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SHAREHOLDERS' EQUITY
 12 Months Ended
Dec. 31, 2022
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.

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.

Equity Issuances

Equity Financing

During the year ended December 31, 2021, the Company completed a registered direct offering of common stock and issued 3,000,000 shares priced at $10.50 per share for gross proceeds of $31.5 million. Total issuance costs amounted to $1.7 million for net proceeds of $29.9 million.

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 have been or will be used for the continued development of 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 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 31, 2020, the Company issued 766,990 flow-through common shares priced at $12.80 per share for gross proceeds of $9.8 million. The purpose of this offering was to fund exploration activities on the Company’s properties in the Timmins region of Canada. No issuance costs were incurred as part of this issuance. Proceeds of $9.8 million were allocated between the sale of tax benefits in the amount of $2.1 million and the sale of common shares in the amount of $7.7 million.

On September 10, 2020, the Company issued 629,816 flow-through common shares priced at $16.50 per share for gross proceeds of $10.4 million. The purpose of this offering was also to fund exploration activities on the Company’s properties in the Timmins region of Canada. The total issuance costs related to the issuance of the flow-through shares were $0.6 million, which were accounted for as a reduction to the common shares. The net proceeds of $9.8 million were allocated between the sale of tax benefits in the amount of $2.0 million and the sale of common shares in the amount of $7.8 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). As of December 31, 2022, the Company had incurred a total of $21.4 million in eligible CEE ($12.7 million as of December 31, 2021). The Company expects to fulfill its remaining CEE commitments from its most recent common share flow through offering of $15.1 million by the end of 2023.

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

On January 29, 2021, the Company issued 1,260,060 flow-through common shares priced at $10.10 per share for gross proceeds of $12.7 million. The purpose of this offering was to fund the continued development of the Froome Mine. 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 common shares. The net proceeds of $12.0 million were allocated between the sale of tax benefits in the amount of $1.2 million and the sale of common shares in the amount of $10.8 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 satisfied the total of $12.7 million CDE requirement during 2021.

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:

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​

​

​

​

​

​

​

​

​

​

​

​

​

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, 2022, 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 (“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 1.75 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 provide potential tax benefits to the recipients compared to non-qualified options.

As of December 31, 2022, 447,787 options were outstanding under the plan (December 31, 2021 – 616,958).

Shareholder Distributions

Pursuant to the ARCA (Note 11), the Company is prevented from paying any dividends on its common stock, so long as the loan is outstanding.

Stock-Based Compensation

The following table summarizes information about stock options outstanding under the Plan at December 31, 2022:

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​

​

​

​

​

​

​

​

​

​

​

​

​

    

​

    

​

​

    

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, 2019

 

527

​

$

20.02

 

3.0

​

$

364

​

Granted

 

510

​

​

12.24

​

—

​

​

—

​

Exercised

 

(14)

​

​

10.20

​

—

​

​

10

​

Forfeited

​

(197)

​

​

21.79

​

—

​

​

2

​

Expired

​

(125)

​

​

11.85

​

—

​

​

—

​

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

​

$

—

​

Exercisable at December 31, 2022

 

321

​

$

13.81

 

2.6

​

$

—

​

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Stock options have been granted to key employees, directors and consultants under the Plan.  Options to purchase shares under the Plan were granted at or above the market value of the common stock as of the date of the grant. 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:

​

​

​

​

​

​

​

​

​

​

2022

    

​

2021

    

​

2020

Risk-free interest rate

-

​

​

0.519% to 0.873%

​

​

0.157% to 0.322%

Dividend yield

-

​

​

0.00%

​

​

0.00%

Volatility factor of the expected market price of common stock

-

​

​

63%

​

​

59%

Weighted-average expected life of option

-

​

​

3.5 years

​

​

3.5 years

Weighted-average grant date fair value

-

​

$

1.22

​

$

1.22

​

During the year ended December 31, 2022, the Company recorded stock option expense of $0.3 million (2021 – $0.8 million, 2020 – $0.6 million) while the corresponding fair value of awards vesting in the period was $0.8 million (2021 – $0.8 million and 2020 – $0.1 million).  

As of December 31, 2022, there was $0.1 million (2021 – $0.6 million, 2020 - $1.4 million) of unrecognized compensation expense related to 0.4 million (2021 – 0.4 million, 2020 – 0.6 million) unvested stock options outstanding. This cost is expected to be recognized over a weighted-average period of approximately 0.9 years (2021 – 1.4 years, 2020 – 1.6 years).

The following table summarizes the status and activity of non-vested stock options for the year ended December 31, 2022, for the Company’s Plan and the replacement options from the acquisition of Lexam:

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​

​

​

​

​

​

​

​

​

​

Weighted Average

​

​

​

​

Grant Date

​

​

Number of

​

Fair Value

​

    

Shares

    

Per Share

​

​

(in thousands, except per share amounts)

Non-vested, beginning of year

​

390

​

$

4.26

Granted

​

—

​

$

-

Cancelled/Forfeited

​

(99)

​

$

4.16

Vested

​

(165)

​

$

4.40

Non-vested, end of year

​

126

​

$

4.15

​