Trilogy Metals Reports Fiscal 2021 Year End Results and Files Technical Report for the Bornite Resource Estimate
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News Release
Trilogy Metals Reports Fiscal 2021 Year End Results and Files
Technical Report for the Bornite Resource Estimate
February 11, 2022 - Vancouver, British Columbia – Trilogy Metals Inc. (TSX / NYSE
American: TMQ) (“Trilogy Metals”, “Trilogy” or “the Company”) announces its financial results
for the year and fourth quarter ended November 30, 2021. Details of the Company's financial
results are contained in the audited consolidated financial statements and Management's
Discussion and Analysis in our annual report on Form 10 -K which will be available on the
Company'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.
President’s Message
2021 was another pivotal year for the C ompany as it marked the resumption of in -the-field
activities at the Upper Kobuk Mineral Projects (“UKMP”), including significant advancements
at the Arctic Project – part of the UKMP. Despite the challenges of the Covid -19 pandemic,
which resulted in the suspension of the 2020 field program, the team at Ambler Metals LLC
(“Ambler Metals”) – our 50/50 joint venture company with South32 Ltd. (“South32”) – was
able to complete the 2021 program in a safe and effective manner.
Without Ambler Metals’ incredible, hard-working, and loyal employees, the 2021 field program
would not have been successful . During the 2021 program, Ambler Metals employed on
average approximately 70 people at site, of which approximately 50% were Alaskan Natives.
Ambler Metals ’ Alaska Native employees are the backbone of the company, and their
experiences, knowledge and culture are what drives our accomplishments.
I also want to acknowledge the Ambler Metals management team, led by Ramzi Fawaz, Kevin
Torpy and Rebecca Donald , for their exceptional job in keeping everyone safe through the
implementation and management of our Covid- 19 safety program. During the summer field
season, over 1,000 Covid-19 tests were administered for site travel, of which only one positive
case was identified at camp on the very last day of the season. The Ambler Metals team is
committed to the safety and well -being of its employees and will continue implementing
rigorous safety protocols.
Ambler Access Project
Throughout the last year, there has also been in credible progress in advancing the Ambler
Access Project (“Ambler Access Project” or “AAP”), which is the proposed 211-mile (340-km)
industrial-use-only road from the UKMP to the Dalton highway.
Recall that in 2020, our infrastructure partner – the Alaska Industrial Development and Export
Authority (“AIDEA”) – received the Joint Record of Decision (“JROD”) from the United States
Bureau of Land Management (“BLM”), and the Section 404 Permit from the United States
Army Corps. of Engineers (“USACE”). These are the two key permits required for the road.
As previously disclosed, lawsuits were filed shortly thereafter by a coalition of national and
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Alaska environmental non-government organizations in response to the BLM's issuance of the
JROD for the Ambler Access Project and the lawsuits are ongoing.
Subsequently, there have been several posit ive developments with the AAP starting with a
funding agreement between AIDEA and Ambler Metals, in which both parties have each
committed $35 million towards the pre-development work on the AAP.
Also in early 2021, AIDEA signed agreements for Right-of-Ways for the AAP with the BLM and
the National Parks Service. AIDEA also signed a land access agreement with Doyon, Limited,
which is an Alaska Native regional corporation. This agreement allows AIDEA to carry out
feasibility and permitting activities on Doyon land.
During the summer of 2021, AIDEA commenced formal field work on the proposed road. The
budgeted $13 million program involved cultural heritage work, aquatic habitat studies and
geotechnical work. On February 4, 2022, AIDEA announced the approval of the 2022 program
and budget for the AAP of $30.8 million, of which $15.4 million will be funded by AIDEA and
$15.4 million will be funded by Ambler Metals. During the 2022 field season, AIDEA will be
carrying out additional work, including geotechnic al studies, right -of-way surveys,
environmental studies, road and bridge engineering design work, and cultural heritage work.
Nearly 50 local jobs have been identified for the 2022 field season.
