Trilogy Metals Inc 10-Q for FY2023 Q3

Trilogy Metals Inc. (TMQ)

10-Q 2023-10-11 For: 2023-08-31

Added on April 11, 2026

About this 10-Q

Trilogy Metals Inc filed this 10-Q on October 11, 2023, covering the quarter ended August 31, 2023 (FY2023 Q3).

Headline figures

Quarter ended August 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $4.05M; compared with a net loss of $9.94M a year earlier
Diluted EPS: -$0.03; compared with -$0.07 a year earlier

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British Columbia	98-1006991
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

Suite 1150, 609 Granville Street Vancouver, British Columbia Canada	V7Y 1G5
(Address of Principal Executive Offices)	(Zip Code)


Large accelerated filer ◻	Accelerated filer ◻	Non-accelerated filer ☒	Smaller reporting company☒	Emerging growth company ☐


		Page
PART I - FINANCIAL INFORMATION		3
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23
Item 4.	Controls and Procedures	23

PART II - OTHER INFORMATION		24
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	25


	in thousands of US dollars
	August 31, 2023	November 30, 2022
	$	$
Assets
Current assets
Cash	3,049	2,573
Accounts receivable	10	17
Deposits and prepaid amounts	457	320
Total current assets	3,516	2,910

Investment in Ambler Metals LLC (note 3)	136,867	142,754
Fixed assets	6	12
Right of use asset (note 5 (a))	188	319
Total assets	140,577	145,995

Liabilities
Current liabilities
Accounts payable and accrued liabilities (note 4)	482	345
Current portion of lease liability	82	189
Total current liabilities	564	534

Long-term portion of lease liability	—	33
Total liabilities	564	567

Shareholders’ equity
Share capital (note 6) – unlimited common shares authorized, no par value issued – 155,559,334 (2022 – 145,868,502)	187,715	182,178
Contributed surplus	118	122
Contributed surplus – options (note 6(b))	28,111	27,352
Contributed surplus – units (note 6(c))	2,858	2,638
Deficit	(78,789)	(66,862)
Total shareholders' equity	140,013	145,428
Total liabilities and shareholders' equity	140,577	145,995


in thousands of US dollars, except share and per share amounts
	For the three months ended			For the nine months ended
		August 31, 2023	August 31, 2022		August 31, 2023	August 31, 2022
		$	$		$	$
Expenses
Amortization		2	4		6	15
Exploration expenses		22	11		23	11
Foreign exchange (gain) loss		3	(11)		1	(7)
General and administrative		278	279		1,014	1,014
Investor relations		18	18		71	155
Professional fees		139	131		897	568
Salaries		191	172		621	847
Salaries and directors expense – stock-based compensation		526	562		3,379	3,146
Total expenses		1,179	1,166		6,012	5,749
Other items
Gain on disposition of mineral property		—	(84)		—	(84)
Interest and other income		(37)	(11)		(83)	(15)
Share of loss on equity investment (note 3(b))		2,910	8,925		5,998	13,295
Write off mineral properties		—	(58)		—	90
Loss and comprehensive loss for the period		(4,052)	(9,938)		(11,927)	(19,035)
Basic loss per common share		(0.03)	(0.07)		(0.08)	(0.13)
Diluted loss per common share		(0.03)	(0.07)		(0.08)	(0.13)
Basic weighted average number of common shares outstanding		155,550,284	145,865,847		151,572,299	145,555,376
Diluted weighted average number of common shares outstanding		155,550,284	145,865,847		151,572,299	145,555,376


