Trilogy Metals Reports Second Quarter Fiscal 2017 Financial Results
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News Release
Trilogy Metals Reports Second Quarter Fiscal 2017 Financial Results
June 28, 2017 - Vancouver, British Columbia – Trilogy Metals Inc. (TSX, NYSE-MKT:
TMQ) ("Trilogy Metals” or "the Company”) is pleased to report its second quarter results for the
period ended May 31, 2017. Details of the Company's financial results are contained in the
unaudited interim consolidated financial statements and Management's Discussion and
Analysis 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.
Second Quarter 2017 Highlights:
• Strong working capital position of $20.1 million, with cash on hand of $14.5 million.
• Financial partnership announced with South32 Limited for an option to form a 50/50
joint venture for a minimum investment of $150 million.
• South32 is required to fund a minimum of $10 million per year, for up to three years to
keep the option in good standing.
• First $10 million has been advanced to the Company and will be spent on 12,000-meter
exploration drill program at the Bornite deposit, which program is underway.
• Engaged independent contractors for the pre-feasibility study (“PFS”) on the
high-grade polymetallic volcanogenic massive sulphide (“VMS”) Arctic deposit.
South32 Option Agreement
On April 10, 2017 the Company announced that it had signed an agreement with South32
Limited (ASX/JSE/LSE: S32) (“South32”) whereby Trilogy had granted South32 an option to
form a 50/50 joint venture with respect to Trilogy’s Alaskan assets, known collectively as the
Upper Kobuk Mineral Projects (“UKMP”), which includes the Arctic and Bornite Projects, the
Exploration and Option to Lease Agreement with NANA Regional Corporation, Inc., and the
remainder of Trilogy’s state mining claims along the 100km VMS belt. South32 must
contribute a minimum of $10 million each year, for a maximum of 3 years, to keep the option
in good standing. South32 may exercise its option at any time over the next three years to
form the 50/50 joint venture. To subscribe for 50% of the joint venture, South32 will
contribute a minimum of $150 million, plus any amounts Trilogy spends at the Arctic Project
over the next three years, to a maximum of $5 million per year (the “Subscription Price”), less
an amount of the Initial Funding contributed by South32.
2017 Field Programs Underway
The exploration program is underway at Bornite utilizing 3 diamond core rigs. Drill results are
anticipated to begin late in the summer and continue into the fall. The site work required to
complete the PFS at Arctic is also underway and results are expected in Q1, 2018.
TSX, NYSE-MKT
Symbol: TMQ
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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 Six months ended
Selected expenses May 31,
2017
$
May 31,
2016
$
May 31,
2017
$
May 31,
2016
$
General and administrative 407 373 785 719
Mineral properties expense 1,297 457 1,936 990
Professional fees 193 210 318 346
Salaries 224 257 466 469
Salaries – stock-based compensation 106 116 499 398
Unrealized (gain) loss on held for
trading investments
(70) - 1,169 -
Loss from continuing operations for the
period
2,390 1,460 5,387 2,983
Loss from discontinued operations for
the period
-
187 - 359
Loss and comprehensive loss for the
period
2,390 1,647 5,387 3,342
Basic and diluted loss per common
share
$0.02 $0.01 $0.05 $0.03
For the three months ended May 31, 2017, Trilogy reported a net loss of $2.4 million (or $0.02
basic and diluted loss per common share) compared to a net loss of $1.6 million for the
corresponding period in 2016 (or $0.01 basic and diluted loss per common share). This
variance was primarily due to the size of the field programs at the UKMP in 2017 as well as the
timing of the program. An increase of $840,000 of mineral property expenses occurred during
the three months ended May 31, 2017 compared to the three months ended May 31, 2016. In
2017, the field program at Arctic and Bornite began with drilling by early June compared to
2016 where the field program kicked off in early July. This earlier start resulted in an increased
mineral property expense during the second quarter of 2017. Additionally, in preparation for
the Arctic PFS study, an increased level of ongoing technical studies was occurring during the
three months ended May 31, 2017 compared to the corresponding period in 2016.
