UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event
reported): October 5, 2017
Trilogy
Metals Inc.
(Exact name of registrant as specified in its charter)
British Columbia |
001-35447 |
98-1006991 |
(State or other jurisdiction of incorporation) |
(Commission
File Number) |
(I.R.S.
Employer Identification Number)
|
Suite 1150, 609 Granville Street
Vancouver, British Columbia
Canada, V7Y 1G5
(Address of principal executive offices,
including zip code)
(604) 638-8088
(Registrant’s telephone number, including
area code)
N/A
(Former name or former address, if changed
since last report)
Check the appropriate box below if the Form
8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions
(see General Instruction A.2 below):
[_] Written communications pursuant
to Rule 425 under the Securities Act (17 CFR 230.425)
[_] Soliciting material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[_] Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.24d-2(b))
[_] Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.23e-4(c))
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☐
If an emerging growth company, indicate by check mark if
the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations
and Financial Condition |
The information
set forth in Item 7.01 below and in Exhibit 99.1 hereto is, to the extent required, incorporated herein by reference.
| Item 7.01 | Regulation FD Disclosure |
On October
5, 2017, Trilogy Metals Inc. (the “Registrant”) issued a press release reporting its financial results for the third
quarter ended August 31, 2017. A copy of the press release is furnished as Exhibit 99.1 to this report.
In accordance
with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not
be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration
statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly
set forth by specific reference in such filing.
Item 9.01
Financial Statements and Exhibits
(d) Exhibits
Exhibit
Number |
Description |
99.1 |
Trilogy
Metals Reports Third Quarter Fiscal 2017 Financial Results
|
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
Trilogy
Metals INC.
Dated: October 5, 2017 | By: | /s/ Elaine Sanders |
| | Elaine
M. Sanders, Chief Financial Officer |
Exhibit 99.1
Trilogy Metals Reports Third Quarter Fiscal 2017 Financial
Results
VANCOUVER, Oct. 5, 2017 /CNW/ - Trilogy Metals Inc.
(TSX, NYSE American: TMQ) ("Trilogy", "Trilogy Metals" or "the Company") is pleased to report its
third quarter results for the period ended August 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.
Third Quarter 2017 Highlights:
| · | Strong working capital position of $11.2 million,
with cash on hand of $10.2 million. |
| · | The focus of this third fiscal quarter has been working
to advance our Upper Kobuk Mineral Projects. With a combined 2017 budget of $17.1 million for the Bornite and Arctic Projects,
this quarter was busy at our project sites in northwest Alaska. |
| · | Financial partnership announced with South32 Limited
in Q2 2017 granting an option to form a 50/50 joint venture for a minimum investment of $150 million, subject to certain adjustments.
South32 is required to fund a minimum of $10 million per year, for up to three years to keep the option in good standing. |
Bornite Project
We are currently executing a $10 million exploration program
at the Bornite Project, funded by South32 Limited (ASX/JSE/LSE: S32), ("South32") under an Option Agreement on the Company's
Upper Kobuk Mineral Projects ("UKMP") announced on April 10, 2017 ("Option Agreement"). The focus of this year's
program is to target high-grade copper mineralization north and east of the previously identified resources which were last drilled
by the Company in 2013. This year's exploration at Bornite was approved by a joint Trilogy-South32 Technical Committee.
Under the terms of the Option Agreement, we granted South32
the right to form a 50/50 joint venture to hold all of the Company's Alaskan assets currently held directly by our wholly owned
subsidiary NovaCopper US Inc., doing business as Trilogy Metals US ("Trilogy Metals US"). Upon exercise of the option,
Trilogy Metals US will transfer its Alaskan assets, including the UKMP and South32 will contribute a minimum of $150 million, subject
to certain adjustments, to a newly formed 50/50 joint venture.
To maintain the option in good standing, South32 is required
to fund a minimum of $10 million per year for up to a three year period, which funds will be used to execute a mutually agreed
upon program at the UKMP. South32 may exercise its option at any time over the next three years to enter into the 50/50 joint venture.
