VANCOUVER, April 8, 2020 /CNW/ - Trilogy Metals Inc.
(TSX / NYSE American: TMQ) ("Trilogy Metals" or "the Company")
announces its financial results for the first quarter ended
February 29, 2020. 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.
First Quarter 2020 and Recent Events Highlights
- Final Environmental Impact Statement for the Ambler access road
released.
- Gain of $176 million recorded on
the contribution of assets to the joint venture.
- Strong working capital position of $14.5
million and cash on hand of $15.2
million.
- Ambler Metals LLC with $145
million to fund the advancement of the projects.
- 2020 budget totalling $22.8
million for the Upper Kobuk Mineral Projects.
- COVID-19 may impact the timing and scope of the 2020 field
programs.
Ambler Mining District Industrial Access Project
("AMDIAP")
On March 27, 2020, the United
States Bureau of Land Management ("BLM"), the lead federal agency
for the permitting of the AMDIAP, released the Final Environmental
Impact Statement ("EIS") for the AMDIAP. The final step in
the permitting process for the AMDIAP is the issuance of the Record
of Decision by the BLM and the issuance of the Clean Water Act
Section 404 permit from the United States Army Corp. of Engineers.
The Company expects these two items to be issued concurrently
within the next couple of months. For more information on the Final
EIS please visit the BLM website at https://www.blm.gov/alaska.
Impact of Coronavirus (COVID-19)
With respect to the outbreak of the novel coronavirus
(COVID-19), Trilogy recognizes that the situation is extremely
fluid and is monitoring the State of Alaska Health Department
recommendations and restrictions on travel. These recommendations
and restrictions may significantly impact our ability to conduct
the planned work programs during the upcoming field season. So,
although the work programs discussed below are still currently
scheduled to commence as originally planned, our highest priority
is the health, safety and welfare of our employees, contractors and
community members. As a result, we and our joint venture partner,
through Ambler Metals LLC ("Ambler Metals"), will make the
necessary adjustments to the work programs, including extending the
timeline or scope for the remainder of the programs, or even
cancelling the planned exploration activities at the UKMP for this
season, if it is determined to be necessary or prudent to do
so.
Project Activities
2020 Operating Budget for the Upper Kobuk Mineral
Projects
In a press release dated February 26,
2020, the Company announced that Ambler Metals had approved
a 2020 program budget of $22.8
million for the advancement of the UKMP. The budget is 100%
funded by Ambler Metals. The 2020 program budget includes 10,000
meters of drilling at the Arctic Project, 2,500 meters of drilling
within the Ambler Volcanogenic massive Sulphide ("VMS") Belt and
geological mapping and geochemical soil sampling at the Bornite
Project. However the timing of these programs maybe delayed, see
"Impact of Coronavirus (COVID-19)" above.
Formation of Joint Venture
On February 11, 2020, the Company
completed the formation of a 50/50 joint venture in the form of
Ambler Metals with South32 Limited ("South32"). As part of the
formation of the joint venture, Trilogy contributed all of its
assets associated with the Upper Kobuk Mineral Projects, including
the Arctic and Bornite projects, while South32 contributed
$145 million, resulting in each
party's subsidiaries directly owning a 50% interest in Ambler
Metals. We use the equity method of accounting for our
investment in the joint venture. Our investment in Ambler
Metals was initially measured at its fair value upon recognition
and a gain of $176 million was
recognized from the contribution of our mineral property assets to
the joint venture.
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 29,
2020
$
|
February 28,
2019
$
|
General and
administrative
|
651
|
492
|
Mineral properties
expense
|
1,545
|
1,535
|
Professional
fees
|
668
|
91
|
Salaries
|
224
|
281
|
Salaries –
stock-based compensation
|
1,196
|
1,939
|
Total
expenses
|
4,475
|
4,458
|
Gain on derecognition
of assets contributed to joint venture
|
(175,770)
|
-
|
Equity in
investee
|
178
|
-
|
Comprehensive
earnings (loss) for the period
|
171,179
|
(4,336)
|
Basic earnings (loss)
per common share
|
$1.22
|
$(0.03)
|
Diluted earnings
(loss) per common share
|
$1.16
|
$(0.03)
|
For the three months ended February 29,
2020, Trilogy reported net earnings of $171 million (or $1.22 basic and $1.16 diluted earnings per common share).
For the comparable period in 2019, we reported a net loss of
$4.3 million (or $0.03 basic and diluted loss per common share).
The first quarter 2020 differences, when compared to the first
quarter 2019, are primarily due to the gain of $176 million recognized from the contribution of
mineral property assets to the joint venture with South32 upon
formation of the joint venture on February
11, 2020. This gain was slightly offset by $0.18 million in loss from equity investee,
consisting of Trilogy's 50% share of Ambler Metals' operating loss
for the first quarter of 2020, for which there is no comparable
amount in the first quarter of 2019.
Other variances noted for the comparable period were i) an
increase in general and administrative expenses of $0.16 million primarily due to an additional
$0.07 million in regulatory fees due
mostly to the filing of the base shelf prospectus and $0.1 million in executive recruiting fees; ii) an
increase in professional fees of $0.58
million mainly consisting of $0.12
million for consulting fees for the research and
implementation of new accounting standards, legal fees of
$0.25 million related to the
formation of the joint venture, valuation and loan capacity
analysis fees of $0.07 million
related to the formation of the joint venture, and $0.1 million of consulting fees; iii) a decrease
of $0.06 million in salaries due to
reductions in head office staffing levels; and iv) a decrease in
stock-based compensation driven primarily by a 0.38 million
reduction in the number of stock options granted during the first
quarter versus the comparative period as well as no vesting of RSUs
during the period, resulting in stock based compensation savings of
approximately $0.74 million and
$0.33 million, respectively.
Mineral property expenses for the three months ended
February 29, 2020 were consistent
with the comparative period and mainly include engineering costs
related to the Company's Arctic feasibility study.
Liquidity and Capital Resources
At February 29, 2020, we had
$15.2 million in cash and cash
equivalents and working capital of $14.5
million, which is sufficient to fund our ongoing operations
for at least the next 12 months. The projects will be funded by
Ambler Metals and we do not anticipate needing to fund our 50%
share of future expenditures to advance the projects until the
approximately $145 million is
spent.
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 and development
company which holds a 50 percent interest in Ambler Metals LLC
which has a 100 percent interest in the UKMP in northwestern
Alaska. On December 19, 2020, South32, which is a globally
diversified mining and metals company, exercised its option to form
a 50/50 joint venture with Trilogy. The UKMP is located within the
Ambler Mining District which 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 and cobalt
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 land package that spans approximately 172,636
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, statements relating to the planned expenditures
and the anticipated drilling, timing of permits, the Company's
ability to fund its operations and the requirement for additional
funding at Ambler Metals 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 the uncertainties involving
success of exploration activities, permitting timelines,
requirements for additional capital, risks pertaining to the
outbreak of the coronavirus (COVID-19), government regulation of
mining operations, environmental risks, prices for energy inputs,
labour, materials, supplies and services, uncertainties involved in
the interpretation of drilling results and geological tests,
unexpected cost increases 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.