SHAREHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2023

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY

NOTE 13 SHAREHOLDERS’ EQUITY

Share Consolidation and Articles of Amendment

Effective after the close of trading on July 27, 2022, the Company filed Articles of Amendment to its Second Amended and Restated Articles of Incorporation with the Colorado Secretary of State to, among other items, effect a one-for-ten

reverse split of its outstanding common stock. This reverse split, or consolidation, resulted in every 10 shares of common stock outstanding immediately prior to the effective date being converted into one share of common stock after the effective date. The consolidation was effected following approval by the shareholders in order for the Company to regain compliance with the NYSE (the “New York Stock Exchange”) listing requirements, specifically those requiring a minimum share trading price of $1 per share. The consolidation was effective for trading purposes on July 28, 2022. Following the consolidation, the Company purchased fractional shares resulting from the split. All share and per share amounts in the consolidated financial statements have been retroactively restated to reflect the consolidation.

The Articles of Amendment also served to reduce the Company’s authorized capital from 675,000,002 shares to 200,000,002 shares, with 200,000,000 shares being common stock and 2 shares being a special preferred stock.

Effective June 30, 2023, the Company filed Articles of Amendment to its Second Amended and Restated Articles of Incorporation with the Colorado Secretary of State to increase the Company’s authorized capital from 200,000,002 shares to 210,000,000 shares, with 200,000,000 shares being common stock and 10,000,000 shares being special preferred stock.

Equity Issuances

Flow-through Shares Issuance – Canadian Exploration Expenditures (“CEE”)

On March 2, 2022, the Company issued 1,450,000 flow-through common shares priced at $10.40 per share for gross proceeds of $15.1 million. The proceeds of this offering were used for continued exploration at the Fox Complex. 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 were $0.8 million, which were accounted for as a reduction to the value of the common shares. The net proceeds of $14.4 million were allocated between the sale of tax benefits in the amount of $4.1 million and the sale of common shares in the amount of $10.3 million.

On December 14, 2023, the Company issued 788,000 flow-through common shares priced at $9.27 per share for gross proceeds of $7.3 million. The proceeds of this offering are expected to be used for the exploration of the Grey Fox, Stock East, and other Fox Complex properties. 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 were $0.5 million, which were accounted for as a reduction to the value of the common shares. The net proceeds of $6.8 million were allocated between the sale of tax benefits in the amount of $1.3 million and the sale of common shares in the amount of $5.5 million.

The Company is required to spend these flow-through share proceeds on flow-through eligible CEE as defined by subsection 66.1(6) of the Income Tax Act (Canada). During the year ended December 31, 2023, the Company incurred a total of $13.5 million in eligible CEE (December 31, 2022 – $21.4 million). The Company expects to fulfill its remaining CEE commitments from its most recent common share flow-through offering of $7.3 million by the end of 2024. CEE commitments from the March 2022 issuance have been fulfilled.

Flow-through Shares Issuance – Canadian Development Expenses (“CDE”)

On December 14, 2023, the Company issued 1,115,000 flow-through common shares priced at $7.86 per share for gross proceeds of $8.8 million. The proceeds of this offering will be used for the development of Stock West. 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 were $0.5 million, which were accounted for as a reduction to the value of the common shares. The net proceeds of $8.3 million were allocated between the sale of tax benefits in the amount of $0.4 million and the sale of common shares in the amount of $7.9 million.

The Company is required to spend these flow-through share proceeds on flow-through eligible CDE as defined by subsection 66.2(5) of the Income Tax Act (Canada). The Company expects to fulfill its remaining CDE commitments from its most recent common share flow-through offering of $8.8 million by the end of 2024.

November 2019 Offering

On November 20, 2019 (the “November Offering”), the Company issued 3,775,000 Units at $13.25 per Unit, for net proceeds of $46.6 million (net of issuance costs of $3.5 million). Each Unit consisted of one share of common stock and

one-half of one warrant. Ten whole warrants are exercisable at any time for one share of common stock of the Company at a price of $17.22, subject to customary adjustments, expiring five years from the date of issuance. The warrants provide for cashless exercise under certain conditions. The warrants under the November Offering are listed for trading on an over-the-counter market.

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. Of the net proceeds of $46.6 million, $37.3 million was allocated to common stock and $9.3 million was allocated to warrants, based on their relative fair values at issuance.

The Company used the Black-Scholes pricing model to determine the fair value of warrants issued in connection with the November Offering using the following assumptions:

	November 20, 2019
Risk-free interest rate		1.55	%
Dividend yield		0.00	%
Volatility factor of the expected market price of common stock		60	%
Weighted-average expected life		5 years
Weighted-average grant date fair value	$	0.52

As of December 31, 2023, 2,170,625 warrants issued under the November Offering remain outstanding and unexercised. The warrants expire in November 2024.