Arctic Project
Despite challenging weather and recruitment issues, we were still able to make tangible
progress at the Arctic Project. During the summer drilling campaign, we drilled 18 drill holes
totaling 4,131 meters. The goal of this program was to convert a portion of the mineral
resources from the indicated category to the measured category and provide material for
metallurgical testing and geotechnical information. So far, we have released the drilling
results for six holes, all of which hosted significant intervals of high-grade mineralization. We
are already planning for the 2022 field season which will encompass 10,000 meters of drilling,
with three drills starting up in late spring.
Arctic Permitting
In the fall of 2021, Ambler Metals engaged Stantec to conduc t a permitting preparedness
review for the Arctic Project. After a thorough review, Stantec concluded that the permitting
strategy is sound, and the permitting package can proceed with minor changes. Ambler Metals
is now making the recommended changes to t he permitting package and expects to file the
permitting application, which will start the formal permitting process for the Arctic Project,
with the United States Army Corps. of Engineers in 2022. We continue to anticipate that the
permitting process will take 24 to 30 months.
Bornite Project
While the immediate focus has been on Arctic, we want to remind investors that Bornite is
still a remarkable asset . This was highlighted when we announced a new resource estimate
in January 2022. Like Arctic, Bornite has extremely high copper grades, specifically the South
Reef area which hosts inferred resources of 35.3 million tonnes at a grade of 3.4% copper.
Overall, Bornite is impressive with indicated in -pit resources grading over 1% copper,
containing almost a billion pounds of copper and inferred in -pit resources of just over two
billion pounds of copper at a grade of almost 1% copper.1 We have passed along our findings
to the Ambler Metals team who will look at how the Bor nite Project fits into the overall
development plan at the UKMP.
1 NI 43-101 Technical Report on the Bornite Project, Northwest Alaska, USA with an effective date of December 31,
2021 and release date of February 11, 2022.
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Going Forward
We are very excited about our prospects for 2022 as we move expeditiously towards the
exploration and development of our assets at the UKMP. The joint venture partners hav e
already approved a $28.5 million budget for 2022, which will include approximately 10,000
meters of drilling at Arctic and the rest of the UKMP. We are also excited to finally be on the
cusp of commencing permitting activities at Arctic, which we believe is one of the most high-
quality copper assets in the world.
Ambler Metals will be recruiting over 60 direct hire positions for the 2022 field season, in
addition to approximately 50 positions hired through contractors. As part of its workforce
development plans, Ambler Metals will be kicking off several vocational training programs
involving participants from the local NANA and Doyon regions.
We look forward to continuing what has been a productive 2021, and we thank you for being
on this journey with us.
Sincerely,
Tony Giardini
President & CEO
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,
2021
$
Year ended
November 30,
2020
$
Exploration expense 143 -
Mineral properties and feasibility study - 2,610
General and administrative 1,517 1,650
Investor relations 602 537
Professional fees 818 1,347
Salaries 2,007 1,411
Salaries – stock-based compensation 3,472 3,564
Gain on derecognition of assets contributed to the joint
venture
- (175,770)
Share of loss on equity investment 13,082 2,855
Comprehensive earnings (loss) for the year (21,660) 161,767
Basic earnings (loss) per common share (0.15) 1.14
Diluted earnings (loss) per common share (0.15) 1.12
For the year ended November 30, 2021, we reported a net loss of $21. 7 million (or $0.15
basic and diluted loss per common share) compared to a net earnings of $161.8 million (or
$1.14 basic earnings and $1.12 diluted earnings per common share) in fiscal 2020. The
$183.4 million decrease in comprehensive earnings in the curr ent year, when compared to
fiscal 2020, is primarily due to the $175.8 million gain on the derecognition of assets
contributed to the joint venture during fiscal 2020. This variance is offset by $2.6 million in
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mineral property and feasibility study expenses incurred in 2020 that were not incurred during
2021. Adding to the variances in 2021 were an increase of $10.2 million in our 50% share of
the joint venture’s net operating loss and an increase of $0.6 million in salaries, offset by a
decrease of $0. 5 million in professional fees. Our share of loss on equity investment was
higher versus the 2020 comparative due to project related drill program costs incurred by
Ambler Metals during the 2021 field season. These costs were not incurred during the prior
year as the 2020 field season had been cancelled due to the COVID-19 pandemic. The increase
in salaries reflects the additions to the executive team during the third quarter of 2020.
