VANCOUVER, Oct. 6, 2016 /PRNewswire/ - Trilogy
Metals Inc. (TSX, NYSE-MKT: TMQ) ("Trilogy" or the "Company"),
formerly NovaCopper Inc., announces its financial results for the
third quarter ended August 31, 2016.
Details of the Company's financial results are contained in the
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.
Corporate and Project Update
Name Change
In September 2016, we changed our
name to Trilogy Metals Inc. to better reflect our Company's
naturally diversified resource base. The Company's Upper Kobuk
Mineral Projects ("UKMP") are located in the Ambler mining district
in northwest Alaska; a region
known to host deposits rich in copper, zinc, lead, gold and silver.
The Company controls the mineral rights to approximately 353,000
acres of land containing two known mineral belts, the Ambler Schist
Belt and the Bornite Carbonate Sequence. The Ambler Schist Belt
hosts volcanogenic massive sulphide ("VMS") type mineralization
occurring as a series of high-grade polymetallic
copper-lead-zinc-gold-silver deposits along the entire 100
kilometer (70 mile) long belt. The Bornite Carbonate Sequence hosts
several copper replacement targets around the Aurora and Pardner
Hill prospects, in addition to an established resource identified
at Bornite. Mineralization at Bornite is open to further
exploration. The shareholders had previously voted in favour of the
change of the Company's name to Trilogy at our annual and special
meeting of shareholders held on May 18,
2016.
Upper Kobuk Mineral Projects
In early August 2016, we wrapped
up another successful season advancing the Arctic deposit towards
pre-feasibility. The majority of the 2016 project budget of
$5.5 million was spent completing a
3,058 metre drill program at the Arctic Project to support
geotechnical, hydrological, waste rock characterization and
metallurgical studies, as well as resource definition. Substantial
field work was also completed to support the continuation of
baseline environmental data collection. During the course of the
field season, data collection was completed to support an aquatic
survey, an avian and large mammal habitat survey, an archaeological
survey and expansion of the wetlands delineation and surface
quality work. The remaining thirty percent of the LiDAR survey
(used to obtain high resolution topographic data) over the UKMP,
initiated during the last field season, was completed. The site
investigation work completed in 2016 will form the basis for the
completion of studies this fall and a future pre-feasibility study
on the Arctic deposit. Drill assay results are expected to be
released during the fall of 2016.
Sale of Sunward and the Titiribi Project
On September 1, 2016, Trilogy
closed the sale of all of the issued and outstanding shares of
Sunward Investments Ltd. ("Sunward Investments") to Brazil
Resources Inc. ("BRI") for consideration of 5,000,000 common shares
of BRI, of which 2,500,000 common shares are subject to a six month
holding period, and 1,000,000 BRI warrants, with each warrant
exercisable into one common share of BRI for a period of two years
from the closing date at an exercise price of Cdn$3.50 for total consideration valued at
approximately $8.1 million.
Sunward Investments, through a subsidiary, owns 100% of the
Titiribi gold-copper exploration project located approximately 70
kilometers southwest of the city of Medellin, in Antioquia Department,
Colombia. Trilogy acquired Sunward
Investments and the Titiribi project as part of its acquisition of
Sunward Resources Ltd. ("Sunward") in a business combination which
closed on June 19, 2015.
The Company reclassified the net assets of Sunward Investments
as an asset held for sale and its operations as a discontinued
operation, retrospectively, in its third quarter financial
statements. The Company expects to realize a gain on the sale of
approximately $4.4 million in the
fourth quarter of 2016.
Third Quarter Financial Results
The following unaudited selected quarterly information is
prepared in accordance with U.S. GAAP.
|
in thousands of
dollars,
except for per share amounts
|
Selected financial
results
|
Three
months
ended
August 31,
2016
$
|
Three
months
ended
August 31,
2015
$
|
Nine
months
ended August 31,
2016
$
|
Nine months
ended August 31,
2015
$
|
Amortization
|
17
|
32
|
59
|
268
|
General and
administrative
|
311
|
297
|
1,030
|
1,059
|
Mineral properties
expense
|
3,077
|
2,771
|
4,067
|
3,389
|
Professional
fees
|
84
|
334
|
430
|
1,180
|
Salaries
|
250
|
281
|
719
|
750
|
Salaries –
stock-based compensation
|
146
|
211
|
544
|
582
|
Loss from continued
operations for the period
|
3,902
|
3,964
|
6,885
|
7,244
|
Loss from
discontinued operations for the period
|
353
|
198
|
712
|
198
|
Loss and
comprehensive loss for the period
|
4,255
|
4,162
|
7,597
|
7,442
|
Basic and diluted
loss per common share
|
$0.04
|
$0.04
|
$0.07
|
$0.10
|
For the three months ended August 31,
2016, Trilogy reported a net loss of $4.3 million (or $0.04 basic and diluted loss per common share)
compared to a net loss of $4.2
million for the corresponding period in 2015 (or
$0.04 basic and diluted loss per
common share). For the three months ended August 31, 2016, Trilogy reported a net loss from
continuing operations of $3.9 million
compared to a net loss of $4.0
million for the corresponding period in 2015. This variance
was primarily due to a decrease in professional fees offset by an
increase in mineral properties expense. We incurred $0.1 million in professional fees for the three
months ended August 31, 2016 compared
to $0.3 million for the three months
ended August 31, 2015. The
significant decrease in professional fees in 2016 is related to the
one time transaction costs of $0.6
million incurred in 2015 for the acquisition of Sunward
which was accounted for as a business combination. Additional
professional fees of $0.1 million
related to the sale of Sunward Investments are included in the loss
from discontinued operations for the three months ended
August 31, 2016. We incurred
$3.1 million in mineral properties
expense for the three months ended August
31, 2016 compared to $2.8
million for the three months ended August 31, 2015. The increase in mineral property
expenses in 2016 is related to higher mining claim maintenance
fees, additional environmental field programs conducted during the
2016 program and temporary geology consultants hired for the
UKMP.
