VANCOUVER, BC, Feb. 11, 2022 /PRNewswire/ - Trilogy Metals
Inc. (TSX: TMQ) (NYSE American: TMQ) ("Trilogy Metals",
"Trilogy" or "the Company") announces its financial results for the
year and fourth quarter ended November
30, 2021. 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.
President's Message
2021 was another pivotal year for the Company as it marked the
resumption of in-the-field activities at the Upper Kobuk Mineral
Projects ("UKMP"), including significant advancements at the Arctic
Project – part of the UKMP. Despite the challenges of the Covid-19
pandemic, which resulted in the suspension of the 2020 field
program, the team at Ambler Metals LLC ("Ambler Metals") – our
50/50 joint venture company with South32 Ltd. ("South32") – was
able to complete the 2021 program in a safe and effective
manner.
Without Ambler Metals' incredible, hard-working, and loyal
employees, the 2021 field program would not have been successful.
During the 2021 program, Ambler Metals employed on average
approximately 70 people at site, of which approximately 50% were
Alaskan Natives. Ambler Metals' Alaska Native employees are the
backbone of the company, and their experiences, knowledge and
culture are what drives our accomplishments.
I also want to acknowledge the Ambler Metals management team,
led by Ramzi Fawaz, Kevin Torpy and Rebecca
Donald, for their exceptional job in keeping everyone safe
through the implementation and management of our Covid-19 safety
program. During the summer field season, over 1,000 Covid-19 tests
were administered for site travel, of which only one positive case
was identified at camp on the very last day of the season. The
Ambler Metals team is committed to the safety and well-being of its
employees and will continue implementing rigorous safety
protocols.
Ambler Access Project
Throughout the last year,
there has also been incredible progress in advancing the Ambler
Access Project ("Ambler Access Project" or "AAP"), which is the
proposed 211-mile (340-km) industrial-use-only road from the UKMP
to the Dalton highway.
Recall that in 2020, our infrastructure partner – the Alaska
Industrial Development and Export Authority ("AIDEA") – received
the Joint Record of Decision ("JROD") from the United States Bureau
of Land Management ("BLM"), and the Section 404 Permit from the
United States Army Corps. of Engineers ("USACE"). These are the two
key permits required for the road. As previously disclosed,
lawsuits were filed shortly thereafter by a coalition of national
and Alaska environmental
non-government organizations in response to the BLM's issuance of
the JROD for the Ambler Access Project and the lawsuits are
ongoing.
Subsequently, there have been several positive developments with
the AAP starting with a funding agreement between AIDEA and Ambler
Metals, in which both parties have each committed $35 million towards the pre-development work on
the AAP.
Also in early 2021, AIDEA signed agreements for Right-of-Ways
for the AAP with the BLM and the National Parks Service. AIDEA also
signed a land access agreement with Doyon, Limited, which is an
Alaska Native regional corporation. This agreement allows AIDEA to
carry out feasibility and permitting activities on Doyon
land.
During the summer of 2021, AIDEA commenced formal field work on
the proposed road. The budgeted $13
million program involved cultural heritage work, aquatic
habitat studies and geotechnical work. On February 4, 2022, AIDEA announced the approval of
the 2022 program and budget for the AAP of $30.8 million, of which $15.4 million will be funded by AIDEA and
$15.4 million will be funded by
Ambler Metals. During the 2022 field season, AIDEA will be carrying
out additional work, including geotechnical studies, right-of-way
surveys, environmental studies, road and bridge engineering design
work, and cultural heritage work. Nearly 50 local jobs have been
identified for the 2022 field season.
Arctic Project
Despite challenging weather and
recruitment issues, we were still able to make tangible progress at
the Arctic Project. During the summer drilling campaign, we drilled
18 drill holes totaling 4,131 meters. The goal of this program was
to convert a portion of the mineral resources from the indicated
category to the measured category and provide material for
metallurgical testing and geotechnical information. So far, we have
released the drilling results for six holes, all of which hosted
significant intervals of high-grade mineralization. We are already
planning for the 2022 field season which will encompass 10,000
meters of drilling, with three drills starting up in late
spring.
