NOTE 10 SHAREHOLDERS’ EQUITY

Shareholder distributions

During the year ended December 31, 2018, the Company paid two semi-annual distributions to shareholders on February 14, 2018 and September 4, 2018 totaling $0.01 (for the year ended December 31, 2017, distributions totaling $0.01 on February 3, 2017 and August 14, 2017) per share of common stock, for a total distribution of $3.4 million (December 31, 2017 – $3.1 million). These distributions were treated as dividends for tax purposes.

Pursuant to a term loan facility dated August 10, 2018, there exists limitations on the distributions the Company is authorized to declare and pay. The Company may declare and pay distributions in any fiscal year that do not exceed the amount of dividends per share made in the fiscal year ended December 31, 2017.

Equity offerings

On June 11, 2018, the Company issued 178,321 shares of common stock in exchange for the acquisition of mineral property interests adjacent to the Black Fox Complex.

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 in a public offering for net proceeds of $43.2 million, after deducting issuance costs of $3.4 million. Each share of common stock sold entitled the holder to receive half a warrant, and each whole warrant entitled the holder to purchase one share of common stock at a price of $2.70. The warrants had an expiration date of September 28, 2018, all warrants expired unexercised.

The Company concluded that both common stock and warrants are equity-linked financial instruments and should be accounted for permanently in the shareholders’ equity section in the Consolidated Balance Sheets, 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

Flow-through shares

On December 20, 2018, the Company issued 6,634,000 flow-through common shares (within the meaning of subsection 66(15) of the Income Tax Act (Canada)) priced at $2.24 per share for total proceeds of $14.9 million (C $20.0 million). On December 19, 2017, the Company issued 4,000,000 flow-through common shares priced at $2.50 per share for total proceeds of $10.0 million. The purpose of both offerings was to fund 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 in 2018 related to the issuance of the flow-through shares was $0.8 million (2017 – $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 $3.0 million (2017 – $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 Sheets as at December 31, 2018 and 2017. No proceeds from the 2018 sale of flow-through common shares had been spent as of December 31, 2018. The Company expects to meet this commitment in 2019. The entire proceeds of $10.0 million from the 2017 sale of flow-through common shares was spent as of December 31, 2018.

At-the-market (“ATM”)

Pursuant to an equity distribution agreement dated November 8, 2018, the Company may offer and sell from time to time shares of its common stock having an aggregate offering price of up to $90.0 million, with the net proceeds to fund working capital and general corporate purposes. During the year ended December 31, 2018, the Company utilized this stock offering program to issue an aggregate of 514,897 shares of common stock for gross and net proceeds of approximately $0.9 million. As of December 31, 2018, approximately $89.1 million remained available for issuance under this ATM stock offering program.

Share repurchase

During the twelve months ended December 31, 2016 the Company repurchased 557,991 shares of common stock, all of which have been cancelled, at a total cost of $0.6 million. The share repurchase program expired on September 30, 2016. No further repurchase programs were initiated during the years ended December 31, 2018 and 2017.