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 2, 2020

Trilogy Metals Inc.

(Exact name of registrant as specified in its charter)

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:

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.  ¨

Trilogy Metals Inc. (the “Company”) commissioned and was provided with a feasibility study for the Artic deposit, part of the Artic Project (the “Technical Report”). The Technical Report is hereby being furnished to the Securities Exchange Commission (“SEC”) as Exhibit 99.1 to this current report on Form 8-K to satisfy the Company's public disclosure obligations under Regulation FD, promulgated by the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Technical Report was prepared in accordance with National Instrument 43-101, Standards of Disclosure for Mineral Projects of the Canadian Securities Administrator (“NI 43-101”).

In accordance with General Instruction B.2 of Form 8-K, the information set forth herein and in the Technical Report is deemed to be "furnished" and shall not be deemed to be "filed" for purposes of the Exchange Act. The information set forth in Item 7.01 of this current report on Form 8-K shall not be deemed an admission as to the materiality of any information in this report on Form 8-K that is required to be disclosed solely to satisfy the requirements of Regulation FD.

Cautionary Note to United States Investors

The information in this report has 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 report have been prepared in accordance with 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 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 report or the Technical Report may not be comparable with information made public by companies that report in accordance with U.S. standards.

(d) Exhibits

Exhibit 99.1 relating to Item 7.01 is intended to be furnished to, not filed with, the SEC pursuant to Regulation FD.

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.

Exhibit 99.1

Arctic Feasibility Study
Alaska, USA
NI 43-101 Technical Report

Important Notice

This report was prepared as National Instrument 43-101 Technical Report for Trilogy Metals Inc. (Trilogy Metals or Trilogy) by Ausenco Engineering Canada Inc., BD Resource Consulting, Inc., Integrated Sustainability Consultants, International Metallurgical & Environmental Inc., SIM Geological Inc., SRK Consulting (Canada) Inc and Wood Canada Limited., collectively the “Report Authors”. The quality of information, conclusions, and estimates contained herein is consistent with the level of effort involved in the Report Authors’ services, based on i) information available at the time of preparation, ii) data supplied by outside sources, and iii) the assumptions, conditions, and qualifications set forth in this report. This report is intended for use by Trilogy Metals subject to the respective terms and conditions of its contracts with the individual Report Authors. Except for the purposes legislated under Canadian provincial securities law, any other uses of this report by any third party is at that party’s sole risk.

Certificates of Qualified Persons

Paul Staples, P.Eng.

CERTIFICATE OF QUALIFIED PERSON 

Paul Staples, P.Eng., Ausenco Engineering Canada Inc.

I, L. Paul Staples, P.Eng., am employed as a Vice President and Global Practice Lead, Minerals and Metals with Ausenco Engineering Canada Inc. with an office address at 855 Homer St., Vancouver, BC, V6B 2W2 and email Paul.Staples@ausenco.com.

This certificate applies to the technical report titled “Arctic Feasibility Study, Alaska, USA, NI 43-101 Technical Report” that has an effective date of 20 August 2020 (the “technical report”).

I am a registered Professional Engineer of British Columbia, membership number 47367. I graduated from Queens University in 1993 with a degree in Materials and Metallurgical Engineering.

I have practiced my profession for 30 years. I have been directly involved in process operation, design and management from over 50 similar studies or projects in Canada, the United States, Mexico, South America, Africa and Asia Pacific.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101) for those sections of the technical report that I am responsible for preparing.

My most recent personal inspection of the Arctic site was on July 25, 2017.

I am responsible for Sections 1.1, 1.2, 1.3.1, 1.4 to 1.6, 1.15, 1.16.1 to 1.16.4, 1.17, 1.19 to 1.22, Section 2, Section 3, Section 4, Section 5, Section 6.1 to 6.2.6, 6.2.8, 6.2.9, Section 17, Section 18.1 to 18.7, 18.12 to 18.16, Section 19, Section 21.1.1 to 21.1.6, 21.1.8.3, 21.1.9, 21.1.12, 21.2.1, 21.2.3 to 21.2.5, Section 22, Section 24, Section 25.1, 25.2, 25.9, 25.10, 25.12 to 25.16, 25.17.1, 25.17.2, 25.17.4, and Section 26.1 of the technical report.

I am independent of Trilogy Metals Inc. as independence is described by Section 1.5 of NI 43–101.

I have been involved with the Arctic Project, Northwest Alaska, USA, NI 43-101 Technical Report on Pre-Feasibility Study that had an effective date of 20 February, 2018.

I have read NI 43–101 and the sections of the technical report for which I am responsible have been prepared in compliance with that Instrument.

As of the effective date of the technical report, to the best of my knowledge, information and belief, the sections of the technical report for which I am responsible contain all scientific and technical information that is required to be disclosed to make those sections of the technical report not misleading.

Dated: 2 October 2020

“Signed and sealed”

L. Paul Staples, P.Eng.

Antonio Peralta Romero, P.Eng.

CERTIFICATE OF QUALIFIED PERSON 

Antonio Peralta Romero, PhD, P.Eng., Wood Ltd.

I, Antonio Peralta Romero, P.Eng., am employed as a Principal Mining Engineer with Wood Canada Limited at 400-111 Dunsmuir Street, Vancouver, BC V6B 5W3.

This certificate applies to the technical report titled “Arctic Feasibility Study, Alaska, USA, NI 43-101 Technical Report” that has an effective date of 20 August 2020 (the “technical report”).

I am a Professional Engineer of Engineers and Geoscientists of British Columbia; License # 45323. I graduated from the University of Guanajuato in 1984 with a B.S. in Mining Engineering, from Queen’s University in 1991 with a M.Sc. in Mining Engineering, and from Colorado School of Mines in 2007 with a Ph.D. in Mining and Earth Systems Engineering.

