VANCOUVER, BC, July 6, 2022
/PRNewswire/ - Trilogy Metals Inc. (TSX: TMQ) (NYSE
American: TMQ) ("Trilogy", "Trilogy Metals" or "the Company")
announces its financial results for the second quarter ended
May 31, 2022. 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
- Exploration field season commenced for the Upper Kobuk Mineral
Projects ("UKMP").
- UKMP fiscal 2022 budget updated to approximately $26.2 million.
- Projects are well funded with the joint venture holding
$52.8 million in cash and
$53.5 million loan receivable from
South32 Limited ("South32") as at May 31,
2022.
- Subsequent to the quarter end, South32 repaid the entire loan
resulting in the joint venture holding over $100 million in cash.
- Trilogy cash position of $3.5
million and working capital of $3.4
million as at May 31, 2022
sufficient to fund head office operations for the next twelve
months.
Upper Kobuk Mineral
Projects
In a press release dated June 8,
2022, the Company announced that Ambler Metals LLC ("Ambler
Metals"), the joint venture company owned 50/50 by Trilogy and
South32 had commenced mobilization for the summer 2022 field
program at the UKMP. The drill program will be helicopter-supported
and will be based out of Ambler Metals' expanded 90-person camp at
Bornite. The previously announced $28.5
million fiscal 2022 budget was updated to approximately
$26.2 million. The field season is
entirely funded by Ambler Metals and consists of a minimum 10,000
meters of diamond drilling with additional meters contingent on
drill performance, weather and approval of supplementary budgets.
The field season program prioritizes advancing the Arctic Project
with additional infill drilling to further improve the confidence
in the resource and the completion of a geotechnical study to
further de-risk the project. Exploration outside of the Arctic
deposit will focus on discovering copper-rich satellite deposits
near Arctic, the Cosmos Hills and the Ambler Lowlands.
The 2022 Arctic program involves a minimum 6,000 meters in 27
holes, as part of an 8,400-meter infill program to increase
confidence from the Indicated to Measured category. In addition,
three to five holes totaling 500 to 750 meters are planned to
complete a geotechnical and hydrogeological assessment of Arctic
that was initiated last year.
The 2022 exploration program for the Cosmos Hills and Ambler
Lowlands includes drilling of approximately 2,400 meters as well as
detailed mapping and soil sampling to build on the work performed
during the prior year. In addition, a minimum 2,000 meters of
trenching is planned around Pardner Hill and the Bornite East
target area.
Annual General Meeting of Shareholders
The Annual General Meeting of shareholders was held on
May 13, 2022. All directors nominated
by the Company and standing for election were elected by
shareholders of the Company. Other items of business included the
approval of amendments to, and unallocated entitlements under, the
Company's Restricted Share Unit Plan ("RSU Plan") and Deferred
Share Unit Plan ("DSU Plan").
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,
2022
$
|
May 31,
2021
$
|
May 31,
2022
$
|
May 31,
2021
$
|
General and
administrative
|
338
|
351
|
735
|
762
|
Investor
relations
|
38
|
116
|
137
|
270
|
Professional
fees
|
192
|
275
|
437
|
504
|
Salaries
|
261
|
407
|
675
|
846
|
Salaries and directors
expense –
stock-based compensation
|
662
|
524
|
2,584
|
2,672
|
Share of loss on equity
investment
|
2,460
|
1,700
|
4,370
|
2,820
|
Comprehensive loss for
the period
|
(4,074)
|
(3,413)
|
(9,097)
|
(7,929)
|
Basic and diluted loss
per common
share
|
(0.03)
|
(0.02)
|
(0.06)
|
(0.05)
|
For the three-month period ended May 31,
2022, cash preservation strategies resulted in overall cash
savings of $0.3 million in general
and administrative expenses, investor relations, professional fees
and salaries when compared to budget. For the three-month period
ended May 31, 2022, Trilogy reported
a net loss of $4.1 million (or
$0.03 basic and diluted loss per
common share). For the comparable period in 2021, the Company
reported a net loss of $3.4 million
(or $0.02 basic and diluted loss per
common share). This difference is primarily due to a $0.8 million increase in the Company's equity
pick-up of Ambler Metals' comprehensive loss in the current period.
