Trilogy Metals Inc 10-Q for FY2024 Q2
Trilogy Metals Inc. (TMQ)
About this 10-Q
Trilogy Metals Inc filed this 10-Q on July 10, 2024, covering the quarter ended May 31, 2024 (FY2024 Q2).
Headline figures
Quarter ended May 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $1.76M
- compared with a net loss of $2.8M a year earlier
- Diluted EPS
- -$0.01
- compared with -$0.02 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the Quarterly Period Ended
OR
For the Transition Period from to
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(
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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As of July 10, 2024, the registrant had
Trilogy Metals Inc.
Table of Contents
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 15 | |
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Trilogy Metals Inc.
Condensed Interim Consolidated Balance Sheets
(unaudited)
| | | in thousands of US dollars | ||||
| | | May 31, 2024 | | | November 30, 2023 | |
|
|
| $ |
|
| $ |
|
Assets | | |
| | |
| |
Current assets | | |
| | |
| |
Cash and cash equivalents | | | | | | | |
Accounts receivable | | | | | | | |
Deposits and prepaid amounts | | | | | | | |
Total current assets | | | | | | | |
| | | | | | | |
Investment in Ambler Metals LLC (note 3) | | | | | | | |
Fixed assets | | | | | | | |
Right of use asset (note 5(a)) | | | | | | | |
Total assets | | | | | | | |
| | | | | | | |
Liabilities | | |
| | |
| |
Current liabilities | | |
| | |
| |
Accounts payable and accrued liabilities (note 4) | | | | | | | |
Current portion of lease liability | | | — | | | | |
Total current liabilities | | | | | | | |
| | | | | | | |
Total liabilities | | | | | | | |
| | | | | | | |
Shareholders’ equity | | |
| | |
| |
Share capital (note 6) – unlimited common shares authorized, | | | | | | | |
Contributed surplus | | | | | | | |
Contributed surplus – options (note 6(a)) | | | | | | | |
Contributed surplus – units (note 6(b)) | | | | | | | |
Deficit | | | ( | | | ( | |
Total shareholders' equity | | | | | | | |
Total liabilities and shareholders' equity | | | | | | | |
Subsequent Events (note 8)
(See accompanying notes to the condensed interim consolidated financial statements)
/s/ Tony Giardini, President, CEO and Director |
| /s/ Diana Walters, Director |
|
|
|
Approved on behalf of the Board of Directors |
|
|
Trilogy Metals Inc.
Condensed Interim Consolidated Statements of Loss
and Comprehensive Loss
(unaudited)
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
in thousands of US dollars, except share and per share amounts | | |||||||||||||
| | For the three months ended | | | For the six months ended | | | |||||||
| |
| May 31, 2024 | | | May 31, 2023 | | | May 31, 2024 | | | May 31, 2023 |
| |
|
| | $ |
|
| $ |
|
| $ |
|
| $ | | |
Expenses | | |
|
| |
| | |
|
| |
| | |
Amortization | | | | | | | | | |
| | | | |
Exploration expenses | | | — | | | — | | | — | | | | | |
Foreign exchange loss (gain) | | | ( | | | | | | |
| | ( | | |
General and administrative | | | | | | | | | |
| | | | |
Investor relations | | | | | | | | | |
| | | | |
Professional fees | | | | | | | | | |
| | | | |
Salaries | | | | | | | | | |
| | | | |
Salaries and directors expense – stock-based compensation | | | | | | | | | |
| | | | |
Total expenses | | | |
| | | | | |
| | | | |
Other items | | |
|
| |
| | |
|
| |
| | |
Interest and other income | | | ( | | | ( | | | ( |
| | ( | | |
Services agreement income | | | ( | | | — | | | ( |
| | — | | |
Share of loss on equity investment (note 3(b)) | | | | | | | | | | | | | | |
Loss and comprehensive loss for the period | | | ( |
| | ( | | | ( |
| | ( | | |
Basic loss per common share | | | ( | | | ( | | | ( | | | ( | | |
Diluted loss per common share | | | ( | | | ( | | | ( | | | ( | | |
Basic weighted average number of common shares outstanding | | | | | | | | | | | | | | |
Diluted weighted average number of common shares outstanding | | | | | | | | | | | | | | |
(See accompanying notes to the condensed interim consolidated financial statements)
| Trilogy Metals Inc. | 4 |
Trilogy Metals Inc.