I have practiced my profession for 36 years. I have been directly involved in mine planning and design, ore control, production forecasting and management, slope stability monitoring, and mineral reserve estimation, mainly for open-pit precious, base metal mines and iron ore mines.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101) for those sections of the technical report that I am responsible for preparing.

I visited the Arctic site on July 25, 2017 for one day.

I am responsible for Section 1.3.2, 1.13, 1.14, 1.16.5, Sections 2.3 to 2.6; Section 15; Sections 16.1 to 16.6, 16.8; Sections 21.1.7.1, 21.1.8.1, 21.2.2, 25.7, 25.8, and 26.1.1.

I am independent of Trilogy Metals Inc. as independence is described by Section 1.5 of NI 43–101.

I have been involved with the Arctic Project in the mining engineering work for the pre-feasibility study and the compilation of the corresponding Technical Report: Staples P., Hannon, J., Peralta Romero A., Davis B., DiMarchi J.J., Austin, J.B., Sim R., Boese C., Murphy, B., Sharp T., 2018, Arctic Project, Northwest Alaska, USA, NI 43-101 Technical Report on Pre-Feasibility Study, effective date of February 20, 2018.

I have read NI 43–101 and the sections of the technical report for which I am responsible have been prepared in compliance with that Instrument.

As of the effective date of the technical report, to the best of my knowledge, information and belief, the sections of the technical report for which I am responsible contain all scientific and technical information that is required to be disclosed to make those sections of the technical report not misleading.

Dated this 2^nd day of October 2020

“Signed”

Antonio Peralta Romero, P.Eng.

Principal Mining Engineer

Wood Canada Limited

Dr. Bruce M. Davis, FAusIMM

CERTIFICATE OF QUALIFIED PERSON 

Bruce M. Davis, FAusIMM, BD Resource Consulting, Inc.

I, Bruce M. Davis, FAusIMM, am employed as a Geostatistician with BD Resource Consulting, Inc. (BDRC), with an office address at 4253 Cheyenne Dr., Larkspur, Colorado, USA 80118.

This certificate applies to the technical report titled “Arctic Feasibility Study, Alaska, USA, NI 43-101 Technical Report” that has an effective date of 20 August 2020 (the “technical report”).

I am a Fellow of the Australasian Institute of Mining and Metallurgy; Number 211185. I have B.S. (1974) and M.S. (1975) degrees from Brigham Young University. I graduated from the University of Wyoming with a Doctor of Philosophy (Geostatistics) in 1978.

I have practiced my profession for 42 years. I have been directly involved in mineral resource and reserve estimations and feasibility studies on numerous open pit and underground base metal and gold deposits in the United States, Canada, Central and South America, Europe, Africa, Asia, and Australia.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101) for those sections of the technical report that I am responsible for preparing.

I visited the Arctic site in 2011, 2012, 2015, and 29 August 2019.

I am responsible for sub-sections 1.9, 1.10, 14.2 – 14.16, and 25.4 and sections 11 and 12 of the technical report.

I am independent of Trilogy Metals Inc. as independence is described by Section 1.5 of NI 43–101.

I have been involved with the Arctic property prior to this technical report. I was a coauthor of a previous technical report with an effective data of 25 April 2017.

I have read NI 43–101 and the sections of the technical report for which I am responsible have been prepared in compliance with that Instrument.

As of the effective date of the technical report, to the best of my knowledge, information and belief, the sections of the technical report for which I am responsible contain all scientific and technical information that is required to be disclosed to make those sections of the technical report not misleading.

Dated: 2 October 2020

Jeffery B. Austin, P.Eng.

CERTIFICATE OF QUALIFIED PERSON 

Jeffery B. Austin, P.Eng., International Metallurgical & Environmental Inc.

I, Jeffrey B. Austin, P.Eng., am employed as an independent consultant of International Metallurgical & Environmental Inc., located at 906 Fairway Crescent, Kelowna, B.C., and incorporated in 1995.

This certificate applies to the technical report titled “Arctic Feasibility Study, Alaska, USA, NI 43-101 Technical Report” that has an effective date of 7 August 2020 (the “technical report”).

I am a member, in good standing, of the Association of Professional Engineers and Geoscientists of British Columbia, license number 15708. I graduated with a B.A.Sc degree from the University of British Columbia in 1984

I have practiced my profession continuously for 33 years and have been involved in the design, evaluation and operation of mineral processing facilities during that time. A majority of my professional practice has been the completion of test work and test work supervision related to feasibility and pre- feasibility studies of projects involving flotation technologies.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101) for those sections of the technical report that I am responsible for preparing.

I have not visited the Arctic site.

I am responsible for Section 1.11, Section 13 and Section 25.5 of the technical report.

I am independent of the issuer applying all of the tests in Section 1.5 of National Instrument 43-101.

I have been involved with the Arctic project since 2011 including supervision of metallurgical test work and input to various engineering studies.

I have read NI 43–101 and the sections of the technical report for which I am responsible have been prepared in compliance with that Instrument.

As of the effective date of the technical report, to the best of my knowledge, information and belief, the sections of the technical report for which I am responsible contain all scientific and technical information that is required to be disclosed to make those sections of the technical report not misleading.

Dated: October 2, 2020

“Signed and sealed”

Jeffrey B. Austin, P.Eng.

International Metallurgical and Environmental Inc.

Robert Sim, P.Geo.

CERTIFICATE OF QUALIFIED PERSON 

Robert Sim, P.Geo., SIM Geological Inc.

I, Robert Sim, P.Geo., am an independent consultant of SIM Geological Inc., with an office address at 508 – 1950 Robson St. Vancouver BC, Canada, V6G 1E8.

This certificate applies to the technical report titled “Arctic Feasibility Study, Alaska, USA, NI 43-101 Technical Report” that has an effective date of 7 August 2020 (the “technical report”).

I am a member in good standing of Engineers and Geoscientists British Columbia, License Number 24076. I graduated from Lakehead University with an Honours Bachelor of Science (Geology) in 1984.

