Share capital

12 Months Ended

Nov. 30, 2020

Share capital.

Share capital

9)    Share capital

Authorized:

unlimited common shares, no par value

	in thousands of dollars, except share amounts
	Number of shares	Ascribed value
		$
November 30, 2018	131,585,612	164,069
Exercise of options	1,725,776	1,123
Restricted Share Units	412,501	424
Deferred Share Units	182,132	189
Exercise of warrants	6,521,740	12,166
November 30, 2019	140,427,761	177,971
Exercise of options	3,297,588	1,133
Restricted Share Units	412,501	642
November 30, 2020, issued and outstanding	144,137,850	179,746

On April 30, 2012, under the NovaGold Arrangement, Trilogy committed to issue common shares to satisfy holders of NovaGold deferred share units (“NovaGold DSUs”), once vested, on record as of the close of business 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 November 30, 2020, a total of  11,927 NovaGold DSUs remain outstanding representing a right to receive 1,988 Common Shares in Trilogy, which will settle upon certain directors retiring from NovaGold’s board.

(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 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 Common Shares (as such terms are defined in the plan) at the date of the option grant. The number of Common Shares optioned to any single optionee may not exceed 10% of the issued and outstanding Common 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, 2020, a total of 4,445,000 options (2019 - 3,077,500 options) at a weighted-average exercise price of CDN$2.79 (2019 - CDN$2.86) were granted 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 2020 was $0.90 (2019 - $1.03).

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

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

	November 30, 2020
Risk-free interest rates	0.92%
Exercise price	CAD$2.79
Expected life	3 years
Expected volatility	64.4%
Expected dividends	Nil

The Company recognized a stock option expense of $3.1 million for the year ended November 30, 2020 (2019 - $2.9 million; 2018 - $0.8 million), net of forfeitures.

As of November 30, 2020, there were 2,493,337 non-vested options outstanding with a weighted average exercise price of $2.15. The non-vested stock option expense not yet recognized was $1.0 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 year ended is as follows:

	November 30, 2020
		Weighted average
		exercise price
	Number of options	$
Balance – beginning of the year	9,205,600	1.11
Granted	4,445,000	2.15
Exercised	(4,263,100)	0.51
Cancelled	(740,000)	2.27
Balance – end of the year	8,647,500	1.84

The following table summarizes information about the stock options outstanding at November 30, 2020.

	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 (CAD$)	options	to expiry	CAD$	options	CAD$	options
$0.44 to $0.50	20,000	0.06	0.44	20,000	0.44	—
$0.51 to $1.00	770,000	1.06	0.72	770,000	0.72	—
$1.01 to $1.50	1,070,000	2.02	1.04	1,070,000	1.04	—
$2.01 to $2.50	865,000	3.98	2.37	865,000	2.37	—
$2.51 to $3.00	3,835,000	3.85	2.77	2,121,665	2.82	1,713,335
$3.01 to $3.41	2,087,500	4.05	3.03	1,307,498	3.04	780,002
	8,647,500	3.43	2.39	6,154,163	2.22	2,493,337

The aggregate intrinsic value of vested share options (the market value less the exercise price) at November 30, 2020 was $2.4 million (2019 - $7.2 million, 2018 - $12.2 million) and the aggregate intrinsic value of exercised options in 2020 was $2.6 million (2019 - $2.6 million, 2018 - $0.5 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. The RSU Plan and DSU Plan may be settled in cash and/or common shares at the Company’s election with each RSU and DSU entitling the holder to receive one common share of the Company or equivalent value. All units are accounted for as equity-settled awards.

On April 13 2020, a Company officer was granted 200,000 RSUs, all of which vested immediately. Directors were granted 83,775 DSUs throughout the year ended November 30, 2020 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 the year	212,501	1,137,488
Granted	200,000	83,775
Vested	(412,501)	—
Balance – end of the year	—	1,221,263

For the year ended November 30, 2020, Trilogy recognized a stock-based compensation expense of $0.5 million (2019 - $0.9 million, 2018 - $0.6 million).

(c)Share purchase warrants

During the year ended November 30, 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. The Company had no warrants outstanding as at November 30, 2020.

(d)Bought deal financing

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.