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): April 8, 2020
_______________________
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))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Common Shares |
TMQ |
NYSE American
Toronto Stock Exchange |
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 |
On April 8, 2020, Trilogy Metals Inc. (the
“Company”) issued a press release reporting financial results for the first quarter ended February 29, 2020. A copy
of the press release is furnished as Exhibit 99.1 to this report.
The information contained in the press release attached hereto is
being furnished and shall not be deemed 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 7.01 | Regulation FD Disclosure |
On April 8, 2020, the Company issued a press release reporting financial
results for the first quarter ended February 29, 2020 and an update of recent events. The press release is attached hereto as Exhibit
99.1.
The information contained in the press release attached hereto is
being furnished and shall not be deemed 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
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:
April 8, 2020 |
|
By: |
/s/ Elaine Sanders |
|
|
|
Elaine Sanders, Chief
Financial Officer |
Exhibit 99.1
Trilogy Metals Reports First Quarter Fiscal
2020 Financial Results
VANCOUVER, April 8, 2020 /CNW/ - Trilogy
Metals Inc. (TSX / NYSE American: TMQ) ("Trilogy Metals" or "the Company") announces its financial results
for the first quarter ended February 29, 2020. 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.
First Quarter 2020 and Recent Events Highlights
- Final Environmental Impact
Statement for the Ambler access road released.
- Gain of $176 million
recorded on the contribution of assets to the joint venture.
- Strong working capital
position of $14.5 million and cash on hand of $15.2 million.
- Ambler Metals LLC with
$145 million to fund the advancement of the projects.
- 2020 budget totalling
$22.8 million for the Upper Kobuk Mineral Projects.
- COVID-19 may impact the timing and scope of the 2020 field
programs.
Ambler Mining District Industrial Access
Project ("AMDIAP")
On March 27, 2020, the United States Bureau
of Land Management ("BLM"), the lead federal agency for the permitting of the AMDIAP, released the Final Environmental
Impact Statement ("EIS") for the AMDIAP. The final step in the permitting process for the AMDIAP is the issuance
of the Record of Decision by the BLM and the issuance of the Clean Water Act Section 404 permit from the United States Army Corp.
of Engineers. The Company expects these two items to be issued concurrently within the next couple of months. For more information
on the Final EIS please visit the BLM website at https://www.blm.gov/alaska.
Impact of Coronavirus (COVID-19)
With respect to the outbreak of the novel coronavirus
(COVID-19), Trilogy recognizes that the situation is extremely fluid and is monitoring the State of Alaska Health Department recommendations
and restrictions on travel. These recommendations and restrictions may significantly impact our ability to conduct the planned
work programs during the upcoming field season. So, although the work programs discussed below are still currently scheduled to
commence as originally planned, our highest priority is the health, safety and welfare of our employees, contractors and community
members. As a result, we and our joint venture partner, through Ambler Metals LLC ("Ambler Metals"), will make the necessary
adjustments to the work programs, including extending the timeline or scope for the remainder of the programs, or even cancelling
the planned exploration activities at the UKMP for this season, if it is determined to be necessary or prudent to do so.
Project Activities
2020 Operating Budget for the Upper Kobuk
Mineral Projects
In a press release dated February 26, 2020,
the Company announced that Ambler Metals had approved a 2020 program budget of $22.8 million for the advancement of the UKMP. The
budget is 100% funded by Ambler Metals. The 2020 program budget includes 10,000 meters of drilling at the Arctic Project, 2,500
meters of drilling within the Ambler Volcanogenic massive Sulphide ("VMS") Belt and geological mapping and geochemical
soil sampling at the Bornite Project. However the timing of these programs maybe delayed, see "Impact of Coronavirus (COVID-19)"
above.
