TMQ.TO · 2022-07-06 12:00:00

Trilogy Metals Reports Second Quarter Fiscal 2022 Financial Results

Financials

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News Release

July 6, 2022 - Vancouver, British Columbia – Trilogy Metals Inc. (TSX / NYSE American:

TMQ) (“Trilogy”, "Trilogy Metals” or "the Company”) announces its financial results for the

second quarter ended May 31, 2022. 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 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

• Exploration field season commenced for the Upper Kobuk Mineral Projects (“UKMP”).

• UKMP fiscal 2022 budget updated to approximately $26.2 million.

• Projects are well funded with the joint venture holding $52.8 million in cash and $53.5

million loan receivable from South32 Limited (“South32”) as at May 31, 2022.

• Subsequent to the quarter end, South32 repaid the entire loan resulting in the joint

venture holding over $100 million in cash.

• Trilogy cash position of $3.5 million and working capital of $3.4 million as at May 31,

2022 sufficient to fund head office operations for the next twelve months.

Upper Kobuk Mineral Projects

In a press release dated June 8, 2022, the Company announced that Ambler Metals LLC

(“Ambler Metals”) , the joint venture company owned 50/50 by Trilogy and South32 had

commenced mobilization for the summer 2022 field program at the UKMP. The drill program

will be helicopter -supported and will be based out of Ambler Metals’ expanded 90 -person

camp at Bornite. The previously announced $28.5 million fiscal 2022 budget was updated to

approximately $26.2 million. The field season is entirely funded by Ambler Metals and consists

of a minimum 10,000 meters of diamond drilling with additional meters contingent on drill

performance, weather and approval of supplementary budgets. The field season program

prioritizes advancing the Arctic Project with additional infill drilling to further improve the

confidence in the resource and the completion of a geotechnical study to further de -risk the

project. Exploration outside of the Arctic deposit will focus on discovering copper-rich satellite

deposits near Arctic, the Cosmos Hills and the Ambler Lowlands.

The 2022 Arctic program involves a minimum 6,000 meters in 27 holes, as part of an 8,400-

meter infill program t o increase confidence from the Indicated to Measured category. In

addition, three to five holes totaling 500 to 750 meters are planned to complete a geotechnical

and hydrogeological assessment of Arctic that was initiated last year.

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The 2022 exploration program for the Cosmos Hills and Ambler Lowlands includes drilling of

approximately 2,400 meters as well as detailed mapping and soil sampling to build on the

work performed during the prior year. In addition, a minimum 2,000 meters of trenchin g is

planned around Pardner Hill and the Bornite East target area.

Annual General Meeting of Shareholders

The Annual General Meeting of shareholders was held on May 13, 2022. All directors

nominated by the Company and standing for election were elected by shareholders of the

Company. Other items of business included the approval of amendments to, and unallocated

entitlements under, the Company’s Restricted Share Unit Plan (“RSU Plan”) and Deferred

Share Unit Plan (“DSU Plan”).

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,

2022

May 31,

2021

May 31,

2022

May 31,

2021

General and administrative 338 351 735 762

Investor relations 38 116 137 270

Professional fees 192 275 437 504

Salaries 261 407 675 846

Salaries and directors expense –

stock-based compensation

662 524 2,584 2,672

Share of loss on equity investment 2,460 1,700 4,370 2,820

Comprehensive loss for the period (4,074) (3,413) (9,097) (7,929)

Basic and diluted loss per common

(0.03) (0.02) (0.06) (0.05)

For the three -month period ended May 31, 2022, cash preservation strategies resulted in

overall cash savings of $0.3 million in general and administrative expenses, investor relations,

professional fees and salaries when compared to budget. For the three -month period ended

May 31, 2022, Trilogy reported a net loss of $4.1 million (or $0.03 basic and diluted loss per

common share). For the comparable period in 2021, the Company reported a net loss of $3.4

million (or $0.02 basic and diluted loss per common s hare). This difference is primarily due

to a $0.8 million increase in the Company’s equity pick- up of Ambler Metals’ comprehensive

loss in the current period. The current quarter includes pre-development costs for the Ambler

Access Project for which there are no prior year comparatives. This increase in the equity

pick-up is offset by reductions in general and administrative expenses, investor relations and

professional fees due to management implemented cost savings strategies during the quarter.

