VANCOUVER,
June 28, 2017
/CNW/ - Trilogy Metals Inc. (TSX, NYSE-MKT: TMQ)
("Trilogy Metals" or "the Company") is pleased to report its second
quarter results for the period ended May 31,
2017. Details of the Company's financial results are
contained in the unaudited interim 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.
Second Quarter 2017 Highlights:
- Strong working capital position of $20.1 million, with cash on hand of $14.5 million.
- Financial partnership announced with South32 Limited for
an option to form a 50/50 joint venture for a minimum investment of
$150 million.
- South32 is required to fund a minimum of $10 million per year, for up to three years to
keep the option in good standing.
- First $10 million has been
advanced to the Company and will be spent on 12,000-meter
exploration drill program at the Bornite deposit, which program is
underway.
- Engaged independent contractors for the pre-feasibility
study ("PFS") on the high-grade polymetallic volcanogenic massive
sulphide ("VMS") Arctic deposit.
South32 Option Agreement
On April 10, 2017 the
Company announced that it had signed an agreement with South32
Limited (ASX/JSE/LSE: S32) ("South32") whereby Trilogy had granted
South32 an option to form a 50/50 joint venture with respect to
Trilogy's Alaskan assets, known collectively as the
Upper Kobuk Mineral Projects ("UKMP"), which includes the Arctic
and Bornite Projects, the Exploration and Option to Lease Agreement
with NANA Regional Corporation, Inc., and the remainder of
Trilogy's state mining claims along the 100km VMS belt. South32
must contribute a minimum of $10
million each year, for a maximum of 3 years, to keep the
option in good standing. South32 may exercise its option at
any time over the next three years to form the 50/50 joint venture.
To subscribe for 50% of the joint venture, South32 will contribute
a minimum of $150 million,
plus any amounts Trilogy spends at the Arctic Project over
the next three years, to a maximum of $5
million per year (the "Subscription Price"),
less an amount of the Initial Funding contributed by
South32.
2017 Field Programs Underway
The exploration program is underway at Bornite utilizing 3
diamond core rigs. Drill results are anticipated to begin
late in the summer and continue into the fall. The site work
required to complete the PFS at Arctic is also underway and results
are expected in Q1, 2018.
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,
2017
$
|
May 31,
2016
$
|
May 31,
2017
$
|
May 31,
2016
$
|
General and administrative
|
407
|
373
|
785
|
719
|
Mineral properties expense
|
1,297
|
457
|
1,936
|
990
|
Professional fees
|
193
|
210
|
318
|
346
|
Salaries
|
224
|
257
|
466
|
469
|
Salaries – stock-based compensation
|
106
|
116
|
499
|
398
|
Unrealized (gain) loss on held for trading
investments
|
(70)
|
-
|
1,169
|
-
|
Loss from continuing operations for the
period
|
2,390
|
1,460
|
5,387
|
2,983
|
Loss from discontinued operations for the
period
|
-
|
187
|
-
|
359
|
Loss and comprehensive loss for the
period
|
2,390
|
1,647
|
5,387
|
3,342
|
Basic and diluted loss per common
share
|
$0.02
|
$0.01
|
$0.05
|
$0.03
|
For the three months ended May 31,
2017, Trilogy reported a net loss of $2.4 million (or $0.02 basic and diluted loss per common share)
compared to a net loss of $1.6
million for the corresponding period in 2016 (or
$0.01 basic and diluted loss per
common share). This variance was primarily due to the size of the
field programs at the UKMP in 2017 as well as the timing of the
program. An increase of $840,000 of
mineral property expenses occurred during the three months ended
May 31, 2017 compared to the three
months ended May 31, 2016. In 2017,
the field program at Arctic and Bornite began with drilling by
early June compared to 2016 where the field program kicked off in
early July. This earlier start resulted in an increased mineral
property expense during the second quarter of 2017. Additionally,
in preparation for the Arctic PFS study, an increased level of
ongoing technical studies was occurring during the three months
ended May 31, 2017 compared to the
corresponding period in 2016.
