Share capital

9 Months Ended

Aug. 31, 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
Private Placement, net of share issue cost	5,854,545	3,115
Restricted Share Units	2,807,921	1,780
Deferred Share Units	415,056	468
NovaGold deferred share units conversion	1,130	3
Services settled by common shares	112,142	60
Joint venture equity contribution (note 3(b))	143,505	111
August 31, 2023, issued and outstanding	155,559,334	187,715

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 at August 31, 2023, a total of 5,144 NovaGold DSUs remain outstanding representing a right to receive 859 Common Shares in Trilogy, which will settle upon certain directors retiring from NovaGold’s board.

(a) Common shares issuance

On April 25, 2023, the Company completed a non-brokered private placement of 5,854,545 common shares of the Company (the “Common Share”) at a price of $0.55 per Common Share for gross proceeds of $3.2 million and net proceeds of $3.1 million.  Financing costs consisted of legal and stock exchange fees.

(b) 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 this option grants was CDN$0.37 (2022 - CDN$0.94).   There were no stock options granted during the second and third quarters.

For the nine-month period ended August 31, 2023, Trilogy recognized a stock-based compensation charge of $0.8 million (2022 - $1.4 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 nine-month period ended August 31, 2023 are as provided below.

	August 31, 2023
Risk-free interest rates	3.49%
Exercise price	CDN$0.78
Expected life	3 years
Expected volatility	67.7%
Expected dividends	Nil

As at August 31, 2023, there were 2,131,757 non-vested options outstanding with a weighted average exercise price of CDN$1.02; the non-vested stock option expense not yet recognized was $0.24 million. This expense is expected to be recognized over the next 16 months.

A summary of the Company’s stock option outstanding and changes during the nine-month period ended August 31, 2023 is as follows:

		August 31, 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
Cancelled	(286,000)	2.70
Expired	(1,170,000)	1.43
Balance – end of the period	12,999,400	2.16

There were no stock options exercised during the nine-month period ended August 31, 2023.

The following table summarizes information about the stock options outstanding at August 31, 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	4.27	0.78	1,463,328	0.78	1,766,672
$2.01 to $2.50	2,270,250	2.56	2.27	1,905,165	2.28	365,085
$2.51 to $3.00	6,041,650	1.73	2.64	6,041,650	2.64	—
$3.01 to $3.50	1,457,500	1.31	3.03	1,457,500	3.03	—
	12,999,400	2.46	2.16	10,867,643	2.38	2,131,757

The aggregate intrinsic value of vested stock options (the market value less the exercise price) at August 31, 2023 was $Nil (2022 - $Nil) and the aggregate intrinsic value of exercised options for the nine-month period ending August 31, 2023 was $Nil (2022 - $0.05 million).

(c) 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 nine-month period ending August 31, 2023 is as follows:

	Number of RSUs	Number of DSUs
Balance – beginning of the period	257,268	1,560,734
Granted	4,273,433	1,107,895
Vested/Converted	(2,920,063)	(415,056)
Balance – end of the period	1,610,638	2,253,573

For the nine-month period ending August 31, 2023, Trilogy recognized a combined RSU and DSU stock-based compensation charge of $2.0 million (2022 - $1.6 million), net of estimated forfeitures.