The current quarter includes pre-development costs for the Ambler
Access Project for which there are no prior year comparatives. This
increase in the equity pick-up is offset by reductions in general
and administrative expenses, investor relations and professional
fees due to management implemented cost savings strategies during
the quarter. The combined total of salaries and stock-based
compensation is consistent between the current period quarter and
the comparative period.
For the six-month period ended May 31,
2022, Trilogy reported a net a loss of $9.1 million (or $0.06 basic and diluted loss per common share).
For the comparable period in 2021, the Company reported a net loss
of $7.9 million (or $0.05 basic and diluted loss per common share).
The difference for the six-month period ended May 31, 2022, when compared to the same period in
2021, is primarily due to a $1.6
million increase in the Company's equity pick up of Ambler
Metals comprehensive loss for the six-month period ending
May 31, 2022. The current period
includes pre-development costs for the Ambler Access Project for
which there are no prior year comparatives as well as higher
engineering and project related salaries and wages versus the
comparative period.
Other variances noted for the comparative six-month period ended
May 31, 2022 consist of: i) a
decrease of $0.13 million in investor
relations activities; ii) a decrease of $0.2
million in salaries as the executive team agreed to receive
a portion of their salary in Restricted Share Units; and iii) a
decrease of $0.1 million in
stock-based compensation, driven by a $0.3
million decrease in the fair value amortization of awards
granted during the period (due to a 0.7 million units reduction of
overall stock-based awards granted versus the comparative period),
and offset by $0.2 million increase
from executives and directors taking equity in lieu of cash
compensation.
Liquidity and Capital Resources
Trilogy expended $2.9 million on
operating activities during the six months ended May 31, 2022 with the majority of cash spent on
corporate salaries, annual insurance renewal, annual fees paid to
the Toronto Stock Exchange and the NYSE American Exchange and
professional fees related to the Company's annual regulatory
filings with the American and Canadian securities commissions.
At May 31, 2022, Trilogy had
$3.5 million in cash and cash
equivalents and working capital of $3.4
million. The Company continues to manage its cash
expenditures through its working capital. Management continues to
review the fiscal 2022 budget for cash preservation opportunities
and has reduced cash expenditures where feasible, including but not
limited to, reductions in marketing and investor conferences and
office expenses. In addition, the Company's Board of Directors have
agreed to take all of their fees in shares of the Company in an
effort to preserve cash and increase share ownership. The Company's
senior management team are also taking a portion of their base
salaries in shares of the Company to preserve cash. Management
believes that the combination of these cost reduction efforts
results in sufficient cash to fund the Company's operations for the
next twelve months.
All project related costs are funded by the joint venture. Amber
Metals is well funded to advance the UKMP with $52.8 million in cash and $53.5 million loan receivable from South32 as at
May 31, 2022. Subsequent to the
quarter end, South32 repaid the full balance of the loan,
consisting of $53.1 million principal
and $0.5 million interest, resulting
in Ambler Metals having over $100
million in cash. There are sufficient funds at the joint
venture to fund the updated budgets for the UKMP of $26.2 million and the Ambler Access Project of
$15.4 million for fiscal 2022.
Trilogy does not anticipate having to fund the activities of Ambler
Metals until the current cash balance of approximately $100 million is expended.
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 UKMP in northwestern
Alaska. On December 19, 2019, South32, 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 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 a land package that spans
approximately 181,387 hectares. Ambler Metals has an agreement with
NANA Regional Corporation, Inc., an Alaska Native Corporation that
provides a framework for the exploration and potential development
of the Ambler Mining District in cooperation with local
communities. Trilogy's 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, perceived merit of properties, expectations
regarding the 2022 field season and budgets for the UKMP and the
continued willingness of the Company's director and
executives to receive their compensation in equity, the Company's
plans to look for opportunities to reduce its cash spend for the
year, management's expectations regarding the effects of cash
conservation efforts and the sufficiency of cash for the next
twelve months, the Company's expectation of raising additional
funds, and the Company's plans to provide further updates and the
timing thereof 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 our
ability to conserve cash and to raise capital at terms favorable to
the Company, or at all 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.
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SOURCE Trilogy Metals Inc.