Arctic Permitting
In the fall of 2021, Ambler
Metals engaged Stantec to conduct a permitting preparedness review
for the Arctic Project. After a thorough review, Stantec concluded
that the permitting strategy is sound, and the permitting package
can proceed with minor changes. Ambler Metals is now making the
recommended changes to the permitting package and expects to file
the permitting application, which will start the formal permitting
process for the Arctic Project, with the United States Army Corps.
of Engineers in 2022. We continue to anticipate that the permitting
process will take 24 to 30 months.
Bornite Project
While the immediate focus has
been on Arctic, we want to remind investors that Bornite is still a
remarkable asset. This was highlighted when we announced a new
resource estimate in January 2022.
Like Arctic, Bornite has extremely high copper grades, specifically
the South Reef area which hosts inferred resources of 35.3 million
tonnes at a grade of 3.4% copper. Overall, Bornite is impressive
with indicated in-pit resources grading over 1% copper, containing
almost a billion pounds of copper and inferred in-pit resources of
just over two billion pounds of copper at a grade of almost 1%
copper.1 We have passed along our findings to the Ambler
Metals team who will look at how the Bornite Project fits into the
overall development plan at the UKMP.
___________________________
|
1 NI
43-101 Technical Report on the Bornite Project, Northwest Alaska,
USA with an effective date of December 31, 2021 and release date of
February 11, 2022.
|
Going Forward
We are very excited about
our prospects for 2022 as we move expeditiously towards the
exploration and development of our assets at the UKMP. The joint
venture partners have already approved a $28.5 million budget for 2022, which will include
approximately 10,000 meters of drilling at Arctic and the rest of
the UKMP. We are also excited to finally be on the cusp of
commencing permitting activities at Arctic, which we believe is one
of the most high-quality copper assets in the world.
Ambler Metals will be recruiting over 60 direct hire positions
for the 2022 field season, in addition to approximately 50
positions hired through contractors. As part of its workforce
development plans, Ambler Metals will be kicking off several
vocational training programs
involving participants from the local NANA and Doyon
regions.
We look forward to continuing what has been a productive 2021,
and we thank you for being on this journey with us.
Sincerely,
Tony
Giardini
President & CEO
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,
2021
$
|
Year
ended
November 30,
2020
$
|
Exploration
expense
|
143
|
-
|
Mineral properties
and feasibility study
|
-
|
2,610
|
General and
administrative
|
1,517
|
1,650
|
Investor
relations
|
602
|
537
|
Professional
fees
|
818
|
1,347
|
Salaries
|
2,007
|
1,411
|
Salaries –
stock-based compensation
|
3,472
|
3,564
|
Gain on derecognition
of assets contributed to the joint venture
|
-
|
(175,770)
|
Share of loss on
equity investment
|
13,082
|
2,855
|
Comprehensive
earnings (loss) for the year
|
(21,660)
|
161,767
|
Basic earnings (loss)
per common share
|
(0.15)
|
1.14
|
Diluted earnings
(loss) per common share
|
(0.15)
|
1.12
|
For the year ended November 30,
2021, we reported a net loss of $21.7
million (or $0.15 basic and
diluted loss per common share) compared to a net earnings of
$161.8 million (or $1.14 basic earnings and $1.12 diluted earnings per common share) in
fiscal 2020. The $183.4 million
decrease in comprehensive earnings in the current year, when
compared to fiscal 2020, is primarily due to the $175.8 million gain on the derecognition of
assets contributed to the joint venture during fiscal 2020. This
variance is offset by $2.6 million in
mineral property and feasibility study expenses incurred in 2020
that were not incurred during 2021. Adding to the variances in 2021
were an increase of $10.2 million in
our 50% share of the joint venture's net operating loss and an
increase of $0.6 million in salaries,
offset by a decrease of $0.5 million
in professional fees. Our share of loss on equity investment was
higher versus the 2020 comparative due to project related drill
program costs incurred by Ambler Metals during the 2021 field
season. These costs were not incurred during the prior year as the
2020 field season had been cancelled due to the COVID-19 pandemic.
The increase in salaries reflects the additions to the executive
team during the third quarter of 2020. Professional fees were
higher in 2020 due to one-time charges incurred for the
implementation of new accounting standards and legal and accounting
fees in relation to the formation of the joint venture.
