Trilogy Metals Reports Fiscal 2019 Year End Results
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News Release
Trilogy Metals Reports Fiscal 2019 Year End Results
February 13, 2020 - Vancouver, British Columbia – Trilogy Metals Inc. (TSX / NYSE
American: TMQ) ("Trilogy Metals” or "the Company”) announces its financial results for the
year and fourth quarter ended November 30, 2019. Details of the Company's financial results
are contained in the audited consolidated financial statements and Management's Discussion
and Analysis in our an nual report on Form 10 -K 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.
Highlights
• Strong cash position of $19.2 million and $17.8 million in working capital at
year end
• With South32 Limited’s (“South32”) election to form the Joint Venture, an
additional $145 million dedicated to advancing the Upper Kobuk Mineral
Projects (“UKMP”)
• Joint Venture is well funded - no additional funding required by Trilogy until
the $145 million Subscription Price has been spent
• Feasibility Study for the Arctic Project anticipated in the second quarter of
2020
Outlook for 2020
On February 11, 2020, Trilogy announced the completion of the 50/50 joint venture with
South32 (the “Joint Venture”). Trilogy contributed all of its assets associated with the
172,675-hectare UKMP, including the Arctic and Bornite projects, while South32 contributed
a Subscription Price of US$145 million, resulting in each party owning a 50% interest in the
joint venture named Ambler Metals LLC (“Ambler Metals”). The funds will be used to advance
the Arctic and Bornite projects, along with exploration in the Ambler mining district.
Many of Trilogy’s employees will be focused on working on the UKMP this year through a
services agreement with Ambler Met als. We expect to recover costs for our US -based
employees from Ambler Metals from February onward and we also expect that the majority
of our US -based employees will transition to being employees of Ambler Metals before the
end of the year. With Ambler Me tals being well funded, with access to $145 million, Trilogy
does not expect to fund programs and budgets to advance the UKMP until the Subscription
Price funds are spent by the LLC. Therefore, we anticipate that Trilogy’s current cash resources
TSX / NYSE American
Symbol: TMQ
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will be sufficient to fund our current level of corporate expenditures for three or more years.
With the Company completing the joint venture and engaging in an executive search for a
new CEO, we anticipate that our professional fees will be approximately $400,000 higher due
to this increased level of corporate activity.
We are also working on the accounting for our investment in the Joint Venture. With the
completion of the Joint Venture, we now hold a 50% interest in the UKMP which we expect to
record our interes t as an equity investment, which results in our share of Ambler Metals’
expenses being recorded in the income statement as an operating loss. We will provide
additional information on the 2020 program and budget when it is finalized.
The Company is also in the process of completing a feasibility study for the Arctic Project
which results are anticipated to be released in the second quarter of this year.
Annual Financial Results
The following selected annual information is prepared in accordance with U.S. GAAP.
in thousands of dollars,
except for per share amounts
Selected financial results Year ended
November 30,
2019
$
Year ended
November 30,
2018
$
Year ended
November 30,
2017
$
General and administrative 1,838 1,532 1,385
Mineral properties expense 19,211 16,490 15,100
Professional fees 1,382 453 708
Salaries 1,314 1,467 975
Salaries – stock-based compensation 3,845 1,441 705
Unrealized loss on held for trading
investments
- - 1,645
Loss gain on sale of investments - 272 580
Loss and comprehensive loss for the year 27,905 21,849 21,104
Basic and diluted loss per common share $0.21 $0.18 $0.20
For the year ended November 30, 2019, we reported a net loss of $27.9 million (or $0.21
basic and diluted loss per common share) compared to a net loss for the corresponding period
in 2018 of $21.8 million (or $0.18 basic and diluted loss per common share) and a net loss of
$21.1 million for the corresponding period in 2017 (or $0.20 basic and diluted loss per
common share). The 2019 movement in net loss was primarily due to the increased size and
magnitude of the field programs undertaken at our mineral properties. Adding to this variance
in 2019 were incremental increases in general and administrative expenses, professional fees
and stock-based compensation offset by a slight decrease in salaries. Additionally, there were
losses recognized on both the sale of investments as well a s investments designated as held
for trading in both respective prior years that did not exist in the fiscal 2019 year.
