Trilogy Metals Reports Third Quarter Fiscal 2021 Financial Results
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News Release
Trilogy Metals Reports Third Quarter Fiscal 2021 Financial Results
October 5, 2021 - 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, 2021. 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 and cash on hand of $6.8 million.
Summer exploration program at the Upper Kobuk Mineral Projects (“UKMP”) completed
by Ambler Metals LLC (“Ambler Metals”), our 50-50 joint venture with South32 Limited.
Staked new State of Alaska mining claims and executed a 10 day preliminary
reconnaisance program.
Joint Venture Project Activities
The exploration camp opened in May in preparation for the start-up of drilling in June at the
Arctic Project. The drilling program planned for 7,600 meters of drilling at Arctic with most of
the drilling targeting infill areas to improve the confidence of the mineral resources, and
geotechnical and metallurgical drill holes to further de-risk the project. An additional 7,000
meters of exploration drilling was planned at targets near the Arctic deposit and elsewhere in
the Ambler Mining District.
Drilling productivity at the project was behind schedule during the quarter 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 metres 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 22, 2021.
Arctic Project
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. In addition, metallurgical drilling was conducted at the project. Most
of this drilling has consisted of large diameter PQ-size (96-mm diameter) core which allows
for the extraction of large sample-sized material. During the field season a total of 18 holes
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were completed at Arctic comprising 4,131 meters of core. All the core has been logged and
sampled with results expected to be announced later this year.
Regional Exploration Project
During the quarter, 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. During the field season a total of 8 holes were completed totalling 3,194
meters. Core samples are being logged and sent for assaying with results expected later this
year.
In addition to the regional drill program, regional geological mapping and soil chemistry
surverys within the Ambler volcanogenic massive sulphide (“VMS”) belt and Cosmos Hills was
carried out during the quarter. The goal of this program has been 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 survey.
Early Stage Exploration
Trilogy has acquired, through staking, mineral claims located in Alaska, USA outside of the
UKMP. During the quarter ended August 31, 2021, the Company executed a 10 day
preliminary reconnaissance program of the claims to confirm government-mapped geology
and to collect rock and stream sediment samples.
Ambler Mining District Industrial Access Project (“AMDIAP” or “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 AMDIAP. 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
route for the Ambler Access Project approved in the JROD. The authorizing documents with
the two agencies are the final federal permits required for the Ambler Access Project.
In April 2021, AIDEA signed a land access agreement with Doyon, Limited to conduct
feasibility and permitting activities to advance the Ambler Access Project and in September
2021 AIDEA signed a land access agreement with NANA Regional Corporation, Inc. to conduct
similar activities.
On September 28, 2021, the Department of Justice (“DOJ”) requested a 60-day stay with
respect to each of the above referenced lawsuits. Trilogy Metals is aware that the United
States Department of Interior (“DOI”) has requested the 60-day stay of all legal proceedings
as they relate to the lawsuits concerning the Ambler Access Project to allow the DOI to consult
with concerned parties. Trilogy Metals, through its joint venture, Ambler Metals, will continue
to work with other intervenor defendants and the DOJ as the DOI undergoes its review.
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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,
2021
$
August 31,
2020
$
August 31,
2021
$
August 31,
2020
$
Exploration expense 130 - 130 -
Mineral properties and feasibility study
expenses
- 232 440 2,519
General and administrative 425 265 1,188 1,349
Professional fees 123 165 627 1,031
Salaries 365 170 1,210 620
Salaries – stock-based compensation 409 1,064 3,081 3,030
Investor relations 170 156 440 383
Gain on derecognition of assets
contributed to the joint venture
- - - (175,770)
Equity in investee 6,072 1,094 8,892 1,833
Comprehensive earnings (loss) for the
period
(7,664) (3,184) (15,593) 164,993
Basic earnings (loss) per common
share
(0.05) (0.02) (0.11) 1.17
Diluted earnings (loss) per common
share
(0.05) (0.02) (0.11) 1.12
For the three-month period ended August 31, 2021, overall cash costs related to general and
administrative expenses, investor relations, professional fees and salaries were primarily
tracking to budget. Trilogy reported a net loss of $7.7 million (or $0.05 basic and diluted loss
per common share). For the comparable period in 2020, we reported a net loss of $3.2 million
(or $0.02 basic and diluted loss per common share). This third quarter difference is primarily
due to a $5.0 million increase in our 50% pro rata share of Ambler Metals’ comprehensive
loss. This was offset by a one-time charge of $0.2 million in feasibility study costs incurred
during the third quarter of 2020. The share of loss in equity investment is higher versus the
comparative period as the current quarter includes mineral property expenses that Ambler
Metals incurred during the quarter for the 2021 summer drill program. These costs were not
incurred in the comparative period as the 2020 field season had been cancelled due to the
COVID-19 pandemic.
Other variances noted for the comparable period were: i) an increase in general and
administrative expenses of $0.2 million primarily due to an increase in insurance premiums
and additional stock exchange fees incurred for updates to the Company’s equity incentive
plans; ii) exploration costs of $0.1 million incurred during the current period for geological
review work for which there is no comparative; iii) an increase of $0.2 million in salaries as
the current period cost reflects additions to the executive team in September 2020; and iv) a
decrease of $0.7 million in stock-based compensation as the Company did not award any new
grants during the current period, compared to 1.8 million options that were awarded during
the comparative quarter in the prior year.
For the nine-month period ended August 31, 2021, overall cash costs related to general and
administrative expenses, investor relations, professional fees and salaries were primarily
tracking to budget. Trilogy reported a net loss of $15.6 million (or $0.11 basic and diluted
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loss per common share). For the comparable period in 2020, we reported net earnings of
$165 million (or $1.17 basic and $1.12 diluted earnings per common share). The difference
for the nine-month period ended August 31, 2021, when compared to the same period in
2020, is primarily due to the $176 million gain on derecognition of mineral property assets
contributed to Ambler Metals upon formation of the joint venture on February 11, 2020. This
variance is offset by $1.5 million of mineral property expenses and $1.0 million of feasibility
study costs incurred during the comparable prior period for which there are no current period
comparatives. Furthermore, our share of loss on the equity investment in Ambler Metals was
$7.1 million higher for the nine-month period ended August 31, 2021, and reflects costs
incurred by Ambler Metals for the 2021 summer drill program.
Other variances noted for the comparative nine-month period ended August 31, 2021 consist
of: i) a decrease of $0.2 million in general and administrative expenses, primarily due to $0.2
million in recruiting fees incurred in the comparative prior year period, offset by an increase
in insurance costs and stock exchange fees during the current period; ii) a decrease of $0.4
million in professional fees as the comparative period includes one-time charges for the
implementation of new accounting standards and legal and accounting fees in relation to the
formation of the joint venture; and iii) an increase of $0.6 million in salaries reflecting
additions to the executive team in September 2020.
Liquidity and Capital Resources
At August 31, 2021, we had $6.8 million in cash and working capital of $6.8 million, which is
sufficient to fund our ongoing operations for at least the next 12 months. The UKMP Projects
are fully funded by Ambler Metals and we do not anticipate needing to fund our 50% share of
future expenditures to advance the UKMP until the subscription price paid by South32 into
Ambler Metals of $145 million is spent.
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, 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 hectares. Ambler
Metals LLC 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, statements relating to the anticipated timing of
drill results, the Company’s ability to fund its operations, our continued work with the DOJ
and other intervenor defendants in the lawsuits concerning the Ambler Access Project, the
requirement for additional funding at Ambler Metals and the perceived merit of the Company’s
properties 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 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, 2020 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.