Professional fees were higher in 2020 due to one -time charges incurred for t he
implementation of new accounting standards and legal and accounting fees in relation to the
formation of the joint venture. Additionally, the Company incurred exploration costs of $0.1
million for a preliminary reconnaissance program on new mineral clai ms that were staked
outside of the UKMP during fiscal 2021.
Liquidity and Capital Resources
We expended $5.1 million on operating activities during the 2021 fiscal year compared with
$8.3 million for operating activities for the same period in 2020. A ma jority of cash spent on
operating activities during the prior fiscal years was expended on mineral property expenses,
general and administrative expenses, salaries and professional fees. Ambler Metals assumed
responsibility for project funding upon formati on of the Joint Venture on February 11, 2020.
As a result, the majority of cash spent on operating activities during the 2021 fiscal year was
expended on general and administrative expenses, salaries and professional fees.
At November 30, 2021, we had $6.3 million in cash and cash equivalents and working capital
of $5.6 million. Management believes that the cash available is sufficient to meet its budgeted
$5.5 million operating requirements for the next twelve months. The Company continues to
manage its cash expenditures through its working capital. All project related costs are funded
by the joint venture. Amber Metals is well funded to advance the UKMP with $61.2 million in
cash and $55.4 million loan receivable from South32 as at November 30, 2021 and a n
operating budget of $28.5 million for fiscal 2022. Trilogy does not anticipate having to fund
the activities of Ambler Metals until the initial contribution of $145 million is expended.
Future cash requirements may vary materially from current expectations due to a number of
factors, including foreign exchange denominated office related costs and insurance renewal
costs. The Company will need to raise additional funds to support its operations and
administration expenses. Future sources of liquidity may include equity financing, convertible
debt, or the exercise of options. The continued operations of the Company are dependent on
its ability to obtain additional financing or to generate future cash flows.
Outlook for 2022
On January 11, 2022, the Company announced the approval of the 2022 program and budget
for Ambler Metals of approximately $28.5 million to advance the UKMP. The budget is fully
funded by Ambler Metals. The 2022 budget for Ambler Metals, approved by the owners,
Trilogy and South32, will cover up to 10,000 meters of helicopter-supported diamond drilling
that is expected to commence in early June. The meterage will be divided between resource
development drilling at Arctic and scout drilling of both volcanic massive sulphide (“VMS”)
targets in the Ambler Belt, with a focus on targets near Arctic, and carbonate-hosted copper
(“CHC”) targets around Bornite and the Cosmos Hills. A greater effort on the ground to identify
and evaluate new targets for drilling, including the use of ground and down -hole electro-
magnetic surveys, is planned.
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On February 7, 2022, the Company announced the approval of the 2022 program and budget
for the Ambler Access Project of approximately $30.8 million of which $15.4 million will be
funded by AIDEA and $15.4 million will be funded by Ambler Metals. During the 2022 field
season, AIDEA will be carrying out additional work including, geotechnical investigations,
right-of-way surveys, environmental studies, road and bridge engineering design work, and
cultural resources work.
The Company has approved a 2022 cash budget for corporate activities of approximately $5.5
million (2021 - $5.3 million). The corporate budget consists of personnel and related costs
of $2.1 million (2021 - $2.0 million), professional fees of $0.9 million (2021 - $1.1 million),
investor relations and marketing costs of $0.6 million (2021 - $0.6 million), office related
costs of $0.5 million (2021 - $0.5 million), insurance costs of $0.5 million (2021 - $0.4
million), regulatory cos ts of $0.3 million (2021 - $0.3 million) and exploration activities of
$0.15 million (2021 - Nil). The 2022 budget has increased slightly from the prior year due
mainly to an increase in insurance costs, addition of exploration activities and foreign
exchange impacts on Canadian dollar sourced amounts for personnel and office related costs.
The Company’s management team is focused on the oversight of our investment in Ambler
Metals and will closely work with Ambler Metals. The Company’s technical staff will work
closely with South32’s technical team and Ambler Metals exploration staff to review
opportunities on advancing its known deposits and look at potential new targets in the large
land package that is held by Ambler Metals. A significant amount of uncer tainty continues to
exist with the Company’s annual renewal of its insurance policies and costs are currently
unpredictable. Insurance premiums may differ significantly from our budget. The Company
has sufficient cash on hand to fund its corporate activities including any increases in insurance
premiums upon renewal.
