Stock Options

12 Months Ended

Dec. 31, 2012

Stock Options

Stock Options

The following table summarizes stock option activity in the Company’s stock-based compensation plans for the year ended December 31, 2012. All options issued were non-qualified stock options. All options have been restated for the 1:50 reverse stock split on January 12, 2012.

	Number of Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value (1)		Number of Shares Exercisable		Weighted Average Fair Value At Date of Grant
Outstanding at December 31, 2010		-		-		-		-
Granted at Fair Value		180,000	$	.83				80,000	$	1.35
Exercised		-		-
Cancelled		-		-				-
Outstanding at December 31, 2011		180,000	$	.83	$	147,000		80,000
Granted at Fair Value		130,000	$	.84				45,000	$	1.32
Exercised		-		-
Cancelled		90,000	$	.83				-
Outstanding at December 31, 2012		220,000	$	.84	$	0		125,000

(1) The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option at December 31, 2012. If the exercise price exceeds the market value, there is no intrinsic value.

The fair value of the stock option grants are amortized over the respective vesting period using the straight-line method and assuming no forfeitures and cancelations. The Company has no historical experience to estimate forfeitures and cancellations.

Compensation expense related to stock options included in Exploration Expense and General and Administrative Expense in the accompanying consolidated statement of operations for the years ended December 31, 2012 and December 31, 2011, was $191,719, and $108,000, respectively. The estimated unrecognized compensation cost from unvested options as of December 31, 2012 was approximately $64,156, which is expected to be recognized over a period of 1.2 years.

Stock options are granted at the fair market value of the Company’s common stock on the date of grant. Options granted to officers and other employees vest immediately or over 24 months as provided in the option at the date of grant.

The fair value of each option granted in 2012 and 2011 was estimated using the Black-Scholes Option Pricing Model. The following assumptions were used to compute the weighted average fair value of options granted during the periods presented.

	2012			2011
Expected life of option	0 to 6 years			0 to 6 years
Risk free interest rates		.8% - .8	%		.9	%
Estimated volatility		514.9% - 585.0	%		685.1	%
Dividend yield		0.0	%		0.0	%

The following table summarizes information about stock options outstanding at December 31, 2012:

Range of Exercise Prices		Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Aggregate Intrinsic Value (1)		Number Exercisable		Weighted Average Exercise Price of Exercisable Options		Aggregate Intrinsic Value (1)
$	.50 - $1.00		220,000		4.1	$	.84	$	0		164,378	$	.78	$	0

(1) The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option at December 31, 2012. If the exercise price exceeds the market value, there is no intrinsic value.

The following table summarizes information about options outstanding at December 31, 2011:

Range of Exercise Prices		Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Aggregate Intrinsic Value (1)		Number Exercisable		Weighted Average Exercise Price of Exercisable Options		Aggregate Intrinsic Value
$	0.01 - $0.02		180,000		4.7	$	.85	$	147,000		80,000	$	.65	$	82,000

A summary of the Company’s non-vested stock options at December 31, 2012 and December 31, 2011 and changes during the years are presented below.

Non-Vested Stock Options	Options			Weighted Average Grant Date Fair Value
Non-Vested at December 31, 2011		100,000		$	1.35
Granted		85,000		$	1.36
Vested		(69,378	)	$	1.26
Forfeited		(60,000	)	$	1.65
Non-Vested at December 31, 2012		55,622		$	1.15

Non-Vested Stock Options	Options			Weighted Average Grant Date Fair Value
Non-Vested at December 31, 2010		0		$	0.00
Granted		180,000		$	1.35
Vested		(80,000	)	$	1.26
Forfeited		0		$	1.65
Non-Vested at December 31, 2011		100,000		$	1.15