Additionally, the Company incurred exploration costs of
$0.1 million for a preliminary
reconnaissance program on new mineral claims that were staked
outside of the UKMP during fiscal 2021.
Liquidity and Capital Resources
We expended $5.1 million on
operating activities during the 2021 fiscal year compared with
$8.3 million for operating activities
for the same period in 2020. A majority of cash spent on operating
activities during the prior fiscal years was expended on mineral
property expenses, general and administrative expenses, salaries
and professional fees. Ambler Metals assumed responsibility for
project funding upon formation of the Joint Venture on February 11, 2020. As a result, the majority of
cash spent on operating activities during the 2021 fiscal year was
expended on general and administrative expenses, salaries and
professional fees.
At November 30, 2021, we had
$6.3 million in cash and cash
equivalents and working capital of $5.6
million. Management believes that the cash available is
sufficient to meet its budgeted $5.5
million operating requirements for the next twelve months.
The Company continues to manage its cash expenditures through its
working capital. All project related costs are funded by the joint
venture. Amber Metals is well funded to advance the UKMP with
$61.2 million in cash and
$55.4 million loan receivable from
South32 as at November 30, 2021 and
an operating budget of $28.5 million
for fiscal 2022. Trilogy does not anticipate having to fund the
activities of Ambler Metals until the initial contribution of
$145 million is expended.
Future cash requirements may vary materially from current
expectations due to a number of factors, including foreign exchange
denominated office related costs and insurance renewal costs. The
Company will need to raise additional funds to support its
operations and administration expenses. Future sources of liquidity
may include equity financing, convertible debt, or the exercise of
options. The continued operations of the Company are dependent on
its ability to obtain additional financing or to generate future
cash flows.
Outlook for 2022
On January 11, 2022, the Company
announced the approval of the 2022 program and budget for Ambler
Metals of approximately $28.5 million
to advance the UKMP. The budget is fully funded by Ambler
Metals. The 2022 budget for Ambler Metals, approved by the owners,
Trilogy and South32, will cover up to 10,000 meters of
helicopter-supported diamond drilling that is expected to commence
in early June. The meterage will be divided between resource
development drilling at Arctic and scout drilling of both volcanic
massive sulphide ("VMS") targets in the Ambler Belt, with a focus
on targets near Arctic, and carbonate-hosted copper ("CHC") targets
around Bornite and the Cosmos Hills. A greater effort on the ground
to identify and evaluate new targets for drilling, including the
use of ground and down-hole electro-magnetic surveys, is
planned.
On February 7, 2022, the Company
announced the approval of the 2022 program and budget for the
Ambler Access Project of approximately $30.8
million of which $15.4 million
will be funded by AIDEA and $15.4
million will be funded by Ambler Metals. During the
2022 field season, AIDEA will be carrying out additional work
including, geotechnical investigations, right-of-way surveys,
environmental studies, road and bridge engineering design work, and
cultural resources work.
The Company has approved a 2022 cash budget for corporate
activities of approximately $5.5
million (2021 - $5.3
million). The corporate budget consists of personnel
and related costs of $2.1 million
(2021 - $2.0 million), professional
fees of $0.9 million (2021 -
$1.1 million), investor relations and
marketing costs of $0.6 million (2021
- $0.6 million), office related costs
of $0.5 million (2021 - $0.5 million), insurance costs of $0.5 million (2021 - $0.4
million), regulatory costs of $0.3
million (2021 - $0.3 million)
and exploration activities of $0.15
million (2021 - Nil). The 2022 budget has increased slightly
from the prior year due mainly to an increase in insurance costs,
addition of exploration activities and foreign exchange impacts on
Canadian dollar sourced amounts for personnel and office related
costs. The Company's management team is focused on the oversight of
our investment in Ambler Metals and will closely work with Ambler
Metals. The Company's technical staff will work closely with
South32's technical team and Ambler Metals exploration staff to
review opportunities on advancing its known deposits and look at
potential new targets in the large land package that is held by
Ambler Metals. A significant amount of uncertainty continues to
exist with the Company's annual renewal of its insurance policies
and costs are currently unpredictable. Insurance premiums may
differ significantly from our budget. The Company has
sufficient cash on hand to fund its corporate activities including
any increases in insurance premiums upon renewal.
