TSX, NYSE-MKT
Symbol: TMQ
VANCOUVER, Feb. 3, 2017 /PRNewswire/ - Trilogy
Metals Inc. (TSX, NYSE-MKT: TMQ) ("Trilogy Metals" or "the
Company") announces its financial results for the year and fourth
quarter ended November 30, 2016 and
provides a review on its activities during 2016. Details of
the Company's financial results are contained in the audited
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.
President's Message
Arctic Project
We made significant progress over the past two years in
advancing the Arctic Project towards pre-feasibility. In 2015, we
completed 3,056 meters of geotechnical and in-fill drilling to
support engineering studies and reclassification of inferred
resources to mesured and indicated categories for the potential of
reporting reserves in a future pre-feasibility study ("PFS"). In
2016, we completed 3,058 meters of geotechnical, hydrological,
metallurgical, waste characterization and in-fill drilling to
collect information to form the basis for engineering studies for a
PFS. Engineering studies are currently on-going with work
focused on open pit slope geotechnical and hydrogeological
evaluations, waste rock characterization, metallurgy and mine
planning. Moving forward we plan to investigate synergies
with the Arctic and Bornite deposits to determine if co-disposing
of tailings would be economically favorable.
A lot of detailed work has been accomplished during the past two
years in advancing the Arctic Project to a pre-feasibility
level. One item that remains outstanding is the geotechnical
drilling to determine the locations of site facilities. The
completion of a number of engineering trade-off studies this spring
will allow us to optimize the site infrastructure layout and
complete the geotechnical drilling.
Bornite Project
We believe Bornite has significant exploration potential.
With only three field seasons of exploration drillling of
approximately 30,000 meters, we have already identified a resource
in excess of 6 billion pounds of copper. Indicated in-pit
resources at the Bornite deposit at a 0.50% Cu cutoff are 40.5
million tonnes at 1.02% Cu. Inferred in-pit resources at the
Bornite deposit at a 0.50% Cu cutoff are 84.1 million tonnes at
0.95% Cu. In addition to the in-pit resources, Inferred below pit
resources at the Bornite deposit are reported (at an elevated 1.5%
Cu cutoff) as 57.8 million tonnes at 2.89% Cu. During our
last year of drilling at Bornite in 2013, five of the last holes
drilled intercepted significant copper intervals.
Mineralization remains open along an approximately 1-kilometer
strike length, including drill hole RC13-224 which intersected 236
meters grading 1.9% copper. The copper grades and thick intervals
of mineralization found at Bornite warrants further exploration to
fully understand the potential of this project.
Being Creative in Difficult Times
In 2015, we acquired Sunward Resources Limited ("Sunward"), a
publicly listed company holding the Titiribi project, a promising
gold asset in Colombia and
approximately $20 million in
cash. In 2016, we received an unsolicited offer to purchase
the Titiribi project by Brazil Resources Inc. in exchange for
marketable securities valued at $8.1
million which we intend to monetize over time.
Thanking our Dedicated Team
With the downturn in the mining sector, we have operated the
Company in a lean fashion. With limited resources, our staff
have "done more with less" over the past few years and continued to
maintain high levels of standards and quality of work throughout
the organization. The Board of Directors and Officers of the
Company appreciate all the hard work and the dedication of the team
during these challenging past few years. Recently, copper
prices have improved as have market interest in development stage
copper projects. Trilogy will continue to steadfastly advance
the Arctic and Bornite projects and work with our partners – NANA
and AIDEA, to advance permitting of the AMDIAP and develop the
Ambler mining district into one of North
America's premier metal producing regions.
Rick Van
Nieuwenhuyse
President & CEO
Review of 2016 Project Activities
In the spring of 2016 we announced the release of an updated
resource estimate and National Instrument 43-101 ("NI 43-101")
Technical Report titled "NI 43-101 Technical Report on the Bornite
Project, Northwest Alaska, USA"
effective May 16, 2016. The
update incorporated a new 3D lithology, alteration and structural
model for the Bornite deposit, as well as results from previously
un-sampled or partially sampled historical Kennecott drill core. A
positive update with contained copper in Indicated Resources
increasing from 334 to 913 million pounds constituting a 173%
increase in contained metal. Total contained copper in Inferred
Resources decreased from 5.7 to 5.5 billion pounds (1.8Blbs in-pit
and 3.7Blbs below-pit) which constitutes a 4% decrease in contained
metal due principally to moving in-pit Inferred Resources to the
Indicated category. We continue to evaluate geological and
hydrogeological data to support internal desktop evaluations and
planning of future field investigations at the Bornite Project.
