VANCOUVER, BC, Feb. 12, 2021 /CNW/ - Trilogy Metals
Inc. (TSX: TMQ) (NYSE American: TMQ) ("Trilogy Metals" or
"the Company") announces its financial results for the year and
fourth quarter ended November 30,
2020. Details of the Company's financial results are
contained in the audited consolidated financial statements and
Management's Discussion and Analysis in our annual report on Form
10-K 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
- Ambler Mining District Industrial Access Project receives
final federal permits
- Feasibility Study for the Arctic Project completed and NI
43-101 report filed
- Strong cash position of $11.1M
and $10.4M in working capital at year
end
- Ambler Metals LLC ("Ambler Metals"), our joint venture with
South32 Limited, has $81.7 million
cash and $58.5 million loan
receivable dedicated to advancing the Upper Kobuk Mineral Projects
("UKMP")
2020 Project Activities
AMDIAP
The Ambler Mining District Industrial Project ("AMDIAP" or
"Ambler Access Project") reached significant project
milestones. On March 27, 2020,
the BLM, the lead federal agency for the permitting of the AMDIAP,
released the Final Environmental Impact Statement ("EIS") for the
AMDIAP. This follows on the Draft EIS completed on
August 23, 2019. On
July 23, 2020, the BLM issued the
Joint Record of Decision ("JROD") for the Ambler Road
Project. Along with the JROD, a Section 404 Permit, which is
governed by the Clean Water Act, was issued by the United States
Army Corp. of Engineers to the Alaska Industrial Development and
Export Authority ("AIDEA").
On January 6, 2021, BLM, NPS 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.
Arctic Feasibility Study
The Company announced the positive results of its feasibility
study for the Arctic Copper-Zinc-Lead-Silver-Gold Project (the
"Arctic FS") on August 20, 2020. The
Arctic FS describes the technical and economic viability of
establishing a conventional open-pit copper-zinc-lead-silver-gold
mine and mill complex for a 10,000 tonne per day operation for a
minimum 12-year mine life. The Arctic FS resulted in a
pre-tax Net Present Value ("NPV")8% of $1.6 Billion and an Internal Rate of Return
("IRR") of 31% for the base case and an after-tax NPV8%
of $1.1 Billion and after-tax IRR of
27% for the base case. The base case scenario utilized
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.
At current spot metals prices of $3.55/lb copper, $1.18/lb zinc, $0.91/lb lead, $1,833/oz gold and $26.63/oz silver, the pre-tax NPV8% is
$2.4 Billion and IRR is 40.1% and
after-tax NPV8% is $1.7
Billion and IRR is 35.1%.
Tony Giardini, the Company's
President and CEO states, "Due to the polymetallic nature of the
deposit, Arctic not only contains a significant amount of base
metals but it will produce a significant amount of precious metals.
The Arctic FS estimated an average annual payable gold and
silver production of 32,000 ounces and 3.4 million ounces
respectfully which, in total, represents 16% of Arctic's net
revenue."
On October 2, 2020, we filed the
technical report for the Company's Arctic Project entitled "Arctic
Feasibility Study Alaska, USA NI 43-101 Technical Report" with an
effective date of August 20, 2020,
prepared by Ausenco Engineering Canada Inc., Wood Canada Limited
and SRK Consulting (Canada) Inc.
(the "Arctic FS Technical Report"). Please refer to the
Arctic FS Technical Report for additional information.
Outlook for 2021
On November 19, 2020, the Company
announced the approval of the 2021 program and budget for Ambler
Metals of approximately $27 million
to advance the UKMP. The budget is fully funded by Ambler
Metals. Activities planned at the Arctic Project include
7,600 meters of drilling which will have the dual purpose of
extracting additional material for metallurgical work and for the
conversion of mineral resources into the measured category. The
metallurgical program that is associated with this drilling will
support variability test work and pilot plant work which will
commence later in 2021. Engineering work will continue at
Arctic with the aim of submitting the application for the Notice of
Intent for the 404 Dredge and Fill Permit, which is covered by the
Clean Water Act, to the United States Army Corps of
Engineers. The Company currently anticipates Ambler Metals
will submit the permit applications during the second half of
2021.
Following up from the 2019 work performed along the 70-mile (100
kilometer) Ambler volcanogenic massive sulphide ("VMS") belt,
Ambler Metals will continue exploration efforts along the belt to
discover and define additional deposits that may provide additional
feed to a future Arctic mill. Ambler Metals plans to conduct
a 7,000-meter regional exploration drill campaign which is expected
to commence in early summer and finish before the end of
September. The drilling may be preceded by detailed geologic
mapping, geochemical soil sampling and ground geophysics.
