VANCOUVER, April 9, 2019 /CNW/ - Trilogy Metals Inc.
(TSX / NYSE American: TMQ) ("Trilogy Metals" or "the Company")
announces its financial results for the first quarter ended
February 28, 2019. 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 of $29.8
million and cash on hand of $30.0
million.
- South32 Limited ("South32") has funded $31.0 million over the three year option period
and has until January 2020 to
exercise the option to form the joint venture.
- 2019 budgets totalling $18.2
million for the Arctic Project, the Bornite Project and
Regional or District Exploration.
Outlook
As previously announced, the approved budgets for the fiscal
year ending November 30, 2019 total
$18.2 million for the Company's
project activities at the Upper Kobuk Mineral Projects ("UKMP") and
for exploration. At the Bornite Project, we anticipate
drilling approximately 7,900 meters in approximately 12 drill holes
with the objective to infill and extend the underground
resource. At the Arctic Project, we anticipate the need for
further drilling inside the open pit to support feasibility level
geotechnical and hydrology analysis required for the mine
plan. Work will be focused on completing a feasibility study
at Arctic with results anticipated to be released in the first half
of 2020. The Company also plans to execute a regional or
district exploration program during this field season. Plan
are in progress to complete an aerial EM geophysics survey this
spring over the Company's 100 Km long Volcanogenic Massive Sulphide
("VMS") belt and, with that information, prepare for exploration
drilling of certain targets this summer. The Company has
started obtaining proposals for necessary contracts, engaging with
local communities for the hiring of seasonal staff and working on
maintenance activities at its remote camp to ready the site for
this year's busy field season.
Project Activities
Arctic Project
In a press release dated January 31,
2019, the Company announced that our Board of Directors
approved a $7.0 million budget for
the 2019 Arctic program, focusing on feasibility level engineering
and environmental work with a view to completing a feasibility
study in the first half of 2020, and to prepare the project for
permitting. During the first quarter, the Company commenced
preparations for the summer field season at the Arctic Project in
addition to ongoing metallurgical studies. The Company will
continue to advance engineering and environmental work in 2019 in
support of completing a feasibility study. We plan to undertake
additional hydrological and geotechnical work at the site this
summer along with water management, tailings facility and waste
rock containment analysis and design during the second half of the
year. Additional metallurgical test work to verify ore hardness and
grinding characteristics is currently on-going.
Bornite Project
In a press release dated December 13,
2018, the Company announced the final set of drill results
at the Bornite Project from the 2018 exploration drill program.
Assay results from these 5 remaining drill holes comprising
approximately 3,024 meters from the 10,123-meter 2018 program show
significant copper mineralization.
In a press release dated January 31,
2019, the Company announced that the Board of Directors
approved a $9.2 million budget for
the 2019 Bornite program, focusing on additional exploration
drilling consisting of a combination of infill and expansion
drilling of the known deposit. South32 Limited committed to
fund the entire $9.2 million budget
and funds were received during the first quarter maintaining the
Option Agreement as defined below in good standing.
In a press release dated March 5,
2019, the Company announced additional copper-cobalt
metallurgical results for the Bornite Project. Nine
individual metallurgical samples have been evaluated for the
recovery of copper and cobalt and the production of saleable copper
concentrates. Results are consistent with previous test
results and significantly expand the metallurgical database for the
project. Hardness testing of the nine samples shows the
materials are of soft to moderate hardness with copper recoveries
ranging from 80.2% to 94.5% and averaged 89.7% for eight of the
nine composites. Copper concentrate grades range from 24.5%
to 34.5% Cu and averaged 27.6% Cu. Copper concentrate quality
is shown to be very good with low levels of penalty elements.
Cobalt has been shown to be readily recoverable to a pyrite
concentrate with grades of this concentrate in the range of 700 to
4500 g/t cobalt. Plans are being made for the next stage of
work to determine the optimal method to recover cobalt from the
pyrite concentrate.
Regional Exploration Project
In a press release dated February 6,
2019, the Company announced an approved new Regional
Exploration budget of $2.0 million,
in addition to the $16.2 million
already approved for the 2019 Bornite and Arctic Projects.