In fiscal 2016, we expended $5.0
million on the UKMP Projects, mainly at Arctic, consisting
of $1.3 million in wages and
benefits, $0.7 million in drilling,
$0.7 million in engineering expenses,
$1.3 million in project support
expenses, $0.4 million in land
maintenance and permit expenses, and $0.3
million in environmental studies. The Company
completed another successful field season in 2016 advancing the
Arctic deposit towards pre-feasibility. We accomplished a
3,058-meter drill program at the Arctic Project, significant
baseline environmental data collection, and furthered the
engineering of the project. The summer field season was completed
on time and 10% under budget, with a total spend of $5.0 million in 2016. The 2016 drill program was
designed to collect data for geotechnical, hydrological, waste rock
characterization and metallurgical studies as well as further
resource definition.
Working with NANA
We continue to work with NANA on workforce development within
NANA's region. Through the Oversight Committee and the
Workforce Development sub-committee, NANA and the Company jointly
work on programs to facilitate local hiring of NANA
shareholders. The Company has contributed a total of
$140,000 to a scholarship fund which
grants awards to NANA shareholders for either (i) the recipient's
student expenses directly related to education, i.e., academic
education at an accredited institution; or (ii) the recipient's
student expenses directly related to vocational or technical
schooling or training at a recognized institution intended to
qualify the recipient for enhanced employment opportunities. The
Workforce Development sub-committee which consists of equal
representation from NANA and the Company will review all
applications for 2017 and will select recipients for grant
awards. We are committed to training and hiring
locally. We have been very successful in hiring NANA
shareholders at the UKMP Projects, having over 50% local hire each
year over the past 5 years. In 2016, our field season employees
consisted of 55% NANA shareholders and in 2017 we are committed to
the continuation of hiring locally at the project.
Working with the State of
Alaska
We continued our efforts in supporting the Alaska Industrial
Development Export Authority ("AIDEA") throughout 2016 towards
drafting an Environmental Impact Statement ("EIS") as prescribed
under the National Environmental Policy Act process to permit the
Ambler Mining District Industrial Access Project ("AMDIAP"). The
AMDIAP is anticipated to provide surface access to the Ambler
mining district and our UKMP Projects – Arctic and
Bornite. The project design is modeled on AIDEA's successful
DeLong Mountain Transportation System ("DMTS"), which includes an
industrial access road from the Red Dog Mine to the DMTS port.
AIDEA worked with private investors to finance construction of the
DMTS industrial access road, and the costs of road construction
were paid back through tolls paid by the mine for use of the road.
AMDIAP, once complete, will provide access to the Ambler Mining
District through Gates of the Arctic National Preserve. This access
is guaranteed in the Alaska National Interest Lands Conservation
Act ("ANILCA") passed by the Congress of the United States of America.
On October 21, 2015, Alaska's Governor authorized AIDEA to begin
the EIS process and shortly thereafter, the Consolidated SF299
ANILCA applications Right of Way application document in respect of
the AMDIAP was submitted by AIDEA to the relevant federal agencies,
including the National Park Service ("NPS"), the U.S. Army Corp of
Engineers ("USACE"), Bureau of Land Management ("BLM"), U.S. Coast
Guard ("USCG"), and the U.S. Federal Highway Administration
("FHWA"). NPS, USACE, BLM, and FHWA have accepted the
application as "complete and compliant" and represents a
significant advancement in the permitting process. BLM will be the
lead federal agency for the EIS, along with NPS taking the lead on
the Environmental and Economic Analysis ("EEA") per ANILCA Section
201.4(d). A project kickoff meeting with the State of Alaska and Federal agencies was held
in early December 2016 to discuss
next steps which include the scope of work for the third party EIS
contractor, anticipated timing of BLM issuance of the Notice of
Intent between March 2017 and
May 2017, and NPS and FHWA working on
the EEA. More information on the AMDIAP and the ANILCA
permitting process is available on AIDEA's website at
www.ambleraccess.org.
Corporate Developments
Shareholders approved the name change to Trilogy Metals Inc. at
our annual and special meeting of shareholders held on May 18, 2016. In September 2016, we changed our name to Trilogy
Metals Inc. to better reflect our Company's naturally diversified
resource base. The UKMP is 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 sulfide (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, Aurora and Partner Hill are all open to further
exploration.
On September 1, 2016, Trilogy
Metals completed 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 completion date at an exercise price of
Cdn$3.50. The total consideration was
valued at approximately $8.1 million.