The Company has approved a 2021 cash budget for corporate
activities of approximately $5.3
million, which includes personnel and related costs of
$2.0 million, professional fees of
$1.1 million, investor relations and
marketing costs of $0.6 million,
office related costs of $0.5 million,
insurance costs of $0.4 million and
regulatory costs of $0.3
million. The Company's management team is focused on
the oversight of our investment in Ambler Metals and will closely
work with Ambler Metals as it starts its first field season as a
new team and prepares to submit the permit applications for the
development and operation of the Arctic Project during the second
half of the year. The Company's technical staff will work
closely with South32's technical team and Ambler Metals exploration
staff to review opportunities on advancing its known deposits and
look at potential new targets in the large land package that is
held by Ambler Metals.
Annual Financial Results
The following selected annual information is prepared in
accordance with U.S. GAAP.
in thousands of
dollars, except for per share amounts
|
Selected financial
results
|
Year
ended
November 30,
2020
$
|
Year
ended
November 30,
2019
$
|
Year
ended
November 30,
2018
$
|
General and
administrative
|
1,650
|
1,838
|
1,532
|
Mineral properties
and feasibility study
|
2,610
|
19,211
|
16,490
|
Professional
fees
|
1,347
|
1,382
|
453
|
Salaries
|
1,411
|
1,314
|
1,467
|
Salaries – technical
services
|
898
|
-
|
-
|
Salaries –
stock-based compensation
|
3,564
|
3,845
|
1,441
|
Loss held for trading
of investments
|
-
|
-
|
272
|
Gain on derecognition
of assets contributed to the joint venture
|
(175,770)
|
-
|
-
|
Equity in
investee
|
2,855
|
-
|
-
|
Comprehensive
earnings (loss) for the year
|
161,767
|
(27,905)
|
(21,849)
|
Basic earnings (loss)
per common share
|
1.14
|
(0.21)
|
(0.18)
|
Diluted earnings
(loss) per common share
|
1.12
|
(0.21)
|
(0.18)
|
For the year ended November 30,
2020, we reported a net earnings of $161.8 million (or $1.14 basic earnings and $1.12 diluted earnings per common share) compared
to a net loss in 2019 of $27.9
million (or $0.21 basic and
diluted loss per common share) and a net loss of $21.8 million in 2018 (or $0.18 basic and diluted loss per common share).
The 2020 movement to net earnings was primarily due to the
$175.8 million gain realized on the
derecognition of assets contributed to Ambler Metals, offset by our
50% share of Ambler Metal's net operating loss and feasibility
study charges incurred for the Arctic Project subsequent to the
formation of the joint venture. Mineral properties expense
was eliminated after the contribution of mineral properties to the
joint venture at the end of the first quarter of 2020. This
resulted in a significant cost savings of $17.7 million in relation to the prior year
comparative. Going forward, all project related costs will be
captured through our 50% equity recognition of Ambler Metal's
operating loss. Adding to the variances in 2020 were incremental
decreases in general and administrative expenses, professional fees
and stock-based compensation offset by an increase in salaries. The
increase in salaries resulted from the addition of management
during the current year for which there is no prior year
comparative. Pursuant to a services agreement between the Company
and Ambler Metals, $0.9 million of
salaries and wages were incurred by the Company in support of
Ambler Metal's back office while the joint venture company set up
its permanent team.
The 2019 movement in net loss was primarily due to the increased
size and magnitude of the field programs undertaken at our mineral
properties. Adding to this variance in 2019 were incremental
increases in general and administrative expenses, professional fees
and stock-based compensation offset by a slight decrease in
salaries. Additionally, there were losses recognized on both the
sale of investments as well as investments designated as held for
trading in the prior year that did not exist in the fiscal 2019
year. We executed a $18.2 million
program at the UKMP in 2019, with $9.2
million on the Bornite Project funded by South32 under the
Option Agreement, $2 million on a new
regional exploration program funded 50/50 by Trilogy Metals and
South32 and $7 million on the Arctic
Project funded entirely by Trilogy Metals.
Liquidity and Capital Resources
At November 30, 2020, we had
$11.1 million in cash and cash
equivalents and working capital of $10.4
million. We expended $8.3
million on operating activities during the 2020 fiscal year
compared with $23.5 million for
operating activities for the same period in 2019, and expenditures
of $22.1 million for operating
activities for the same period in 2018. A majority of cash spent on
operating activities during all periods was expended on mineral
property expenses, general and administrative expenses, salaries
and professional fees. Ambler Metals assumed responsibility for
project funding upon formation on February
11, 2020. At November 30,
2020, Ambler Metals is well funded with $81.7 million cash and $58.5 million loan receivable from South32, all
funding is 100% dedicated to advancing the UKMP.
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 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. 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.
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, advancement of the Ambler Road Project, planned
activities at the UKMP, the Company's anticipated budget for
corporate activities and the Company's ability to fund its
operations and the requirement for additional funding at Ambler
Metals, the timing and amount of estimated future production and
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 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.
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 disclosure 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 contained in SEC Industry Guide 7, and resource and reserve
information contained herein may not be comparable to similar
information disclosed by U.S. companies under SEC Industry Guide 7.
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. We have
no reserves under SEC Industry Guide 7.
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SOURCE Trilogy Metals Inc.