TSX, NYSE-MKT
Symbol: TMQ
VANCOUVER, April 10, 2017 /CNW/ - Trilogy Metals Inc.
(TSX, NYSE-MKT: TMQ) ("Trilogy" or "Trilogy
Metals") is pleased to announce that it has signed an agreement
with South32 Limited (ASX/JSE/LSE: S32)
("South32") whereby Trilogy has granted South32 an option to
form a 50/50 joint venture with respect to Trilogy's Alaskan
assets, known collectively as the Upper Kobuk Mineral Projects
("UKMP"), which includes the Arctic and Bornite Projects,
the Exploration and Option to Lease Agreement with NANA Regional
Corporation, Inc. ("NANA"), and the remainder of Trilogy's
state mining claims along the 100km volcanogenic massive sulphide
belt ("UKMP Assets"). South32 must contribute a minimum of
$10 million each year, for a maximum
of 3 years, to keep the option in good standing ("Initial
Funding"). South32 may exercise its option at any time to
form the 50/50 joint venture ("JV"). To subscribe for 50% of
the JV, South32 will contribute a minimum of $150 million, plus any amounts Trilogy spends at
the Arctic Project over the next three years to a maximum of
$5 million per year (the
"Subscription Price"), less an amount of the Initial Funding
contributed by South32. All amounts are in US
dollars.
Trilogy will host a conference call today at 1:30pm PT. See conference details below.
Highlights of the agreement and an updated $17 million 2017 field program:
- South32 to fund $10 million
per year, for a maximum of 3 years.
- South32 may elect at any time to form a 50/50 joint venture
for min. $150M.
- Bornite Exploration: South32's Initial Funding of
$10 million this year will be spent
on exploration at the Bornite Project during the 2017 field season
to test the extension of high-grade copper at the Bornite deposit.
The drill program will be off-setting previously drilled diamond
drill holes, including RC13-0224 which intersected 236 meters of
continuous mineralization averaging 1.9% copper last drilled during
the 2013 field program.
- Arctic Pre-Feasibility Study: Trilogy previously announced
spending of $7.1 million mainly at
the Arctic Project during 2017 in preparation for a pre-feasibility
study anticipated to be released in Q1 2018.
- Trilogy will continue to work closely with the Alaska
Industrial Development and Export Authority ("AIDEA") and
NANA to advance the Environmental Impact Study ("EIS") permitting
process for the Ambler Access Road.
Conference Call & Webcast Details
Trilogy's conference call and webcast to discuss this
transaction will take place on April 10,
2017 at 1:30pm PT
(4:30pm ET). The webcast and
conference call-in details are provided below. The webcast
will be archived on Trilogy's website for two weeks.
Webcast http://event.on24.com/wcc/r/1405849-1/E5EEF42CA2215B384927A08301DDEECB
North American callers:
1-888-390-0546
International
callers:
1-416-764-8688
Conference
ID:
68372321
Agreements
Trilogy and South32 have entered into an agreement whereby
Trilogy has granted South32 an option to subscribe for a 50%
interest in a joint venture which will hold the UKMP Assets. To
maintain the option in good standing South32 must contribute the
Initial Funding which will be used to test the extension of the
high-grade copper resource identified at the Bornite deposit.
South32 can exercise the option at any time over the next 3 years.
Once the option is exercised, Trilogy will transfer the UKMP Assets
to a newly created limited liability company (the "LLC") in
which Trilogy and South32 will be equal partners. Advancing the
projects towards a production decision will be funded by the
Subscription Price.
2017 Project Plans
South32 and Trilogy Metals have agreed in principal on the 2017
exploration program at Bornite. The parties will drill a
minimum of 7 drill holes up to 1,400 meters deep to test the
northern extension of the Bornite mineralization. The
drilling will evaluate an area approximately one kilometer
east-west by 400 meters north-south.
Trilogy Metals also intends to conduct a $7.1 million program at the Arctic Project,
focused on geotechnical drilling to identify, test, and evaluate
potential locations for all mine-related facilities, including: the
ore processing facility (crushing and milling); the waste rock and
tailings disposal area(s); water storage ponds; and supporting road
infrastructure. This work is being done in support of
completing a pre-feasibility level of study for the Arctic Project
in the first quarter of 2018. In addition, the Company will
continue to work closely with AIDEA and NANA to advance the EIS
permitting process for the Ambler Access Road, also known as the
Ambler Mining District Industrial Access Project
("AMDIAP").
Trilogy will manage both the Arctic and Bornite programs.