2021 Project Activities
Upper Kobuk Mineral Projects
In a press release dated May 17,
2021, the Company announced that Ambler Metals had finalized
the details of the 2021 exploration field program at the UKMP for
the previously approved $27 million
exploration budget. The budget was 100% funded by Ambler Metals and
included 7,600 meters of infill and metallurgical drilling at the
Arctic Project as well as 7,000 meters of exploration drilling
within the Ambler VMS Belt. The exploration program was aligned
with a strategy developed by the Company and South32 which
prioritized the exploration budget within the UKMP. The strategy
defined a program that advances the highest priority projects and
exploration targets, both VMS and CHC, ranging from early-stage
geophysical anomalies that were identified during the 2019 airborne
versatile time domain electromagnetic survey to advanced VMS and
CHC prospects with historical resources. The site camp opened on
June 1, 2021 with the summer drill
program completing on September 22,
2021.
Drilling productivity at the UKMP was behind schedule during the
2021 field season due to adverse weather conditions in the district
and challenges with the contractor staffing the drill rigs. As a
result, a total of 7,325 meters of the originally planned drill
program were completed. Despite the lower-than-expected drill
productivity, all planned geotechnical drilling at the Arctic
Project was completed and sufficient mineralized material was
recovered to complete the planned metallurgical program. The summer
2021 drill program was completed on September 23, 2021.
Arctic Project
The 2021 field season plan for the Arctic Project focused on
drilling in order to extract additional material for metallurgical
work and for the conversion of mineral resources into the measured
category. The metallurgical program associated with this drilling
was to support variability test work and pilot plant work.
Technical activities at the Arctic Project commenced in early June
with initial work focused on infill drilling to further improve the
confidence of the Mineral Resources from the Indicated to Measured
category. During the field season a total of 18 holes were
completed at Arctic comprising 4,131 meters of core. All the core
has been logged and sampled.
Regional Exploration Project
During the 2021 field season, two drill rigs were relocated from
the Arctic Project to the Regional drilling program. Regional
drilling was focused on near Arctic ("Arctic Hub") exploration
targets, with the goal of discovering nearby copper-rich satellite
deposits within a 3-to-5-kilometer radius of the Arctic deposit.
Drilling was completed at the Arctic East and Southeast Arctic
targets before moving drills to investigate other targets within
the UKMP, including Snow and the Ambler Lowlands. A total of 8
holes were completed totaling 3,194 meters.
In addition to the regional drill program, geologists also
carried out regional geological mapping within the Ambler VMS belt.
Traverses were completed along creeks within the Center of the
Universe prospect, the DH prospect, and in Jackass Creek (between
the DH and Cliff prospects), the Bud-Sunshine-West Dead Creek
prospect cluster, Dead Creek, Pipe, and the Nora prospects.
Geochemical soil sampling is ongoing within the Cosmos Hills
around Bornite and the Ambler VMS Belt. The goal of this program is
to follow-up on previous anomalous geochemical results and to
investigate geophysical anomalies that were identified during the
2019 airborne versatile time domain electromagnetic survey.
Arctic Mine Permitting
Arctic mine permitting preparation work was ongoing during
fiscal 2021 for filing of formal federal permitting documentation
for the Arctic Project. An independent consulting company has
completed a preparedness review of the draft permitting package for
the Arctic Project and presented the results of this review to the
technical teams of South32 and Trilogy. The review concluded that
the Ambler Metals permitting strategy is sound and the permitting
package can proceed with minor changes. Ambler Metals is now making
the recommended changes to the permitting package and expects to
file the permitting application, which will start the formal
permitting process for the Arctic Project, with the USACE in early
2022. The Company expects to file the permit application
during the first quarter of 2022, and for the overall permitting
process to take 24 to 30 months to be completed.
Ambler Access Project
During the summer of 2020, the United States Bureau of Land
Management ("BLM") issued the Joint Record of Decision ("JROD") for
the AAP. Lawsuits were filed shortly thereafter by a coalition of
national and Alaska environmental
non-government organizations in response to the BLM's issuance of
the JROD for the Ambler Access Project.