Provided that all the exploration data and information has been made available to South32 by no later than December 31 of each
year, South32 must decide before the end of January of the following year whether: (i) to fund a further tranche of a minimum of
$10 million, or (ii) to withdraw and not provide any further annual funding. If the election to fund a further tranche is
not made in January, South32 has until the end of March to exercise the option to form the LLC and make the subscription payment.
This year's exploration program at Bornite is one of the larger
programs in the history of drilling at the Bornite Project. With an approved budget of $10 million, we plan on drilling approximately
9,000 meters at Bornite this field season to test the extension of the mineralization from the drill holes from our 2013 drill
campaign along with a ground gravity survey, continuation of hydrology data collection and initiating metallurgy and acid based
accounting for Bornite.
Drilling at the Bornite Project began in early June and is
expected to be finished by mid-October with results released throughout the fall. We completed 6,037 meters by August 31, 2017
and released our first results on September 18, 2017 from the first three holes comprising 3,083 meters.
Arctic Project
In early June 2017, we announced the engagement of Ausenco
Engineering Canada Inc. to prepare the Arctic Project Pre-feasibility Study ("PFS") technical report anticipated to be
complete in Q1 2018. The Company has 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 summer field program for the Arctic Project PFS was conducted
in July with the completion of 257 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 results from this summer's field program are currently
being compiled and analyzed by the PFS consultants. We currently anticipate the completion of the PFS in Q1 2018.
We also completed 455 meters of in-fill drilling at Arctic
in late August collecting PQ size core to provide two tonnes of material for an ore-sorting study to be initiated in Q4 2017. We
anticipate releasing assay results for the additional Arctic in-fill holes by November. The results of the ore sorting program
will be evaluated 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 |
Nine months ended |
Selected expenses |
August 31, 2017
$ |
August 31, 2016
$ |
August 31, 2017
$ |
August 31, 2016
$ |
Foreign exchange (gain) loss |
(592) |
3 |
(542) |
8 |
General and administrative |
273 |
311 |
1,050 |
1,030 |
Mineral properties expense |
8,471 |
3,077 |
10,407 |
4,067 |
Professional fees |
86 |
84 |
404 |
430 |
Salaries |
218 |
250 |
683 |
719 |
Salaries – stock-based compensation |
104 |
146 |
603 |
544 |
Unrealized loss on held for trading investments |
83 |
- |
1,252 |
- |
Loss from continuing operations for the period |
8,992 |
3,902 |
14,378 |
6,885 |
Loss from discontinued operations for the period |
- |
353 |
- |
712 |
Loss and comprehensive loss for the period |
8,992 |
4,255 |
14,378 |
7,597 |
Basic and diluted loss per common share |
$0.09 |
$0.04 |
$0.14 |
$0.07 |
For the three months ended August 31, 2017, Trilogy reported
a net loss of $9.0 million (or $0.09 basic and diluted loss per common share) compared to a net loss of $4.3 million for the corresponding
period in 2016 (or $0.04 basic and diluted loss per common share). This variance of $4.7 million 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 $5.4 million in mineral property
expenses incurred during the three months ended August 31, 2017 compared to the three months ended August 31, 2016 accounted for
the increase in its entirety. The 2017 program consists of a $10.0 million exploration program at the Bornite Project, funded by
South32, and a $7.1 million program towards completing a pre-feasibility study at the Arctic Project expected to be completed in
Q1 2018. Comparably, in 2016, the field program consisted of a drill program at Arctic to prepare the project for pre-feasibility
work. The field program in 2017 began in late May and continued through the third quarter. In 2016, the field program consisted
of a 45-day program that wrapped up in late July. The increase in the mineral property expenses is due to the size and variety
of the programs being undertaken. The increase was offset by slight decreases in general and administrative, salaries and stock-based
compensation expense during the three months ended August 31, 2017 compared to the three months ended August 31, 2016.