Rick Van Nieuwenhuyse, President
and CEO of Trilogy Metals said, "This is a terrific opportunity for
Trilogy shareholders. South32 is a global diversified metals and
mining company who will bring a wealth of operational experience to
the project. Along with our Alaska Native Corporation
partner, NANA and their experience as the land owner and co-owner
of the Red Dog Mine, one of the largest zinc mines in the world, we
have a strong team that will be invaluable as the UKMP progresses
towards development."
Rick Van Nieuwenhuyse continued,
"We believe this deal recognizes the quality of our assets.
By offering to fund at a 150% premium to the investment made by
Trilogy, the terms recognize the high-quality asset base that
Trilogy has assembled at the UKMP. In terms of the option,
South32 will invest up to $30 million
to explore, expand and advance the already sizeable metal endowment
identified to date. The immediate exploration focus will be
to expand the known copper mineralization along the northern
frontier of the Bornite deposit. With only three field
seasons of exploration drillling at Bornite, we have already
identified a resource in excess of 6 billion pounds of
copper1. During our last year of drilling at
Bornite in 2013, five of the last holes drilled for exploration
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 warrant further exploration to
fully understand the potential of this project."
Wayne Westlake, President and CEO
of NANA Regional Corporation added, "NANA looks forward to
partnering with Trilogy and South32 on this new phase of
exploration. Our region has benefited from responsible
resource development, and we value working with companies that
advance our land's mineral potential and create shareholder value
while respecting our traditional subsistence lifestyle."
_____________________________
|
1
|
Indicated in-pit
resources at the Bornite deposit at a 0.50% Cu cutoff are 40.5
million tonnes at 1.02% Cu. An additional Inferred in-pit resources
at the Bornite deposit at a 0.50% Cu cutoff measures 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 1.5% Cu
cutoff) as 57.8 million tonnes at 2.89% Cu.
|
Option Funding Phase
South32 will contribute a minimum of $10
million each year, for up to 3 years, to fund exploration
expenditure at Bornite. Provided that all the exploration data and
information has been made available to South32 by no later than
December 31 of each year, South32
must decide by the end of January of the following year whether;
(i) to fund a further tranche of a minimum of $10 million, or (ii) to withdraw and not provide
any further annual funding. If the election to fund a further
tranche is not made in January, South32 has until the end of March
to exercise the option to form the LLC and make the subscription
payment. If South32 elects to exercise the option, the Subscription
Price less certain deductions for Initial Funding shall be paid in
one tranche within 45 business days. Should South32 elect to
withdraw the option will lapse and South32 will have no claim to
ownership or the funds it had already spent.
Subscription Funding Phase
At any time during the Option Funding Phase of the agreement
South32 may elect to subscribe for a 50% interest in a newly formed
LLC which will take transfer of, and hold, the UKMP Assets. The
Subscription Price is based on a 1.5 times multiple of Trilogy's
historical expenditures on the projects of approximately
$100 million. As part of the
Subscription Price, South32 will match any spending Trilogy makes
at the Arctic Project over the next 3 years, to a maximum of
$15 million. Depending on when the
option is exercised, certain amounts of the Initial Funding will be
deducted from the Subscription Price.
Trilogy estimates that the Subscription Price will fund the
Arctic and Bornite Projects through feasibility and the permitting
of the first mine to be developed in the Ambler mining
district. Once the full amount of the subscription payment of
approximately $150 million is
expended, the parties will contribute funding pro rata, as
contemplated by the operating agreement which will govern the LLC
(the "LLC Agreement"). The LLC Agreement anticipates a
General Manager, Chief Financial Officer and Chief Operating and
Technical Officer ("LLC Management Team") to be appointed by
the LLC's Board, which will have equal representation from Trilogy
and South32.
Qualified Persons
Erin Workman, P.Geo., Director of
Technical Services and an employee of Trilogy Metals, is a
Qualified Person as defined by National Instrument 43-101. Ms.
Workman has reviewed the scientific and technical information in
this news release and approves the disclosure contained herein.
Advisors
Blake, Cassels & Graydon LLP and Dorsey & Whitney LLP
acted as legal advisors and Deloitte LLP acted as tax advisors to
Trilogy Metals.
About South32
South32 is a globally diversified metals and mining company with
high-quality and well maintained operations which mine and produce
bauxite, alumina, aluminum, energy and metallurgical coal,
manganese, nickel, silver, lead and zinc in Australia, Southern
Africa and South America.
More information about South32 is available on their company's
website at www.south32.net.
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, zinc
and precious metals 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.