On January 6, 2021, BLM, the
National Park Service and AIDEA signed Right-of-Way agreements
giving AIDEA the ability to cross federally owned and managed lands
along the route for the Ambler Access Project approved in the JROD.
The authorizing documents with the two agencies are the final
federal permits required for the Ambler Access Project.
During the second quarter of 2021, AIDEA signed a land access
agreement with Doyon Limited to conduct feasibility and permitting
activities to advance the Ambler Access Project and in September 2021 AIDEA signed a land access
agreement with NANA Regional Corporation, Inc. to conduct similar
activities.
On October 27, 2021, the federal
defendants were granted a 60-day stay with respect to each of the
lawsuits. In its request for the stay, the DOJ stated that it was
necessary to "accommodate review of this matter by officials within
the United States Department of the Interior who have engaged in
various discussions with multiple parties involving this matter and
in government-to-government consultations with tribal
entities".
On February 7, 2022, the court
granted a second request from the federal defendants for an
extension to file their response to the plaintiff's brief.
Ambler Metals had opposed the extension request. The federal
defendants are now required to file their response no later than
February 22, 2022.
Development Funding Agreement regarding the Ambler Access
Project with the AIDEA
The 2021 field season for the Ambler Access Project consisted of
cultural heritage work along the proposed 211-mile,
east-west-running controlled industrial access road that would
provide industrial access to the Ambler Mining District in
Northwestern Alaska. The Alaska
Industrial Development and Export Authority has prioritized
cultural heritage work, aquatic habitat studies and geotechnical
planning for this year's and next year's field seasons to progress
the feasibility engineering and permitting work for the road. On
August 9, 2021, the Governor of
Alaska, Mike Dunleavy, visited the UKMP. During the
visit, the Governor reiterated his strong support for the
development of the Ambler Mining District and for the development
of the Ambler Access Project. He also announced the formation of
the Subsistence Advisory Committee Working Group which is to
include Native stakeholders within the Northwest Arctic Borough and
the Doyon Region who could be affected by the proposed road. This
committee is being formed to develop the terms of reference for the
formal Subsistence Advisory Committee that will provide guidance on
subsistence and other matters for the design and operation of the
road.
Bornite Technical Report
The Company also announces it has filed a National Instrument
43-101 technical report with the Canadian securities regulators
relating to the Bornite Project which supports the resource
estimate previously announced in a press release on January 20, 2022. The technical report is
entitled NI 43-101 Technical Report on the Bornite Project,
Northwest Alaska, USA and prepared
by Bruce Davis, Robert Sim and Jeff
Austin, all of whom are "Qualified Persons" under NI 43-101
(the "Bornite Technical Report").
A copy of the Bornite Technical Report is available on the
Company's website at www.trilogymetals.com and under the Company's
profiles on SEDAR at www.sedar.com and EDGAR at www.sec.gov.
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 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 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, proposed advancement of the Ambler Road
Project, planned activities at the UKMP, the Outlook for 2022, the
Company's anticipated budget for corporate activities and the
Company's ability to fund its operations and the requirement for
additional funding at Ambler Metals, resource and reserve estimates
and the timing and amount of estimated future production and 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 the outcome of pending litigation, 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, 2021 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 contained in SEC Industry Guide 7, and resource and reserve
information contained herein may not be comparable to similar
information disclosed by U.S. companies under SEC Industry Guide 7.
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. The SEC's new
mining disclosure rules under Regulation S-K 1300 are closer, but
not identical to NI 43-101 and CIM Definition Standards. As the
Company is not yet subject to Regulation S-K 1300, it remains
subject to SEC industry Guide 7. We have no reserves under SEC
Industry Guide 7. Accordingly, information concerning mineral
deposits set forth herein may not be comparable with information
made public by companies that report in accordance with U.S.
standards under either SEC's Industry Guide 7 or Regulation S-K
1300.
View original
content:https://www.prnewswire.com/news-releases/trilogy-metals-reports-fiscal-2021-year-end-results-and-files-technical-report-for-the-bornite-resource-estimate-301480331.html
SOURCE Trilogy Metals Inc.