Formation of Joint Venture
On February 11, 2020, the Company completed
the formation of a 50/50 joint venture in the form of Ambler Metals with South32 Limited ("South32"). As part of the
formation of the joint venture, Trilogy contributed all of its assets associated with the Upper Kobuk Mineral Projects, including
the Arctic and Bornite projects, while South32 contributed $145 million, resulting in each party's subsidiaries directly owning
a 50% interest in Ambler Metals. We use the equity method of accounting for our investment in the joint venture. Our
investment in Ambler Metals was initially measured at its fair value upon recognition and a gain of $176 million was recognized
from the contribution of our mineral property assets to the joint venture.
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 |
Selected expenses |
February 29,
2020
$ |
February 28,
2019
$ |
General and administrative |
651 |
492 |
Mineral properties expense |
1,545 |
1,535 |
Professional fees |
668 |
91 |
Salaries |
224 |
281 |
Salaries – stock-based compensation |
1,196 |
1,939 |
Total expenses |
4,475 |
4,458 |
Gain on derecognition of assets contributed to joint venture |
(175,770) |
- |
Equity in investee |
178 |
- |
Comprehensive earnings (loss) for the period |
171,179 |
(4,336) |
Basic earnings (loss) per common share |
$1.22 |
$(0.03) |
Diluted earnings (loss) per common share |
$1.16 |
$(0.03) |
For the three months ended February 29, 2020,
Trilogy reported net earnings of $171 million (or $1.22 basic and $1.16 diluted earnings per common share). For the comparable
period in 2019, we reported a net loss of $4.3 million (or $0.03 basic and diluted loss per common share). The first quarter 2020
differences, when compared to the first quarter 2019, are primarily due to the gain of $176 million recognized from the contribution
of mineral property assets to the joint venture with South32 upon formation of the joint venture on February 11, 2020. This gain
was slightly offset by $0.18 million in loss from equity investee, consisting of Trilogy's 50% share of Ambler Metals' operating
loss for the first quarter of 2020, for which there is no comparable amount in the first quarter of 2019.
Other variances noted for the comparable period
were i) an increase in general and administrative expenses of $0.16 million primarily due to an additional $0.07 million in regulatory
fees due mostly to the filing of the base shelf prospectus and $0.1 million in executive recruiting fees; ii) an increase in professional
fees of $0.58 million mainly consisting of $0.12 million for consulting fees for the research and implementation of new accounting
standards, legal fees of $0.25 million related to the formation of the joint venture, valuation and loan capacity analysis fees
of $0.07 million related to the formation of the joint venture, and $0.1 million of consulting fees; iii) a decrease of $0.06 million
in salaries due to reductions in head office staffing levels; and iv) a decrease in stock-based compensation driven primarily by
a 0.38 million reduction in the number of stock options granted during the first quarter versus the comparative period as well
as no vesting of RSUs during the period, resulting in stock based compensation savings of approximately $0.74 million and $0.33
million, respectively.
Mineral property expenses for the three months
ended February 29, 2020 were consistent with the comparative period and mainly include engineering costs related to the Company's
Arctic feasibility study.
Liquidity and Capital Resources
At February 29, 2020, we had $15.2 million
in cash and cash equivalents and working capital of $14.5 million, which is sufficient to fund our ongoing operations for at least
the next 12 months. The projects will be funded by Ambler Metals and we do not anticipate needing to fund our 50% share of future
expenditures to advance the projects until the approximately $145 million is spent.
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
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, 2020, 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, statements
relating to the planned expenditures and the anticipated drilling, timing of permits, the Company's ability to fund its operations
and the requirement for additional funding at Ambler Metals 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 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, 2019 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.
View original content:http://www.prnewswire.com/news-releases/trilogy-metals-reports-first-quarter-fiscal-2020-financial-results-301037163.html
SOURCE Trilogy Metals Inc.
View original content: http://www.newswire.ca/en/releases/archive/April2020/08/c0111.html
%CIK: 0001543418
For further information: Company Contacts: Elaine Sanders,
Vice President & Chief Financial Officer; Patrick Donnelly, Vice President Corporate Communications & Development; 604-638-8088
or 1-855-638-8088
CO: Trilogy Metals Inc.
CNW 06:30e 08-APR-20
This regulatory filing also includes additional resources:
ex991.pdf
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