Trilogy Metals Reports Second Quarter Fiscal 2020 Financial Results
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News Release
Trilogy Metals Reports Second Quarter Fiscal 2020 Financial Results
July 8, 2020 - Vancouver, British Columbia – Trilogy Metals Inc. (TSX / NYSE American:
TMQ) ("Trilogy Metals” or "the Company”) an nounces its financial results for the second
quarter ended May 31, 2020. Details of the Company's financial results are contained in the
interim unaudited 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.
Highlights
Strong working capital position of $12.8 million and cash on hand of $12.3 million.
Ambler Mining District Industrial Access Project, or AMDIAP, Record of Decision
expected by the end of July 2020.
Feasibility study results for the Arctic Project expected in Q3 2020.
The outbreak of the novel coronavirus (COVID-19) has resulted in the deferral of this
summer’s exploration programs at the Upper Kobuk Mineral Projects (“UKMP”).
Ambler Mining District Industrial Access Project (AMDIAP)
In a press release dated March 27, 2020, the Company announced the release of the final
Environmental Impact Statement (EIS) by the United States Bureau of Land Management
(BLM). The final step in the permitting process for the AMDIAP is the issuance of the Record
of Decision by the BLM which is expected to be issued by the end of July 2020.
Project Activities
Activities at the Arctic Project during the second quarter focused mainly on updating the 2020
Arctic resource and metallurgical drill program for resource definition and variability testing
and planning for the next stages of engineering studies to advance the project towards
permitting and development. Wo rk on the feasibility study for the Arctic project continued
during the second quarter, with an expected completion date in the third quarter of 2020.
The Bornite geological model was updated during the second quarter incorporating the 2019
drill program results. Additional sample collection from Bornite drill core was completed during
the quarter for age determinations on certain mineral species. Five additional composite
samples for metallurgical testing from the potential underground resource area were collected
during the quarter.
Regional project activities during the second quarter consisted mainly of updating the
Sunshine prospect geologic model incorpor ating the 2019 drill results. In addition,
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metallurgical work began on five composite samples from the Sunshine prospect. Test work
is ongoing and will continue through the third quarter. The Company also continued its review
of historical exploration data collected for the Ambler Mining District.
Deferral of the 2020 Summer Exploration Programs at the UKMP
Through Ambler Metals LLC (“Ambler Metals”) we and our joint venture partner, South32
Limited (“South32”) have decided not to proceed with the 2020 exploration program after
assessing the current novel coronavirus (COVID- 19) environment. Ambler Metals gave due
consideration to the merits of carrying out an abridged work program at the UKMP. However,
given the continued uncertainty resulting from COVID-19, ongoing safety concerns (despite
added safety protocols including physical dist ancing, protective equipment and testing) and
the fact that, due to COVID-19, the planned field season had already been delayed to the
point at which any field season would provide lim ited critical path benefits, the decision has
been made not to proceed with a 2020 field season. The safety of our employees, contractors
and the communities where we work is paramount . We are disappointed as we know delay
affects everyone involved, including our partne r NANA Regional Corporation, Inc. (“NANA”)
and our NANA shareholder hires.
We do not anticipate the deferral of the field season to significantly impact the development
timeframe for the UKMP. In the meantime, Am bler Metals will continue advancing the
metallurgical test work on both Sunshine and Bornite over the last half of the year which will
provide a better understanding of metallurgical performance in an operating scenario and
advancing Arctic to the next level of mine design with identifying engineering studies such as
trade-off studies and optimization studies of previously completed work. Ambler Metals will
continue focusing on regional exploration by compiling historical data from the Ambler VMS
Belt and developing 3D geologic models of the most promising prospects and prospect areas.