I have practiced my profession for 35 years and have been involved in mineral exploration, mine site geology and operations, mineral resource and reserve estimations and feasibility studies on numerous underground and open pit base metal and gold deposits in Canada, the United States, Central and South America, Europe, Asia, Africa and Australia. I have worked on similar VMS-type deposits at Cayeli in Turkey, the Winston Lake mine in Ontario and on several deposits in Rouyn-Noranda, Quebec.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101) for those sections of the technical report that I am responsible for preparing.

I visited the Arctic site between September 20-22, 2018.

I am responsible for Sections 7, 8, 9.1 through 9.6, 10, 14 and portions of Sections 1 and 25 of the technical report.

I am independent of Trilogy Metals Inc. as independence is described by Section 1.5 of NI 43–101.

I have had prior involvement with the property that is the subject of the Technical Report. I was an author of a previous technical reports on the Arctic Project, dated November 9, 2017 and April 6, 2018.

I have read NI 43–101 and the sections of the technical report for which I am responsible have been prepared in compliance with that Instrument.

As of the effective date of the technical report, to the best of my knowledge, information and belief, the sections of the technical report for which I am responsible contain all scientific and technical information that is required to be disclosed to make those sections of the technical report not misleading.

Dated: October 2, 2020

“Signed and sealed” 

Robert Sim P.Geo.

SIM Geological Inc.

Calvin Boese, PEng.

CERTIFICATE OF QUALIFIED PERSON 

Calvin Boese, P.Eng., M.Sc., SRK Consulting (Canada) Inc.

I, Calvin Boese, PEng., am employed as a Principal Consultant (Geotechnical Engineering) with the firm of SRK Consulting (Canada) Inc. (SRK) with an office at Suite 600, 350 3rd Avenue North, Saskatoon, Saskatchewan.

This certificate applies to the technical report titled “Arctic Feasibility Study, Alaska, USA, NI 43-101 Technical Report” that has an effective date of 20 August 2020 (the “technical report”).

I am a Professional Engineer of the Association of Professional Engineers, Geologists of British Columbia (P.Eng. #29478). I am also a registered Professional Engineer in Alberta and Saskatchewan. I am a Member of the Society for Mining, Metallurgy and Exploration. I am a graduate of the University of Saskatchewan with a B.Sc. in Civil Engineering (1999) and a M.Sc. in Geo-Environmental Engineering (2004).

I have practiced my profession for 20 years. I have been directly involved in geotechnical aspects of mining, including the site selection, design, permitting, operation and closure of mine waste facilities in Canada, the US, Indonesia and Turkey.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101) for those sections of the technical report that I am responsible for preparing.

My most recent personal inspection of the Arctic site was from July 10 to July 12, 2018.

I am responsible for Section 1.16.6, 1.16.7 and 1.18, Sections 18.10 and 18.11, Section 20.1.6, 20.1.7, 20.1.8, 20.2, 20.3, 20.4, 20.4.1, 20.4.1.1, 20.4.1.2.1, 20.4.1.2.2, 20.4.1.2.3, 20.4.1.2.4, 20.4.1.2.5, 20.4.1.2.6, 20.4.1.2.8, 20.4.1.3.1, and 20.4.1.4, Section 21.1.10, Section 25.11, and Section 26.1.5 of the technical report.

I am independent of Trilogy Metals Inc. as independence is described by Section 1.5 of NI 43–101.

I was previously involved in the project as the Qualified Person for the “Arctic Project, Northwest Alaska, USA, NI 43-101 Technical Report on Pre-Feasibility Study” dated February 20, 2018.

I have read NI 43–101 and the sections of the technical report for which I am responsible have been prepared in compliance with that Instrument.

As of the effective date of the technical report, to the best of my knowledge, information and belief, the sections of the technical report for which I am responsible contain all scientific and technical information that is required to be disclosed to make those sections of the technical report not misleading.

Dated: October 2, 2020

“Signed and sealed” 

Calvin Boese, P.Eng., M.Sc.

Principal Consultant

SRK Consulting (Canada) Inc.

Bruce Murphy, PEng.

CERTIFICATE OF QUALIFIED PERSON 

Bruce Murphy, P.Eng., SRK Consulting (Canada) Inc.

I, Bruce Murphy, PEng am employed as a Principal Consultant at SRK Consulting (Canada) Inc, located at 2200 -1066 West Hastings Street, Vancouver, BC.

This certificate applies to the technical report titled Arctic Feasibility Study, Alaska, USA, NI 43-101 Technical Report” that has an effective date of 20 August 2020 (the “technical report”)

I am a professional engineer registered with the Association of Professional Engineers of British Columbia – PEng License No.: 44271; I am a graduate of University of the Witwatersrand, Johannesburg, South Africa with a M.Sc. degree in Mining Engineering. I have practiced my profession continuously since graduation (1989) working in the rock engineering field on operating mines till 2002 and then in the consulting field.

I have practiced my profession for 30 years. I have been directly involved in the geotechnical data acquisition, characterization and slope stability evaluation of the deposit.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101) for those sections of the technical report that I am responsible for preparing.

I have visited the Arctic Site August 27 – 29th, 2019.

I am responsible for Sections 6.2.7.1, 9.7.1; 16.7, 21.1.7.2, 21.1.8.2, 26.1.2, 26.1.3 and Section 26.1.4 of the technical report.

I am independent of Trilogy Metals Inc. as independence is described by Section 1.5 of NI 43–101.

I was previously involved in the project as the Qualified Person for the “Arctic Project, Northwest Alaska, USA, NI 43-101 Technical Report on Pre-Feasibility Study” dated February 20, 2018.

I have read NI 43–101 and the sections of the technical report for which I am responsible have been prepared in compliance with that Instrument.

As of the effective date of the technical report, to the best of my knowledge, information and belief, the sections of the technical report for which I am responsible contain all scientific and technical information that is required to be disclosed to make those sections of the technical report not misleading.