Trilogy recognized a gain on foreign exchange during the three
months ended August 31, 2017 of $0.6 million due to the appreciation of the Canadian dollar in the current fiscal year. We were
holding a higher average volume of cash and cash equivalents in Canadian dollars during the third quarter of 2017 mainly due to
the sale of investments which consist of shares in Gold Mining Inc. ("GMI"). The investments are also denominated in
Canadian dollars and benefited from the appreciation of the Canadian dollar in the third quarter. We acquired the investments on
September 1, 2016 as consideration for the sale of Sunward Investments Limited ("Sunward") and its Titiribi gold-copper
exploration project in Colombia. As such, a comparable foreign currency movement did not exist in the third quarter of 2016. There
was also a loss from discontinued operations of $0.4 million for the three months ended August 31, 2016 which relates to the sale
of Sunward. There is no comparable amount in the current fiscal year as the sale was completed on September 1, 2016. Other minor
differences noted for the comparable periods were i) a small decrease in general and administrative expenses; ii) a small decrease
in salaries due to lower level of staff in the third quarter of 2017 compared to 2016; and iii) a small decrease in stock-based
compensation due to the timing of the amortization of expense.
The basic and diluted loss per common share of $0.09 for the
three months ended August 31, 2017 increased from the basic and diluted loss per common share of $0.04 for the three months ended
August 31, 2016 due to the increased loss as described above.
For the nine months ended August 31, 2017, Trilogy reported
a net loss of $14.4 million (or $0.14 basic and diluted loss per common share) compared to a net loss of $7.6 million for the corresponding
period in 2016 (or $0.07 basic and diluted loss per common share). The increase in net loss is primarily due to an increase in
mineral property expense of $6.3 million from $4.1 million for the nine months ended August 31, 2016 to $10.4 million for the nine
months ended August 31, 2017. Similarly to the variance in the three-month periods, the field program being executed in 2017
is significantly larger and more varied than the field program completed in 2016. The variance is also due to an unrealized loss
on investments on the GMI securities of $1.3 million classified as held for trading for which changes in the fair value of the
investments are recorded through the statement of loss. There are no comparable amounts for the nine months ended August 31, 2016
as the Company acquired the investments in September 2016.
Trilogy recognized a gain on foreign exchange during the nine
months ended August 31, 2017 of $0.5 million due to the appreciation of the Canadian dollar in the current quarter as well as the
volume of funds held in Canadian dollars. There is no comparable amount in 2016 due to the timing of acquiring the GMI investments.
Additionally, there was a loss from discontinued operations of $0.7 million for the nine months ended August 31, 2016 from the
operations of Sunward for which there is no comparable amount in 2017. Other minor differences noted for the comparable periods
were i) a small increase in general and administrative expenses; ii) a small decrease in professional fees due to a lower level
of corporate activity compared to 2016, iii) a small decrease in salaries due to lower level of staff in the third quarter of 2017
compared to 2016; and iv) a small increase in stock-based compensation due to increasing Black-Scholes valuations from an increased
share price.
The basic and diluted loss per common share of $0.14 for the
nine months ended August 31, 2017 increased from the basic and diluted loss per common share of $0.07 for the nine months ended
August 31, 2016 due to the increased loss as described above.
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 Project PFS will be supported by information collected during the 2015 - 2017 field
seasons. The completion of our 2017 field program has completed 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 focused
on infrastructure and mine design. The Arctic Project PFS is anticipated to be completed in Q1 2018.
The exploration program at the Bornite Project is an opportunity
to potentially expand the size of the Bornite deposit by drilling the extensions of mineralization last drilled by the Company
in 2013. It is expected that approximately 9,000 meters will be drilled at Bornite which drilling will be focused entirely on testing
the size and depth of the extension of the known deposit.
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 drilling at Bornite, the timing of drill results at Bornite,
the preparation of a PFS on the Arctic deposit and timing of its release, 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.
View original content: http://www.newswire.ca/en/releases/archive/October2017/05/c8940.html
%CIK: 0001543418
For further information: Company Contacts: Rick Van Nieuwenhuyse,
President & Chief Executive Officer; Elaine Sanders, Vice President & Chief Financial Officer; info@trilogymetals.com,
604-638-8088 or 1-855-638-8088
CO: Trilogy Metals Inc.
CNW 07:00e 05-OCT-17
This regulatory filing also includes additional resources:
ex991.pdf
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