Sunward Investments, through a subsidiary, owns 100% of the
Titiribi gold-copper exploration project. On December 7, 2016 BRI changed its name to
GoldMining Inc. The Company acquired Sunward Investments and
the Titiribi project as part of its acquisition of Sunward in a
business combination which closed on June
19, 2015.
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,
2016
$
|
Year
ended
November 30,
2015
$
|
Year
ended
November 30,
2014
$
|
General and
administrative
|
1,337
|
1,346
|
1,484
|
Mineral properties
expense
|
5,037
|
4,167
|
2,512
|
Professional
fees
|
442
|
1,346
|
952
|
Salaries
|
1,003
|
1,085
|
3,012
|
Salaries –
stock-based compensation
|
615
|
831
|
887
|
Loss from continued
operations for the year
|
8,712
|
9,134
|
9,648
|
(Income)/loss from
discontinued operations for the year
|
(3,850)
|
398
|
-
|
Loss and
comprehensive loss for the year
|
4,862
|
9,532
|
9,648
|
Basic and diluted
loss per common share
|
$0.05
|
$0.12
|
$0.17
|
For the year ended November 30,
2016, we reported a net loss of $4.9
million (or $0.05 basic and
diluted loss per common share) compared to a net loss for the
corresponding period in 2015 of $9.5
million (or $0.12 basic and
diluted loss per common share) and a net loss of $9.6 million for the corresponding period in 2014
(or $0.17 basic and diluted loss per
common share). This variance was primarily due to a one-time gain
on the sale of Sunward Investments. Additionally, there were
decreases in annual professional fees and stock-based compensation
expense offset against an increase in mineral properties expenses
in 2016.
The significant variance in 2016 relates to the gain recognized
on the sale of Sunward Investments and the Titiribi Project of
$4.4 million, pre-tax. This was a
one-time event for which there is no comparable gain in prior
years. Additionally, as a result of the sale, the operations of
Sunward Investments were reclassified as a discontinued operation,
retrospectively. Expenses of $0.6
million for the year ended November
30, 2016 and $0.4 million for
the year ended November 30, 2015
related to the Sunward Investments operations were reclassified to
discontinued operations. As Sunward Resources Ltd. was purchased by
the Company in June 2015, there are
no amounts prior to June 2015
included in the consolidated results. In addition to the gain
recognized on the sale, we also realized $0.1 million in gains on the sale of investments
received as consideration for the year ended November 30, 2016.
Professional fees for the year ended November 30, 2016 were $0.4 million, a reduction of $0.9 million from the $1.3
million incurred for the year ended November 30, 2015, and a reduction from the
$1.0 million incurred for the year
ended November 30, 2014. Expenses in
2016 were down significantly due to less corporate transaction
activity as well as $0.2 million in
costs related to the sale of Sunward recorded in discontinued
operations. In 2015, expenses were incurred for legal and technical
due diligence and regulatory approvals associated with the
acquisition of Sunward and, in 2014, legal costs associated with a
private placement financing were incurred for which there is no
comparable amount in the current year.
The variance in the mineral properties expense was primarily due
to the differing magnitude of the field programs at our UKMP
Project in 2016, 2015 and 2014. In 2016, we completed a
similar-sized drill program consisting of 3,058 meters at the
Arctic Project, however, we significantly increased the
environmental baseline data collection and engineering site
investigations compared to the 2015 program. In 2015, we completed
fourteen diamond drill holes amounting to 3,056 meters at the
Arctic Project, as well as engineering and environmental site
investigations. In 2014, we completed a re-sampling and re-assaying
program of approximately 13,000 meters of historical drill core
from Bornite. Mineral property expenses consist of direct drilling,
personnel, community, resource reporting and other exploration
expenses, as well as indirect project support expenses such as
fixed wing charters, helicopter support, fuel, and other camp
operation costs.
The comparable basic and diluted loss per common share for 2016
is lower than 2015 and 2014 due to the gain on the sale of Sunward
Investments. The 2015 basic and diluted loss per common share is
lower than 2014 mainly as a result of the additional shares issued
during 2015 as a result of the Sunward acquisition completed in
June 2015 as well as a lower loss
figure.