/s/ Tony Giardini, President, CEO and Director		/s/ Diana Walters, Director

Approved on behalf of the Board of Directors


				Contributed	Contributed		Total
			Contributed	surplus –	surplus –		shareholders’
	Number of shares	Share capital	surplus	options	units	Deficit	equity
	outstanding	$	$	$	$	$	$
Balance – November 30, 2021	145,009,811	180,820	122	25,990	1,712	(42,605)	166,039
Exercise of options	31,674	50	—	(32)	—	—	18
Restricted Share Units	391,332	650	—	—	(650)	—	—
Joint venture contribution	31,469	51	—	—	—	—	51
Stock-based compensation	—	—	—	864	1,001	—	1,865
Loss for the period	—	—	—	—	—	(5,023)	(5,023)
Balance – February 28, 2022	145,464,286	181,571	122	26,822	2,063	(47,628)	162,950
Exercise of options	50,000	26	—	10	—	—	36
Restricted Share Units	110,000	113	—	—	(113)	—	—
Stock-based compensation	—	—	—	274	229	—	503
Loss for the period	—	—	—	—	—	(4,074)	(4,074)
Balance – May 31, 2022	145,624,286	181,710	122	27,106	2,179	(51,702)	159,415
Restricted Share Units	244,216	235	—	—	(235)	—	—
Stock-based compensation	—	—	—	221	350	—	571
Loss for the period	—	—	—	—	—	(9,938)	(9,938)
Balance - August 31, 2022	145,868,502	181,945	122	27,327	2,294	(61,640)	150,048

Balance – November 30, 2022	146,225,035	182,178	122	27,352	2,638	(66,862)	145,428
Restricted Share Units	2,346,366	1,538	(1)	—	(1,537)	—	—
Joint venture contribution	143,505	111	—	—	—	—	111
Services settled by common shares	7,793	4	—	—	—	—	4
Stock-based compensation	—	—	—	520	1,700	—	2,220
Loss for the period	—	—	—	—	—	(5,072)	(5,072)
Balance – February 28, 2023	148,722,699	183,831	121	27,872	2,801	(71,934)	142,691
Shares issued for private placement, net of share issue cost	5,854,545	3,115	—	—	—	—	3,115
Restricted Share Units	213,463	121	—	—	—	—	121
Deferred Share Units conversion	415,056	468	—	—	(468)	—	—
Services settled by common shares	63,533	35	—	—	—	—	35
Stock-based compensation	—	—	—	114	257	—	371
Loss for the period	—	—	—	—	—	(2,803)	(2,803)
Balance – May 31, 2023	155,269,296	187,570	121	27,986	2,590	(74,737)	143,530
Restricted Share Units	248,092	122	—	—	—	—	122
Services settled by common shares	40,816	20	—	—	—	—	20
NovaGold deferred share units conversion	1,130	3	(3)	—	—	—	—
Stock-based compensation	—	—	—	125	268	—	393
Loss for the period	—	—	—	—	—	(4,052)	(4,052)
Balance – August 31, 2023	155,559,334	187,715	118	28,111	2,858	(78,789)	140,013


		in thousands of dollars
		$
November 30, 2022, Investment in Ambler Metals		142,754
Joint venture equity contribution		111
Share of loss on equity investment for the nine-month period ending August 31, 2023		(5,998)
August 31, 2023, Investment in Ambler Metals		136,867


			in thousands of dollars
	Three months ended			Nine months ended
	August 31, 2023	August 31, 2022		August 31, 2023	August 31, 2022
	$	$		$	$
Depreciation	38	32		113	77
Corporate salaries and wages	478	477		1,417	1,437
General and administrative	43	158		389	560
Mineral property expense	5,210	17,120		10,002	24,527
Professional fees	181	125		397	626
Foreign exchange (gain)/loss	(6)	10		(3)	5
Interest and other income	(125)	(72)		(319)	(642)
Comprehensive loss	5,819	17,850		11,996	26,590


		in thousands of dollars
		$
Balance as at November 30, 2022		319
Net amortization		(131)
Balance as at August 31, 2023		188


		in thousands of dollars
		August 31, 2023
Fiscal year		$
2023		51
2024		33
2025		—
Total undiscounted lease payments		84
Effect of discounting		(2)
Present value of lease payments recognized as lease liability		82


	in thousands of dollars, except share amounts
	Number of shares	Ascribed value
		$
November 30, 2022	146,225,035	182,178
Private Placement, net of share issue cost	5,854,545	3,115
Restricted Share Units	2,807,921	1,780
Deferred Share Units	415,056	468
NovaGold deferred share units conversion	1,130	3
Services settled by common shares	112,142	60
Joint venture equity contribution (note 3(b))	143,505	111
August 31, 2023, issued and outstanding	155,559,334	187,715


