Stock Based Compensation

September

15,

2010,

the Company's Board of Directors (the “Board”) adopted the Contango ORE, Inc. Equity Compensation Plan (the

“2010

Plan”). On

November 14, 2017,

the Stockholders of the Company approved and adopted the Contango ORE, Inc. Amended and Restated

2010

Equity Compensation Plan (the “Amended Equity Plan”). The amendments to the

2010

Plan included (a) increasing the number of shares of common stock that the Company

may

issue under the plan by

500,000

shares; (b) extending the term of the plan until

September 15, 2027;

and (c) allowing the Company to withhold shares to satisfy the Company's tax withholding obligations with respect to grants paid in Company Stock.

November 13, 2019,

the Stockholders of the Company approved and adopted the First Amendment (the “Amendment”) to the Contango ORE, Inc. Amended and Restated

2010

Equity Compensation Plan (as amended, the “Equity Plan”) which increases the number of shares of common stock that the Company

may

issue under the Equity Plan by

500,000

shares. Under the Equity Plan, the Board

may

issue up to

2,000,000

shares of common stock and options to officers, directors, employees or consultants of the Company. Awards made under the Equity Plan are subject to such restrictions, terms and conditions, including forfeitures, if any, as

may

be determined by the Board. As of

June 30, 2021,

there were

401,333

shares of unvested restricted common stock outstanding and

100,000

options to purchase shares of common stock outstanding issued under the Equity Plan. Stock-based compensation expense for the years ended

June 30, 2021

and

2020

was

$3,892,883

and

$3,368,916,

respectively. The amount of compensation expense recognized does

not

reflect cash compensation actually received by the individuals during the current period, but rather represents the amount of expense recognized by the Company in accordance with GAAP. All restricted stock grants are expensed over the applicable vesting period based on the fair value at the date the stock is granted. The grant date fair value

may

differ from the fair value on the date the individual's restricted stock actually vests.

Stock Options.

Under the Equity Plan, options granted must have an exercise price equal to or greater than the market price of the Company's common stock on the date of grant. The Company

may

grant key employees both incentive stock options intended to qualify under Section

422

of the Internal Revenue Code of

1986,

as amended, and stock options that are

not

qualified as incentive stock options. Stock option grants to non-employees, such as directors and consultants,

may

only be stock options that are

not

qualified as incentive stock options. Options generally expire after

five

years. Upon option exercise, the Company's policy is to issue new shares to option holders.

The Company applies the fair value method to account for stock option expense. Under this method, cash flows from the exercise of stock options resulting from tax benefits in excess of recognized cumulative compensation cost (excess tax benefits)

are classified as financing cash flows. See Note

Summary of Significant Accounting Policies. All employee stock option grants are expensed over the stock option's vesting period based on the fair value at the date the options are granted. The fair value of each option is estimated as of the date of grant using the Black-Scholes options-pricing model. Expected volatilities are based on the historical weekly volatility of the Company's stock with a look back period equal to the expected term of the options. The expected dividend yield is

zero

as the Company has never declared and to does

not

anticipate declaring dividends on its common stock. The expected term of the options granted represent the period of time that the options are expected to be outstanding. The simplified method is used for estimating the expected term, due to the lack of historical stock option exercise activity. The risk-free interest rate is based on U.S. Treasury bills with a duration equal to or close to the expected term of the options at the time of grant. The fair value of stock options vested in fiscal year

2021

and

2020

was approximately

$7.42

and

$0,

respectively. As of

June 30, 2021,

the total unrecognized compensation cost related to nonvested stock options was

$192,089

. As of

June 30, 2021 the stock options had a weighted average remaining life of 3.5 years

In connection with the appointment of Rick Van Nieuwenhuyse as the President and Chief Executive Officer of the Company, on

January 6, 2020,

the Company granted to Mr. Van Nieuwenhuyse options to purchase

100,000

shares of Common Stock of the Company, with an exercise price of

$14.50

per share, which is equal to the closing price on

January 6, 2020,

the day on which he began employment with the Company. The options vest in

two

equal installments, half vested on the

first

anniversary of Mr. Van Nieuwenhuyse's employment with the Company and half will vest on the

second

anniversary of his employment with the Company, subject to acceleration upon a change of control of the Company.

