Trilogy Metals Inc 10-Q for FY2021 Q1

Trilogy Metals Inc. (TMQ)

10-Q 2021-04-07 For: 2021-02-28

Added on April 11, 2026

About this 10-Q

Trilogy Metals Inc filed this 10-Q on April 7, 2021, covering the quarter ended February 28, 2021 (FY2021 Q1).

Headline figures

Quarter ended February 28, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $4.52M; compared with net income of $171.18M a year earlier
Diluted EPS: -$0.03; compared with $1.16 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	24
Item 4.	Controls and Procedures	25

PART II - OTHER INFORMATION		26
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	26


		in thousands of US dollars
	February 28, 2021		November 30, 2020
	$		$
Assets
Current assets
Cash and cash equivalents	9,631		11,125
Accounts receivable (note 3)	24		129
Deposits and prepaid amounts	217		184
	9,872		11,438

Investment in Ambler Metals LLC (note 4)	172,025		173,145
Fixed assets (note 5)	189		206
Right of use asset (note 7 (a))	448		476
	182,534		185,265
Liabilities
Current liabilities
Accounts payable and accrued liabilities (note 6)	551		888
Current portion of lease liability	166		158
	717		1,046

Long-term portion of lease liability (note 7 (b))	374		408
	1,091		1,454
Shareholders’ equity
Share capital (note 8) – unlimited common shares authorized, no par value Issued – 144,214,485 (2020 – 144,137,850)	180,080		179,746
Contributed surplus	122		122
Contributed surplus – options (note 8(a))	25,081		23,303
Contributed surplus – units (note 8(b))	1,621		1,585
Deficit	(25,461)		(20,945)
	181,443		183,811
	182,534		185,265


	in thousands of US dollars, except share and per share amounts
	For the three months ended
		February 28, 2021	February 29, 2020
		$	$
Expenses
Amortization		17	42
Foreign exchange loss		35	23
General and administrative		401	651
Investor relations		154	126
Mineral properties expense (note 4(a))		—	1,545
Professional fees		229	668
Salaries		439	224
Salaries – stock-based compensation		2,148	1,196
Total expenses		3,423	4,475
Other items
Gain on derecognition of assets contributed to joint venture (note 4(a))		—	(175,770)
Share of loss on equity investment (note 4(b))		1,120	178
Interest and other income		(5)	(62)
Services agreement income (note 4(e))		(22)	—
Comprehensive (loss) earnings for the year		(4,516)	171,179
Basic (loss) earnings per common share		(0.03)	1.22
Diluted (loss) earnings per common share		(0.03)	1.16
Basic weighted average number of common shares outstanding		144,163,869	140,616,672
Diluted weighted average number of common shares outstanding		144,163,869	147,649,507


/s/ Tony Giardini, President, CEO and Director		/s/ Kalidas Madhavpeddi, Director

Approved on behalf of the Board of Directors


	Trilogy Metals Inc. For the Quarter Ended February 28, 2021	3


					Contributed	Contributed		Total
				Contributed	surplus –	surplus –		shareholders’
	Number of shares	Share capital	Warrants	surplus	options	units	Deficit	equity
	outstanding	$	$	$	$	$	$	$
Balance – November 30, 2019	140,427,761	177,971	—	122	21,123	1,759	(182,712)	18,263
Exercise of options	19,514	6	—	—	(6)	—	—	—
Restricted Share Units	212,501	330	—	—	—	(330)	—	—
Stock-based compensation	—	—	—	—	1,155	41	—	1,196
Loss for the period	—	—	—	—	—	—	171,179	171,179
Balance - February 29, 2020	140,659,776	178,307	—	122	22,272	1,470	(11,533)	190,638

Balance – November 30, 2020	144,137,850	179,746	—	122	23,303	1,585	(20,945)	183,811
Exercise of options	76,635	334	—	—	(334)	—	—	—
Stock-based compensation	—	—	—	—	2,112	36	—	2,148
Loss for the period	—	—	—	—	—	—	(4,516)	(4,516)
Balance – February 28, 2021	144,214,485	180,080	—	122	25,081	1,621	(25,461)	181,443


	in thousands of dollars
	February 28, 2021	November 30, 2020
	$	$
GST input tax credits	23	15
Ambler Metals LLC	1	114
Accounts receivable	24	129


		in thousands of dollars
		$
Fair value ascribed to Ambler Metals LLC interest		176,000
Less: carrying value of contributed /eliminated assets
Mineral properties		(30,631)
Property, plant and equipment		(618)
Elimination of Fairbanks warehouse right of use asset		(93)
Elimination of prepaid State of Alaska mining claim fees		(303)
Add:
Reimbursement of claims staking		44
Demobilization costs of drills		278
Cancellation of Fairbanks warehouse lease liability		93
Fair value of mineral properties purchase option		31,000
Gain on derecognition		175,770


