Trilogy Metals Reports First Quarter Fiscal 2020 Financial Results
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News Release
Trilogy Metals Reports First Quarter Fiscal 2020 Financial Results
April 8, 2020 - Vancouver, British Columbia – Trilogy Metals Inc. (TSX / NYSE
American: TMQ) ("Trilogy Metals” or "the Company”) announces its financial results for the
first quarter ended February 29, 20 20. Details of the Company's financial results are
contained in the interim un audited consolidated financial statements and Management's
Discussion and Analysis which will be available on the C ompany's website at
www.trilogymetals.com, on SEDAR at www.sedar.com and on EDGAR at www.sec. gov. All
amounts are in United States dollars unless otherwise stated.
First Quarter 2020 and Recent Events Highlights
• Final Environmental Impact Statement for the Ambler access road released.
• Gain of $176 million recorded on the contribution of assets to the joint venture.
• Strong working capital position of $14.5 million and cash on hand of $15.2 million.
• Ambler Metals LLC with $145 million to fund the advancement of the projects.
• 2020 budget totalling $22.8 million for the Upper Kobuk Mineral Projects.
• COVID-19 may impact the timing and scope of the 2020 field programs.
Ambler Mining District Industrial Access Project (“AMDIAP”)
On March 27, 2020, the United States Bureau of Land Management (“BLM”), the lead federal
agency for the permitting of the AMDIAP, released the Final Environmental Impact Statement
(“EIS”) for the AMDIAP. The final step in the permittin g process for the AMDIAP is the
issuance of the Record of Decision by the BLM and the issuance of the Clean Water Act Section
404 permit from the United States Army Corp. of Engineers. The Company expects these two
items to be issued concurrently within th e next couple of months. For more information on
the Final EIS please visit the BLM website at https://www.blm.gov/alaska.
Impact of Coronavirus (COVID-19)
With respect to the outbreak of the novel coronavirus (COVID -19), Trilogy recognizes that
the situation is extremely fluid and is monitoring the State of Alaska Health Department
recommendations and restrictions on travel. These recommendations and restric tions may
significantly impact our ability to conduct the planned work programs during the upcoming
field season. So, although the work programs discussed below are still currently scheduled to
commence as originally planned, our highest priority is the he alth, safety and welfare of our
employees, contractors and community members. As a result, we and our joint venture
partner, through Ambler Metals LLC (“Ambler Metals”), will make the necessary adjustments
to the work programs, including extending the time line or scope for the remainder of the
TSX / NYSE American
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programs, or even cancelling the planned exploration activities at the UKMP for this season,
if it is determined to be necessary or prudent to do so.
Project Activities
2020 Operating Budget for the Upper Kobuk Mineral Projects
In a press release dated February 26, 2020, the Company announced that Ambler Metals had
approved a 2020 program budget of $22.8 million for the advancement of the UKMP. The
budget is 100% funded by Ambler Metals. The 2020 program budget includes 10,000 meters
of drilling at the Arctic Project, 2,500 meters of drilling within the Ambler Volcanogenic
massive Sulphide (“VMS”) Belt and geological mapping and geochemical soil sampling at the
Bornite Project. However the timing of these program s maybe delayed, see “Impact of
Coronavirus (COVID-19)” above.
Formation of Joint Venture
On February 11, 2020, the Company completed the formation of a 50/50 joint venture in the
form of Ambler Metals with South32 Limited (“South32”). As part of the formation of the joint
venture, Trilogy contributed all of its assets associated with the Upper Kobuk Mineral Projects,
including the Arctic and Bornite projects, while South32 contributed $145 million, resulting in
each party’s subsidiaries directly owning a 50% interest in Ambler Metals. We use the equity
method of accounting for our investment in the joint venture. Our investment in Ambler
Metals was initially measured at its fair value upon recognition and a gain of $176 million was
recognized from the contribution of our mineral property assets to the joint venture.
Selected Results
The following selected financial information is prepared in accordance with U.S. GAAP.
in thousands of dollars,
except for per share amounts
Three months ended
Selected expenses February 29,
2020
$
February 28,
2019
$
General and administrative 651 492
Mineral properties expense 1,545 1,535
Professional fees 668 91
Salaries 224 281
Salaries – stock-based compensation 1,196 1,939
Total expenses 4,475 4,458
Gain on derecognition of assets contributed to
joint venture
(175,770) -
Equity in investee 178 -
Comprehensive earnings (loss) for the period 171,179 (4,336)
Basic earnings (loss) per common share $1.22 $(0.03)
Diluted earnings (loss) per common share $1.16 $(0.03)
For the three months ended February 29, 2020, Trilogy reported net earnings of $171 million
(or $1.22 basic and $1.16 diluted earnings per common share). For the comparable period
in 2019, we reported a net loss of $4.3 million (or $0.03 basic and diluted loss per common
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share). The first quarter 2020 differences, when compared to the first quarter 2019 , are
primarily due to the gain of $176 million recognized from the contribution of mineral property
assets to the joint venture with South32 upon formation of the joint venture on February 11,
2020. This gain was slightly offset by $0.18 million in loss from equity investee, consisting of
Trilogy’s 50% share of Ambler Metals’ operating loss for the first quarter of 2020, for which
there is no comparable amount in the first quarter of 2019.