2021 Project Activities
Upper Kobuk Mineral Projects
In a press release dated May 17, 2021, the Company announced that Ambler Metals had
finalized the details of the 2021 exploration field program at the UKMP for the previously
approved $27 million exploration budget. The budget was 100% funded by Ambler Metals and
included 7,600 meters of infill and metallurgical drilling at the Arctic Project as well as 7,000
meters of ex ploration drilling within the Ambler VMS Belt. The exploration program was
aligned with a strategy developed by the Company and South32 which prioritize d the
exploration budget within the UKMP. The strategy define d a program that advances the
highest priority projects and exploration targets, both VMS and CHC, ranging from early-stage
geophysical anomalies that were identified during the 2019 airborne versatile time domain
electromagnetic survey to advanced VMS and CHC prospects with historical resources. T he
site camp opened on June 1, 2021 with the summer drill program completing on September
22, 2021.
Drilling productivity at the UKMP was behind schedule during the 2021 field season due to
adverse weather conditions in the district and challenges with the contractor staffing the drill
rigs. As a result, a total of 7,325 meters of the originally planned drill program were
completed. Despite the lower-than-expected drill productivity, all planned geotechnical drilling
at the Arctic Project was completed and sufficient mineralized material was recovered to
complete the planned metallurgical program. The summer 2021 drill program was completed
on September 23, 2021.
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Arctic Project
The 2021 field season plan for the Arctic Project focused on drilling in order to extrac t
additional material for metallurgical work and for the conversion of mineral resources into the
measured category. The metallurgical program associated with this drilling was to support
variability test work and pilot plant work. Technical activities at the Arctic Project commenced
in early June with initial work focused on infill drilling to further improve the confidence of the
Mineral Resources from the Indicated to Measured category. During the field season a total
of 18 holes were completed at Arctic comprising 4,131 meters of core. All the core has been
logged and sampled.
Regional Exploration Project
During the 2021 field season, two drill rigs were relocated from the Arctic Project to the
Regional drilling program. Regional drilling was focused on near Arctic (“Arctic Hub”)
exploration targets, with the goal of discovering nearby copper -rich satellite deposits within
a 3-to-5-kilometer radius of the Arctic deposit. Drilling was completed at the Arctic East and
Southeast Arctic targets before moving drills to investigate other targets within the UKMP,
including Snow and the Ambler Lowlands. A total of 8 holes were completed totaling 3,194
meters.
In addition to the regional drill program, geologists also carried out regional g eological
mapping within the Ambler VMS belt. Traverses were completed along creeks within the
Center of the Universe prospect, the DH prospect, and in Jackass Creek (between the DH and
Cliff prospects), the Bud-Sunshine-West Dead Creek prospect cluster, Dead Creek, Pipe, and
the Nora prospects.
Geochemical soil sampling is ongoing within the Cosmos Hills around Bornite and the Ambler
VMS Belt. The goal of this program is to follow-up on previous anomalous geochemical results
and to investigate geophysical anomalies that were identified during the 2019 airborne
versatile time domain electromagnetic survey.
Arctic Mine Permitting
Arctic mine permitting preparation work was ongoing during fiscal 2021 for filing of formal
federal permitting documentation for the Arctic Project. An independent consulting company
has completed a preparedness review of the draft permitting package for the Arctic Project
and presented the results of this review to the technical teams of South32 and Trilogy. The
review concluded that the Ambler Metals permitting strategy is sound and the permitting
package can proceed with minor changes. Ambler Metals is now making the recommended
changes to the permitting package and expects to file the permitting application, which will
start the formal permitting process for the Arctic Project, with the USACE in early 2022. The
Company expects to file the permit applic ation during the first quarter of 2022, and for the
overall permitting process to take 24 to 30 months to be completed.
Ambler Access Project
During the summer of 2020, the United States Bureau of Land Management ("BLM") issued
the Joint Record of Decision ("JROD") for the AAP. Lawsuits were filed shortly thereafter by a
coalition of national and Alaska environmental non -government organizations in response to
the BLM's issuance of the JROD for the Ambler Access Project.