For the six months ended May 31, 2017, Trilogy reported a net loss of $5.4 million (or $0.05
basic and diluted loss per common share) compared to a net loss of $3.3 million for the
corresponding period in 2016 (or $0.03 basic and diluted loss per common share). This
variance was primarily due to an unrealized loss on investments of $1.2 million classified as
held for trading for which movements in the fair value of the investments are recorded through
the statement of loss. The investments consist of common shares and warrants in Gold Mining
Inc. acquired as consideration for the sale of Sunward Investments Limited and its Titiribi
gold-copper exploration project in Colombia. There are no comparable amounts for the six
months ended May 31, 2016 as the Company acquired the investments in September 2016.
Adjusting for the unrealized loss on held for trading investments, there is a loss from continued
operations of $4.2 million for the six months ended May 31, 2017 compared to the loss from
continuing operations of $3.0 million for the six months ended May 31, 2016. The remaining
increase is due almost entirely to an increase of $1.0 in mineral properties expenses. We
incurred $1.9 million in mineral properties expense for the six months ended May 31, 2017
compared to $1.0 million for the six months ended May 31, 2016. The increase in mineral
property expenses in 2017 is due to the significantly increased size of the 2017 field program
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compared to the 2016 program as discussed above. The increase is also attributable to several
ongoing engineering studies, specifically an updated 3D geology model and resource estimate
for the Arctic deposit, metallurgical test programs on the Arctic and Bornite Projects,
completion of a pre-feasibility level slope geotechnical and hydrology study on the Arctic
deposit, and a review of the hydrogeological conditions at the Bornite property. Waste
characterization is also continuing on the Arctic Project which began in 2016. General and
administrative expenses, salaries, stock-based compensation, and professional fees continue
to be at comparable levels in the periods presented.
Outlook
Our 2017 program has a total budget of $17.1 million with $7.1 million to be expended during
the fiscal year to advance the Arctic Project to pre-feasibility and $10.0 million for the
exploration program at the Bornite Project. The Arctic PFS will be supported by information
collected during the 2015 and 2016 field seasons as well as additional information to be
collected during the 2017 summer field program. The completion of the 2017 field program
will complete a staged three-year site investigation program where the first two years focused
almost exclusively on collecting data in and around the proposed Arctic open-pit, and the third
year focuses on infrastructure and mine design. The Arctic PFS is anticipated to be completed
in Q1 2018.
The exploration program at the Bornite Project is an exciting opportunity to potentially expand
the resource at Bornite by drilling the extensions of mineralization last drilled by the Company
in 2013. Approximately 12,000 meters will be drilled by Bornite focused entirely on testing the
size and depth of the extension of the known deposit. Drilling at the Bornite Project
commenced in early June and will continue through to late September with drill results
anticipated to be released late in the summer and continue into the fall.
Qualified Persons
Andrew W. West, P.Geo., 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., formerly NovaCopper Inc., is a metals exploration company focused on
exploring and developing the Ambler mining district located in northwestern 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 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 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.
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Company Contacts
Rick Van Nieuwenhuyse Elaine Sanders
President & Chief Executive Officer Vice President & Chief Financial Officer
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, statements relating to our outlook, the future operating
or financial performance of the Company, planned expenditures and the anticipated exploration and development
activity, including with respect to the 2017 field program at the UKMP Projects, the timing of drill results at Bornite, the
potential timing and preparation of a PFS on the Arctic deposit, and the potential exercise of the option by South32 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 the need for additional financing to explore and develop properties and availability of financing
in the debt and capital markets; uncertainties involved in the interpretation of drilling results and geological tests and
the estimation of reserves and resources; the need for cooperation of government agencies and native groups in the
development and operation of properties as well as the construction of the access road; the need to obtain permits and
governmental approvals; risks of construction and mining projects such as accidents, equipment breakdowns, bad
weather, non-compliance with environmental and permit requirements, unanticipated variation in geological
structures, metal grades or recovery rates; unexpected cost increases, which could include significant increases in
estimated capital and operating costs; fluctuations in metal prices and currency exchange rates; and other risks and
uncertainties disclosed in the Company’s Annual Report on Form 10-K for the year ended November 30, 2016 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 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.