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,
2020
$
May 31,
2019
$
May 31,
2020
$
May 31,
2019
$
General and administrative 433 436 1,084 928
Mineral properties expense - 2,906 1,545 4,441
Feasibility study 742 - 742 -
Professional fees 198 153 866 244
Salaries 226 282 450 563
Salaries – stock-based compensation 770 664 1,966 2,603
Investor relations 101 175 227 292
Gain on derecognition of assets
contributed to joint venture
- - (175,770) -
Equity in investee 561 - 739 -
Comprehensive earnings (loss) for the
period
(3,002) (4,509) 168,177 (8,845)
Basic earnings (loss) per common
share
(0.02) (0.04) 1.20 (0.07)
Diluted earnings (loss) per common
share
(0.02) (0.04) 1.13 (0.07)
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For the three months ended May 31, 2020, Trilo gy reported loss of $3.0 million (or $0.02
basic and diluted loss per common share). For the comparable period in 2019, we reported a
net loss of $4.5 million (or $0.04 basic and diluted loss per common share). The decrease in
comprehensive loss is primarily due to the elimination of mineral properties expense as these
expenditures became the responsibility of Ambler Metals subsequent to the formation of the
joint venture with South32 Limited (“South32”) on February 11, 2020. For the three-month
period ended May 31, 2019, Trilogy Metals spent $2.9 million in mineral properties expense,
mostly consisting of internal engineering studies for the Bornite and Arctic Projects,
meteorological and air quality studies for the Arctic Project and costs associated with
preparing the camp for the field season.
Other variances in relation to the compar ative three-month period ended May 31, 2020
consists of the following: i) feasibility study expenses of $0.7 million were related to the Arctic
Project, and include costs incurred subsequent to the formation of Ambler Metals on February
11, 2020, for which there are no prior year comparatives; ii) share of loss in equity investment
in Ambler Metals of $0.6 million, amounts fo r which do not exist in the comparable second
quarter of 2019; iii) an increase of $0.1 million in stock-based compensation primarily due to
option and restricted share unit (“RSU”) awards that were granted and fully vested during the
quarter; and iv) a decrease of $0.07 million in investor relations as marketing events
scheduled during the quarter were postponed due to the impact of COVID-19.
For the six-month period ended May 31, 2020, Trilogy Metals reported comprehensive
earnings of $168 million (or $1.20 basic and $1.13 diluted earnings per common share). For
the comparable period in 2019, we reported a comprehensive loss of $8.8 million (or $0.07
basic and diluted loss per common share). The differences for the six-month period ended
May 31, 2020, when compared to the same period in 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 Ambler Metals on February 11, 2020. This gain was offset
by a $0.7 million loss reflecting the Company’s 50% equity share of Ambler Metals operating
loss for the six-month period ended May 31, 2020. There is no comparable amount in the
second quarter of 2019.
Other variances noted for the comparative six- month period ended May 31, 2020 consist of
the following: i) an increase in general and administrative expenses of $0.2 million, primarily
due to executive recruiting fees; ii) an elimination of $2.9 million in mineral properties
expense as all mineral property assets were contributed to Ambler Metals upon formation of
the joint venture on February 11, 2020; iii) an in crease of $0.6 million in professional fees
primarily attributed to the implementation of new lease accounting standards, legal fees
related to the formation of the joint venture and consulting fees for the former CEO, Rick Van
Nieuwenhuyse who remained as a consultant to Trilogy Metals through to February 29, 2020;
iv) the inclusion of $0.1 million of salaries in stock based compensation for the interim CEO;
and iv) a decrease of $0.6 million in stock-based compensation driven primarily by a
combination of a 200,000 unit reduction in the nu mber of stock options granted as well as
a lower share price contributing to a lower fair value for stock options, RSUs and deferred
share units granted to non-executive directors as a portion of their director fees during the
six-month period ended May 31, 2020.
Liquidity and Capital Resources
At May 31, 2020, we had $12.3 million in cash an d cash equivalents and working capital of
$12.8 million, which is sufficient to fund our ongoing operations for at least the next 12
months. The Ambler and Bornite Projects are fu lly funded by Ambler Metals and we do not
anticipate needing to fund our 50% share of future expenditures to advance the projects until
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Ambler Metals’ $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 volcanogenic massive sulphide (“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 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.
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 Private Securities Litigation Reform Act of
1995. All statements, other than statements of historical fact, included herein, including, without
limitation, statements relating to timing of permits (including the AMDIAP Record of Decision), the
timing of the feasibility study on the Arctic Project, the Company’s ability to fund its operations
and the requirement for addition al 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 va rious 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,
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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 Exchan ge 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.