VANCOUVER, BC, Oct. 7, 2020 /PRNewswire/ - Trilogy
Metals Inc. (TSX: TMQ) (NYSE American: TMQ) ("Trilogy
Metals", "Trilogy" or "the Company") announces its financial
results for the third quarter ended August
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 – Meeting Milestones While Maintaining a Strong
Cash Position
- Feasibility Study results for the Arctic Project released on
August 20, 2020 confirms that Arctic
is an economically robust project.
- Joint Record of Decision for the Ambler Mining District
Industrial Access Project ("AMDIAP" or "Ambler Access Road") was
issued on July 23, 2020 following the
Final Environmental Impact Statement ("EIS") that was issued on
March 27, 2020.
- The Alaska Industrial Development and Export Authorty ("AIDEA")
has commenced the next stages of work to move the AMDIAP
forward.
- Strong working capital position of $11.8
million and cash on hand of $12.8
million plus $142 million
dedicated to advancing the Upper Kobuk Mineral Projects.
Arctic Feasibility Study
On August 20, 2020, the Company
announced the positive results of its Feasibility Study ("FS") for
the Arctic Copper-Zinc-Lead-Silver-Gold Project ("Arctic" or the
"Arctic Project") in the Ambler mining district of Northwestern
Alaska. The Arctic Project is held by Ambler Metals LLC
("Ambler Metals"), the joint venture operating company equally
owned by Trilogy and South32 Limited ("South32").
The FS was prepared on a 100% ownership basis, of which
Trilogy's share is 50%. The FS describes the technical and
economic viability of establishing a conventional open-pit
mine-and-mill complex for a 10,000 tonne-per-day operation for a
minimum 12-year mine life. The base case scenario utilizing
long-term metal prices of $3.00/lb
for copper, $1.10/lb for zinc,
$1.00/lb for lead, $1,300/oz for gold and $18.00/oz for silver resulted in:
- a pre-tax Net Present Value ("NPV")8% of
$1.6 billion and an Internal Rate of
Return ("IRR") of 31%; and
- an after-tax NPV8% of $1.1
billion and after-tax IRR of 27%.
On October 2, 2020, the Company
filed on a voluntary basis a National Instrument 43-101 technical
report summarizing the FS titled "Arctic Feasibility Study Alaska,
USA NI 43-101 Technical Report" with an effective date of
August 20, 2020 and a release date of
October 2, 2020 with the United
States Securities and Exchange Commission and the securities
regulatory authorities in each of the provinces of Canada. A copy of the report is available at
www.edgar.com, www.sedar.com and on the Company's website at
www.trilogymetals.com. More information on the Arctic Project
is available on the Company's website.
Ambler Mining District Industrial Access Project
(AMDIAP)
On July 23, 2020 a Joint Record of
Decision for the AMDIAP was issued by the Lead Federal Agency, the
Bureau of Land Management along with the Cooperating Federal
Agency, the U.S. Army Corps of Engineers. The AMDIAP will
provide access to the Ambler Mining District by linking the mining
district to the rest of Alaska's
infrastructure. The Ambler Mining District is home to the
Upper and Lower Kobuk villages, many residents of which are
shareholders of NANA Regional Corporation, Inc. ("NANA"), and to
the Company's projects.
On June 24, 2020, the Board of
Directors of the AIDEA approved a Memorandum of Understanding with
Ambler Metals which specifies how the parties will jointly
establish a plan regarding the permitting, feasibility, engineering
and design, construction and operation, financing and closure of
the AMDIAP. Ambler Metals has committed to contribute up to
$35 million to match AIDEA's
contribution of $35 million for these
activities over the next couple of years. Ambler Metals and
AIDEA will equally contribute up to $1
million in 2020 for engineering and planning work on the
road.
Ambler Metals Update
Activities at Ambler Metals include the hiring of Ramzi Fawaz as President and Chief Executive
Officer. Mr. Fawaz joined Ambler Metals from Newmont
Corporation where he was Senior Vice President Projects from
February 2011 to October 2019, with responsibility for the
development and execution of Newmont's major gold and copper
projects globally.
Before joining Newmont, Mr Fawaz served as Senior Vice President
Operations at Atomic Energy Canada Ltd. where he led all project
development, refurbishment and building of the CANDU reactor
projects. Prior to Atomic Energy, he was with Royal Dutch Shell, where he worked for 30 years
in various senior roles. Among those, Mr Fawaz was responsible for
leading the Athabasca Oil Sands Expansion Project in Canada and the Nigeria LNG Train 3 and LPG
expansion project in Nigeria.
Mr. Fawaz brings to the role extensive leadership experience in
US and international project development. Throughout his career, he
has engaged extensively with all stakeholders related to major
project developments, including executive management, boards of
directors, shareholders, local communities, contractors, utilities
and various regional and federal government agencies.