Dated:    October 2, 2020

“Signed and sealed”

Bruce Murphy, PEng

Principal Consultant

SRK Consulting (Canada) Inc

Tom Sharp, PEng.

CERTIFICATE OF QUALIFIED PERSON 

Tom Sharp, PhD, P.Eng., SRK Consulting (Canada) Inc.

I, Tom Sharp, PEng, am employed as a Principal Consultant (Water Management and Treatment Engineering) with the firm of SRK Consulting (Canada) Inc. (SRK) with an office at Suite 2200 – 1066 West Hastings Street, Vancouver, British Columbia.

This certificate applies to the technical report titled ““Arctic Feasibility Study, Alaska, USA, NI 43-101 Technical Report” that has an effective date of 20 August 2020 (the “Technical Report”).

I am a Professional Engineer of the Association of Professional Engineers, Geologists of British Columbia (P.Eng. #36988). I am also a registered Professional Engineer in Northwest Territories, Nunavut, Yukon and Montana. I am a Member of the Society for Mining, Metallurgy and Exploration. I graduated from Montana State University and Montana Tech with a B.Sc. and M.Sc. in Biological Sciences (1988 and 1993), M.Sc. in Environmental Engineering (1996) and a Ph.D. in Civil Engineering (1999).

I have practiced my profession for 28 years. I have been directly involved mine water management and treatment on projects in North America, South America, Europe and Asia.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101) for those sections of the technical report that I am responsible for preparing.

I have not visited the Arctic site.

I am responsible for Section 1.16.8, 1.16.9.1; Sections 6.2.7.2; Sections 9.7.2, 9.7.3; Sections 11.3, 11.8.6; Sections 18.8, 18.9; Sections 20.1.1, 20.1.2, 20.1.3, 20.1.4, 20.1.5, 20.1.9, 20.4.1.2.7.1; Section 21.1.11; Section 25.17.3; and Sections 26.1.6, 26.1.7, and 26.1.8.1 of the technical report.

I am independent of Trilogy Metals Inc. as independence is described by Section 1.5 of NI 43–101.

I was previously involved in the project as the Qualified Person for the “Arctic Project, Northwest Alaska, USA, NI 43-101 Technical Report on Pre-Feasibility Study” dated February 20, 2018.

I have read NI 43–101 and the sections of the technical report for which I am responsible have been prepared in compliance with that Instrument.

As of the effective date of the technical report, to the best of my knowledge, information and belief, the sections of the technical report for which I am responsible contain all scientific and technical information that is required to be disclosed to make those sections of the technical report not misleading.

Dated:    October 2, 2020

“Signed and sealed”

Tom Sharp, PEng

Principal Consultant

SRK Consulting (Canada) Inc.

AJ MacDonald, P.Eng.

CERTIFICATE OF QUALIFIED PERSON 

AJ MacDonald, P.Eng., Integrated Sustainability Consultants

I, AJ MacDonald, P.Eng., am employed as a Vice President / Senior Technical Specialist with Integrated Sustainability Ltd., with an office address at 1050 West Pender Street, Vancouver BC, V6C 3S7.

This certificate applies to the technical report titled “Arctic Feasibility Study, Alaska, USA, NI 43-101 Technical Report” that has an effective date of 20 August 2020 (the “technical report”).

I am a Professional Engineer of Professional Engineers Yukon, Engineers and Geoscientists British Columbia, Association of Professional Engineers and Geoscientists of Alberta and Professional Engineers Ontario. I graduated from Queen’s University in Kingston, Ontario with Bachelor of Science in 2005 and Carleton University in Ottawa, Ontario with Master of Applied Science in 2007.

I have practiced my profession for 15 years. I have been involved or associated with the mining industry since 2007. I have participated in dozens of mining and other resource sector projects, with a particular focus on water treatment process engineering, primarily in Western North America. My experience spans all phases of project delivery including preliminary analysis, conceptual design, detailed design, construction, commissioning and optimization of infrastructure at industrial water treatment facilities in Canada and around the world.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101) for those sections of the technical report that I am responsible for preparing.

I have not visited the Arctic site.

I am responsible for Sections 1.16.9, 20.4.1.2, 7.2, 20.4.1.3.2 and 26.1.8.2 of the technical report.

I am independent of Trilogy Metals Inc. as independence is described by Section 1.5 of NI 43–101.

I have had no previous involvement with the Arctic Project.

I have read NI 43–101 and the sections of the technical report for which I am responsible have been prepared in compliance with that Instrument.

As of the effective date of the technical report, to the best of my knowledge, information and belief, the sections of the technical report for which I am responsible contain all scientific and technical information that is required to be disclosed to make those sections of the technical report not misleading.

Dated: October 2, 2020

“Signed”

AJ MacDonald, P.Eng.

Table of Contents

Appendix A – List of Claims

List of Tables

; 

; 

List of Figures

Glossary

Trilogy Metals Inc. (Trilogy Metals or Trilogy) commissioned Ausenco Engineering Canada Inc. (Ausenco) to compile a Technical Report (the Report) on the Arctic deposit, part of the Arctic Project (the Project) in the Ambler Mining District of northwest Alaska.

The Project demonstrates the financial outcomes summarized below:

o      NPV of $1,550.9 million  at an 8% discount rate

o      IRR of 30.8%

o      Payback period of 2.4 years

o      NPV of $1,134.7 million at an 8% discount rate

o      IRR of 27.1%

o      Payback period of 2.6 years

o      Initial capital cost of $905.6 million

o      Sustaining capital cost of $113.8 million

o      Closure cost of $205.4 million

1.3.1          General

The Report supports disclosure by Trilogy Metals in the news release dated August 20, 2020, entitled “Trilogy Metals Announces Positive Feasibility Study Results for the Arctic Project Located in Alaska, USA”.

