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): February 13, 2020
_______________________
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 February 13, 2020, Trilogy Metals Inc.
(the “Company”) issued a press release reporting financial results for the fiscal year and fourth quarter ended November
30, 2019. 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 February 13, 2020, the Company issued a press release reporting
financial results for the fiscal year and fourth quarter ended November 30, 2019 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.
|
TRILOGY METALS INC. |
|
|
|
Dated:
February 13, 2020 |
By: |
/s/ Elaine Sanders |
|
|
Elaine Sanders, Chief Financial Officer |
Exhibit 99.1
Trilogy Metals Reports Fiscal 2019 Year
End Results
VANCOUVER, Feb. 13, 2020 /CNW/ - 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.
View original content:http://www.prnewswire.com/news-releases/trilogy-metals-reports-fiscal-2019-year-end-results-301004198.html
SOURCE Trilogy Metals Inc.
View original content: http://www.newswire.ca/en/releases/archive/February2020/13/c4085.html
%CIK: 0001543418
For further information: Company Contacts: Elaine Sanders,
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 13-FEB-20
This regulatory filing also includes additional resources:
ex991.pdf
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