Trilogy Metals Reports Third Quarter Fiscal 2020 Financial Results
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News Release
Trilogy Metals Reports Third Quarter Fiscal 2020 Financial Results
October 7, 2020 - Vancouver, British Columbia – Trilogy Metals Inc. (TSX / NYSE
American: TMQ) ("Trilogy Metals”, “Trilogy” or "the Company”) announces its financial results
for the third quarter ended August 31, 2020. Details of the Company's financial results are
contained in the interim un audited 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 – Meeting Milestones While Maintaining a Strong Cash Position
• Feasibility Study results for the Arctic Project released on August 20, 2020 confirms
that Arctic is an economically robust project.
• Joint Record of Decision for the Ambler Mining District Industrial Access Project
(“AMDIAP” or “Ambler Access Road”) was issued on July 23, 2020 following the Final
Environmental Impact Statement (“EIS”) that was issued on March 27, 2020.
• The Alaska Industrial Development and Export Authorty (“AIDEA”) has commenced
the next stages of work to move the AMDIAP forward.
• Strong working capital position of $11.8 million and cash on hand of $12.8 million plus
$142 million dedicated to advancing the Upper Kobuk Mineral Projects.
Arctic Feasibility Study
On August 20, 2020, the Company announced the positive results of its Feasibility Study
(“FS”) for the Arctic Copper-Zinc-Lead-Silver-Gold Project (“Arctic” or the “Arctic Project”) in
the Ambler mining district of Northwestern Alaska. The Arctic Project is held by Ambler Metals
LLC (“Ambler Metals”) , the joint venture operating company equally owned by Trilogy and
South32 Limited (“South32”).
The FS was prepared on a 100% ownership basis, of which Trilogy’s share is 50%. The FS
describes the technical and economic viability of establishing a conve ntional open-pit mine-
and-mill complex for a 10,000 tonne-per-day operation for a minimum 12-year mine life. The
base case scenario utilizing long-term metal prices of $3.00/lb for copper, $1.10/lb for zinc,
$1.00/lb for lead, $1,300/oz for gold and $18.00/oz for silver resulted in:
• a pre-tax Net Present Value (“NPV”)8% of $1.6 billion and an Internal Rate of Return
(“IRR”) of 31%; and
• an after-tax NPV8% of $1.1 billion and after-tax IRR of 27%.
TSX / NYSE American
Symbol: TMQ
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On October 2, 2020 , the Company filed on a voluntary basis a National Instrument 43 -101
technical report summarizing the FS titled "Arctic Feasibility Study Alaska, USA NI 43 -101
Technical Report" with an effective date of August 20, 2020 and a release date of October 2,
2020 with the United States Securities and Exchange Commission and the securities
regulatory authorities in each of the provinces of Canada. A copy of the report is available at
www.edgar.com, www.sedar.com and on the Company’s website at www.trilogymetals.com.
More information on the Arctic Project is available on the Company’s website.
Ambler Mining District Industrial Access Project (AMDIAP)
On July 23, 2020 a Joint Record of Decision for the AMDIAP was issued by the Lead Federal
Agency, the Bureau of Land Management along with the Cooperating Federal Agency, the U.S.
Army Corps of Engineers. The AMDIAP will provide access to the Ambler Mining District by
linking the mining district to the rest of Alaska’s infrastructure. The Ambler Mining District is
home to the Upper and Lower Kobuk villages , many residents of which are shareholders of
NANA Regional Corporation, Inc. (“NANA”), and to the Company’s projects.
On June 24, 2020, the Board of Directors of the AIDEA approved a Memorandum of
Understanding with Ambler Metals which specifies how the parties will jointly establish a plan
regarding the permitting, feasibility, engineering and design, construction and operation,
financing and closure of the AMDIAP. Ambler Metals has committed to contribute up to $35
million to match AIDEA’s contribution of $35 million for these activities over the next couple
of years . Ambler Metals and AIDEA will equally contribute up to $1 million in 2020 for
engineering and planning work on the road.
Ambler Metals Update
Activities at Ambler Metals include the hiring of Ramzi Fawaz as President and Chief Executive
Officer. Mr. Fawaz joined Ambler Metals from Newmont Corporation where he was Senior
Vice President Projects from February 2011 to October 2019, with responsibi lity for the
development and execution of Newmont’s major gold and copper projects globally.
Before joining Newmont, Mr Fawaz served as Senior Vice President Operations at Atomic
Energy Canada Ltd. where he led all project development, refurbishment and building of the
CANDU reactor projects. Prior to Atomic Energy, he was with Royal Dutch Shell, where he
worked for 30 years in various senior roles. Among those, Mr Fawaz was responsible for
leading the Athabasca Oil Sands Expansion Project in Canada and the Nigeria LNG Train 3 and
LPG expansion project in Nigeria.
Mr. Fawaz brings to the role extensive leadership experience in US and international project
development. Throughout his career, he has engaged extensively with all stakeholders related
to major project developments, including executive management, boards of directors,
shareholders, local communities, contractors, utilities and various regional and federal
government agencies.