The combi ned total of salaries and stock -based compensation is consistent between the

current period quarter and the comparative period.

For the six-month period ended May 31, 2022, Trilogy reported a net a loss of $9.1 million

(or $0.06 basic and diluted loss per common share). For the comparable period in 2021, the

Company reported a net loss of $7.9 million (or $0.05 basic and diluted loss per common

share). The difference for the six-month period ended May 31, 2022, when compared to the

same period in 2021, is primarily due to a $1.6 million increase in the Company’s equity pick

up of Ambler Metals comprehensive loss for the six-month period ending May 31, 2022. The

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current period includes pre-development costs for the Ambler Access Project for which there

are no prior year comparatives as well as higher engineering and project related salaries and

wages versus the comparative period.

Other variances noted for the comparative six-month period ended May 31, 2022 consist of:

i) a decrease of $0.13 million in investor relations activities; ii) a decrease of $0.2 million in

salaries as the executive team agreed to receive a portion of their salary in Restricted Share

Units; and iii) a decrease of $0.1 million in stock-based compensation, driven by a $0.3 million

decrease in the fair value amortization of awards granted during the period (due to a 0.7

million units reduction of overall stock-based awards granted versus the comparative period),

and offset by $0.2 million increase from executives and directors taking equity in lieu of cash

compensation.

Liquidity and Capital Resources

Trilogy expended $2.9 million on operating activities during the six months ended May 31,

2022 with the majority of cash spent on corporate salaries, annual insurance renewal, annual

fees paid to the Toronto Stock Exchange and the NYSE American Exchange and professional

fees related to the Company’s annual regulatory filings with the American and Canadian

securities commissions.

At May 31, 2022, Trilogy had $3.5 million in cash and cash equivalents and working capital

of $3.4 million. The Company continues to manage its cash expenditures through its working

capital. Management continues to review the fiscal 2022 budget for cash preservation

opportunities and has reduced cash expenditures where feasible, including but not limited to,

reductions in marketing and investor conferences and office expenses. In addition, the

Company’s Board of Directors have agreed to take all of their fees in shares of the Company

in an effort to preserve cash and increase share ownership. The Company’s senior

management team are also taking a portion of their base salaries in shares of the Company

to preserve cash. Management believes that the combination of these cost reduction efforts

results in sufficient cash to fund the Company’s operations for the next twelve months.

All project related costs are funded by the joint venture. Amber Metals is well funded to

advance the UKMP with $52.8 million in cash and $53.5 million loan receivable from South32

as at May 31, 2022. Subsequent to the quarter end, South32 repaid the full balance of the

loan, consisting of $53.1 million principal and $0.5 million interest, resulting in Ambler Metals

having over $100 million in cash. There are sufficient funds at the joint venture to fund the

updated budgets for the UKMP of $26.2 million and the Ambler Access Project of $15.4 million

for fiscal 2022. Trilogy does not anticipate having to fund the activities of Ambler Metals until

the current cash balance of approximately $100 million is expended.

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.

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, 2019, South32, 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

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Ambler Mining District which is one of the richest and most -prospective known copper -

dominant districts 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 a land package that spans approximately 181,387 hectares. Ambler Metals

has an agreement with NANA Regional Corporation, Inc., a n Alaska Native Corporation that

provides a framework for the exploration and potential development of the Ambler Mining

District in cooperation with local communities. Trilogy’s vision is to develop the Ambler Mining

District into a premier North American copper producer.

Company Contacts

Tony Giardini 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, perceived merit of properties, expectations regarding the 2022 field season and budgets

for the UKMP and the continued willingness of the Company’s director and executives to receive

their compensation in equity, the Company’s plans to look for opportunities to reduce its cash

spend for the year, management’s expectations regarding the effects of cash conservation efforts

and the sufficiency of cash for the next twelve months, the Company’s expectation of raising

additional funds, and the Company’s plans to provide further updates and the timing thereof 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 our ability to conserve cash and to raise capital at

terms favorable to the Company, or at all and other risks and uncertainties disclosed in the

Company’s Annual Report on Form 10-K for the year ended November 30, 2021 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.

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