NOTE 8 SHAREHOLDERS’ EQUITY

During the nine months ended September 30, 2017, 20,000 shares of common stock were issued upon the exercise of stock options under the Company’s Equity Incentive Plan, at the weighted average exercise price of $2.34 per share for proceeds of $0.1 million. This compares to 1,377,085 shares of common stock issued upon exercise of stock options during the same period of 2016, at a weighted average exercise price of $2.56 per share for proceeds of $3.5 million.

During the nine months ended September 30, 2017, the Company paid two semi-annual returns of capital distributions totaling $0.01 (September 30, 2016 - $0.01) per share of common stock, for a total distribution of $3.1 million (September 30, 2016 - $3.0 million).

The Company issued 12,687,035 shares of common stock as part of the Lexam acquisition completed on April 26, 2017. See Note 15 Acquisition of Lexam.

Equity Offering

On September 22, 2017, the Company issued 20,700,000 common shares and 10,350,000 warrants for net proceeds of $43.2 million, after deducting issuance costs of $3.4 million. Each common share subscribed for, entitled the holder to receive half a warrant, and each whole warrant entitles the holder to purchase one common share at a price of $2.70. Warrants are exercisable at any time prior to September 28, 2018, after which the warrants will expire and be of no value.

The Company concluded that both common shares and warrants are equity-linked financial instruments and should be accounted for permanently in the Shareholder’s Equity section in the Consolidated Balance Sheet, with no requirement to subsequently revalue any of the instruments. Based on the relative fair values, the Company allocated $39.4 million to common shares and $3.8 million to warrants, net of issuance costs.

The Company used the Black-Scholes pricing model to determine the fair value of warrants using the following assumptions:


Risk-free interest rate	1.56	%
Dividend yield	0.36	%
Volatility factor of the expected market price of common stock	71	%
Weighted-average expected life	53 weeks
Weighted-average grant date fair value	0.40

All 10,350,000 warrants remained outstanding and unexercised as of September 30, 2017.