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,
2020
$
|
August
31,
2019
$
|
August
31,
2020
$
|
August
31,
2019
$
|
General and
administrative
|
265
|
435
|
1,349
|
1,363
|
Mineral properties
expense
|
-
|
10,951
|
1,545
|
15,392
|
Feasibility
study
|
232
|
-
|
974
|
-
|
Professional
fees
|
165
|
414
|
1,031
|
658
|
Salaries
|
170
|
272
|
620
|
835
|
Salaries –
stock-based compensation
|
1,064
|
402
|
3,030
|
3,005
|
Investor
relations
|
156
|
164
|
383
|
456
|
Gain on derecognition
of assets contributed to the joint venture
|
-
|
-
|
(175,770)
|
-
|
Equity in
investee
|
1,094
|
-
|
1,833
|
-
|
Comprehensive
earnings (loss) for the period
|
(3,184)
|
(12,535)
|
164,993
|
(21,380)
|
Basic earnings (loss)
per common share
|
($0.02)
|
($0.09)
|
$1.17
|
($0.16)
|
Diluted earnings
(loss) per common share
|
($0.02)
|
($0.09)
|
$1.12
|
($0.16)
|
For the three months ended August 31,
2020, Trilogy reported a loss of $3.2
million (or $0.02 basic and
diluted loss per common share). For the comparable period in 2019,
we reported a net loss of $12.5
million (or $0.09 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 on February 11, 2020. For the three-month period
ended August 31, 2019, for which
there are no current period comparatives, Trilogy spent
$11 million in mineral properties
expense, mostly consisting drilling costs for the Bornite, Arctic
and Regional Projects, project support costs such as camp
operations, fixed wing charters and helicopters for the field
season, and engineering and environmental studies for the Arctic
Project.
Other variances in relation to the comparative three-month
period ended August 31, 2020 consists
of the following: i) feasibility study expenses of $0.2 million were related to the Arctic Project,
and include costs incurred subsequent to the formation of Ambler
Metals on February 11, 2020; ii)
share of loss in equity investment in Ambler Metals of $1.1 million, which do not exist in the
comparable third quarter of 2019; iii) a decrease of $0.1 million in salaries as CEO compensation that
was salary based in the comparative period is stock based in the
current period; iv) a decrease of $0.2
million in professional fees primarily due to lower legal
fees; v) a decrease of $0.2 million
in general and administrative expenses primarily due to lower
travel cost imposed by COVID-19 restrictions; and vi) an increase
of $0.7 million in stock-based
compensation due to 1.8 million more options being granted during
the current quarter versus the comparative period.
For the nine-month period ended August
31, 2020, Trilogy reported comprehensive earnings of
$165 million (or $1.17 basic and $1.12 diluted earnings per common share). For the
comparable period in 2019, we reported a comprehensive loss of
$21.3 million (or $0.16 basic and diluted loss per common share).
The differences for the nine-month period ended August 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 $1.1 million loss reflecting the Company's 50%
equity share of Ambler Metals operating loss for the nine-month
period ended August 31, 2020. There
is no comparable amount in the third quarter of 2019.
Other variances noted for the comparative nine-month period
ended August 31, 2020 consist of the
following: i) a decrease in mineral properties expenses of
$13.9 million as all mineral property
assets were contributed to Ambler Metals upon formation of the
joint venture on February 11, 2020;
ii) feasibility study expenses of $1.0
million for the Arctic project incurred subsequent to the
joint venture formation; iii) an increase of $0.4 million in professional fees primarily
attributed to the implementation of new lease accounting standards
and legal fees related to the formation of the joint venture; and
iv) a decrease of $0.2 million in
salaries due to the inclusion CEO salaries in stock based
compensation.
Liquidity and Capital Resources
At August 31, 2020, we had
$12.8 million in cash and cash
equivalents and working capital of $11.8
million, which is sufficient to fund our ongoing operations
for at least the next 12 months. The 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
approximately $142 million is spent
by our joint venture company.
Qualified Persons
Richard Gosse, P.Geo, Vice
President Exploration for Trilogy Metals Inc., is a Qualified
Person as defined by National Instrument 43-101. Mr. Gosse
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 Upper Kobuk Mineral
Projects ("UKMP") in northwestern Alaska. On December 19,
2019 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, the Company's ability to fund its operations
and the requirement for additional funding at Ambler Metals and the
timing and amount of estimated future production, the net present
value and internal rate of return at the Arctic Project, 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.
Cautionary Note to United States Investors
This press release has been prepared in accordance with the
requirements of the securities laws in effect in Canada, which differ from the requirements of
U.S. securities laws. Unless otherwise indicated, all resource and
reserve estimates included in this press release have
been prepared in accordance with Canadian National Instrument
43-101 Standards of Disclosure for Mineral Projects ("NI 43-101")
and the Canadian Institute of Mining, Metallurgy and Petroleum
(CIM)—CIM Definition Standards on Mineral Resources and Mineral
Reserves, adopted by the CIM Council, as amended ("CIM Definition
Standards"). NI 43-101 is a rule developed by the Canadian
Securities Administrators which establishes standards for all
public disclosure an issuer makes of scientific and technical
information concerning mineral projects. Canadian standards,
including NI 43-101, differ significantly from the requirements of
the SEC, and resource and reserve information 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". 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.
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SOURCE Trilogy Metals Inc.