The firms and consultants who are providing Qualified Persons (QPs) responsible for the content of this Report, which is based on the Feasibility Study completed in 2020 (the 2020 FS) and supporting documents prepared for the 2020 FS, are, in alphabetical order: Ausenco Engineering Canada Inc. (Ausenco); BD Resource Consulting, Inc., (BDRC); Integrated Sustainability Consultants; International Metallurgical & Environmental Inc (IME); SIM Geological Inc. (SIM); SRK Consulting (Canada) Inc. (SRK), and Wood Canada Limited (previously Amec Foster Wheeler Americas Ltd.) (Wood).

The Report presents Mineral Resource and Mineral Reserve estimates for the Project, and an economic assessment based on open pit mining operations and a conventional processing circuit that would produce copper, zinc and lead concentrates.

All units of measurement in this Report are metric, unless otherwise stated. The monetary units are in US dollars, unless otherwise stated.

1.3.2          Mineral Resources and Reserves

Mineral Resources and Mineral Reserves are reported in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards for Mineral Resources and Mineral Reserves (May 2014; the 2014 CIM Definition Standards).

The Arctic Project is located in the Ambler mining district (Ambler Mining District) of the southern Brooks Range, in the Northwest Arctic Borough (NWAB) of Alaska. The Property is geographically isolated with no current road access or nearby power infrastructure. The Project is located 270 km east of the town of Kotzebue, 37 km northeast of the village of Kobuk, and 260 km west of the Dalton Highway, an all-weather state-maintained highway.

NovaGold Resources Inc. (NovaGold) acquired the Arctic Project from Kennecott Exploration Company and Kennecott Arctic Company (collectively, Kennecott) in 2004. In 2011, NovaGold transferred all copper projects to NovaCopper Inc. and spun-out NovaCopper to its then existing shareholders in 2012. NovaCopper Inc. subsequently underwent a name change to Trilogy Metals Inc. in 2016. Under the Kennecott Purchase and Termination Agreement, Kennecott retained a 1% net smelter return (NSR) royalty that has been subsequently sold by Kennecott. The 1% NSR runs with the lands and is purchasable at any time from the royalty holder for a one-time payment of $10 million.

The Project is directly held by Ambler Metals LLC (Ambler Metals), a 50/50 joint venture formed between South32 Limited (South32) and Trilogy Metals Inc. (Trilogy Metals) in February 2020. Upon the formation of the joint venture, Trilogy Metals contributed all of its Alaskan assets, including the Project and Trilogy’s agreement with NANA (see below), to Ambler Metals in exchange for a 50% membership interest and at the same time, South32 contributed $145 million in cash for a 50% membership interest.

Ambler Metals holds approximately 185,805 acres (75,192 ha) of State of Alaska mining claims and US Federal patented mining claims in the Kotzebue Recording District. The Arctic Project land tenure consists of 1,851 contiguous State mining claims, including 905 40-acre claims, 946 160-acre claims, and 18 Federal patented claims comprising 271.9 acres (110 ha) held in the name of Ambler Metals.

Surface use of the private land held as Federal patented claims is limited only by reservations in the patents and by generally-applicable environmental laws. Surface use of State claims allows the owner of the mining claim to make such use of the surface as is “necessary for prospecting for, extraction of, or basic processing of minerals.”

The NANA Regional Corporation, Inc. (NANA) controls lands granted under the Alaska Native Claims Settlement Act (ANCSA) to the south of the Project boundary. Ambler Metals and NANA are parties to an agreement (the NANA Agreement) that consolidates the parties’ land holdings into an approximately 172,675 ha land package and provides a framework for the exploration and development of the area. The NANA Agreement has a term of 20 years, with an option in favour of Ambler Metals to extend the term for an additional 10 years. If, following receipt of a feasibility study and the release for public comment of a related draft environmental impact statement, a decision is made to proceed with construction of a mine on the lands subject to the NANA Agreement, NANA will have 120 days to elect to either (a) exercise a non-transferrable back-in-right to acquire between 16% and 25% (as specified by NANA) of that specific project; or (b) not exercise its back-in-right, and instead receive a net proceeds royalty equal to 15% of the net proceeds realized from such project. In the event that NANA elects to exercise its back-in-right, the parties will, as soon as reasonably practicable, form a joint venture with NANA electing to participate between 16% to 25%, and Ambler Metals owning the balance of the interest in the joint venture. If Ambler Metals decides to proceed with construction of a mine on its own lands subject to the NANA Agreement, NANA will enter into a surface use agreement which will afford Ambler Metals access to the project along routes approved by NANA. In consideration for the grant of such surface use rights, NANA will receive a 1% net smelter royalty on production and provide an annual payment on a per acre basis.

Primary access to the Project is by air, using both fixed wing aircraft and helicopters.

There are four well-maintained, approximately 1,500 m-long gravel airstrips located near the Project, capable of accommodating charter fixed wing aircraft. These airstrips are located 64 km west at Ambler, 46 km southwest at Shungnak, 37 km southwest at Kobuk, and 34 km southwest at Dahl Creek. There is daily commercial air service from Kotzebue to the village of Kobuk, the closest community to the Project. During the summer months, the Dahl Creek Camp airstrip is suitable for larger aircraft, such as a C-130 and DC-6.

In addition to the four 1,500 m airstrips, there is a 700 m airstrip located at the Bornite Camp. The airstrip at Bornite is suited to smaller aircraft, which support the Bornite Camp with personnel and supplies. There is also a 450 m airstrip (Arctic airstrip) located at the base of Arctic Ridge that can support smaller aircraft.

A winter trail and a one-lane dirt track suitable for high-clearance vehicles or construction equipment links the Arctic Project’s main camp located at Bornite to the Dahl Creek airstrip southwest of the Arctic deposit. An unimproved gravel track connects the Arctic airstrip with the Arctic deposit.

