VANCOUVER, Feb. 13, 2020 /PRNewswire/ - Trilogy
Metals Inc. (TSX / NYSE American: TMQ) ("Trilogy Metals" or
"the Company") announces its financial results for the year and
fourth quarter ended November 30,
2019. Details of the Company's financial results are
contained in the audited consolidated financial statements and
Management's Discussion and Analysis in our annual report on Form
10-K 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 cash position of $19.2
million and $17.8 million in
working capital at year end
- With South32 Limited's ("South32") election to form the
Joint Venture, an additional $145
million dedicated to advancing the Upper Kobuk Mineral
Projects ("UKMP")
- Joint Venture is well funded - no additional funding
required by Trilogy until the $145
million Subscription Price has been spent
- Feasibility Study for the Arctic Project anticipated in the
second quarter of 2020
Outlook for 2020
On February 11, 2020, Trilogy
announced the completion of the 50/50 joint venture with South32
(the "Joint Venture"). Trilogy contributed all of its assets
associated with the 172,675-hectare UKMP, including the Arctic and
Bornite projects, while South32 contributed a Subscription Price of
US$145 million, resulting in each
party owning a 50% interest in the joint venture named Ambler
Metals LLC ("Ambler Metals"). The funds will be used to advance the
Arctic and Bornite projects, along with exploration in the Ambler
mining district.
Many of Trilogy's employees will be focused on working on the
UKMP this year through a services agreement with Ambler Metals. We
expect to recover costs for our US-based employees from Ambler
Metals from February onward and we also expect that the majority of
our US-based employees will transition to being employees of Ambler
Metals before the end of the year. With Ambler Metals being well
funded, with access to $145 million,
Trilogy does not expect to fund programs and budgets to advance the
UKMP until the Subscription Price funds are spent by the LLC.
Therefore, we anticipate that Trilogy's current cash resources will
be sufficient to fund our current level of corporate expenditures
for three or more years. With the Company completing the joint
venture and engaging in an executive search for a new CEO, we
anticipate that our professional fees will be approximately
$400,000 higher due to this increased
level of corporate activity.
We are also working on the accounting for our investment in the
Joint Venture. With the completion of the Joint Venture, we
now hold a 50% interest in the UKMP which we expect to record our
interest as an equity investment, which results in our share of
Ambler Metals' expenses being recorded in the income statement as
an operating loss. We will provide additional information on the
2020 program and budget when it is finalized.
The Company is also in the process of completing a feasibility
study for the Arctic Project which results are anticipated to be
released in the second quarter of this year.
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,
2019
$
|
Year
ended
November 30,
2018
$
|
Year
ended
November 30,
2017
$
|
General and
administrative
|
1,838
|
1,532
|
1,385
|
Mineral properties
expense
|
19,211
|
16,490
|
15,100
|
Professional
fees
|
1,382
|
453
|
708
|
Salaries
|
1,314
|
1,467
|
975
|
Salaries –
stock-based compensation
|
3,845
|
1,441
|
705
|
Unrealized loss on
held for trading investments
|
-
|
-
|
1,645
|
Loss gain on sale of
investments
|
-
|
272
|
580
|
Loss and
comprehensive loss for the year
|
27,905
|
21,849
|
21,104
|
Basic and diluted
loss per common share
|
$0.21
|
$0.18
|
$0.20
|
For the year ended November 30,
2019, we reported a net loss of $27.9
million (or $0.21 basic and
diluted loss per common share) compared to a net loss for the
corresponding period in 2018 of $21.8
million (or $0.18 basic and
diluted loss per common share) and a net loss of $21.1million for the corresponding period in 2017
(or $0.20 basic and diluted loss per
common share). The 2019 movement in net loss was primarily due to
the increased size and magnitude of the field programs undertaken
at our mineral properties. Adding to this variance in 2019 were
incremental increases in general and administrative expenses,
professional fees and stock-based compensation offset by a slight
decrease in salaries. Additionally, there were losses recognized on
both the sale of investments as well as investments designated as
held for trading in both respective prior years that did not exist
in the fiscal 2019 year.
The increase in the net loss pertaining to 2019 relates to the
size of the program undertaken at the UKMP. We executed a
$18.2 million program at the UKMP in
2019, with $9.2 million on the
Bornite Project funded by South32 under the Option Agreement,
$2 million on a new regional
exploration program funded 50/50 by Trilogy and South 32 and
$7 million on the Arctic Project
funded entirely by Trilogy. The 2019 field program consisted of
7,610 meters of exploration drilling at the Bornite Project. At the
Arctic Project, we completed 10 holes for 2,422 meters of
geotechnical drilling. The regional program included a VTEM and
ZTEM helicopter airborne geophysical survey and 1,357 meters of
exploration diamond drilling program completed at the Sunshine
prospect for which there are no prior year comparatives.
The slight increase in the net loss pertaining to 2018 relative
to 2017 relates to the size of the program undertaken at the UKMP
in 2018. We executed a $16.5 million
program at the UKMP in 2018, with $10.8
million on the Bornite Project funded by South32 under the
Option Agreement. The 2018 field program consisted of 10,123 meters
of exploration drilling at the Bornite Project. At the Arctic
Project, 593 meters of geotechnical drilling and 40 test pits were
completed to provide additional geotechnical and hydrologic
information for the waste rock dump, tailings management facility
and surface infrastructure in the area.
