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11. Equity

12 Months Ended

Dec. 31, 2019

11. Equity

The Company has authorized 200,000,000 shares of no par common stock at December 31, 2019 and 2018. In addition, the Company has authorized 1,000,000 shares of no par preferred stock, none of which had been issued at December 31, 2019 or 2018.

2019 Activity:

·In the second quarter of 2019, 1,200,000 warrants were exercised in exchange for 398,575 shares of the Company’s common stock in a cashless warrant exercise.

2018 Activity

·On March 2, 2018, the Company entered into an agreement with J-J Farms LLC and Achievement Holdings LLC (“Crown Point”) to lease a group of patented and unpatented mining claims. The initial payment was 1,333,333 shares of the Company’s restricted common stock valued at $0.175/share. Fair value was based on the trading price of the Company’s stock on the date of the transaction.

·In the first and second quarters of 2018, the Company offered units for sale under a private placement. Each unit consisted of one share of the Company’s stock and one half of one stock purchase warrant with each whole warrant exercisable for one share of the Company’s stock at $0.22 for 24 months. The Company sold 8,858,578 units for net proceeds of $1,107,571.

·In 2018, the Company issued 108,000 shares of common stock pursuant to the exercise of stock purchase options at $0.15 per share for $16,200 cash.

·In the fourth quarter of 2018, the Company offered units for sale under a private placement. The Company sold 750,000 units for net proceeds of $99,285. Each unit consisted of one share of the Company’s stock and one half of one stock purchase warrant with each whole warrant exercisable for one share of the Company’s stock at CDN$0.25 for 48 months. These warrants were initially sold with an exercise price that was not in the Company’s functional currency of the U.S. dollar. The Company did not account for the warrants as derivatives at December 31, 2018 as it was not considered material to the consolidated financial statements. Subsequently, the Company amended the exercise price of the warrants to USD $0.18.

·During the year ended December 31, 2018, the Company issued 53,286 shares of its common stock valued at $9,059 for professional services. Fair value was based on the trading price of the Company’s stock on the date of the transaction.

Stock Purchase Warrants Outstanding

Transactions in common stock purchase warrants for the years ended December 31, 2019 and 2018 are as follows:

		Number of Warrants		Exercise Prices
Balance December 31, 2017		9,295,834		$0.10-0.20
Issued in connection with private placements		4,804,289		0.18-0.22
Balance December 31, 2018		14,100,123		$0.10-0.22
Exercised		(1,200,000)		0.10
Balance December 31, 2019		12,900,123		$0.18-0.22

These warrants expire as follows:

Shares	Exercise Price	Expiration Date
2,137,500	$0.20	February 28, 2020
4,250,000	$0.20	March 28, 2020
1,708,334	$0.20	November 3, 2020
2,506,212	$0.22	March 30, 2020
1,923,077	$0.22	April 20, 2020
375,000	$0.18	December14, 2023
12,900,123

Stock Options

In April 2014, the Board of Directors of the Company established a stock option plan to authorize the granting of stock options to officers and employees. Upon exercise of the options shares are issued from the available authorized shares of the Company. Options reserved to any one related person on an annual basis may not upon exercise exceed 5% and the aggregate number of all options outstanding will not exceed 10% of the issued outstanding common shares as a whole calculated at that time.

In 2017, the Company granted a total of 662,500 options to consultants and employees of the Company. These options vested in 2018. The options had a fair value of $66,539 which was being recognized ratably over the vesting period. Compensation cost of $42,020 was recognized on these options in 2018. No additional options were granted in 2018 and there was no unrecognized compensation at December 31, 2018.

In June 2019, 2,100,000 stock options were granted to non-officer employees. These options vested immediately and are exercisable at $0.14 for 3 years. Total stock based compensation recognized on these options was $190,019. The weighted average fair value of stock option awards granted and the key assumptions used in the Black-Scholes valuation model to calculate the fair value of the options are as follows:

	For the Year Ended December 31, 2019
Weighted average fair value	$0.09
Options issued	2,100,000
Exercise price	$0.14
Expected term (in years)	3.0
Risk-free rate	1.81%
Volatility	98.6%

Transactions in stock options for the years ended December 31, 2019 and 2018 are as follows:

	Number of Options		Exercise Prices
Balance December 31, 2017	7,662,500		0.10-0.18
Exercised	(108,000)		0.15
Expired	(500,000)		0.10
Balance December 31, 2018	7,054,500		0.10-0.18
Granted	2,100,000		0.14
Expired	(3,892,000)		0.10-0.15
Balance December 31, 2019	5,262,500		0.10-0.18

Exercisable at December 31, 2019	5,262,500	$	0.10-0.18

At December 31, 2019, the stock options have an intrinsic value of approximately $54,000 and have a weighted average remaining term of 1.62 years.