Bought deal financing	24,784,482	28,750
Share issuance costs	—	(1,805)
Exercise of options	315,148	140
Restricted share units	800,000	457
NovaGold DSU conversion	1,459	2
November 30, 2018	131,585,612	164,069
Exercise of options	203,112	122
Restricted share units	412,501	424
Deferred share units	182,132	189
Exercise of warrants	6,521,740	12,166
August 31, 2019, issued and outstanding	138,905,097	176,970

On April 30, 2012, under the NovaGold Arrangement, Trilogy committed to issue common shares to satisfy holders of NovaGold deferred share units (“NovaGold DSUs”) on record as of the close of business on April 27, 2012. When vested, Trilogy 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. As of August 31, 2019, there remains 11,927 NovaGold DSUs outstanding representing a right to receive 1,988 Common Shares in Trilogy, which will settle upon certain directors retiring from NovaGold’s board.

On April 20, 2018, the Company completed a bought-deal financing for gross proceeds of $28.7 million by issuing 24,784,482 common shares at $1.16 per common share. Expenses including bank commissions, legal fees, stock exchange and other fees totaled $1.8 million for net proceeds of $26.9 million.

(a)

Stock options

During the nine – months ended August 31, 2019, the Company granted 2,527,500 options (2018 – 2,395,000 options) at a weighted-average exercise price of CAD$2.96 (2018 – CAD$1.15) to employees, consultants and directors exercisable for a period of five years with various vesting terms from immediate vesting to over a two-year period. The weighted-average fair value attributable to options granted in the period was $1.08 (2018 - $0.43).

For the nine - month period ended August 31, 2019, Trilogy recognized a stock-based compensation charge of $2.23 million (2018– $0.71 million) for options granted to directors, employees and service providers, net of estimated forfeitures.

The recognized fair value of the stock options granted during the nine - month period ended August 31, 2019 has been estimated using the Black-Scholes option pricing model.

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


	August 31, 2019
Risk-free interest rates		2.03	%
Exercise price	CAD$	2.97
Expected life		3.0 years
Expected volatility		75.0	%
Expected dividends		Nil

As of August 31, 2019, there were 1,775,005 non-vested options outstanding with a weighted average exercise price of $1.82; the non-vested stock option expense not yet recognized was $0.63 million. 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 nine - month period ended August 31, 2019 is as follows:


	August 31, 2019
		Weighted average
		exercise price
	Number of options	$
Balance – beginning of the period	8,821,434	0.60
Granted	2,527,500	2.22
Exercised	(306,432)	0.84
Balance – end of period	11,042,502	0.97

The following table summarizes information about the stock options outstanding at August 31, 2019.


	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
$0.33 to $0.50	3,876,433	0.97	0.39	3,876,433	0.39	—
$0.51 to $1.00	4,333,569	2.21	0.72	3,885,233	0.71	448,336
$1.01 to $1.50	225,000	3.62	1.32	175,000	1.29	50,000
$1.51 to $2.00	90,000	3.87	1.83	73,333	1.82	16,667
$2.01 to $2.52	2,517,500	4.27	2.21	1,257,498	2.22	1,260,002
	11,042,502	2.29	0.96	9,267,497	0.80	1,775,005

The aggregate intrinsic value of vested share options (the market value less the exercise price) at August 31, 2019 was $10.6 million (2018 - $9.2 million) and the aggregate intrinsic value of exercised options for the nine - month period ended August 31, 2019 was $0.5 million (2018 - $0.4 million).

(b)

Restricted Share Units and Deferred Share Units

The Company has 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. Awards under the RSU Plan and DSU Plan may be settled in cash and/or common shares of the Company at the Company’s election with each restricted share unit (“RSU”) and deferred share unit (“DSU”) entitling the holder to receive one common share of the Company or equivalent value. All units are accounted for as equity-settled awards.

A summary of the Company’s unit plans and changes during the nine - month period ended August 31, 2019 is as follows:


	Number of RSUs	Number of DSUs
Balance – beginning of the period	400,002	1,182,106
Granted	225,000	119,139
Vested/paid	(412,501)	(182,132)
Balance – end of period	212,501	1,119,113

For the nine - month period ended August 31, 2019, Trilogy recognized a stock-based compensation charge of $0.78 million (2018‑ $0.56 million), net of estimated forfeitures.

As part of the annual incentive payout for the 2018 fiscal year, 225,000 RSUs were granted to officers during the three - month period ended February 28, 2019, vesting half on the grant date and half on the first anniversary of the grant date. RSUs vesting in December 2018 were settled on December 21, 2018 through the issuance of 412,501 common shares.

(c)

Share Purchase Warrants

During the three - month period ended August 31, 2019, all the outstanding warrants were exercised in advance of the July 2, 2019 expiry date. As a result of the warrants exercised, the Company issued a total of 6,521,740 common shares and received cash proceeds of approximately $9.9 million.