VANCOUVER, Oct. 9, 2019 /PRNewswire/ - Trilogy Metals
Inc. (TSX / NYSE American: TMQ) ("Trilogy Metals" or "the
Company") announces its financial results for the third quarter
ended August 31, 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 $23.2
million and cash on hand of $26.9
million.
- Public release of the Ambler Mining District Industrial Access
Project or Ambler Road ("AMDIAP") draft Environmental Impact
Statement ("EIS") by the United States Bureau of Land Management
("BLM").
- Geotechnical drilling completed at Arctic for feasbility level
studies with the goal of completing the feasibility study in the
first half of 2020.
- Exploration drilling substantially completed during the quarter
at Bornite.
- Regional exploration completed at the Sunshine prospect.
Outlook and Project Activities
Ambler Mining District Industrial Access Project
In a press release dated August 23,
2019, the Company announced the public release of the draft
EIS for the Ambler access road by the BLM. This is a critical
milestone for the permitting of the AMDIAP in relation to further
exploration and development of the Ambler Mining District. The BLM,
which is the lead agency for the permitting of the AMDIAP, has now
completed the draft EIS which has been posted on the BLM website.
The next step is a public comment period. Comments on the draft EIS
will be accepted through October 29,
2019.
Arctic Project
During the third quarter ended August 31,
2019, we drilled 11 holes at the Arctic Project resulting in
approximately 2,411 meters drilled, utilizing two rigs from Tuuq
Drilling LLC ("Tuuq"). Tuuq is owned by NANA Development
Corporation. The Company anticipates announcing drill results from
the 2019 Arctic drill program during the fourth quarter of 2019.
Work at the Arctic deposit commenced in late June with a view of
completing feasibility level geotechnical and hydrology work. The
main goal of this year's work program was to complete engineering
and environmental studies to prepare a National Instrument 43-101
compliant feasibility study which results are anticipated to be
released in the first half of 2020. Work is also being done to
prepare the Arctic Project for permitting, which we expect to
commence in 2020. The permitting preparation work being carried out
will support Federal, State and Borough permitting
requirements.
Bornite Project
The main goal of the 2019 drill program was to drill
approximately 8,000 meters within 12 holes, including both infill
and expansion drilling. Exploration activities commenced at the
beginning of June with 7,598 meters within 10 holes of drilling
completed through to August 31, 2019.
In a press release dated September 10,
2019, the Company announced assay results on 4 holes
comprising approximately 3,014 meters from the recently completed
7,610-meter drill campaign. The Company anticipates announcing
further drill results from the 2019 Bornite drill program during
the fourth quarter of 2019.
Regional Exploration Project
District-wide Versatile Time Domain Electromagnetic ("VTEM") and
Z – Axis Tipper Electromagnetic ("ZTEM") helicopter airborne
geophysical surveys were completed this spring along the entire
100-kilometer long belt of the favorable stratigraphy hosting known
polymetallic volcanogenic-massive sulphide ("VMS") deposits, as
well as the areas around the Bornite deposit and the surrounding
Cosmos Hills area. The surveys were flown by Geotech Ltd. and the
data is currently being re-processed by Resource Potential PTY Ltd.
The new VTEM and ZTEM surveys have been integrated into our dataset
of historical drilling accumulated over a 40-year period of
exploration, all of which has been geo-referenced into an
integrated GIS database.
The exploration drilling completed during the field season
targeted the Sunshine prospect, which is approximately eight miles
(13 kilometers) from the Arctic Project. In a press release dated
September 10, 2019, the Company
announced assay results for one drill hole from the Sunshine
prospect comprising 161 meters of the 1,357 meter, six-hole drill
campaign at this prospect. The Company anticipates announcing
further drill results from the 2019 regional exploration program
during the fourth quarter of 2019.
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
|
Nine months
ended
|
Selected
expenses
|
August 31,
2019
$
|
August 31,
2018
$
|
August 31,
2019
$
|
August 31,
2018
$
|
General and
administrative
|
435
|
376
|
1,363
|
1,175
|
Mineral properties
expense
|
10,951
|
9,051
|
15,392
|
12,657
|
Professional
fees
|
414
|
13
|
658
|
286
|
Salaries
|
272
|
286
|
835
|
738
|
Salaries –
stock-based compensation
|
402
|
204
|
3,005
|
1,277
|
Investor
relations
|
164
|
59
|
456
|
261
|
Loss and
comprehensive loss for the
|
12,535
|
9,920
|
21,380
|
16,530
|
period
|
|
|
|
|
Basic and diluted
loss per common
|
$0.09
|
$0.08
|
$0.16
|
$0.14
|
share
|
|
|
|
|
For the three - month period ended August
31, 2019, Trilogy reported a net loss of $12.5 million (or $0.09 basic and diluted loss per common share)
which was higher than the net loss of $9.9
million for the comparative period in 2018 (or $0.08 basic and diluted loss per common share).
