NOTE 10 SHAREHOLDERS’ EQUITY

Capital distributions

During the year ended December 31, 2017, the Company paid two semi-annual distribution on February 14 and August 17, totaling $0.01 (December 31, 2016 - $0.01) per share of common stock, for a total distribution of $3.1 million (December 31, 2016 - $3.0 million). In light of the Tax and Jobs Act, enacted on December 22, 2017, the Company incurred a one-time transition tax on earnings of certain foreign subsidiaries, that were previously tax deferred. As a result of the inclusion of its subsidiaries’ foreign earnings, the Company will be in a taxable income position. As a result, the distributions made during 2017 have been re-characterized as taxable dividends.

Equity offerings

The Company issued 12,687,035 shares of common stock as part of the Lexam acquisition completed on April 26, 2017. See Note 19 Acquisitions.

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 purchased 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 remain outstanding and unexercised as of December 31, 2017.

Flow-through shares

On December 19, 2017, the Company issued 4,000,000 flow-through common shares (within the meaning of subsection 66(15) of the Income Tax Act (Canada)) priced at $2.50 per share for total proceeds of $10 million. The purpose of the offering is to fund generative exploration activities on the Company’s properties in the Timmins region of Canada. The total proceeds were allocated between the sale of tax benefits and the sale of common shares. The total issuance costs related to the issuance of the flow-through shares was $0.5 million, which are accounted for as a reduction to the common shares. The Company has also recorded a liability for the flow-through premium received in the amount of $1.6 million, which was accounted for as a reduction to the common share proceeds. The obligation is fulfilled when eligible expenditures are incurred.

The proceeds of the flow-through shares offering are shown as Restricted cash on the Consolidated Balance Sheet.

Share repurchase

During the twelve months ended December 31, 2016 the Company repurchased 557,991 shares of common stock (December 31, 2015 – 1,896,442 shares of common stock), all of which have been cancelled, at a total cost of $0.6 million (December 31, 2015 - $1.8 million). The share repurchase program expired on September 30, 2016. No further repurchase programs were initiated during the year ended December 31, 2017.