Other variances noted for the comparable period were i) an increas e in general and
administrative expenses of $0.16 million primarily due to an additional $0.07 million in
regulatory fees due mostly to the filing of the base shelf prospectus and $0.1 million in
executive recruiting fees; ii) an increase in professional fees of $0.58 million mainly consisting
of $0.12 million for consulting fees for the research and implementation of new accounting
standards, legal fees of $0.25 million related to the formation of the joint venture, valuation
and loan capacity analysis fees of $0.07 million related to the formation of the joint venture,
and $0.1 million of consulting fees; iii) a decrease of $0.06 million in salaries due to reductions
in head office staffing levels; and iv) a decrease in stock-based compensation driven primarily
by a 0.38 million reduction in the number of stock options granted during the first quarter
versus the comparative period as well as no vesting of RSUs during the period, resulting in
stock based compensation savings of approximately $0.74 million an d $0.33 million,
respectively.
Mineral property expenses for the three months ended February 29, 2020 were consistent
with the comparative period and mainly include engineering costs related to the Company’s
Arctic feasibility study.
Liquidity and Capital Resources
At February 29, 2020, we had $15.2 million in cash and cash equivalents and working capital
of $14.5 million, which is sufficient to fund our ongoing operations for at least the next 12
months. The projects will be funded by Ambler Metals and we do not anticipate needing to
fund our 50% share of future expenditures to advance the projects until the approximately
$145 million is spent.
Qualified Persons
Andrew W. West, Certified Professional Geologist, Exploration Manager for Trilogy Metals Inc.,
is a Qualified Person as defined by National Instrument 43- 101. Mr. West has reviewed the
technical information in this news release and approves the disclosure contained herein.
About Trilogy Metals
Trilogy Metals Inc. is a metals exploration and development company which holds a 50 percent
interest in Ambler Metals LLC which has a 100 percent interest in the UKMP in northwestern
Alaska. On December 19, 2020 , South32, which is a globally diversified mining and metals
company, exercised its option to form a 50/50 joint venture with Trilogy. The UKMP is located
within the Ambler Mining District which is one of the richest and most -prospective known
copper-dominant districts located in one of the safest geopolitical jurisdictions in the world. It
hosts world-class polymetallic VMS deposits that contain copper, zinc, lead, gold and silver,
and carbonate replacement deposits which have been found to host high -grade copper and
cobalt mineralization. Exploration efforts have been focused on two depo sits in the Ambler
mining district - the Arctic VMS deposit and the Bornite carbonate replacement deposit. Both
deposits are located within land package that spans approximately 172,636 hectares. The
Company has an agreement with NANA Regional Corporation, Inc., a Regional Alaska Native
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Corporation that provides a framework for the exploration and potential development of the
Ambler mining district in cooperation with local communities. Our vision is to develop the
Ambler mining district into a premier North American copper producer.
Company Contacts
Elaine Sanders Patrick Donnelly
Vice President & Chief Financial Officer Vice President Corporate Communications
& Development
604-638-8088 or 1-855-638-8088
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Cautionary Note Regarding Forward-Looking Statements
This press release includes certain "forward-looking information” and "forward-looking statements”
(collectively "forward-looking statements”) within the meaning of applicable Canadian and United
States securities legislation including the United States Pr ivate Securities Litigation Reform Act of
1995. All statements, other than statements of historical fact, included herein, including, without
limitation, statements relating to the planned expenditures and the anticipated drilling, timing of
permits, the Company’s ability to fund its operations and the requirement for additional funding at
Ambler Metals are forward -looking statements. Forward -looking statements are frequently, but
not always, identified by words such as "expects”, "anticipates”, "believes”, "intends”, "estimates”,
"potential”, "possible”, and similar expressions, or statements that events, conditions, or results
"will”, "may”, "could”, or "should” occur or be achieved. Forward -looking statements involve
various risks and uncertainties. There can be no assurance that such statements will prove to be
accurate, and actual results and future events could differ materially from those anticipated in such
statements. Important factors that could cause actual results to differ materially from the
Company's expectations include the uncertainties involving success of exploration activities,
permitting timelines, requirements for additional capital, risks pertaining to the outbreak of the
coronavirus (COVID-19), government regulation of mining operations, environmental risks, prices
for energy inputs, labour, materials, supplies and services, uncertainties involved in the
interpretation of drilling results and geological tests, unexpected cost increases and other risks
and uncertainties disclosed in the Company’s Annual Report on Form 10 -K for the year ended
November 30, 2019 filed with Canadian securities regulatory authorities and with the United States
Securities and Exchange Commission and in other Company reports and documents filed with
applicable se curities regulatory authorities from time to time. The Company's forward -looking
statements reflect the beliefs, opinions and projections on the date the statements are made. The
Company assumes no obligation to update the forward -looking statements or bel iefs, opinions,
projections, or other factors, should they change, except as required by law.