VANCOUVER, Feb. 2, 2018 /PRNewswire/ - Trilogy Metals
Inc. (TSX / NYSE American: TMQ) ("Trilogy Metals" or "the
Company") announces its financial results for the year and fourth
quarter ended November 30, 2017 and
provides a review on its activities during 2017. Details of
the Company's financial results are contained in the audited
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 cash position of $15.4
million including $5.4 million
at year end plus fully received $10
million from South32 Limited ("South32") in January 2018
- Pre-Feasibility Study for the Arctic Project is on track for
Q1 2018
- Planning underway for the 2018 program at the Bornite
Project
Review of 2017 Activities
South32 Option Agreement
On April 10, 2017, Trilogy Metals
entered into an Option Agreement to form a Joint Venture with
South32 on the Company's Upper Kobuk Minerals Projects ("UKMP
Projects") ("Option Agreement"). Under the terms of the Option
Agreement, Trilogy Metals granted South32 the right to form a 50/50
joint venture to hold all of the Company's Alaskan assets. Upon
exercise of the option, the Company will transfer its Alaskan
assets, including the UKMP Projects, and South32 will contribute a
minimum of $150 million, to a newly
formed joint venture. For more information on the Option
Agreement see the Company's press release on April 10, 2017 (https://Trilogy PR April 10 2017).
Bornite Project
In partnership with South32, we completed a $10 million exploration program at the Bornite
Project. The focus of the 2017 program was to target high-grade
copper mineralization north and east of the previously identified
resources last drilled by the Company in 2013 and to define the
edges of the mineralized system.
The 2017 exploration program was one of the larger programs in
the history of drilling at the Bornite Project. We drilled nine
diamond drill holes comprising 8,437 meters this field season to
test the extension of the mineralization from the drill holes from
our 2013 drill campaign. Drilling at the Bornite Project began in
early June and wrapped up in mid-October with the results released
throughout the fall. Due to inclement weather, two holes
(RC17-241 and 242) were stopped before reaching target depth and
cemented in preparation for re-entry during the 2018 drill program.
The 2017 drilling program doubled the size of the known mineralized
footprint and continues to demonstrate that the high-grade Bornite
copper resource system is open to further expansion.
Bornite drill results were released by the Company's on
September 18, 2017 (https://Trilogy
PR Sep 18 2017) and December 4, 2017 (https://Trilogy PR
Dec 4 2017).
Early in December 2017, South32
committed to fund the $10 million
2018 program and budget for the Bornite Project. The funds, which
represent the second tranche of $10
million under the Option Agreement, maintains the agreement
in good standing, were fully received in January 2018. Planning for the 2018 program
is underway and will include in-fill and off-set drilling to better
define and expand the high grade copper resources at Bornite.
Arctic Project
2017 continued to be a busy year at the Arctic Project. In the
spring of 2017, we announced several milestones including the
release of an updated mineral resource estimate, metallurgical,
geotechnical and hydrogeological results in preparation for a
pre-feasibility study ("PFS"). In early June
2017, we announced the engagement of Ausenco Engineering
Canada Inc. to prepare the Arctic Project PFS technical report. The
Company also engaged Amec Foster Wheeler to complete mine planning
and SRK Consulting (Canada) Inc.
to complete tailings and waste design, hydrology and environmental
studies. The PFS study is on track to be completed in Q1 2018.
The summer field program for the Arctic Project PFS was
conducted in July with the completion of 274 meters of geotechnical
drilling and 26 test pits completed to determine site facility
locations and mine design. We also completed geophysical ground
surveys to evaluate ground conditions. We continued our
environmental baseline program through the summer of 2017 which
includes baseline data collection on aquatic and avian resources,
ongoing water quality, hydrology and meteorology. The water quality
program was expanded in 2017 to include additional sample locations
and increased sample frequency. The field program information is
currently being incorporated into the engineering design for the
PFS.
We also completed 785 meters of infill drilling at Arctic in
early September collecting core to provide two tonnes of material
for an ore-sorting study. The core collected during the
program has been crushed and is currently being transported to
begin the next phase of the ore sorting study. Drill results were
announced on January 16, 2018
(https://Trilogy PR Jan 16 2018).
