Page 63 - Sun Resources 2014 Annual Report

16 Share-based Payments (continued)
The Company issued 20,000,000 unlisted options on 12 September 2012 to a stockbroking firm with an exercise price
of $0.025 per option on or before 31 March 2014 in consideration for services rendered in relation to the expansion of the
Delta Oil Project. The fair value calculated of $991,009 for these 18 month options at the date of issue was independently
determined using the Black-Scholes option pricing model that takes into account the exercise price ($0.025), the share price
at grant date ($0.07), expected volatility of the share price (90%) and the risk-free interest rate (2.45%).
The Company issued 8,265,000 unlisted options on 12 September 2012 to the Vendor of the Delta Oil Project with an
exercise price of $0.025 per option on or before 31 March 2014 in consideration for the acquisition of the Delta Oil Project.
The fair value calculated of $409,534 for these 18 month options at the date of issue was independently determined using
the Black-Scholes option pricing model that takes into account the exercise price ($0.025), the share price at grant date
($0.07), expected volatility of the share price (90%) and the risk-free interest rate (2.45%).
The Company issued the following Performance Options on 12 September 2012 to Carina Energy LLC:
Class D Performance Options
The Company issued 10,744,500 class D performance options on 12 September 2012.
These options can be exercised if the Company acquires at least 5,000 net acres of additional oil and gas leases (introduced
by the Delta Oil Project Vendor on acceptable terms to the Company, acting reasonably) by 5pm WST on 28 February
2013. The Company determined that it was “more likely” rather than “less likely” that the performance milestone would be
achieved.
A Black-scholes valuation was completed for this 3rd progressive issue using an applicable exercise price of $0.001 per
option on or before 28 February 2013 in consideration for the acquisition of the Delta Oil Project. The fair value calculated
as $741,656 for these options at the date of issue was independently determined using the Black-Scholes option pricing
model that takes into account the exercise price ($0.001), the share price at grant date ($0.07), expected volatility of the
share price (90%) and the risk-free interest rate (2.45%).
Class E Performance Options
The Company issued 10,744,500 Class E Performance Options expiring no later than 5pm on the 30 April 2017.
These options can be exercised if the Company attains 2P Reserves (net to the Company) of 10,000,000 barrels of oil and
average daily oil production of 500 barrels of oil per day (from assets introduced to the Company by Carina) by 5pm WST
on 31 August 2016.
The Company determined that it was “less likely” rather than “more likely” that the performance milestone would be achieved
due to the inherent uncertainty of oil & gas exploration.
A value of zero was given to this class of options.
Class F Performance Options
The Company issued 12,397,500 Class F Performance Options expiring no later than 5pm on the 30 April 2017.
These options can be exercised if the Company attains 2P Reserves (net to the Company) of 20,000,000 barrels of oil and
average daily oil production of 1,000 barrels of oil per day (from assets introduced to the Company by Carina) by 5pm WST
on 31 August 2016.
The Company determined that it was “less likely” rather than “more likely” that the performance milestone would be achieved
due to the inherent uncertainty of oil & gas exploration.
A value of zero was given to this class of options.
Class G Performance Options
The Company issued 75,000,000 class G performance options on 12 September 2012.
These options can be exercised if the Company acquires at least 5,000 net acres of additional Woodbine oil and gas leases
(introduced by the Delta Oil Project Vendor on acceptable terms to the Company, acting reasonably) by 5pm WST on 30
June 2013. The Company determined that it was “more likely” rather than “less likely” that the performance milestone would
be achieved.
A Black-scholes valuation was completed for this issue using an applicable exercise price of $0.001 per option on or before
30 June 2013 in consideration for the acquisition of the Delta Oil Project. The fair value calculated as $5,176,583 for these
options at the date of issue was independently determined using the Black-Scholes option pricing model that takes into
account the exercise price ($0.001), the share price at grant date ($0.07), expected volatility of the share price (90%) and
the risk-free interest rate (2.45%).
Class H Performance Options
The Company issued 75,000,000 Class H Performance Options expired on 5.00pm on the 31 March 2013.
These options can be exercised by the holder in the event a substantial portion of the acres the subject of the Delta Oil
Project are farmed out to a reputable third party or is the subject of a materially value accretive transaction with a reputable
third party, on or before 5.00pm WST on 31 March 2013.
The Company determined that it was “less likely” rather than “more likely” that the performance milestone would be achieved
due to the inherent uncertainty of oil & gas exploration.
A value of zero was given to this class of options.
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS
SUN RESOURCES ANNUAL REPORT 2014  61