UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event
reported): October 9, 2019
_______________________
Trilogy Metals Inc.
(Exact name of registrant as specified
in its charter)
_______________________
British Columbia |
001-35447 |
98-1006991 |
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification Number) |
Suite 1150, 609 Granville Street
Vancouver, British Columbia
Canada, V7Y 1G5
(Address of principal executive offices,
including zip code)
(604) 638-8088
(Registrant’s telephone number, including
area code)
N/A
(Former name or former address, if changed
since last report)
Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see
General Instruction A.2 below):
[_] Written communications pursuant
to Rule 425 under the Securities Act (17 CFR 230.425)
[_] Soliciting material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[_] Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.24d-2(b))
[_] Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.23e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Common Shares |
TMQ |
NYSE American
Toronto Stock Exchange |
Indicate by check mark whether the registrant is an emerging
growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth
company [_]
If an emerging
growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_]
Item 2.02 Results of Operations and Financial Condition
On
October 9, 2019, Trilogy Metals Inc. (the “Company”) issued a press release reporting third quarter fiscal 2019 financial
results. A copy of the press release is furnished as Exhibit 99.1 to this report.
In accordance with General Instruction B.2
of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed”
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject
to the liability of that section, and shall not be incorporated by reference into any registration statement or other document
filed under Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference
in such filing.
Item 7.01
Regulation FD Disclosure
On
October 9, 2019, Trilogy Metals Inc. (the “Company”) issued a press release reporting third quarter fiscal 2019 financial
results and an update on project activities.
A
copy of the press release is furnished as Exhibit 99.1 to this report.In accordance with General Instruction B.2 of Form 8-K, the
information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the
liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under
the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such
filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
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TRILOGY METALS INC. |
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Dated: |
October
9, 2019 |
By: |
/s/ Elaine Sanders |
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Elaine Sanders, Chief Financial Officer |
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Exhibit 99.1
Trilogy Metals Reports Third Quarter Fiscal
2019 Financial Results
VANCOUVER, Oct. 9, 2019 /CNW/ - 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.
View original content:http://www.prnewswire.com/news-releases/trilogy-metals-reports-third-quarter-fiscal-2019-financial-results-300934427.html
SOURCE Trilogy Metals Inc.
View original content: http://www.newswire.ca/en/releases/archive/October2019/09/c7827.html
%CIK: 0001543418
For further information: Company Contacts, Elaine Sanders,
Vice President & Chief Financial Officer, Patrick Donnelly, Vice President Corporate Communications & Development, 604-638-8088
or 1-855-638-8088
CO: Trilogy Metals Inc.
CNW 06:30e 09-OCT-19
This regulatory filing also includes additional resources:
ex991.pdf
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