Corporate Developments
In December 2017, we announced the
appointment of Mr. William Iggiagruk Hensley to the Company's Board
of Directors. Mr. Hensley is an Alaska native leader who significantly
contributed to the settlement of Alaska's Native claims with the United States federal government in 1971.
He was elected to the Alaskan House of Representatives, served four
full terms as an Alaskan Senator and two further terms through an
appointment by Governor Steve
Cowper. Willie Hensley was a
founder of NANA, served for 20 years as a director, became the head
of NANA Development Corporation and finally President of NANA. He
was a founder of the Alaska Federation of Natives and served as
director, executive director, president and co-chair.
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,
2017
$
|
Year
ended
November 30,
2016
$
|
Year
ended
November 30,
2015
$
|
General and
administrative
|
1,385
|
1,337
|
1,346
|
Mineral properties
expense
|
15,100
|
5,037
|
4,167
|
Professional
fees
|
708
|
442
|
1,346
|
Salaries
|
975
|
1,003
|
1,085
|
Salaries –
stock-based compensation
|
705
|
615
|
831
|
Unrealized loss
(gain) on held for trading investments
|
1,645
|
(88)
|
-
|
Loss (gain) on sale
of investments
|
580
|
(57)
|
-
|
Loss from continued
operations for the year
|
8,712
|
8,712
|
9,134
|
(Income)/loss from
discontinued operations for the year
|
-
|
(3,850)
|
398
|
Loss and
comprehensive loss for the year
|
21,104
|
4,862
|
9,532
|
Basic and diluted
loss per common share
|
$0.20
|
$0.05
|
$0.12
|
For the year ended November 30,
2017, we reported a net loss of $21.1
million (or $0.20 basic and
diluted loss per common share) compared to a net loss for the
corresponding period in 2016 of $4.9
million (or $0.05 basic and
diluted loss per common share) and a net loss of $9.5 million for the corresponding period in 2015
(or $0.12 basic and diluted loss per
common share). This variance was primarily due to the significantly
increased size and magnitude of the field programs undertaken at
our mineral properties in 2017 as well as a one-time gain on the
sale of Sunward Investments Ltd. ("Sunward Investments"), which
through a subsidiary, owned 100% of the Titiribi gold-copper
exploration project in Colombia,
in 2016. Additionally, there were losses recognized on both
the sale of investments as well as investments designated as held
for trading in 2017 that did not exist in the two prior fiscal
years. The investments consist of shares and warrants to purchase
shares in Gold Mining Inc. ("GMI") that were acquired through the
sale of Sunward Investments in 2016.
For the year ended November 30,
2017, we reported a net loss from continuing operations of
$21.1 million (or $0.20 basic and diluted loss from continuing
operations per common share) compared to a net loss for the
corresponding period in 2016 of $8.7
million (or $0.08 basic and
diluted loss from continuing operations per common share) and a net
loss of $9.1 million for the
corresponding period in 2015 (or $0.11 basic and diluted loss from continuing
operations per common share).
The significant increase in the loss pertaining to 2017 relates
to the size of the program undertaken at the UKMP in 2017. We
executed a $15.1 million program at
the UKMP in 2017, with $10.0 million
on the Bornite Project funded by South32 under the Option
Agreement. The 2017 field program consisted of 8,437 meters of
exploration drilling at the Bornite Project, 274 meters of
geotechnical drilling and 26 test pits completed to determine site
facility locations and mine design at the Arctic Project, and 785
meters of infill drilling to collect material for an ore-sorting
study at the Arctic Project. Additionally, significant engineering
work was completed on the PFS study at the Arctic Project to be
completed in Q1 2018. Comparably, in 2016, we executed a
$5.0 million program on the Arctic
Project and in 2015, a $4.2 million
program on the Arctic Project. The programs in 2015 and 2016 were
focused on moving the Arctic Project towards pre-feasibility
compared to the significant programs undertaken at the Bornite and
Arctic Projects in 2017. In 2016, we completed a drill program
consisting of 3,058 meters at the Arctic Project and increased the
environmental baseline data collection and engineering site
investigations compared to the 2015 program. In 2015, we completed
fourteen diamond drill holes amounting to 3,056 meters at the
Arctic Project, as well as engineering and environmental site
investigations. Mineral property expenses consist of direct
drilling, personnel, community, resource reporting and other
exploration expenses, as well as indirect project support expenses
such as fixed wing charters, helicopter support, fuel, and other
camp operation costs.