The climate in the region is typical of a sub-arctic environment. Weather conditions on the Project can vary significantly from year to year and can change suddenly. During the summer exploration season, average maximum temperatures range from 10 °C to 20 °C, while average lows range from -2 °C to 7 °C (Western Regional Climate Center: WRCC - Alaska Climate Summaries: Kobuk 1971 to 2000). By early October, unpredictable weather limits safe helicopter travel to the Project. During winter months, the Project can be accessed by snow machine, track vehicle, or fixed wing aircraft. Winter temperatures are routinely below -25 °C and can exceed -50 °C. Annual precipitation in the region varies with elevation.

It is expected that any future mining activity will be conducted on a year-round basis. Exploration activities are generally confined to the period from late May to late September.

Kotzebue is a potential source of limited mining-related supplies and labourers, and is the nearest centre serviced by regularly scheduled, large commercial aircraft (via Nome or Anchorage). In addition, there are seven other villages in the region that will be a potential source of some of the workforce for the Project. Fairbanks (population 31,036; 2010 US Census) has a long mining history along with currently operating mines and can provide most mining-related supplies and support that cannot be sourced closer to the Project area.

Drilling and mapping programs are seasonal and have been supported out of the Bornite Camp and Dahl Creek Camp. The Bornite Camp facilities are located on Ruby Creek on the northern edge of the Cosmos Hills. The camp provides office space and accommodations for the geologists, drillers, pilots, and support staff. Power is supplied by two Caterpillar diesel generators – one 300kW and one 225 kW. Water was supplied by the permitted artesian well located 250 m from camp; however, a water well was drilled in camp during the 2017 field season that was permitted by 2019 to provide all potable water for the Bornite Camp.

Prior to Trilogy Metals’ Project interest, work programs were conducted by Bear Creek Mining Company (BCMC), an exploration subsidiary of Kennecott Exploration (Kennecott) and Anaconda. Exploration activities included geological and reconnaissance mapping, geochemical sampling, airborne and ground geophysical surveys, drilling, metallurgical testwork, petrological and mineralogical studies, and resource estimates.

Trilogy Metals obtained its project interest in 2004, when the Alaska Gold Company, a wholly-owned subsidiary of NovaGold completed an Exploration and Option Agreement with Kennecott to earn an interest in the Ambler land holdings. In 2010, NovaGold acquired a 100% controlling interest by buying out Kennecott’s interest, although Kennecott retained an NSR royalty. Work conducted by NovaGold, its successor NovaCopper and Trilogy Metals included geological mapping, soil and silt geochemical sampling, time-domain electromagnetic (TDEM) ground geophysical surveys, airborne DIGHEM geophysical surveys, down-hole geophysics, drilling programs, metallurgical testwork, Mineral Resource and Mineral Reserve estimates, mining studies, and baseline environmental studies.

The Arctic deposit is considered to be a volcanogenic massive sulphide (VMS) deposit based on its geologic setting, associated host rocks, stratiform ore morphology, and ore mineralogy.

The Ambler Mining District is located on the southern margin of the Brooks Range. Within the VMS belt, several deposits and prospects (including the Arctic deposit) are hosted in the Ambler Sequence, a group of Middle Devonian to Early Mississippian, metamorphosed, bimodal volcanic rocks with interbedded tuffaceous, graphitic, and calcareous volcaniclastic metasediments. The Ambler Sequence occurs in the upper part of the regional Anirak Schist. VMS-style mineralization is found along the entire 110 km strike length of the Ambler Sequence.

Stratigraphically, the Ambler Sequence consists of variably metamorphosed calc-turbidites, overlain by calcareous schists with irregularly distributed mafic sills and pillow lavas. These are overlain by the Arctic-sulphide host section which consists mainly of fine-grained, carbonaceous siliciclastic rocks which are in turn overlain by reworked silicic volcanic rocks, including meta-rhyolite porphyries and most notably the regionally extensive Button Schist with its characteristically large relic porphyroblasts. Greywacke sandstones, interpreted to be turbidites, occur throughout the section but are concentrated higher in the stratigraphy. Several rock units within the stratigraphy show substantial variation in local thickness as a consequence of basin morphology at the time of deposition and later deformation.

Alteration at the Arctic deposit is characterized by magnesium metasomatism, primarily as talc, Mg-rich chlorite, and phengite alteration products associated with the sulphide-bearing horizons and continuing in the footwall. Stratigraphically above the sulphide-bearing horizons, significant muscovite as paragonite is developed and results in a marked shift in Na/Mg (sodium/magnesium) ratios across the sulphide bearing horizons.

Mineralization occurs as stratiform semi-massive sulphide (SMS) to massive sulphide (MS) beds within primarily graphitic chlorite schists and fine-grained quartz schists. The sulphide beds average 4 m in thickness but vary from less than 1 m up to as much as 18 m in thickness.

The bulk of the mineralization occurs within eight modelled SMS and MS zones lying along the upper and lower limbs of the interpreted Arctic isoclinal anticline. All of the zones are within an area of roughly 1 km² with mineralization extending to a depth of approximately 250 m below the surface. Mineralization is predominately coarse-grained sulphides consisting mainly of chalcopyrite, sphalerite, galena, tetrahedrite-tennantite, pyrite, arsenopyrite, and pyrrhotite. Trace amounts of electrum are also present.

Drilling at the Arctic deposit and within the Ambler Mining District has been ongoing since its initial discovery in 1967. Approximately 60,857 m of drilling was completed within the Ambler Mining District, including 42,571 m of drilling in 207 drill holes at the Arctic deposit or on potential extensions in 29 campaigns spanning 52 years. Drill programs were completed by Kennecott and its subsidiaries, Anaconda, and Trilogy Metals and its predecessor companies.

Core recoveries are acceptable. Geological and geotechnical logging is in line with industry generally-accepted practices. Drill collar and downhole survey data were collected using industry-recognized instrumentation and methods at the time the data were collected.

