VANCOUVER, BC, July 8, 2020 /PRNewswire/ - Trilogy Metals
Inc. (TSX: TMQ) (NYSE American: TMQ) ("Trilogy Metals" or "the
Company") announces its financial results for the second quarter
ended May 31, 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.
Highlights
- Strong working capital position of $12.8
million and cash on hand of $12.3
million.
- Ambler Mining District Industrial Access Project, or AMDIAP,
Record of Decision expected by the end of July 2020.
- Feasibility study results for the Arctic Project expected in Q3
2020.
- The outbreak of the novel coronavirus (COVID-19) has resulted
in the deferral of this summer's exploration programs at the Upper
Kobuk Mineral Projects ("UKMP").
Ambler Mining District Industrial Access Project
(AMDIAP)
In a press release dated March 27,
2020, the Company announced the release of the final
Environmental Impact Statement (EIS) by the United States Bureau of
Land Management (BLM). The final step in the permitting process for
the AMDIAP is the issuance of the Record of Decision by the BLM
which is expected to be issued by the end of July 2020.
Project Activities
Activities at the Arctic Project during the second quarter
focused mainly on updating the 2020 Arctic resource and
metallurgical drill program for resource definition and variability
testing and planning for the next stages of engineering studies to
advance the project towards permitting and development. Work on the
feasibility study for the Arctic project continued during the
second quarter, with an expected completion date in the third
quarter of 2020.
The Bornite geological model was updated during the second
quarter incorporating the 2019 drill program results. Additional
sample collection from Bornite drill core was completed during the
quarter for age determinations on certain mineral
species. Five additional composite samples for metallurgical
testing from the potential underground resource area were collected
during the quarter.
Regional project activities during the second quarter consisted
mainly of updating the Sunshine prospect geologic model
incorporating the 2019 drill results. In addition, metallurgical
work began on five composite samples from the Sunshine prospect.
Test work is ongoing and will continue through the third
quarter. The Company also continued its review of historical
exploration data collected for the Ambler Mining District.
Deferral of the 2020 Summer Exploration Programs at the
UKMP
Through Ambler Metals LLC ("Ambler Metals") we and our joint
venture partner, South32 Limited ("South32") have decided not to
proceed with the 2020 exploration program after assessing the
current novel coronavirus (COVID-19) environment. Ambler
Metals gave due consideration to the merits of carrying out an
abridged work program at the UKMP. However, given the
continued uncertainty resulting from COVID-19, ongoing safety
concerns (despite added safety protocols including physical
distancing, protective equipment and testing) and the fact that,
due to COVID-19, the planned field season had already been delayed
to the point at which any field season would provide limited
critical path benefits, the decision has been made not to proceed
with a 2020 field season. The safety of our employees,
contractors and the communities where we work is paramount. We
are disappointed as we know delay affects everyone involved,
including our partner NANA Regional Corporation, Inc. ("NANA") and
our NANA shareholder hires.
We do not anticipate the deferral of the field season to
significantly impact the development timeframe for the UKMP. In the
meantime, Ambler Metals will continue advancing the metallurgical
test work on both Sunshine and Bornite over the last half of the
year which will provide a better understanding of metallurgical
performance in an operating scenario and advancing Arctic to the
next level of mine design with identifying engineering studies such
as trade-off studies and optimization studies of previously
completed work. Ambler Metals will continue focusing on regional
exploration by compiling historical data from the Ambler VMS Belt
and developing 3D geologic models of the most promising prospects
and prospect areas.