Comparably, the significant increase in the net loss pertaining
to 2017 relates to the size of the program undertaken at the UKMP
in 2017. We executed a $15.1 million
program at the UKMP in 2017, with $10.0
million on the Bornite Project funded by South32 under the
Option Agreement. The 2017 field program consisted of 8,437 meters
of exploration drilling at the Bornite Project, 274 meters of
geotechnical drilling and 26 test pits completed to determine site
facility locations and mine design at the Arctic Project, and 785
meters of infill drilling to collect material for an ore-sorting
study at the Arctic Project. Additionally, significant engineering
work was completed on the pre-feasibility study ("PFS") at the
Arctic Project that was completed in Q1 2018.
During the year ended November 30,
2018, the Company sold the remaining 2,365,000 common shares
of Gold Mining Inc. ('GMI") for proceeds of $2.3 million and realized a loss on sale of
$0.3 million. Similarly, during the
year ended November 30, 2017, the
Company sold 2,525,000 common shares of GMI for proceeds of
$3.5 million and realized a loss on
sale of $0.6 million. For the year
ended November 30, 2017, we
recognized an unrealized loss on held for trading investments of
$1.6 million on 2,365,000 common
shares of GMI and 1,000,000 warrants to purchase a common share of
GMI.
Professional fees for the year ended November 30, 2019 were $1.4 million, an increase of $0.9 million from the $0.5
million incurred for the year November 30, 2018, and an increase of
$0.7 million from the $0.7 million incurred for the year ended
November 30, 2017. The increase in
professional fees in 2019 is primarily due to increased legal fees
due to filing of the base shelf prospectus and accounting fees for
research and implementation of new accounting standards per US
GAAP. Professional fees in 2018 decreased from 2017 as the prior
year included the arrangement with South32 and preparatory costs
associated with the filing of a base shelf prospectus in
Canada and the United States.
Other variances for the year ended November 30, 2019 compared to 2018 and 2017 are
as follows: (a) $1.8 million in
general and administrative expenses in 2019 compared to
$1.5 million in 2018 and $1.4 million in 2017 primarily due to increased
stock exchange fees driven by the Company's increased market
capitalization and regulatory fees related to the filing of the
base shelf prospectus. The slight increase in 2018 compared to 2017
was primarily due to less favorable foreign exchange movement; (b)
$1.3 million in salaries in 2019
compared to $1.5 million in 2018 and
$1 million in 2017 due to changes in
staffing levels at the corporate office; and (c) $3.8 million in
stock based compensation in 2019 compared to $1.4 million in 2018
and $0.7 million in 2017 due to the fair value of grants valued
using the Black-Scholes model, which is most sensitive to the
Company's increased share price and future expected volatility.
The comparable basic and diluted loss per common share for 2019
of $0.21 is higher than 2018 due to
the higher net loss for the year offset by the dilutive effect of
an increased weighted average number of shares outstanding at
November 30, 2019, primarily driven
by the exercise of warrants during 2019 versus the prior year. The
basic and diluted loss per common share for 2018 of $0.18 is lower than 2017 primarily due to the
dilutive effect of a significantly increased weighted average
number of shares outstanding at November 30,
2018 from the issuance of shares related to the Bought-deal
financing in 2018.
Liquidity and Capital Resources
At November 30, 2019, we had
$19.2 million in cash and cash
equivalents. We expended $23.5
million on operating activities during the 2019 fiscal year
compared with $22.1 million for
operating activities for the same period in 2018, and expenditures
of $15.4 million for operating
activities for the same period in 2017. A majority of cash
spent on operating activities during all periods was expended on
mineral property expenses, general and administrative expenses,
salaries and professional fees. The increase in cash spent in the
year ended November 30, 2019 is
mainly due to increased mineral property expenses of $2.7 million, professional fees of $0.9 million, and general and administrative
expenses of $0.3 million offset by
$2.4 million in cash saving from
changes in net non-cash working capital. As at November 30, 2019, the Company had consolidated
cash of $19.2 million and working
capital of $18 million. The Company
continues to manage its cash expenditures through its working
capital and management believes that the working capital available
is sufficient to meet its operational requirements for the next
three years.
During the year ended November 30,
2019, the Company received proceeds of approximately
$9.9 million as a result of an
exercise of 6,521,740 warrants and $0.2
million from directors and officers exercise of stock
options. Comparatively, during the year ended November 30, 2018, the Company completed a
bought-deal financing for gross proceeds of $28.7 million by issuing 24,784,482 common shares
at $1.16 per common share. The
financing related costs including the bank commissions, legal fees,
stocking exchange and other fees totaled $1.8 million for net proceeds of $26.9 million.
During the year ended November 30,
2019, we raised $9.6 million
from investing activities. The investing proceeds consist of
$10.2 million raised through mineral
property funding from South32 offset by outflows of $0.6 million on the purchase of a new septic
system. During the year ended November 30,
2018, we raised $12.7 million
from investing activities. These investing proceeds consist of
$10.4 million of mineral property
funding from South32 and $2.3 million
proceeds received from the disposition of the remaining investment
in GMI shares. During the year ended November 30, 2017, we raised $13.5 million from investing activities of which
$10.4 million was mineral property
funding from South32 and $3.4 million
from the sale of GMI shares offset by outflows of $0.3 million for acquisition of equipment.
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 in this
press release, other than statements of historical fact, are
forward-looking statements, including, without limitation, the
outlook for 2020, anticipated timing and results of a feasibility
study on the Arctic Project, the future operating or financial
performance of the Company, including how long its working capital
is expected to last, planned expenditures and the anticipated
activity at the UKMP Projects, and anticipated accounting treatment
of the joint venture. 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 the
uncertainties involving the need for additional financing to
explore and develop properties and availability of financing in the
debt and capital markets; unexpected cost increases, which could
include significant increases in estimated capital and operating
costs; and other risks and uncertainties disclosed in the Company's
Annual Report on Form 10-K for the year ended November 30, 2019 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.
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SOURCE Trilogy Metals Inc.