SHAREHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2024

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 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 Expenses (“CEE”)

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.

On June 14, 2024, the Company issued 643,000 flow-through common shares priced at $15.45 per share for gross proceeds of $10.0 million. The proceeds of this offering are expected to be used for the ongoing exploration of the Fox Complex. The total issuance costs related to the issuance of the flow-through shares were $0.7 million, which were accounted for as a reduction to the value of the common shares. The net proceeds of $9.3 million were allocated between the sale of tax benefits in the amount of $3.3 million and sale of common shares in the amount of $6.0 million.

The Company is required to spend these flow-through share proceeds on flow-through eligible expenditures, as defined by subsection 66.1(5) and 66.1(6) of the Income Tax Act (Canada). As of December 31, 2024, the Company incurred a total of $7.9 million in eligible CEE (December 31, 2023 – $13.5 million). The Company has met its CEE commitments from the December 2023 issuance in 2024. The remaining CEE commitments from the June 2024 issuance are expected to be fulfilled by the end of 2025.

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.

On June 14, 2024, the Company issued 890,000 flow-through common shares priced at $13.40 per share for gross proceeds of $11.9 million. The proceeds of this offering are expected to be used for the ongoing development of the Fox Complex. 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 $11.1 million were allocated between the sale of tax benefits in the amount of $2.7 million and sale of common shares in the amount of $8.4 million.

The Company is required to spend these flow-through share proceeds on flow-through eligible expenditures, as defined by subsection 66.1(5) and 66.1(6) of the Income Tax Act (Canada). As of December 31, 2024, the Company incurred a total of $9.5 million in eligible CDE (December 31, 2023 – $nil). The Company has met its CDE commitments from the December 2023 issuance in 2024. The remaining CDE commitments from the June 2024 issuance are expected to be fulfilled by the end of 2025.

Shares Issued in Timberline Acquisition

On August 19, 2024, the Company acquired Timberline Resources Corporation (“Timberline”). Pursuant to the Agreement and Plan of Merger, the Company issued 1,839,306 common shares with a fair value of $18.3 million and 205,349 warrants valued at $0.9 million. The fair value of instruments was included in the cost of acquired assets, as described in Note 20.

The number of common shares to be issued was determined by multiplying the number of Timberline shares outstanding by the exchange ratio of 0.01. The Company recorded $17.7 million in equity for the common shares issued, determined as total proceeds of $18.3 million less issuance costs of $0.6 million.

Outstanding Timberline warrants were assumed by the Company on the date of the acquisition. Each of the warrants assumed entitles the holder to purchase one share of the Company at the agreed-upon exercise price, as converted using the exchange ratio. Of the 205,349 warrants issued, 37,500 expired on October 15, 2024; 72,849 expire on August 31, 2026; and 95,000 expire on December 31, 2027. Exercise prices for each series are $12.00, $8.00, and $6.00, respectively.

Stock-based Compensation

Stock Options

The Company’s Amended and Restated Equity Incentive Plan (the “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, 2024, 832,614 options were outstanding under the plan (December 31, 2023 – 1,011,170).

The following table summarizes information about stock options outstanding under the Plan at December 31, 2024:

				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, 2021	617	$	13.43	4.2	$	53
Forfeited	(159)		12.27	—		2
Expired	(10)		28.70	—		—
Balance at December 31, 2022	448	$	13.43	2.6	$	—
Granted	630		7.22	—		—
Forfeited	(67)		11.45	—		3
Balance at December 31, 2023	1,011	$	9.69	3.0	$	61
Exercised	(8)		7.10	—		6
Forfeited	(75)		10.56	—		49
Expired	(95)		16.70	—		—
Balance at December 31, 2024	833	$	8.84	2.7	$	352
Exercisable at December 31, 2024	448	$	10.23	2.0	$	115

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. No stock options were granted during the year ended December 31, 2024. 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 $7.22 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.

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:

	2024		2023	2022
Risk-free interest rate	—		4.44%	—
Dividend yield	—		0.00%	—
Volatility factor of the expected market price of common stock	—		67%	—
Weighted-average expected life of option	—		3 years	—
Weighted-average grant date fair value	—	$	3.36	—

During the year ended December 31, 2024, the Company recorded stock option expense of $0.9 million (December 31, 2023 – $0.3 million, and December 31, 2022 – $0.3 million) while the corresponding fair value of awards vesting in the year was $0.7 million (December 31, 2023 – $0.4 million, and December 31, 2022 – $0.8 million).

As of December 31, 2024, there was $1.3 million (December 31, 2023 – $1.9 million, and December 31, 2022 – $0.1 million) of unrecognized compensation expense related to 0.4 million unvested stock options outstanding (December 31, 2023 – 0.6 million, and December 31, 2022 – 0.4 million). This cost is expected to be recognized over a weighted-average period of approximately 1.3 years (2023 – 1.5 years, 2022 – 0.9 years).

The following table summarizes the status and activity of non-vested stock options for the year ended December 31, 2024, 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, 2023	623	$	3.39
Forfeited	(27)	$	3.36
Vested	(211)	$	3.43
Non-vested balance at December 31, 2024	385	$	3.37

Restricted Stock Units

The following table summarizes information about Restricted Stock Units (“RSUs”) under the Plan for the years ended December 31, 2024, 2023 and 2022:

	Number of Shares
	(in thousands)
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
Granted	258
Vested and issued	(273)
Balance at December 31, 2024	14

The Company provides equity compensation in the form of RSUs to certain eligible employees. For the year ended December 31, 2024, 257,906 RSU awards were granted. The related compensation expense recognized during 2024 was $2.3 million (December 31, 2023 – $0.6 million, and December 31, 2022 – $nil).