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
(unaudited)
in thousands of US dollars, except share amounts
| | | | |
| | | | | | Contributed | | | Contributed | | |
| | | Total |
|
| | | | | | | | Contributed | | | surplus – | | | surplus – | | | | | | shareholders’ |
|
| | Number of shares | | | Share capital | | | surplus | | | options | | | units | | | Deficit | | | equity | |
|
| outstanding |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
Balance – November 30, 2022 |
| | | | | | | | | | | | | | | | ( | | | | |
Restricted Share Units |
| | | | | | | ( | | | — | | | ( | | | — | | | — | |
Joint venture contribution | | | | | | | | — | | | — | | | — | | | — | | | | |
Services settled by common shares |
| | | | | | | — | | | — | | | — | | | — | | | | |
Stock-based compensation | | — | | | — | | | — | | | | | | | | | — | | | | |
Loss for the period |
| — | | | — | | | — | | | — | | | — | | | ( | | | ( | |
Balance – February 28, 2023 |
| | | | | |
| | |
| | |
| | |
| ( | | | | |
Shares issued for private placement, net of share issue cost | | | | | | | | — | | | — | | | — | | | — | | | | |
Restricted Share Units | | | | | | | | — | | | — | | | — | | | — | | | | |
Deferred Share Units conversion | | | | | | | | — | | | — | | | ( | | | — | | | — | |
Services settled by common shares | | | | | | | | — | | | — | | | — | | | — | | | | |
Stock-based compensation | | — | | | — | | | — | | | | | | | | | — | | | | |
Loss for the period |
| — | | | — | | | — | | | — | | | — | | | ( | | | ( | |
Balance – May 31, 2023 | | | | | | | | | | | | | | | | | ( | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Balance – November 30, 2023 | | | | | | | | | | | | | | | | | ( | | | | |
Restricted Share Units |
| | | | | | | — | | | — | | | ( | | | — | | | — | |
Joint venture contribution | | | | | | | | — | | | — | | | — | | | — | | | | |
Services settled by common shares | | | | | | | | — | | | — | | | — | | | — | | | | |
Stock-based compensation |
| — | | | — | | | — | | | | | | | | | — | | | | |
Loss for the period | | — | | | — | | | — | | | — | | | — | | | ( | | | ( | |
Balance – February 29, 2024 | | | | | | | | | | | | | | | | | ( | | | | |
Restricted Share Units | | | | | | | | — | | | — | | | ( | | | — | | | — | |
Services settled by common shares | | | | | | | | — | | | — | | | — | | | — | | | | |
Stock-based compensation | | — | | | — | | | — | | | | | | | | | — | | | | |
Loss for the period |
| — | | | — | | | — | | | — | | | — | | | ( | | | ( | |
Balance – May 31, 2024 |
| | | | | |
| | |
| | |
| | |
| ( | | | | |
(See accompanying notes to the condensed interim consolidated financial statements)
| Trilogy Metals Inc. | 5 |
Trilogy Metals Inc.