		August 31, 2023
Risk-free interest rates		3.49%
Exercise price		CDN$0.78
Expected life		3 years
Expected volatility		67.7%
Expected dividends		Nil


		August 31, 2023
		Weighted average
		exercise price
	Number of options	CDN$
Balance – beginning of the period	11,225,400	2.49
Granted	3,230,000	0.78
Cancelled	(286,000)	2.70
Expired	(1,170,000)	1.43
Balance – end of the period	12,999,400	2.16


	Outstanding			Exercisable		Unvested
			Weighted		Weighted
	Number of	Weighted	average	Number of	average	Number of
	outstanding	average years	exercise price	exercisable	exercise price	unvested
Range of exercise price - CDN	options	to expiry	CDN$	options	CDN$	options
$0.75 to $1.00	3,230,000	4.27	0.78	1,463,328	0.78	1,766,672
$2.01 to $2.50	2,270,250	2.56	2.27	1,905,165	2.28	365,085
$2.51 to $3.00	6,041,650	1.73	2.64	6,041,650	2.64	—
$3.01 to $3.50	1,457,500	1.31	3.03	1,457,500	3.03	—
	12,999,400	2.46	2.16	10,867,643	2.38	2,131,757


	Number of RSUs	Number of DSUs
Balance – beginning of the period	257,268	1,560,734
Granted	4,273,433	1,107,895
Vested/Converted	(2,920,063)	(415,056)
Balance – end of the period	1,610,638	2,253,573


	in thousands of dollars
	Total	< 1 Year	1–2 Years	2–5 Years	Thereafter
	$	$	$	$	$
Accounts payable and accrued liabilities	482	482	—	—	—
Office lease	84	84	—	—	—
	566	566	—	—	—


			in thousands of US dollars, except per share amounts
	Three months ended			Nine months ended
		August 31, 2023	August 31, 2022		August 31, 2023	August 31, 2022
Selected expenses		$	$		$	$

General and administrative		278	279		1,014	1,014
Investor relations		18	18		71	155
Professional fees		139	131		897	568
Salaries		191	172		621	847
Salaries and directors expense – stock-based compensation		526	562		3,379	3,146
Share of loss on equity investment		2,910	8,925		5,998	13,295
Comprehensive loss for the period		(4,052)	(9,938)		(11,927)	(19,035)
Basic and diluted loss per common share		(0.03)	(0.07)		(0.08)	(0.13)


Exhibit No.		Description
3.1		Certificate of Incorporation, dated April 27, 2011 (incorporated by reference Exhibit 99.2 to the Registration Statement on Form 40-F as filed on March 1, 2012, File No. 001-35447)

3.2		Articles of Trilogy Metals Inc., effective April 27, 2011, as altered March 20, 2011 (incorporated by reference to Exhibit 99.3 to Amendment No. 1 to the Registration Statement on Form 40-F as filed on April 19, 2012, File No. 001-35447)

3.3		Notice of Articles and Certificate of Change of Name, dated September 1, 2016 (incorporated by reference to Exhibit 3.1 to the Form 8-K dated September 8, 2016)

31.1		Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a)

31.2		Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a)

32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350

32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350

101		Interactive Data Files

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document


Date: October 11, 2023	TRILOGY METALS INC.


	By:	/s/ Tony Giardini
		Tony Giardini

		President and Chief Executive Officer


	By:	/s/ Elaine M. Sanders
		Elaine M. Sanders

		Vice President and Chief Financial Officer

By:	/s/ Tony Giardini
	Tony Giardini
	President and Chief Executive Officer
	(principal executive officer)

By:	/s/ Elaine Sanders
	Elaine Sanders
	Vice President and Chief Financial Officer
	(principal financial officer)

	(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

	(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date:	October 11, 2023
By:	/s/ Tony Giardini
	Tony Giardini
	President and Chief Executive Officer
	(principal executive officer)