Between 2004 and 2005, NovaGold conducted a systematic drill core re-logging and re-sampling campaign of Kennecott and BCMC era drill holes. NovaGold either took 1 m to 2 m samples every 10 m, or sampled entire lengths of previously un-sampled core within a minimum of 1 m and a maximum of 3 m intervals. During the Trilogy Metals campaigns, sample intervals were determined by the geological relationships observed in the core and limited to a 2.5 m to 3 m maximum length and 0.3 m minimum length. An attempt was made to terminate sample intervals at lithological and mineralization boundaries. Sampling was generally continuous from the top to the bottom of the drill hole. When the hole was in un-mineralized rock, the sample length was generally 3 m, whereas in mineralized units, the sample length was shortened to 1 m to 2 m with a maximum of 2.5 m.

Gold assays were conducted using fire assay fusion followed by an atomic absorption spectroscopy (AAS) finish. An additional 49-element suite was assayed by inductively coupled plasma-mass spectroscopy (ICP-MS) methodology, following a four acid (hydrochloric, nitric, hydrofluoric, and perchloric) digestion. The copper, zinc, lead, and silver analyses were completed by atomic absorption (AA), following a triple acid digest, in 2004 and 2005, and by inductively coupled plasma-atomic emission spectroscopy (ICP-AES) following a triple acid digestion from 2006 to 2019, when overlimits occurred with the ICP-MS methodology.

Standard reference materials, blanks, duplicates, and check samples have been regularly submitted at a combined level of 20% of sampling submissions for all NovaGold/NovaCopper/Trilogy Metals era campaigns. BD Resource Consulting, Inc (BDRC) reviewed the quality assurance and quality control (QA/QC) dataset and reports and found the sample insertion rate and the timeliness of results received and reviewed meets or exceeds industry best practices.

Specific gravity (SG) measurements were conducted on 4,708 samples in the database and range from a minimum of 1.49 to a maximum of 5.35 and average 3.04. The distribution of SG data is considered sufficient to support estimation in the resource model.

Current Mineral Resource estimates and geologic models use topography completed in 2010 by PhotoSat Inc. The resolution of the satellite imagery used was at 0.5 m, and a 1 m contour map and digital elevation model were generated. An aerial light detection and ranging (LiDAR) survey was completed to support feasibility level resource estimation, engineering design, environmental studies, and infrastructure layout evaluations. Agreement between surveyed drill hole collar elevations and a LiDAR topographic surface verifies the correctness of the digital topography for use in estimation.

It was concluded that the drill database and topographic surface for the Arctic deposit is reliable and sufficient to support the current estimate of mineral resources.

The data for the Arctic deposit were generated over three primary drilling campaigns: 1966 to 1986 when BCMC, a subsidiary of Kennecott was the primary operator, 1998 when Kennecott resumed work after a long hiatus, and 2004 to present under NovaGold, NovaCopper, and Trilogy Metals.

Between 2004 and 2005, NovaGold conducted a systematic drill core re-logging and re-sampling campaign of Kennecott and BCMC era drill holes AR-09 to AR-74. NovaGold either took 1 to 2 m samples every 10 m, or sampled entire lengths of previously unsampled core within a minimum of 1 m and a maximum or 3 m intervals. The objective of the sampling was to generate a full inductively-coupled plasma (ICP) geochemistry dataset for the Arctic deposit and ensure continuous sampling throughout the deposit.

During NovaGold, NovaCopper, and Trilogy eras, samples were selected based on lithologic contacts, significant mineralization and alteration. Drill core was sampled at no less than 30 cm and no more than 2.5 m when in un-mineralized material, and 2 m maximum intervals when in mineralized material. All samples processed at the logging facility at the Bornite Camp were sawn in half with one half being sent to ALS Minerals in Vancouver, BC for analysis and the other half stored on site at the Bornite Camp. Shipment of core samples from the site occurred on a drill hole by drill hole basis. Rice bags, containing two to four poly-bagged core samples each, were marked and labelled with the ALS Minerals address, project and hole number, bag number, and sample numbers enclosed. Rice bags were secured with a pre-numbered plastic security tie and a twist wire tie and then assembled into standard fish totes for transport by chartered flights on a commercial airline to Fairbanks, where they were met by a contracted expeditor for delivery directly to the ALS Minerals preparation facility in Fairbanks. In addition to the core, control samples are inserted into the shipments at the approximate rate of one standard, one blank and one duplicate per 17 core samples

Samples were logged into a tracking system on arrival at ALS Minerals, and weighed. Samples were then crushed, dried, and a 250 g split pulverized to greater than 85% passing 75 μm.

Gold assays were determined using fire assay fusion followed by an atomic absorption spectroscopy (AAS) finish. The lower detection limit was 0.005 ppm gold; the upper limit was 1,000 ppm gold. An additional 49-element suite was assayed by ICP-MS, following a 4-acid digestion. The copper, zinc, lead, and silver analyses were completed by AA, following a triple acid digest, when over limit results occurred using the ICP-MS assay method.

Drill hole collars, topography, core logging, and database verification were completed by third party independent contractors. Quality assurance and quality control measures have been in place on an annual basis since 2011 with full data audits of the NovaGold era assay database including retaining independent consultant Caroline Vallat, P.Geo. of GeoSpark Consulting Inc. (GeoSpark) to: 1) re-load 100% of the historical assay certificates, 2) conduct a QA/QC review of paired historical assays and NovaGold era re-assays; 3) monitor an independent check assay program for the 2004 to 2008 and 2011-2019 drill campaigns; and 4) generate QA/QC reports for the NovaGold era 2004 to 2008 and NovaCopper/Trilogy Metals era 2011, 2015, 2016, 2017 and 2019 drill campaigns.

BDRC reviewed the QA/QC dataset and reports and found the sample insertion rate and the timeliness of results analysis met or exceeded industry best practices. The QA/QC results indicate that the assay results collected by Trilogy Metals, and previously by NovaGold and NovaCopper, are reliable and suitable for use in the 2020 FS.