Condensed Interim Consolidated Statements of Cash Flows
(unaudited)
| in thousands of US dollars | ||||||
| | For the six months ended | | ||||
| | | May 31, 2024 | | | May 31, 2023 | |
|
| | $ |
|
| $ |
|
Cash flows used in operating activities | | |
|
| |
| |
Loss for the period | | | ( |
| | ( | |
Adjustments to reconcile net loss to cash flows used in operating activities | | | |
| |
| |
Amortization | | | |
| | | |
Consulting fees settled by common shares | | | | | | | |
Office lease accounting | | | | | | ( | |
Loss on equity investment in Ambler Metals LLC (note 3(b)) | | | | | | | |
Unrealized foreign exchange (gain) loss | | | ( |
| | | |
Stock-based compensation | | | |
| | | |
Net change in non-cash working capital | | | |
| | | |
Decrease in accounts receivable | | | |
| | | |
Decrease in deposits and prepaid amounts | | | |
| | | |
Increase in accounts payable and accrued liabilities | | | |
| | | |
Total cash flows used in operating activities | | | ( |
| | ( | |
Cash flows from financing activities | | |
|
| |
| |
Issuance of common shares, net of share issue cost (note 6(a)) | | | — |
| | | |
Total cash flows from financing activities | | | — |
| | | |
Cash flows from investing activities | | |
|
| |
| |
Return of capital from Ambler Metals LLC (note 3(c)) | | | |
| | — | |
Total cash flows from investing activities | | | |
| | — | |
Change in cash | | | |
| | | |
Effect of exchange rate on cash | | | |
| | ( | |
Cash and cash equivalents – beginning of the period | | | |
| | | |
Cash and cash equivalents – end of the period | | | |
| | | |
(See accompanying notes to the condensed interim consolidated financial statements)
| Trilogy Metals Inc. | 6 |
Trilogy Metals Inc.
Notes to the Condensed Interim Consolidated Financial Statements
1) Nature of operations
Trilogy Metals Inc. (“Trilogy” or the “Company”) was incorporated in British Columbia, Canada under the Business Corporations Act (British Columbia) on April 27, 2011. The Company is engaged in the exploration and development of mineral properties, through our equity investee (see note 3), with a focus on the Upper Kobuk Mineral Projects (“UKMP”), including the Arctic and Bornite Projects located in Northwest Alaska in the United States of America (“US”). The Company also conducts early-stage exploration through a wholly owned subsidiary, 995 Exploration Inc.
2) Summary of significant accounting policies
Basis of presentation
These condensed interim consolidated financial statements have been prepared using accounting principles generally accepted in the United States (“U.S. GAAP”) and include the accounts of Trilogy and its wholly owned subsidiaries, NovaCopper US Inc. (dba “Trilogy Metals US”) and 995 Exploration Inc. All intercompany transactions are eliminated on consolidation. For variable interest entities (“VIEs”) where Trilogy is not the primary beneficiary, we use the equity method of accounting.
All figures are in United States dollars unless otherwise noted. References to CDN$ refer to amounts in Canadian dollars.
These condensed interim consolidated financial statements include all adjustments necessary for the fair statement of the Company’s financial position as of May 31, 2024 and our results of operations and cash flows for the six-month period ended May 31, 2024 and May 31, 2023. The results of operations for the six-month period ended May 31, 2024 are not necessarily indicative of the results to be expected for the fiscal year ending November 30, 2024.
As these condensed interim consolidated financial statements do not contain all of the disclosures required by U.S. GAAP for annual financial statements, these condensed interim consolidated financial statements should be read in conjunction with the annual financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended November 30, 2023, filed with the U.S. Securities and Exchange Commission (“SEC”) and Canadian securities regulatory authorities on February 9, 2024.
These condensed interim consolidated financial statements were approved by the Company’s Audit Committee on behalf of the Board of Directors for issue on July 9, 2024.
Use of estimates and measurement uncertainties
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions of future events that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of expenditures during the period. Significant estimates include the measurement of income taxes and the valuation of stock-based compensation. Actual results could differ materially from those reported.
Management assesses the possibility of impairment in the carrying value of its equity method investment in Ambler Metals whenever events or circumstances indicate that the carrying amount of the investment may not be recoverable. Ambler Metals is a non-publicly traded equity investment owning exploration and development projects. Significant judgments are made in assessing the possibility of impairment. The Company assesses whether there has been a potential triggering event for other-than-temporary impairment by assessing the underlying assets of Ambler Metals for recoverability and assessing whether there has been a change in the development plan or strategy for the projects. If the Company concludes there is sufficient evidence for an other-than-temporary impairment, an assessment of fair value is performed. If the underlying assets are not recoverable, the Company will record an impairment charge equal to the difference between the carrying amount of the equity investment and its fair value. This assessment is subjective and require consideration at each period end.
| Trilogy Metals Inc. | 7 |
Trilogy Metals Inc.