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
|
Six months
ended
|
Selected
expenses
|
May 31,
2020
$
|
May 31,
2019
$
|
May 31,
2020
$
|
May 31,
2019
$
|
General and
administrative
|
433
|
436
|
1,084
|
928
|
Mineral properties
expense
|
-
|
2,906
|
1,545
|
4,441
|
Feasibility
study
|
742
|
-
|
742
|
-
|
Professional
fees
|
198
|
153
|
866
|
244
|
Salaries
|
226
|
282
|
450
|
563
|
Salaries –
stock-based compensation
|
770
|
664
|
1,966
|
2,603
|
Investor
relations
|
101
|
175
|
227
|
292
|
Gain on derecognition
of assets contributed to joint venture
|
-
|
-
|
(175,770)
|
-
|
Equity in
investee
|
561
|
-
|
739
|
-
|
Comprehensive
earnings (loss) for the period
|
(3,002)
|
(4,509)
|
168,177
|
(8,845)
|
Basic earnings (loss)
per common share
|
(0.02)
|
(0.04)
|
1.20
|
(0.07)
|
Diluted earnings
(loss) per common
share
|
(0.02)
|
(0.04)
|
1.13
|
(0.07)
|
For the three months ended May 31,
2020, Trilogy reported loss of $3.0
million (or $0.02 basic and
diluted loss per common share). For the comparable period in 2019,
we reported a net loss of $4.5
million (or $0.04 basic and
diluted loss per common share). The decrease in comprehensive loss
is primarily due to the elimination of mineral properties expense
as these expenditures became the responsibility of Ambler Metals
subsequent to the formation of the joint venture with South32
Limited ("South32") on February 11,
2020. For the three-month period ended May 31, 2019, Trilogy Metals spent $2.9 million in mineral properties expense,
mostly consisting of internal engineering studies for the Bornite
and Arctic Projects, meteorological and air quality studies for the
Arctic Project and costs associated with preparing the camp for the
field season.
Other variances in relation to the comparative three-month
period ended May 31, 2020 consists of
the following: i) feasibility study expenses of $0.7 million were related to the Arctic Project,
and include costs incurred subsequent to the formation of Ambler
Metals on February 11, 2020, for
which there are no prior year comparatives; ii) share of loss in
equity investment in Ambler Metals of $0.6
million, amounts for which do not exist in the comparable
second quarter of 2019; iii) an increase of $0.1 million in stock-based compensation
primarily due to option and restricted share unit ("RSU") awards
that were granted and fully vested during the quarter; and iv) a
decrease of $0.07 million in investor
relations as marketing events scheduled during the quarter were
postponed due to the impact of COVID-19.
For the six-month period ended May 31,
2020, Trilogy Metals reported comprehensive earnings of
$168 million (or $1.20 basic and $1.13 diluted earnings per common share). For the
comparable period in 2019, we reported a comprehensive loss of
$8.8 million (or $0.07 basic and diluted loss per common share).
The differences for the six-month period ended May 31, 2020, when compared to the same period in
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
Ambler Metals on February 11, 2020.
This gain was offset by a $0.7
million loss reflecting the Company's 50% equity share of
Ambler Metals operating loss for the six-month period ended
May 31, 2020. There is no comparable
amount in the second quarter of 2019.
Other variances noted for the comparative six-month period ended
May 31, 2020 consist of the
following: i) an increase in general and administrative expenses of
$0.2 million, primarily due to
executive recruiting fees; ii) an elimination of $2.9 million in mineral properties expense as all
mineral property assets were contributed to Ambler Metals upon
formation of the joint venture on February
11, 2020; iii) an increase of $0.6
million in professional fees primarily attributed to the
implementation of new lease accounting standards, legal fees
related to the formation of the joint venture and consulting fees
for the former CEO, Rick Van
Nieuwenhuyse who remained as a consultant to Trilogy Metals
through to February 29, 2020; iv) the
inclusion of $0.1 million of salaries
in stock based compensation for the interim CEO; and iv) a decrease
of $0.6 million in stock-based
compensation driven primarily by a combination of a 200,000 unit
reduction in the number of stock options granted as
well as a lower share price contributing to a lower fair value for
stock options, RSUs and deferred share units granted to
non-executive directors as a portion of their director fees during
the six-month period ended May 31,
2020.
Liquidity and Capital Resources
At May 31, 2020, we had
$12.3 million in cash and cash
equivalents and working capital of $12.8
million, which is sufficient to fund our ongoing operations
for at least the next 12 months. The Ambler and Bornite Projects
are fully funded by Ambler Metals and we do not anticipate needing
to fund our 50% share of future expenditures to advance the
projects until Ambler Metals' $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 volcanogenic massive sulphide ("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 timing of permits
(including the AMDIAP Record of Decision), the timing of the
feasibility study on the Arctic Project, 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.