Since 1970, metallurgical testwork has been conducted to evaluate the ability of the Arctic deposit to produce copper, lead and zinc concentrates. In-general, the samples tested produced similar metallurgical performances and the project has seen the development of a robust metal recovery process to support the current operational plans. Work conducted included mineralogy and flotation testing, locked cycle tests, comminution tests, copper/lead separation testwork, talc optimization testwork, and thickening and filtration testing.

Testwork can be broken into three key time periods:

In 2012, SGS Vancouver conducted a metallurgical test program to further study metallurgical responses of the samples produced from Zones 1, 2, 3, and 5 of the Arctic deposit. The flotation test procedures used talc pre-flotation, conventional copper-lead bulk flotation and zinc flotation, followed by copper and lead separation. In general, the 2012-2015 test results indicated that the samples responded well to the flowsheet tested. The average results of the locked cycle tests (without copper and lead separation) were as follows:

Using an open circuit procedure, the copper and lead separation tests on the bulk copper–lead concentrate produced from the locked cycle tests generated reasonable copper and lead separation. The copper concentrates produced contained approximately 28 to 31% copper, while the grades of the lead concentrates were in the range of 41% to 67% lead. In this testwork program, it appeared that most of the gold reported to the copper concentrate and on average the silver was equally recovered into the copper and lead concentrates. Subsequent testwork to better define the copper and lead separation process was conducted in 2017, including a more detailed evaluation of the precious metal deportment in the copper and lead separation process.

Grindability testing was completed during both the SGS Vancouver and ALS Metallurgy testwork programs to support the design and economics of efficient grinding of the Arctic materials. Semi-autogenous grind (SAG) mill test results included a single JKTech drop-weight test and 19 SAG media competency (SMC) tests using variability samples. Test results show the material is amenable to SAG milling and is relatively soft, with a reported breakage (axb) average value of 189.7. Bond ball mill work index (BWi) tests were completed on 44 samples and values ranged from 5.4 to 13.1 kWhr/t with an average BWi of 8.82 kWhr/t. Abrasion index (Ai) tests were completed on five samples and values fluctuated from 0.017 to 0.072 g for the measured samples. The data indicate that the samples are neither resistant nor abrasive to ball mill grinding. The materials are considered to be soft or very soft in terms of grinding requirements. The grinding testwork was used to support detailed grinding circuit design.

In 2017, ALS Metallurgy conducted detailed copper and lead separation flotation testwork using a bulk sample of copper–lead concentrate produced from the operation of a pilot plant. This testwork confirmed high lead recoveries in locked cycle testing of the copper–lead separation process and confirmed precious metal recoveries into the representative copper and lead concentrates. This testwork indicated a clear tendency of the gold values to follow the lead concentrate, giving it a significant gold grade and value. Detailed mineralogical analysis showed that a majority of gold values were occurring as liberated fine-grained gold particles.

The conclusions of testwork conducted both in 2012 and 2017 indicate that the Arctic materials are well-suited to the production of high-quality copper and zinc concentrates using flotation techniques which are industry standard. Copper and zinc recovery data were reported in the range of 88 to 92%, which reflected the high-grade nature of the deposit as well as the coarse-grained nature of these minerals. Grade variations within   the deposit will be observed as indicated by the grade variations observed in variability samples, however mill feed variability is expected to be limited and readily manageable with good plant operational practices. Lead concentrates have the potential to be of good quality and can also be impacted by zones of very high talc. Considerable care will be required to ensure maximum talc recovery to remove talc, which has the potential to dilute lead concentrate grades. The lead concentrate is also shown to be rich in precious metals, which has some advantages in terms of marketability of this material.

An overall metallurgical balance for the project is summarized in Table 1-1. The projected metallurgical recoveries are based on an expected average recovery over the life-of-mine (LOM), and results of metallurgical testwork conducted in 2012 and 2017–2019.

Table 1-1     Summary of Overall Metal Recovery – Arctic Project

Ancillary testwork was completed by third party consultants on representative concentrate samples, to provide thickening and filtration data for the various concentrates. Settling and filtration rates were observed to be typical for sulphide concentrates and moisture contents in final filter cakes were observed to be lower than expected.

Metallurgical testwork was completed to provide representative tailings samples for use in detailed solids settling and compaction testwork to provide data for tailings design studies.

A detailed study of water treatment chemistry was undertaken to evaluate and confirm the option of destroying cyanide contained in solutions from the proposed copper–lead separation process. The use of an SO2/air process in a small-scale pilot plant demonstrated removal of 99% of the contained cyanide and supported the concept of maintaining low cyanide concentrations within the proposed tailings pond solutions.

Mineral resource estimates are estimated from a 3D block model based on geostatistical applications using commercial mine planning software (MineSight v11.60-2). The block model has a nominal block size measuring 10 x 10 x 5 m and uses data derived from 152 drill holes in the vicinity of the Arctic deposit. The resource estimate was generated using drill hole sample assay results and the interpretation of a geological model which relates to the spatial distribution of copper, lead, zinc, gold and silver. Interpolation characteristics were defined based on the geology, drill hole spacing, and geostatistical analysis of the data. The effects of potentially anomalous high-grade sample data, composited to 2 m intervals, are controlled by limiting the distance of influence during block grade interpolation. The grade models have been validated using a combination of visual and statistical methods. The resources were classified according to their proximity to the sample data locations and are reported using the 2014 CIM Definition Standards. Model blocks estimated by three or more drill holes spaced at a maximum distance of 100 m are included in the Indicated category. Inferred blocks are within a maximum distance of 150 m from a drill hole.

The estimate of Indicated and Inferred Mineral Resources is constrained within a conceptual pit shell derived using the projected technical and economic parameters in Table 1-2.

Table 1-2    Parameters Used to Generate a Resource-Limiting Pit Shell