Notes to the Condensed Interim Consolidated Financial Statements
3) Investment in Ambler Metals LLC
(a) | Formation of Ambler Metals LLC |
On February 11, 2020, the Company completed the formation of a
Ambler Metals is a company jointly controlled by Trilogy and South32 through a
(b) | Carrying value of equity method investment |
Trilogy recognized, based on its
|
| in thousands of dollars | |
| | $ |
|
November 30, 2023, Investment in Ambler Metals | | | |
Joint venture equity contribution | | | |
Return of capital | | ( | |
Share of loss on equity investment for the six-month period ending May 31, 2024 | | ( | |
May 31, 2024, Investment in Ambler Metals | | | |
(c) | The following table summarizes Ambler Metals’ Balance Sheet as at May 31, 2024. |
|
| in thousands of dollars | ||||
| | May 31, 2024 | | | November 30, 2023 | |
| | $ |
|
| $ |
|
Total assets | | | | | | |
Cash and cash equivalents | | | | | | |
Mineral properties | | | | | | |
Total liabilities | | ( | | | ( | |
Accounts payable and accrued liabilities | | ( | | | ( | |
Members' equity (total assets less total liabilities) | | | | | | |
| Trilogy Metals Inc. | 8 |
Trilogy Metals Inc.
Notes to the Condensed Interim Consolidated Financial Statements
Members’ cash and cash equivalents are held at one bank, the majority of cash and cash equivalent is uninsured as at May 31, 2024. During the second quarter, Ambler Metals returned $
(d) The following table summarizes Ambler Metals' loss for the six-month period ended May 31, 2024 and May 31, 2023.
| | in thousands of dollars | ||||||||||
| | Three months ended | | | Six months ended | | ||||||
| | May 31, 2024 | | | May 31, 2023 | | | May 31, 2024 | | | May 31, 2023 | |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
Depreciation | | | | | | | | | | | | |
Corporate salaries and wages | | | | | | | | | | | | |
General and administrative | | | | | | | | | | | | |
Mineral property expense | | | | | | | | | | | | |
Professional fees | | | | | | | | | | | | |
Foreign exchange loss | | — | | | | | | | | | | |
Interest and other income | | ( | | | ( | | | ( | | | ( | |
Comprehensive loss | | | | | | | | | | | | |
(e) Related party transactions
During the six-month period ended May 31, 2024, the Company charged $
4) Accounts payable and accrued liabilities
| in thousands of dollars | |||||
| | May 31, 2024 | | | November 30, 2023 | |
|
| $ |
|
| $ |
|
Trade accounts payable | | | | | | |
Accrued liabilities |
| |
| | | |
Accrued salaries and vacation |
| |
| | | |
Accounts payable and accrued liabilities |
| |
| | | |
Subsequent to the end of the second quarter, on June 3, 2024, approximately $
| Trilogy Metals Inc. | 9 |
Trilogy Metals Inc.
Notes to the Condensed Interim Consolidated Financial Statements
5) Leases
| (a) | Right-of-use asset |
| | in thousands of dollars | |
|
| $ |
|
Balance as at November 30, 2023 | | | |
Net amortization | | ( | |
Balance as at May 31, 2024 | | | |
| (b) | Lease liabilities |
The Company’s lease arrangements primarily consist of an operating lease for our office space ending in June 2024. There are
Total lease expense recorded within general and administrative expenses was comprised of the following components:
|
| in thousands of dollars | ||||
| | Six months ended | | | Six months ended | |
| | May 31, 2024 | | | May 31, 2023 | |
| | $ |
|
| $ |
|
Operating lease costs | | | | | | |
Variable lease costs | | | | | | |
Total lease expense | | | | | | |
Variable lease costs consist primarily of the Company’s portion of operating costs associated with the office space lease as the Company elected to apply the practical expedient not to separate lease and non-lease components.