		in thousands of dollars
		$
November 30, 2020, investment in Ambler Metals LLC.		173,145
Share of loss on equity investment for the three month period ending February 28, 2021		(1,120)
February 28, 2021, investment in Ambler Metals LLC.		172,025


	in thousands of dollars
	Period ending	Period ending
	February 28, 2021	February 29, 2020
	$	$
Amortization	16	12
Mineral properties expense	1,400	167
General and administrative expense	1,095	219
Interest income	(272)	(43)
Comprehensive loss	2,239	355


	in thousands of dollars
	February 28, 2021

		Accumulated
	Cost	amortization	Net
	$	$	$
British Columbia, Canada
Furniture and equipment	63	(45)	18
Leasehold improvements	253	(82)	171
Computer hardware and software	115	(115)	—
	431	(242)	189


		in thousands of dollars
		$
ASC transition as at December 1, 2019		681
Amortization		(162)
Lease accretion		50
Derecognition of Fairbanks warehouse lease		(93)
Balance as at November 30, 2020		476
Amortization		(38)
Lease accretion		10
Balance as at February 28, 2021		448


	in thousands of dollars
	Three months ended	Three months ended
	February 28, 2021	February 29, 2020
	$	$
Operating lease costs	38	50
Variable lease costs	35	34
Total lease expense	73	84


		in thousands of dollars
		February 28, 2021
Fiscal year		$
2021		151
2022		206
2023		212
2024		126
Total undiscounted lease payments		695
Effect of discounting		(155)
Present value of lease payments recognized as lease liability		540


		February 28, 2021
Risk-free interest rates		0.31%
Exercise price		CAD$2.52
Expected life		3 years
Expected volatility		64.4%
Expected dividends		Nil


	in thousands of dollars, except share amounts
	Number of shares	Ascribed value
		$
November 30, 2019	140,427,761	177,971
Exercise of options	3,297,588	1,133
Restricted Share Units	412,501	642
November 30, 2020	144,137,850	179,746
Exercise of options	76,635	334
February 28, 2021, issued and outstanding	144,214,485	180,080


	February 28, 2021
		Weighted average
		exercise price
	Number of options	$
Balance – beginning of the period	8,647,500	1.88
Granted	3,374,150	1.98
Exercised	(381,373)	1.97
Cancelled	(120,000)	2.42
Balance – end of the period	11,520,277	1.90


	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 price	options	to expiry	$	options	$	options
$0.55 to $1.00	1,705,627	1.34	0.69	1,705,627	0.69	—
$1.01 to $1.50	75,000	1.81	1.15	75,000	1.15	—
$1.51 to $2.00	4,277,150	4.54	1.95	2,779,483	1.94	1,497,667
$2.01 to $2.50	5,425,000	3.72	2.24	3,618,330	2.28	1,806,670
$2.51 to $3.00	37,500	3.23	2.68	37,500	2.68	—
	11,520,277	3.66	1.90	8,215,940	1.82	3,304,337


		Number of DSUs
Balance – beginning of the period		1,218,520
Granted		19,992
Balance – end of the period		1,238,512


	in thousands of dollars
	Total	< 1 Year	1–2 Years	2–5 Years	Thereafter
	$	$	$	$	$
Accounts payable and accrued liabilities	551	551	—	—	—
Office lease	694	201	421	72	—
	1,245	752	421	72	—


		in thousands of dollars,
		except per share amounts
	Q1 2021	Q4 2020	Q3 2020	Q2 2020	Q1 2020	Q4 2019	Q3 2019	Q2 2019
	02/28/21	11/30/20	08/31/20	05/31/20	02/29/20	11/30/19	08/31/19	05/31/19
	$	$	$	$	$	$	$	$
Interest and other income	5	5	8	12	62	91	137	150
Mineral properties and feasibility study expenses	—	91	232	742	1,545	3,819	10,951	2,906
Share of loss on equity investment	1,120	1,022	1,094	561	178	—	—	—
Earnings (loss) for the period	(4,516)	(3,226)	(3,184)	(3,002)	171,179	(6,525)	(12,535)	(4,509)
Earnings (loss) per common share – basic	(0.03)	(0.04)	(0.02)	(0.02)	1.22	(0.05)	(0.09)	(0.04)
Earnings (loss) per common share – diluted	(0.03)	(0.01)	(0.01)	(0.02)	1.16	(0.05)	(0.09)	(0.04)


	In thousands of dollars
	Total	<1 Year	1–2 Years	2–5 Years	Thereafter
	$	$	$	$	$
Accounts payable and accrued liabilities	551	551	—	—	—
Office lease	694	201	421	72	—
	1,245	752	421	72	—


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: April 7, 2021	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