For the six months ended May 31,
2017, Trilogy reported a net loss of $5.4 million (or $0.05 basic and diluted loss per common share)
compared to a net loss of $3.3
million for the corresponding period in 2016 (or
$0.03 basic and diluted loss per
common share). This variance was primarily due to an unrealized
loss on investments of $1.2 million
classified as held for trading for which movements in the fair
value of the investments are recorded through the statement of
loss. The investments consist of common shares and warrants in Gold
Mining Inc. acquired as consideration for the sale of Sunward
Investments Limited and its Titiribi gold-copper exploration
project in Colombia. There are no
comparable amounts for the six months ended May 31, 2016 as the Company acquired the
investments in September
2016.
Adjusting for the unrealized loss on held for trading
investments, there is a loss from continued operations of
$4.2 million for the six months ended
May 31, 2017 compared to the loss
from continuing operations of $3.0
million for the six months ended May
31, 2016. The remaining increase is due almost entirely to
an increase of $1.0 in mineral
properties expenses. We incurred $1.9
million in mineral properties expense for the six months
ended May 31, 2017 compared to
$1.0 million for the six months ended
May 31, 2016. The increase in mineral
property expenses in 2017 is due to the significantly increased
size of the 2017 field program compared to the 2016 program as
discussed above. The increase is also attributable to several
ongoing engineering studies, specifically an updated 3D geology
model and resource estimate for the Arctic deposit, metallurgical
test programs on the Arctic and Bornite Projects, completion of a
pre-feasibility level slope geotechnical and hydrology study on the
Arctic deposit, and a review of the hydrogeological conditions at
the Bornite property. Waste characterization is also continuing on
the Arctic Project which began in 2016. General and administrative
expenses, salaries, stock-based compensation, and professional fees
continue to be at comparable levels in the periods
presented.
Outlook
Our 2017 program has a total budget of $17.1 million with $7.1
million to be expended during the fiscal year to advance the
Arctic Project to pre-feasibility and $10.0
million for the exploration program at the Bornite Project.
The Arctic PFS will be supported by information collected during
the 2015 and 2016 field seasons as well as additional information
to be collected during the 2017 summer field program. The
completion of the 2017 field program will complete a staged
three-year site investigation program where the first two years
focused almost exclusively on collecting data in and around the
proposed Arctic open-pit, and the third year focuses on
infrastructure and mine design. The Arctic PFS is anticipated to be
completed in Q1 2018.
The exploration program at the Bornite Project is an
exciting opportunity to potentially expand the resource at Bornite
by drilling the extensions of mineralization last drilled by the
Company in 2013. Approximately 12,000 meters will be drilled by
Bornite focused entirely on testing the size and depth of the
extension of the known deposit. Drilling at the Bornite Project
commenced in early June and will continue through to late September
with drill results anticipated to be released late in the summer
and continue into the fall.
Qualified Persons
Andrew W. West, P.Geo.,
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., formerly NovaCopper Inc., is a metals
exploration company focused on exploring and developing the Ambler
mining district located in northwestern Alaska. It 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 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 the Company's
land package that spans approximately 143,000 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 our outlook, the future
operating or financial performance of the Company,
planned expenditures and the
anticipated exploration and development activity, including with
respect to the 2017 field program at the UKMP Projects, the timing
of drill results at Bornite, the potential timing and preparation
of a PFS on the Arctic deposit, and the potential exercise of the
option by South32 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 need for additional financing to
explore and develop properties and availability of financing in the
debt and capital markets; uncertainties involved in the
interpretation of drilling results and geological tests and the
estimation of reserves and resources; the need for cooperation of
government agencies and native groups in the development and
operation of properties as well as the construction of the access
road; the need to obtain permits and governmental approvals; risks
of construction and mining projects such as accidents, equipment
breakdowns, bad weather, non-compliance with environmental and
permit requirements, unanticipated variation in geological
structures, metal grades or recovery rates; unexpected cost
increases, which could include significant increases in estimated
capital and operating costs; fluctuations in metal prices and
currency exchange rates; and other risks and uncertainties
disclosed in the Company's Annual Report on Form 10-K for the year
ended November 30, 2016 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.
SOURCE Trilogy Metals Inc.