Additionally, the significant variance in 2016, compared to 2017
and 2015, relates to the gain recognized on the sale of Sunward
Investments and the Titiribi Project of $4.4
million, pre-tax. This was a one-time event for which there
is no comparable gain in prior years. As a result of the sale, the
operations of Sunward Investments were reclassified as a
discontinued operation, retrospectively. Expenses of $0.6 million for the year ended November 30, 2016 and $0.4
million for the year ended November
30, 2015 related to the Sunward Investments operations were
reclassified to discontinued operations. As Sunward Resources Ltd.
was purchased by the Company in June
2015, there are no amounts prior to June 2015 included in the consolidated
results.
During the year ended November 30,
2017, the Company sold 2,525,000 common shares of GMI for
proceeds of $3.5 million and realized
a loss on sale of $0.6 million. For
the year ended November 30, 2017, we
recognized an unrealized loss on held for trading investments of
$1.6 million on 2,365,000 common
shares of GMI and 1,000,000 warrants to purchase a common share of
GMI. During the year ended November 30,
2016, the Company sold 110,000 common shares of GMI for net
proceeds of $0.2 million and realized
a gain on sale of $0.06 million. For
the year ended November 30, 2016, we
recognized an unrealized gain on held for trading investments of
$0.1 million.
Professional fees for the year ended November 30, 2017 were $0.7 million, an increase of $0.3 million from the $0.4
million incurred for the year November 30, 2016, and a reduction of
$0.6 million from the $1.3 million incurred for the year ended
November 30, 2015. Expenses in 2017
increased from 2016 due to the arrangement with South32 and
preparatory costs incurred associated with the filing of a base
shelf prospectus in Canada and the
US. Costs in 2016 were down significantly from other years due to
less corporate transaction activity as well as $0.2 million in costs related to the sale of
Sunward recorded to discontinued operations. In 2015, expenses were
incurred for legal and technical due diligence and regulatory
approvals associated with the acquisition of Sunward.
Other variances for the year ended November 30, 2017 compared to 2016 and 2015
are as follows: (a) $1.4 million in
general and administrative expenses in 2017 compared to
$1.3 million in 2016 and 2015 due to
a less favorable foreign exchange movement; (b) $1.0 million in salaries in 2017 and 2016
compared to $1.1 million in 2015 due
to minor changes in staffing levels at the corporate office; and
(c) $0.7 million in stock based compensation in 2017 compared to
$0.6 million in 2016 and $0.8 million in 2015 due to minor changes
in the number of eligible employees for annual stock option grants
and the fair value of grants valued using the Black-Scholes model
which is most sensitive to the Company's share price and future
expected volatility.
The comparable basic and diluted loss per common share for 2017
of $0.20 is significantly higher than
2016 and 2015 due to the higher loss for the year. The basic and
diluted loss per common share for 2016 of $0.05 is lower than 2017 and 2015 due to the gain
on the sale of Sunward Investments recognized in the year. The 2015
basic and diluted loss per common share of $0.12 is also affected by the additional shares
issued during 2015 as a result of the Sunward acquisition completed
in June 2015 as well as a lower loss
figure compared to 2017.
Fourth Quarter Results
During the fourth quarter of 2017, we had a loss of $6.7 million compared to income earned of
$2.7 million in the fourth quarter of
2016. The earnings in the fourth quarter of 2016 were due to the
gain on sale of Sunward Investments of $4.4
million offsetting net expenses of $2.0 million. There is no comparable gain on the
sale of Sunward Investments in the fourth quarter of 2017 as it was
a non-recurring item. We incurred $4.7
million of mineral property expenses in the fourth quarter
of 2017 compared to $1.0 million of
mineral property expenses in the fourth quarter of 2016. The
increase in mineral property expenses is due to the length and size
of the field program in 2017 compared to 2016. Our 2017 field
program was a significantly larger program and longer program
resulting in a significant portion of mineral property expenses
incurred in the fourth quarter as we were operating through
September and October of 2017. In 2016, the field program wrapped
up during the third quarter. The difference in timing and size of
the programs accounts for the significant movement between the
periods.