The increase in the net loss pertaining to 2019 relates to the size of the program undertaken
at the UKMP. We executed a $18.2 million program at the UKMP in 2019, with $9.2 million on
the Bornite Project funded by South32 under the Option Agreement, $2 million on a new
regional exploration program funded 50/50 by Trilogy and South 32 and $7 million on the
Arctic Project funded entirely by Trilogy. The 2019 field program consisted of 7,610 meters
of exploration drilling at the Bornite Project. At the Arctic Project, we completed 10 holes for
2,422 meters of geotechnical drilling. The regional program included a VTEM and ZTEM
helicopter ai rborne geophysical survey and 1,357 meters of exploration diamond drilling
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program completed at the Sunshine prospect for which there are no prior year comparatives.
The slight increase in the net loss pertaining to 2018 relative to 2017 relates to the size of
the program undertaken at the UKMP in 2018. We executed a $16.5 million program at the
UKMP in 2018, with $10.8 million on the Bornite Project funded by South32 under the Option
Agreement. The 2018 field program consisted of 10,123 meters of explorat ion drilling at the
Bornite Project. At the Arctic Project, 593 meters of geotechnical drilling and 40 test pits were
completed to provide additional geotechnical and hydrologic information for the waste rock
dump, tailings management facility and surface infrastructure in the area.
Comparably, the significant increase in the net loss pertaining to 2017 relates to the size of
the program undertaken at the UKMP in 2017. We executed a $15.1 million program at the
UKMP in 2017, with $10.0 million on the Bornite Project funded by South32 under the Option
Agreement. The 2017 field program consisted of 8,437 meters of exploration drilling at the
Bornite Project, 274 meters of geotechnical drilling and 26 test pits completed to determine
site facility locations and mine design at the Arctic Project, and 785 meters of infill drilling to
collect material for an ore -sorting study at the Arctic Project. Additionally, significant
engineering work was completed on the pre-feasibility study (“PFS”) at the Arctic Project that
was completed in Q1 2018.
During the year ended November 30, 2018, the Company sold the remaining 2,365,000
common shares of Gold Mining Inc. (‘GMI”) for proceeds of $2.3 million and realized a loss on
sale of $0.3 million. Similarly, during the year ended November 30, 2017, the Company sold
2,525,000 common shares of GMI for proceeds of $3.5 million and realized a loss on sale of
$0.6 million. For the year ended November 30, 2017, we recognized an unrealized loss on
held for trading investments of $ 1.6 million on 2,365,000 common shares of GMI and
1,000,000 warrants to purchase a common share of GMI.
Professional fees for the year ended November 30, 2019 were $1.4 million, an increase of
$0.9 million from the $0.5 million incurred for the year November 30, 2018, and an increase
of $0.7 million from the $0.7 million incurred for the year ended November 30, 2017. The
increase in professional fees in 2019 is primarily due to increased legal fees due to filing of
the base shelf prospectus and accountin g fees for research and implementation of new
accounting standards per US GAAP. Professional fees in 2018 decreased from 2017 as the
prior year included the arrangement with South32 and preparatory costs associated with the
filing of a base shelf prospectus in Canada and the United States.
Other variances for the year ended November 30, 2019 compared to 2018 and 2017 are as
follows: (a) $1.8 million in general and administrative expenses in 2019 compared to $1.5
million in 2018 and $1.4 million in 2017 primarily due to increased stock exchange fees driven
by the Company’s increased market capitalization and regulatory fees related to the filing of
the base shelf prospectus. The slight increase in 2018 compared to 2017 was primarily due
to less favorable foreign exchange movement; (b) $1.3 mil lion in salaries in 2019 compared
to $1.5 million in 2018 and $1 million in 2017 due to changes in staffing levels at the corporate
office; and (c) $3.8 million in stock based compensation in 2019 compared to $1.4 million in
2018 and $0.7 million in 2017 due to the fair value of grants valued using the Black -Scholes
model, which is most sensitive to the Company’s increased share price and future expected
volatility.