A summary of the status of stock options granted under the

2010

Plan as of

June 30, 2021

and

2020,

and changes during the fiscal years then ended, is presented in the table below:

	Year Ended June 30,
	2021				2020
				Weighted			Weighted
		Shares		Average	Shares		Average
		Under		Exercise	Under		Exercise
		Options		Price	Options		Price
Outstanding, beginning of year		100,000	$	14.50		—	$	—
Granted		—	$	—		100,000	$	14.50
Exercised		—	$	—		—	$	—
Forfeited		—	$	—		—	$	—
Cancelled		—	$	—		—	$	—
Outstanding, end of year		100,000	$	14.50		100,000	$	14.50
Aggregate intrinsic value	$	595,468			$	—

Exercisable, end of year		50,000	$	—		—	$	—
Aggregate intrinsic value	$	297,734			$	—

Available for grant, end of year		260,927				466,760

Weighted average fair value of options granted during the year (1)	$	—			$	7.42

_______________

(

)

The fair value of each option is estimated as of the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grant during the year ended

June 30, 2020

respectively: (i) risk-free interest rate of

1.56

percent (ii) expected life of

3.3

(iii) expected volatility of

74.0

percent and (iv) expected dividend yield of

zero

percent.

There were

options granted during the fiscal year ended

June 30, 2021

Restricted Stock.

Under the Equity Plan, the Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) shall determine to what extent, and under what conditions, the Participant shall have the right to vote shares of Stock Awards and to receive any dividends or other distributions paid on such shares during the restriction period. The terms and applicable voting and dividend rights are outlined in the individual restricted stock agreements.

All restricted stock grants are expensed over the applicable vesting period based on the fair value at the date the stock is granted. The grant date fair value

may

differ from the fair value on the date the individual's restricted stock actually vests. The total grant date fair value of the restricted stock granted in the fiscal years ended

June 30, 2021

and

2020

was

$3.7

million and

$3.5

million, respectively.

November 2019,

the Company granted

158,000

restricted shares of Common Stock to its executives and non-executive directors. The restricted stock granted vests in

January 2022.

As of

June 30, 2021,

there were

158,000

shares of such restricted stock that remained unvested.

In connection with the appointment of Rick Van Nieuwenhuyse as the President and Chief Executive Officer of the Company, on

January 9, 2020,

the Company issued

75,000

shares of restricted stock to Mr. Van Nieuwenhuyse. The shares of restricted stock will vest in

two

equal installments, half on the

first

anniversary of Mr. Van Nieuwenhuyse's employment with the Company and half on the

second

anniversary of his employment with the Company, subject to acceleration upon a change of control of the Company. As of

June 30, 2021,

there were

37,500

shares of restricted stock from this grant that remained unvested.

December 1, 2020,

the Company granted an aggregate

20,000

shares of Common Stock to

two

new employees. The restricted stock granted to such employees vests in equal installments over

three

years on the anniversary of the grant date. On

December 11, 2020,

the Company granted

162,500

restricted shares of Common Stock to its executives and non-executive directors. The restricted stock granted to the executives and non-executive directors vests between

January 2022

and

January 2023.

December 11, 2020

the Company also granted Mr. Van Nieuwenhuyse

23,333

shares of restricted stock in conjunction with his short-term incentive plan, and such shares will vest in

January 2022.

As of

June 30, 2021,

all

205,833

shares of restricted stock granted in

December 2020

remained unvested.

As of

June 30, 2021,

there were

401,333

shares of such restricted stock that remained unvested.

A summary of the Company

's restricted stock as of

June

30,

2021

and

2020

and the change during the years then ended, is as follows:

	Number of Shares			Weighted Average Fair Value Per Share
Nonvested balance at June 30, 2019		456,666		$	18.34
Granted		233,000		$	14.81
Vested		(155,000	)	$	19.50
Forfeited		—		$	—
Nonvested balance at June 30, 2020		534,666		$	16.47
Granted		205,833		$	17.89
Vested		(339,166	)	$	17.58
Nonvested balance at June 30, 2021		401,333		$	16.28

As of

June

30,

2021

, the total compensation cost related to nonvested restricted share awards

not

yet recognized was

$3,435,316

. The remaining costs are expected to be recognized over the remaining vesting period of the awards.