Fourth Quarter Results
During the fourth quarter of 2016, we earned income of
$2.0 million compared to a net loss
of $2.1 million for the comparable
period in 2015. The earnings in the fourth quarter of 2016 were due
to the gain on sale of Sunward Investments of $4.4 million offsetting net expenses of
$2.4 million. We incurred
$1.4 million of mineral property
expenses in the fourth quarter of 2016 compared to $0.9 million in the fourth quarter of 2015 for
fairly comparable expenses including assaying costs from the summer
drill program and engineering costs for the Arctic deposit. We
recognized $0.2 million in foreign
exchange losses in the fourth quarter of 2016 mainly due to the
movement of the Canadian dollar as a result of holding the
investments in BRI. As we acquired the investments in the fourth
quarter of 2016, there is no comparable amount in 2015.
Liquidity and Capital Resources
At November 30, 2016, we had
$7.3 million in cash and cash
equivalents. We expended $8.9 million
on operating activities during the 2016 fiscal year compared with
$8.4 million for operating activities
for the same period in 2015, and expenditures of $8.6 million for operating activities for the
same period in 2014. A majority of cash spent on operating
activities during all periods was expended on mineral property
expenses, professional fees, salaries and general and
administrative expenses. The increase in cash spent in the year
ended November 30, 2016 is mainly due
to increased mineral property expenses of $0.9 million, increased discontinued operations
expense of $0.2 million expended on
Sunward offset by decreased professional fees of $0.9 million.
During the year ended November 30,
2016, we raised $0.2 million
in sales from investments acquired through the sale of Sunward
Investments. During the year ended November
30, 2015, we generated $19.4
million from investing activities through the acquisition of
Sunward. During the year ended November 30,
2014, we raised $7.2 million
in proceeds from the completion of a private placement in
July 2014.
As at November 30, 2016, the
Company continues to manage its cash expenditures and management
believes that the working capital available is sufficient to meet
its operational requirements for the next year. Future financings
are anticipated through equity financing, debt financing, the sale
of investments, convertible debt, or other means.
Qualified Persons
Erin Workman, P.Geo., Director of
Technical Services for Trilogy Metals Inc., is a Qualified Person
as defined by NI 43-101. Ms. Workman has reviewed the technical
information in this news release and approves the disclosure
contained herein.
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, included herein, including,
without limitation, statements relating to the future operating or
financial performance of the Company, planned
expenditures and the anticipated activity at the UKMP
Projects, the potential timing and preparation of a PFS on the
Arctic deposit, and anticipated activity with respect to the
AMDIAP, 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. These forward-looking statements may
include statements regarding perceived merit of properties;
exploration plans and budgets; mineral reserves and resource
estimates; work programs; capital expenditures; timelines;
strategic plans; market prices for precious and base metals; or
other statements that are not statements of fact. 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 as well as the construction of the access
road; 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, 2016 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
The Arctic Preliminary Economic Assessment and the Bornite
Technical Report have 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 National Instrument 43-101 Standards of
Disclosure for Mineral Projects ("NI 43-101") and the Canadian
Institute of Mining, Metallurgy, and Petroleum Definition Standards
on Mineral Resources and Mineral Reserves. 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 United States Securities and Exchange
Commission ("SEC"), and resource and reserve information contained
therein may not be comparable 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 is made. The
SEC's disclosure standards normally do not permit the inclusion of
information concerning "measured mineral resources", "indicated
mineral resources" or "inferred mineral resources" or other
descriptions of the amount of mineralization in mineral deposits
that do not constitute "reserves" by U.S. standards in documents
filed with the SEC. Investors are cautioned not to assume that any
part or all of mineral deposits in these categories will ever be
converted into reserves. U.S. investors should also understand that
"inferred mineral resources" have a great amount of uncertainty as
to their existence and great uncertainty as to their economic and
legal feasibility. It cannot be assumed that all or any part of an
"inferred mineral resource" will ever be upgraded to a higher
category. Under Canadian rules, estimated "inferred mineral
resources" may not form the basis of feasibility or pre-feasibility
studies except in rare cases. Investors are cautioned not to assume
that all or any part of an "inferred mineral resource" exists or is
economically or legally mineable. Disclosure of "contained ounces"
in a resource is permitted disclosure under Canadian regulations;
however, the SEC normally only permits issuers to report
mineralization that does not constitute "reserves" by SEC standards
as in-place tonnage and grade without reference to unit measures.
The requirements of NI 43-101 for identification of "reserves" are
also not the same as those of the SEC, and reserves reported by the
Company in compliance with NI 43-101 may not qualify as "reserves"
under SEC standards. Accordingly, information concerning mineral
deposits set forth in this press release or the Bornite Technical
Report may not be comparable with information made public by
companies that report in accordance with U.S. standards.
SOURCE Trilogy Metals Inc.