The comparable basic and diluted loss per common share for 2019 of $0.21 is higher than
2018 due to the higher net loss for the year offset by the dilutive effect of an increased
weighted average number of shares outstanding at November 30, 2019, primarily driven by
the exercise of warrants during 2019 versus the prior year. The basic and dilut ed loss per
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common share for 2018 of $0.18 is lower than 2017 primarily due to the dilutive effect of a
significantly increased weighted average number of shares outstanding at November 30, 2018
from the issuance of shares related to the Bought-deal financing in 2018.
Liquidity and Capital Resources
At November 30, 2019, we had $19.2 million in cash and cash equivalents. We expended
$23.5 million on operating activities during the 2019 fiscal year compared with $22.1 million
for operating activities for t he same period in 2018, and expenditures of $15.4 million for
operating activities for the same period in 2017. A majority of cash spent on operating
activities during all periods was expended on mineral property expenses, general and
administrative expenses, salaries and professional fees. The increase in cash spent in the year
ended November 30, 2019 is mainly due to increased mineral property expenses of $2.7
million, professional fees of $0.9 million, and general and administrative expenses of $0.3
million offset by $2.4 million in cash saving from changes in net non-cash working capital. As
at November 30, 2019, the Company had consolidated cash of $19.2 million and working
capital of $18 million. The Company continues to manage its cash expenditures t hrough its
working capital and management believes that the working capital available is sufficient to
meet its operational requirements for the next three years.
During the year ended November 30, 2019, the Company received proceeds of approximately
$9.9 million as a result of an exercise of 6,521,740 warrants and $0.2 million from directors
and officers exercise of stock options. Comparatively, during the year ended November 30,
2018, the Company completed a bought-deal financing for gross proceeds of $28.7 million by
issuing 24,784,482 common shares at $1.16 per common share. The financing related costs
including the bank commissions, legal fees, stocking exchange and other fees totaled $1.8
million for net proceeds of $26.9 million.
During the year ended November 30, 2019, we raised $9.6 million from investing activities.
The investing proceeds consist of $10.2 million raised through mineral property funding from
South32 offset by outflows of $0.6 million on the purchase of a new septic system. During
the year ended November 30, 2018, we raised $12.7 million from investing activities. These
investing proceeds consist of $10.4 million of mineral property funding from South32 and
$2.3 million proceeds received from the disposition of the remaining investme nt in GMI
shares. During the year ended November 30, 2017, we raised $13.5 million from investing
activities of which $10.4 million was mineral property funding from South32 and $3.4 million
from the sale of GMI shares offset by outflows of $0.3 million for acquisition of equipment.
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 company focused on exploring and developing the
Ambler mining district located in n orthwestern Alaska. It 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 mineralization. Exploration efforts have been focused on two deposits
in the Ambler mining district - the Arctic VMS deposit and the Bornite carbonate replacement
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deposit. Both deposits are located within the Company 's land package that spans
approximately 143,000 hectares. The Company has an agreement with NANA Regional
Corporation, Inc., a Reg ional Alaska Native 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
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 Private Securities Litigation Reform Act of
1995. All statements in this press release , other than statements of historical fact, are forward-
looking statements, including, without limitation, the outlook for 20 20, anticipated timing and
results of a feasibility study on the Arctic Project, the future operating or financial performance of
the Company, including how long its working capital is expected to last, planned expenditures and
the anticipated activity at the UKMP Projects, and anticipated accounting treatment of the joint
venture. Forward-looking statements are frequently, but not always, identified by words such as
"expects”, "anticipates”, "believes”, "intends”, "estimates”, "potential”, "possible”, and simi lar
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 th e need for additional financing to explore and develop properties and
availability of financing in the debt and capital markets; unexpected cost increases, which could
include significant increases in estimated capital and operating costs; 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 an d documents filed with
applicable securities 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 beliefs, opinions,
projections, or other factors, should they change, except as required by law.