As at May 31, 2024, the weighted-average remaining lease term is
Supplemental cash and non-cash information relating to our leases during the six-month period ending May 31, 2024 are as follows:
| ● | Cash paid for amounts included in the measurement of lease liabilities was $ |
| Trilogy Metals Inc. | 10 |
Trilogy Metals Inc.
Notes to the Condensed Interim Consolidated Financial Statements
6) Share capital
Authorized:
unlimited common shares,
| | in thousands of dollars, except share amounts | | |||
| | Number of shares | | | Ascribed value | |
|
| |
|
| $ |
|
November 30, 2023 |
| | | | | |
Restricted Share Units | | | | | | |
Services settled by common shares | | | | | | |
Joint venture equity contribution (note 3(a)) | | | | | | |
May 31, 2024, issued and outstanding | | | | | | |
On April 30, 2012, under the NovaGold Arrangement, Trilogy committed to issue common shares to satisfy holders of NovaGold deferred share units (“NovaGold DSUs”), once vested, on record as of the close of business April 27, 2012. When vested, Trilogy committed to deliver one common share to the holder for every
(a) | Stock options |
During the three-month period ended February 29, 2024, the Company granted
For the six-month period ended May 31, 2024, Trilogy recognized a stock-based compensation charge of $
The fair value of the stock options recognized in the period has been estimated using the Black-Scholes option pricing model.
Assumptions used in the pricing model for the six-month period ended May 31, 2024 are as provided below.
|
| May 31, 2024 |
Risk-free interest rates |
| |
Exercise price |
| CDN$ |
Expected life |
| |
Expected volatility |
| |
Expected dividends |
|
As at May 31, 2024, there were
| Trilogy Metals Inc. | 11 |
Trilogy Metals Inc.
Notes to the Condensed Interim Consolidated Financial Statements
A summary of the Company’s stock options outstanding and changes during the six-month period ended May 31, 2024 is as follows:
| | | | | May 31, 2024 | |
| | | | | Weighted average | |
| | | | | exercise price | |
|
| Number of options |
|
| CDN$ |
|
Balance – beginning of the period |
| | | | | |
Granted |
| | | | | |
Expired |
| ( | | | | |
Balance – end of the period |
| | | | | |
There were
The following table summarizes information about the stock options outstanding at May 31, 2024.
| | 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 |
|
$ |
| | | | | | | | | | | | | | | | | |
$ |
| | | | | | | | | | | | | | | | | |
$ | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
The aggregate intrinsic value of vested stock options (the market value less the exercise price) at May 31, 2024 was $Nil (2023 - $Nil) and the aggregate intrinsic value of exercised options for the six-month period ending May 31, 2024 was $Nil (2023 - $Nil).
(b) | Restricted Share Units and Deferred Share Units |
The Company has a Restricted Share Unit Plan (“RSU Plan”) to provide long-term incentives to employees and consultants, a Non-Executive Director Deferred Share Unit Plan (“DSU Plan”), and a Non-Executive Directors Fixed Deferred Share Unit Plan (“Fixed DSU Plan”) to offset cash payments for fees to directors. Awards under the RSU Plan and DSU Plan have been settled in common shares of the Company with each restricted share unit (“RSU”) and deferred share unit (“DSU”) entitling the holder to receive
A summary of the Company’s unit plans and changes during the six-month period ending May 31, 2024 is as follows:
|
| Number of RSUs |
|
| Number of DSUs |
|
| Number of Fixed DSUs |
|
Balance – beginning of the period | | | |
| | | | — | |
Granted |
| | | | | | | — | |
Vested/Converted |
| ( | | | — | | | — | |
Balance – end of the period |
| | |
| | | | — | |
For the six-month period ending May 31, 2024, Trilogy recognized a combined RSU and DSU stock-based compensation charge of $
| Trilogy Metals Inc. | 12 |
Trilogy Metals Inc.