The Company and South32 have agreed to equally fund the Regional
Exploration budget. Funds were received during the first
quarter from South32 for their $1.0
million contribution, which is in excess of the $30 million in option payments. The Regional
Exploration program will be focused on identifying and testing new
drill targets within the Ambler VMS Belt.
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
|
Selected
expenses
|
February 28,
2019 $
|
February 28,
2018 $
|
General and
administrative
|
492
|
345
|
Mineral properties
expense
|
1,535
|
1,131
|
Professional
fees
|
91
|
159
|
Salaries
|
281
|
229
|
Salaries –
stock-based compensation
|
1,939
|
922
|
Total
expenses
|
4,458
|
2,828
|
Loss on held for
trading investments
|
-
|
135
|
Loss and
comprehensive loss for the period
|
4,336
|
2,946
|
Basic and diluted
loss per common share
|
$0.03
|
$0.03
|
For the three months ended February 28,
2019, Trilogy reported a net loss of $4.3 million (or $0.03 basic and diluted loss per common share)
which was higher than the net loss of $2.9
million for the corresponding period in 2018 (or
$0.03 basic and diluted loss per
common share). The first quarter 2019 differences, when compared to
the first quarter 2018 are mostly due to factors discussed
below.
During the three months ended February
28, 2018, the Company sold 1,360,000 (2017 – 410,000) common
shares of Goldmining Inc. ("GMI") for proceeds of $1.4 million and recorded a loss on held for
trading investments of $0.14 million.
There are no comparable figures for the period ended February 28, 2019 as the remaining investment in
GMI was fully disposed of during fiscal 2018.
Other differences noted for the comparable period were i) an
increase in general and administrative expenses of $0.15 million consisting mostly of $0.04 million in travel costs related to
conference attendance and $0.11
million in stock exchange and regulatory fees; ii) an
increase of $0.4 million in mineral
properties expense mostly consisting of geochemistry work during
the first quarter 2019 related to the Arctic Corescan project,
waste water system design costs and set up costs incurred for the
new warehouse in Fairbanks; iii) a
decrease in professional fees as the comparative period included
legal and accounting fees for the base shelf prospectus for which
there are no comparable figures for the first quarter 2019; iv) an
increase in salaries due to new hires during the second half of
fiscal 2018; v) an increase in stock-based compensation due to a
higher share price contributing to an overall greater fair value
for options granted during the first quarter 2019; and vi) a
quarter of the December 5, 2018 stock
option grant fully vested at the grant date, which further
contributed to the increase in stock-based compensation when
compared to the first quarter 2018.
Liquidity and Capital Resources
At February 28, 2019, we had
$30.0 million in cash and cash
equivalents and working capital of $29.8
million. The increase in cash and working capital was a
result of fully receiving the $9.2
million Year 3 funding from South32 as well as an additional
$1.0 million for the regional
exploration program discussed above.
We expended $3.2 million on
operating activities during the three months ended February 28, 2019 compared with $4.3 million for operating activities for the
same period in 2018. Most cash spent on operating activities during
all periods was expended on mineral property expenses, general and
administrative, salaries and professional fees.
The Company continues to fund its cash expenditures through its
working capital and funding from South32. The Company will need to
raise additional funds to support its operations and administration
expenses in the future. Future sources of liquidity may include
debt financing, equity financing, convertible debt, exercise of
options, or other means. The continued operations of the Company
are dependent on its ability to obtain additional financing or to
generate future cash flows.
Qualified Persons
Andrew W. West, Certified
Professional Geologist, Exploration Manager for Trilogy Metals
Inc., is a Qualified Person as defined by National Instrument
43-101. Mr. West 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 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, the outlook for 2019, anticipated timing and
results of a feasibility study on the Arctic Project, the future
operating or financial performance of the Company, planned
expenditures and the anticipated activity at the UKMP Projects, 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; timing
of the feasibility study; funding by South32; 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 interpretation of drill results, 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,
2018 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 Technical Report 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. 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.
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SOURCE Trilogy Metals Inc.