Share capital

3 Months Ended

Feb. 28, 2023

Share capital.

Share capital

6)    Share capital

Authorized:

unlimited common shares, no par value

	in thousands of dollars, except share amounts
	Number of shares	Ascribed value
		$
November 30, 2022	146,225,035	182,178
Restricted Share Units	2,346,366	1,538
Services settled by common shares	7,793	4
Joint venture equity contribution (note 4(b))	143,505	111
February 28, 2023, issued and outstanding	148,722,699	183,831

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 February 28, 2023, a total of 9,293 NovaGold DSUs remain outstanding representing a right to receive 1,549 Common Shares in Trilogy, which will settle upon certain directors retiring from NovaGold’s board.

(a) Stock options

During the three-month period ended February 28, 2023, the Company granted 3,230,000 stock options (2022 - 1,734,500 stock options) at an exercise price of CDN$0.78 (2022 - CDN$2.21) to employees, consultants and directors exercisable for a period of five years with various vesting terms from immediate vesting to vesting over a two-year period. The fair value attributable to options granted in the period was CDN$0.37 (2022 - CDN$0.90).

For the three-month period ended February 28, 2023, Trilogy recognized a stock-based compensation charge of $0.5 million (2022 - $0.86 million) for options granted to directors, employees and service providers, net of estimated forfeitures.

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 three-month period ended February 28, 2023 are as provided below.

	February 28, 2023
Risk-free interest rates	3.49%
Exercise price	CDN$0.78
Expected life	3 years
Expected volatility	67.7%
Expected dividends	Nil

As of February 28, 2023, there were 2,148,424 non-vested options outstanding with a weighted average exercise price of CDN$1.03; the non-vested stock option expense not yet recognized was $0.47 million. This expense is expected to be recognized over the 22 months.

A summary of the Company’s stock option plan and changes during the three-month period ended February 28, 2023 is as follows:

		February 28, 2023
		Weighted average
		exercise price
	Number of options	CDN$
Balance – beginning of the period	11,225,400	2.49
Granted	3,230,000	0.78
Expired	(870,000)	1.05
Balance – end of the period	13,585,400	2.18

There were no stock options exercised during the first quarter 2023.

The following table summarizes information about the stock options outstanding at February 28, 2023.

	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 exercise price - CDN	options	to expiry	CDN$	options	CDN$	options
$0.75 to $1.00	3,230,000	4.77	0.78	1,463,328	0.78	1,766,672
$2.00 to $2.50	2,396,250	2.96	2.27	2,014,498	2.28	381,752
$2.51 to $3.00	6,411,650	2.14	2.64	6,411,650	2.64	—
$3.01 to $3.41	1,547,500	1.81	3.03	1,547,500	3.03	—
	13,585,400	2.87	2.18	11,436,976	2.39	2,148,424

The aggregate intrinsic value of vested stock options (the market value less the exercise price) at February 28, 2023 was $0.02 million (2022 - $0.15 million) and the aggregate intrinsic value of exercised options for the three-month period ending February 28, 2023 was $Nil million (2022 - $0.03 million).

(b) Restricted Share Units and Deferred Share Units

The Company has a Restricted Share Unit Plan (“RSU Plan”) to provide long-term incentives to employees and consultants and a Non-Executive Director Deferred Share Unit Plan (“DSU Plan”) to offset cash payments for fees to directors.  Awards under the RSU Plan and DSU Plan have been settled in common shares of the Company with each restricted share unit

(“RSU”) and deferred share unit (“DSU”) entitling the holder to receive one common share of the Company.  All units are accounted for as equity-settled awards.

A summary of the Company’s unit plans and changes during the three-month period ending February 28, 2023 is as follows:

	Number of RSUs	Number of DSUs
Balance – beginning of the period	257,268	1,560,734
Granted	3,699,297	760,519
Vested	(2,345,927)	—
Balance – end of the period	1,610,638	2,321,253

For the three-month period ending February 28, 2023, Trilogy recognized a combined RSU and DSU stock-based compensation charge of $1.1 million (2022 - $1.0 million), net of estimated forfeitures.