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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 Nine months ended
Selected expenses August 31,
2020
$
August 31,
2019
$
August 31,
2020
$
August 31,
2019
$
General and administrative 265 435 1,349 1,363
Mineral properties expense - 10,951 1,545 15,392
Feasibility study 232 - 974 -
Professional fees 165 414 1,031 658
Salaries 170 272 620 835
Salaries – stock-based compensation 1,064 402 3,030 3,005
Investor relations 156 164 383 456
Gain on derecognition of assets
contributed to the joint venture
- - (175,770) -
Equity in investee 1,094 - 1,833 -
Comprehensive earnings (loss) for the
period
(3,184) (12,535) 164,993 (21,380)
Basic earnings (loss) per common
share
($0.02) ($0.09) $1.17 ($0.16)
Diluted earnings (loss) per common
share
($0.02) ($0.09) $1.12 ($0.16)
For the three months ended August 31, 2020, Trilogy reported a loss of $3.2 million (or $0.02
basic and diluted loss per common share). For the comparable period in 2019, we reported a
net loss of $12.5 million (or $0.09 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 on February 11, 2020. For the three-month period
ended August 31, 2019, for which there are no current period comparatives, Trilogy spent
$11 million in mineral properties expense, mostly consisting drilling costs for the Bornite,
Arctic and Regional Projects, project support costs such as camp operations, fixed wing
charters and helicopters for the field season, and engineering and environmental stud ies for
the Arctic Project.
Other variances in relation to the comparative three -month period ended August 31, 2020
consists of the following: i) feasibility study expenses of $0.2 million were related to the Arctic
Project, and include costs incurred subsequent to the formation of Ambler Metals on February
11, 2020; ii) share of loss in equity investment in Ambler Metals of $1.1 million, which do not
exist in the comparable third quarter of 2019; iii) a decrease of $0.1 million in salaries as CEO
compensation that was salary based in the comparative period is stock based in the current
period; iv) a decrease of $0.2 million in professional fees primarily due to lower legal fees; v)
a decrease of $0.2 million in general and administrative expenses primarily due to lower travel
cost imposed by COVID -19 restrictions; and vi) an increase of $0.7 million in stock- based
compensation due to 1.8 million more options being granted during the current quarter versus
the comparative period.
For the nine-month period ended August 31, 2020, Trilogy reported comprehensive earnings
of $165 million (or $1.17 basic and $1.12 diluted earnings per common share). For the
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comparable period in 2019, we reported a comprehensive loss of $21.3 million (or $0.16 basic
and diluted loss per common share). The differences for the nine-month period ended August
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 $1.1 million loss reflecting the Company’s 50% equity share of Ambler Metals operating loss
for the nine -month period ended August 31, 2020. There is no compar able amount in the
third quarter of 2019.
Other variances noted for the comparative nine-month period ended August 31, 2020 consist
of the following: i) a decrease in mineral properties expenses of $13.9 million as all mineral
property assets were contributed to Ambler Metals upon formation of the joint venture on
February 11, 2020; ii) feasibility study expenses of $1.0 million for the Arctic project incurred
subsequent to the joint venture formation; iii) an increase of $0.4 million in professional fees
primarily attributed to the implementation of new lease accounting standards and legal fees
related to the formation of the joint venture; and iv) a decrease of $0.2 million in salaries due
to the inclusion CEO salaries in stock based compensation.
Liquidity and Capital Resources
At August 31, 2020, we had $12.8 million in cash and cash equivalents and working capital
of $11.8 million, which is sufficient to fund our ongoing operations for at least the next 12
months. The projects are fully funded by Ambler Metals and we do not anticipate needing to
fund our 50% share of future expenditures to advance the projects until approximately $142
million is spent by our joint venture company.
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 Upper Kobuk Mineral
Projects (“UKMP”) 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 volcanogenic massive
sulphide (“VMS”) deposits that contain copper, zinc, lead, gold and silver, and carbonate
replacement deposits which h ave 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.
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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, the Company’s ability to fund its operations and the requirement for additional funding
at Ambler Metals and the timing and amount of estimated future production, 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 uncertainties. There can be no assurance that such
statements will prove to be accurate, and actual results and future events could differ m aterially
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,
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 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.
Cautionary Note to United States Investors
This press release has been prepared in accordance with the requirements of the securities laws
in effect in Canada, which differ from the requirements of U.S. securities laws. Unless otherwise
indicated, all resource and reserve estimates included in this press release have been prepared in
accordance with Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects
(“NI 43- 101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) —CIM
Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as
amended (“CIM Definition Standards”). NI 43-101 is a rule developed by the Canadian Securities
Administrators which establishes standards for all public disclosu re an issuer makes of scientific
and technical information concerning mineral projects. Canadian standards, including NI 43 -101,
differ significantly from the requirements of the SEC, and resource and reserve information
contained herein may not be compara ble to similar information disclosed by U.S. companies. In
particular, and without limiting the generality of the foregoing, the term "resource” does not equate
to the term "reserves”. Under U.S. standards, mineralization may not be classified as a "reserve ”
unless the determination has been made that the mineralization could be economically and legally
produced or extracted at the time the reserve determination.