Liquidity and Capital Resources
At November 30, 2017, we had
$5.4 million in cash and cash
equivalents. We expended $15.4
million on operating activities during the 2017 fiscal year
compared with $8.9 million for
operating activities for the same period in 2016, and expenditures
of $8.4 million for operating
activities for the same period in 2015. A majority of cash spent on
operating activities during all periods was expended on mineral
property expenses, general and administrative expenses, salaries
and professional fees. The increase in cash spent in the year ended
November 30, 2017 is mainly due to
increased mineral property expenses of $10.1
million offset by an increase in accounts payable and
accrued liabilities of $3.5
million. As at November 30,
2017, the Company had consolidated cash of $5.4 million and working capital of $5.0 million. The Company continues to manage its
cash expenditures through the sale of investments, funding from
South32, and its working capital. The Company will need to raise
additional funds to support its operations and administration
expenses. Future sources of liquidity may include debt
financing, equity financing, convertible debt, exercise of options,
or other means. The continued operations of the Company are
dependent on its ability to obtain additional financing or to
generate future cash flows.
During the years ended November 30,
2017, 2016 and 2015, we have not undertaken significant
financing activities.
During the year ended November 30,
2017, we raised $13.5 million
from investing activities. $10.4
million was raised through mineral property funding from
South32, $3.5 million from proceeds
from the sale of investments in GMI, net of $0.3 million expended on capital purchases.
During the year ended November 30,
2106, we raised $0.2 million
in sales from investments acquired through the sale of Sunward
Investments. During the year ended November
30, 2015, we generated $19.4
million from investing activities through the acquisition of
Sunward.
Through December 2017 and
January 2018, the Company has
received proceeds of C$1.4 million
from the sale of investments in GMI. In total, we have sold
to the end of January 2018 3,675,000
GMI shares for gross proceeds of C$6.1
million and have a further 1,325,000 GMI shares which we
will continue to sell.
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 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, anticipated timing and results of the PFS, the
future operating or financial performance of the Company, planned
expenditures and the anticipated activity at the UKMP Projects, 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. These forward-looking statements may include
statements regarding perceived merit of properties; exploration
plans and budgets; mineral reserves and resource estimates; work
programs; capital expenditures; timelines; strategic plans; market
prices for precious and base metals; or other statements that are
not statements of fact. 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 interpretation of drill results, 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,
2017 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
The Arctic Technical Report and the Bornite Technical Report
have 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 National Instrument 43-101 Standards of
Disclosure for Mineral Projects ("NI 43-101") and the Canadian
Institute of Mining, Metallurgy, and Petroleum Definition Standards
on Mineral Resources and Mineral Reserves. 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 United States Securities and Exchange
Commission ("SEC"), and resource and reserve information contained
therein 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 is made. The
SEC's disclosure standards normally do not permit the inclusion of
information concerning "measured mineral resources", "indicated
mineral resources" or "inferred mineral resources" or other
descriptions of the amount of mineralization in mineral deposits
that do not constitute "reserves" by U.S. standards in documents
filed with the SEC. Investors are cautioned not to assume that any
part or all of mineral deposits in these categories will ever be
converted into reserves. U.S. investors should also understand that
"inferred mineral resources" have a great amount of uncertainty as
to their existence and great uncertainty as to their economic and
legal feasibility. Under Canadian rules, estimated "inferred
mineral resources" may not form the basis of feasibility or
pre-feasibility studies except in rare cases. Investors are
cautioned not to assume that all or any part of an "inferred
mineral resource" exists or is economically or legally mineable.
Disclosure of "contained ounces" in a resource is permitted
disclosure under Canadian regulations; however, the SEC normally
only permits issuers to report mineralization that does not
constitute "reserves" by SEC standards as in-place tonnage and
grade without reference to unit measures. The requirements of NI
43-101 for identification of "reserves" are also not the same as
those of the SEC, and reserves reported by the Company in
compliance with NI 43-101 may not qualify as "reserves" under SEC
standards. Accordingly, information concerning mineral deposits set
forth in this press release or the Bornite Technical Report may not
be comparable with information made public by companies that report
in accordance with U.S. standards.
SOURCE Trilogy Metals Inc.