On January 6, 2021, BLM, the National Park Service and AIDEA signed Right- of-Way
agreements giving AIDEA the ability to cross federally owned and managed lands along the
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route for the Ambler Access Project approved in the JROD. The authorizing documents wi th
the two agencies are the final federal permits required for the Ambler Access Project.
During the second quarter of 2021, AIDEA signed a land access agreement with Doyon Limited
to conduct feasibility and permitting activities to advance the Ambler Ac cess Project and in
September 2021 AIDEA signed a land access agreement with NANA Regional Corporation,
Inc. to conduct similar activities.
On October 27, 2021, the federal defendants were granted a 60-day stay with respect to each
of the lawsuits. In its request for the stay, the DOJ stated that it was necessary to
“accommodate review of this matter by officials within the United States Department of the
Interior who have engaged in various discussions with multiple parties involving this matter
and in government-to-government consultations with tribal entities”.
On February 7, 2022, the court granted a second request from the federal defendants for an
extension to file their response to the plaintiff’s brief. Ambler Metals had opposed the
extension request. The federal defendants are now required to file their response no later
than February 22, 2022.
Development Funding Agreement regarding the Ambler Access Project with the AIDEA
The 2021 field season for the Ambler Access Project consisted of cultural heritage work along
the proposed 211-mile, east-west-running controlled industrial access road that would provide
industrial access to the Ambler Mining District in Northwestern Alaska. The Alaska Industrial
Development and Export Authority has pr ioritized cultural heritage work, aquatic habitat
studies and geotechnical planning for this year’s and next year’s field seasons to progress the
feasibility engineering and permitting work for the road. On August 9, 2021, the Governor of
Alaska, Mike Dunleavy, visited the UKMP. During the visit, the Governor reiterated his strong
support for the development of the Ambler Mining District and for the development of the
Ambler Access Project. He also announced the formation of the Subsistence Advisory
Committee Working Group which is to include Native stakeholders within the Northwest Arctic
Borough and the Doyon Region who could be affected by the proposed road. This committee
is being formed to develop the terms of reference for the formal Subsistence Advisory
Committee that will provide guidance on subsistence and other matters for the design and
operation of the road.
Bornite Technical Report
The Company also announces it has filed a National Instrument 43 -101 technical report with
the Canadian securities regulators relating to the Bornite Project which supports the resource
estimate previously announced in a press release on January 20, 2022. The technical report
is entitled NI 43 -101 Technical Report on the Bornite Project, Northwest Alaska, USA and
prepared by Bruce Davis, Robert Sim and Jeff Austin, all of whom are “Qualified Persons”
under NI 43-101 (the “Bornite Technical Report”).
A copy of the Bornite Technical Report is available on the Company’s website at
www.trilogymetals.com and under the Company’s profiles on SEDAR at www.sedar.com and
EDGAR at www.sec.gov.
Qualified Persons
Richard Gosse, P.Geo, Vice President Exploration for Trilogy Metals Inc., is a Qualified Person
as defined by National Instrument 43-101. Mr. Gosse has reviewed the technical information
in this news release and approves the disclosure contained herein.
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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 Upper Kobuk Mineral
Projects in northwestern Alaska. On December 19, 2019 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 deposits 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 hectare s. The Company has an agreement with NANA Regional
Corporation, Inc., a Regional 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
Patrick Donnelly
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, other than statements of historical fact, included herein, including, without
limitation, proposed advancement of the Ambler Road Project, planned activities at the UKMP, the
Outlook for 2022, the Company’s anticipated budget for corporate activities and the Company’s
ability to fund its operations and the requirement for additional funding at Ambler Metals, resource
and reserve estim ates and the timing and amount of estimated future production and the net
present value and internal rate of return at the Arctic Project, 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 uncer tainties. 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 the outcome of pending litigation, success of exploration activities, permitting timelines,
requirements for additional capital, risks pertaining to the outbreak of the coronavirus (COV ID-
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, 20 21 filed with
Canadian securities regulatory authorities and with the United States Securities and Exchange
Commission and in other Comp any reports and documents filed with applicable securities
regulatory authorities from time to time. The Company's forward -looking statements reflect the