This variance was primarily due to an increase in mineral
properties expense due to the size, scope and timing of the field
program versus the comparative three – month period.
The $1.9 million difference in
mineral properties expense consists of the following changes.
During the three months ended August 31,
2019, we completed 2,411 meters (2018 – 593 meters) of
drilling at the Arctic project, 7,598 meters (2018 – 7,707 meters)
at the Bornite project and executed a new regional exploration
drilling program of approximately 1,357 meters. As a result, we
incurred increased drilling costs of $1.1
million and increased project supporting costs of
$0.6 million (including camp
operation, logistics and personnel). The remaining variance in
mineral properties expense consists of an increase of $0.4 million in engineering costs related to the
feasibility study and the geotechnical study for the Arctic
project, an increase of $0.1 million
in geochemistry costs associated with drill assay testing, all
offset by a $0.3 million decrease in
geophysics and environment related costs.
Other differences noted for the comparable periods were: i) a
slight increase in general and administrative expenses in the
current period; ii) an increase of $0.4
million in professional fees due to increased legal fees;
iii) an increase of $0.2 million in
stock-based compensation due to a higher share price contributing
to a higher fair value vesting for previously granted stock
options, RSUs and DSUs; and iv) an increase of $0.1 million in investor relations expenses due
to the Company's increased level of marketing activity including
attendance at more investor conferences and meetings in the current
period.
For the nine - month period ended August
31, 2019, Trilogy reported a net loss of $21.4 million (or $0.16 basic and diluted loss per common share)
compared to a net loss of $16.5
million for the corresponding period in 2018 (or
$0.14 basic and diluted loss per
common share).
The $2.7 million increase in
mineral properties expense in relation to the comparative nine -
month period ended August 31, 2018
consist of the following changes. Due to the increased size and
scope of the 2019 field program, we drilled 3,066 more meters for
the nine - months ended August 31,
2019 in contrast to the comparative period, resulting in an
increase of $1.1 million in drilling
costs. Project support and personnel costs increased by
$1.1 million and includes
$0.5 million in VTEM and ZTEM
airborne survey costs, for which there are no prior year
comparatives. The remaining variance in mineral properties expense
consists of an increase of $0.5
million in engineering costs and an increase of $0.3 million in geochemistry costs, all offset by
a decrease of $0.3 million in
geophysics costs.
Other differences noted for the comparable periods were: i) an
increase of $0.2 million in general
and administration costs primarily due to increased stock exchange
fees, office computer hardware and software, and travel costs; ii)
a slight increase in salaries; iii) an increase of $0.2 million in investor relations expenses due
to the Company's increased level of marketing activity including
attendance at more investor conferences and meetings during the
nine - month period ended August 31,
2019; iv) an increase of $0.4
million in professional fees due to increased legal fees;
and v) an increase of $1.7 million in
stock-based compensation due to a higher share price contributing
to a greater fair value amortization of stock options, RSUs and
DSUs granted during the nine - month period ended August 31, 2019.
Liquidity and Capital Resources
At August 31, 2019, we had
$26.9 million in cash and cash
equivalents and working capital of $23.2
million. During the three-month period ended August 31, 2019, the Company received proceeds of
approximately $9.9 million as a
result of an exercise of 6,521,740 warrants.
The increase in cash was a result of fully receiving the
$9.2 million Year 3 funding from
South32, an additional $1.0 million
for the regional exploration program and an injection of
$9.9 million upon exercise of all
warrants. These cash inflows were offset by $15.4 million in mineral properties expense,
$3.3 million in cumulative general
and administrative expenses, investor relations, professional fees,
salaries and $2.5 million in cash
savings from changes in net non-cash working capital. The increase
in working capital for the period was a result of higher accounts
payable and prepaid balances, offset by a higher accounts
receivable balance as at August 31,
2019.
We expended $15.8 million on
operating activities during the nine months ended August 31, 2019 compared with $14.6 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. As the Company is not currently in production, 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.
All cash generated from investing activities during the nine
months ended August 31, 2019 were
from the South 32 Option Agreement funding of $10.2 million (2018 - $10.4 million) and there were no proceeds from
the sale of investments (2018 - $2.3
million) as all Gold Mining Inc. shares were full disposed
during fiscal 2018. During the nine months ended August 31, 2019, $9.9
million in cash was generated from financing activities
(2018 - $26.9 million).
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, statement under Outlook and Project Activities,
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
Upper Kobuk Mineral Projects, including permitting and drill
results, 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
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
Estimates of mineralization and other technical information
have been prepared in accordance with National Instrument 43-101
Standards of Disclosure for Mineral Projects ("NI 43-101").
Canadian standards, including NI 43-101, differ significantly from
the current requirements of the SEC, and information on mineral
deposits contained herein 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", and the requirements for
"reserves" under NI 43-101 are also not the same as those under SEC
rules. 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. Accordingly, information concerning
mineral deposits set forth in this press release 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.