Stock Options

The Company’s Amended and Restated Equity Incentive Plan (“Plan”) allows for equity awards to be granted to employees, consultants, advisors, and directors. The Plan is administered by the Compensation Committee of the Board of Directors (the “Committee”), which determines the terms pursuant to which any award is granted. The Committee may delegate to certain officers the authority to grant awards to certain employees (other than such officers), consultants and advisors. The number of shares of common stock reserved for issuance thereunder is 3.0 million shares, including shares issued under the Plan before it was amended, with no more than 1 million shares subject to grants of options to an individual in a calendar year. The Plan provides for the grant of incentive options under Section 422 of the Internal Revenue Code, which provides potential tax benefits to the recipients compared to non-qualified options.

As of December 31, 2023, 951,170 options were outstanding under the plan (December 31, 2022 – 447,787).

Stock-based Compensation

The following table summarizes information about stock options outstanding under the Plan at December 31, 2023:

				Weighted
		Weighted		Average
		Average		Remaining
	Number of	Exercise		Contractual	Intrinsic
	Shares	Price		Life (Years)	Value
	(in thousands, except per share and year data)
Balance at December 31, 2020	701	$	15.51	4.2	$	53
Granted	95		12.21	—		—
Exercised	—		—	—		10
Forfeited	(159)		14.56	—		2
Expired	(20)		71.00	—		—
Balance at December 31, 2021	617	$	13.43	4.2	$	53
Forfeited	(159)		12.27	—		2
Expired	(10)		27.80	—		—
Balance at December 31, 2022	448	$	13.43	2.6	$	—
Granted	570		7.10	—		—
Forfeited	(67)		11.45	—		3
Balance at December 31, 2023	951	$	9.78	3.0	$	61
Exercisable at December 31, 2023	385	$	13.53	1.5	$	—

Stock options have been granted to key employees, directors and consultants under the Plan.  Options to purchase shares under the Plan were granted with an exercise price at or above the market value of the common stock as of the date of the grant. During the year ended December 31, 2023, the Company granted stock options to certain employees and directors for an aggregate of 0.6 million shares of common stock at a weighted average exercise price of $7.1 per share. The options vest equally over a three-year period if the individuals remain affiliated with the Company and are exercisable for a period of five years from the date of grant.

No options were granted during the year ended December 31, 2022.

During the year ended December 31, 2021, the Company granted stock options to certain employees and directors for an aggregate of 0.1 million shares of common stock at a weighted average exercise price of $12.20 per share. The options vest equally over a three-year period if the individuals remain affiliated with the Company (subject to acceleration of vesting in certain events) and are exercisable for a period of five years from the date of grant.

The fair value of the options granted under the Plan was estimated at the date of grant, using the Black-Scholes option-pricing model, with the following weighted-average assumptions:

		2023		2022		2021
Risk-free interest rate		4.44%		—		0.519% to 0.873%
Dividend yield		0.00%		—		0.00%
Volatility factor of the expected market price of common stock		67%		—		63%
Weighted-average expected life of option		3 years		—		3.5 years
Weighted-average grant date fair value	$	3.36	$	—	$	1.22

During the year ended December 31, 2023, the Company recorded stock option expense of $0.3 million (December 31, 2022 – $0.3 million, and December 31, 2021 – $0.8 million) while the corresponding fair value of awards vesting in the period was $0.4 million (December 31, 2022 – $0.8 million, and December 31, 2021 – $0.8 million).  

As of December 31, 2023, there was $1.9 million (December 31, 2022 – $0.1 million, and December 31, 2021 – $0.6 million) of unrecognized compensation expense related to 0.6 million unvested stock options outstanding (December 31, 2022 – 0.4 million, and December 31, 2021 – 0.4 million). This cost is expected to be recognized over a weighted-average period of approximately 1.5 years (2022 – 0.9 years, 2021 – 1.4 years).

The following table summarizes the status and activity of non-vested stock options for the year ended December 31, 2023, for the Company’s Plan and the replacement options from the acquisition of Lexam:

		Weighted Average
		Grant Date
	Number of	Fair Value
	Shares	Per Share
	(in thousands, except per share amounts)
Non-vested balance at December 31, 2022	126	$	4.15
Granted	570	$	3.36
Cancelled/Forfeited	(28)	$	3.65
Vested	(102)	$	4.12
Non-vested balance at December 31, 2023	566	$	3.39

Restricted Stock Units

The following table summarizes information about Restricted Stock Units (“RSUs”) under the Plan for the years ended December 31, 2023, 2022 and 2021:

	Number of
	Shares
	(in thousands)
Balance at December 31, 2020	—
Granted	—
Vested and issued	—
Balance at December 31, 2021	—
Granted	—
Vested and issued	—
Balance at December 31, 2022	—
Granted	109
Vested and issued	(80)
Balance at December 31, 2023	29

The Company provides equity compensation in the form of RSUs to certain eligible members. For the year ended December 31, 2023, 109,000 awards were granted to certain employees. The compensation expense related to the RSU awards recognized by the Company during 2023 was $0.6 million (December 31, 2022 – $nil, and December 31, 2021 – $nil).