For the nine months ended August 31,
2016, Trilogy reported a net loss of $7.6 million (or $0.07 basic and diluted loss per common share)
which was commensurate with the net loss of $7.4 million incurred for the corresponding
period in 2015 (or $0.10 basic and
diluted loss per common share). For the nine months ended
August 31, 2016, Trilogy reported a
net loss from continued operations of $6.9
million compared to a net loss of $7.2 million for the corresponding period in
2015. The increase in mineral property expenses of $0.7 million was offset by a decrease in
professional fees of $0.8 million and
amortization of $0.2 million. The
increase in mineral property expenses to $4.1 million in 2016 compared to $3.4 million in 2015 was attributed to higher
costs incurred at the UKMP of $0.2
million for additional environmental studies, $0.1 million for waste characterization and
geotechnical work, and $0.1 million
in higher claim fees and $0.1 million
in additional consultants and personnel costs. The reduction of
$0.8 million in professional fees was
due to transaction costs incurred of $0.6
million in 2015 for the Sunward acquisition offset against
higher professional fees incurred in 2016 for other corporate
matters. Amortization expense decreased due to the timing of
capital asset purchases. The increase in loss from discontinued
operations from $0.2 million for the
nine months ended August 31, 2015 to
$0.7 million for the nine months
ended August 31, 2016 is mainly
related to the timing of the acquisition of the Titiribi project in
June 2015. In 2016, there were nine
months of mineral property expenses incurred compared to two months
in the earlier period. Additionally, $0.1
million in professional fees were incurred in 2016 related
to the sale of Sunward Investments which forms part of the loss
from discontinued operations.
Other differences in the nine months ended August 31, 2016 compared to the nine months ended
August 31, 2015 resulted from a
decrease in salaries, stock-based compensation and general and
administrative expenses offset by an increase in the activity level
of investor relations. The decrease in salaries, stock-based
compensation and general and administrative expenses was due mainly
to continued favorable foreign exchange rates of the US dollar
against the Canadian dollar in 2016 compared to the first nine
months of 2015. The majority of these expenses are incurred in
Canadian dollars. The increase in investor relations of
$0.1 million was due to increased
marketing activity and conference attendance by Trilogy.
Liquidity and Capital Resources
At August 31, 2016, we had
$9.2 million in cash and cash
equivalents. We expended $6.7 million
on operating activities during the nine month period ended
August 31, 2016, compared with
expenditures of $6.1 million for
operating activities for the same period in 2015. The majority of
cash spent on operating activities during both periods was expended
on mineral property expenses, general and administrative costs and
salaries. The increase in cash spent in the nine months ended
August 31, 2016 compared to the
corresponding period in 2015 was mainly due to higher mineral
property expense for environmental and engineering studies
conducted for the UKMP and expenditures incurred in Colombia offset by significantly lower
professional fees due to the acquisition of Sunward in 2015.
During the nine month period ended August
31, 2016 and August 31, 2015,
we received no cash from financing activities. During the nine
month period ended August 31, 2016,
we expended $121,000 on investing
activities for acquisition of equipment and $17,000 during the corresponding nine month
period ended August 31, 2015.
As at August 31, 2016, the Company
continues to manage its cash expenditures and management believes
that the working capital available is sufficient to meet its
operational requirements over the next twelve months. Future
financings are anticipated through equity offerings, debt
financing, sale of investments, convertible debt, or other means,
although there can be no assurance that a financing would be
available on terms favorable to the Company, or at
all.
About Trilogy Metals
Trilogy Metals Inc., formerly NovaCopper Inc. is a metals
exploration company focused on exploring and developing the Ambler
mining district located in northwestern Alaska. It 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 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 the Company's
land package that spans approximately 143,000 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, are forward-looking statements
including but not limited to anticipated activities at the UKMP,
and achieving a pre-feasibility level of study at some point in the
future. 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 the
need for additional financing to explore and develop properties and
availability of financing in the debt and capital markets;
uncertainties involved in the interpretation of drilling results
and geological tests and the estimation of reserves and resources;
the need for cooperation of government agencies and native groups
in the development and operation of properties and infrastructure;
the need to obtain permits and governmental approvals; risks of
construction and mining projects such as accidents, equipment
breakdowns, bad weather, non-compliance with environmental and
permit requirements, unanticipated variation in geological
structures, metal grades or recovery rates; unexpected cost
increases, which could include significant increases in estimated
capital and operating costs; fluctuations in metal prices and
currency exchange rates; and other risks and uncertainties
disclosed in the Company's Annual Report on Form 10-K for the year
ended November 30, 2015 filed with
Canadian securities regulatory authorities and with the United
States Securities and Exchange Commission and in other NovaCopper
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.
SOURCE Trilogy Metals Inc.