Notes to the Condensed Interim Consolidated Financial Statements
7) Financial instruments
The Company is exposed to a variety of risks arising from financial instruments. These risks and management’s objectives, policies and procedures for managing these risks are disclosed as follows.
The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, deposits, and accounts payable and accrued liabilities. The fair value of the Company’s financial instruments approximates their carrying value due to the short-term nature of their maturity. The Company’s financial instruments initially measured at fair value and then held at amortized cost include cash and cash equivalents, accounts receivable, deposits, and accounts payable and accrued liabilities.
Financial risk management
The Company’s activities expose it to certain financial risks, including currency risk, credit risk, liquidity risk, interest risk and price risk.
(a) | Currency risk |
Currency risk is the risk of a fluctuation in financial asset and liability settlement amounts due to a change in foreign exchange rates. The Company operates in the United States and Canada. The Company’s exposure to currency risk at May 31, 2024 is limited to the Canadian dollar balances consisting of cash of approximately CDN$
(b) | Credit risk |
Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company holds cash with a Canadian chartered financial institution of which the majority is uninsured as at May 31, 2024. The Company’s only significant exposure to credit risk is equal to the balance of cash as recorded in the financial statements.
(c) | Liquidity risk |
Liquidity risk is the risk that the Company will encounter difficulties raising funds to meet its financial obligations as they fall due. The Company is in the exploration stage and does not have cash inflows from operations; therefore, the Company manages liquidity risk through the management of its capital structure and financial leverage.
Contractually obligated undiscounted cash flow requirements as at May 31, 2024 are as follows:
| | in thousands of dollars |
| ||||||||||||
|
| Total |
|
| < 1 Year |
|
| 1–2 Years |
|
| 2–5 Years |
|
| Thereafter |
|
| | $ | | | $ | | | $ | | | $ | | | $ | |
Accounts payable and accrued liabilities |
| | |
| | |
| | | | | | | | |
|
| | |
| | |
| | | | | | | | |
Included in accounts payable and accrued liabilities approximately $
| Trilogy Metals Inc. | 13 |
Trilogy Metals Inc.
Notes to the Condensed Interim Consolidated Financial Statements
(d) | Interest rate risk |
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk with respect to interest earned on cash. Based on balances as at May 31, 2024, a
As we are currently in the exploration phase none of our financial instruments are exposed to commodity price risk; however, our ability to obtain long-term financing and its economic viability could be affected by commodity price volatility.
8) Subsequent events
On June 3, 2024, pursuant to previous elections, the Board of Directors were granted
On June 10, 2024, Trilogy received $
| Trilogy Metals Inc. | 14 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Trilogy Metals Inc.
Management’s Discussion & Analysis
For the Quarter Ended May 31, 2024
(expressed in US dollars)
Cautionary notes
Forward-looking statements
This Management’s Discussion and Analysis (“MD&A”) contains “forward-looking information” and “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), and other applicable securities laws. These forward-looking statements may include statements regarding the Company’s work programs and budgets; perceived merit of properties, exploration results and budgets, the impact of the Bureau of Land Management’s (“BLM”) suspension of permits on the right-of-way with the Alaska Industrial Development and Export Authority (“AIDEA”) relating to the Ambler Road Project, the Company and Ambler Metals’ funding requirements, mineral reserves and resource estimates, work programs, capital expenditures, operating costs, cash flow estimates, production estimates and similar statements relating to the economic viability of a project, timelines, strategic plans, statements regarding Ambler Metals’ plans and expectations relating to its Upper Kobuk Mineral Projects (as defined below), sufficiency of the Ambler Metals’ cash to fund the UKMP, impact of COVID-19 on the Company’s operations, market prices for precious and base metals, statements regarding the Ambler Access Project (also known as the Ambler Mining District Industrial Access Project), or other statements that are not statements of fact. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Statements concerning mineral resource estimates may also be deemed to constitute “forward-looking statements” to the extent that they involve estimates of the mineralization that will be encountered if the property is developed.
Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, identified by words or phrases such as “expects”, “is expected”, “anticipates”, “believes”, “plans”, “projects”, “estimates”, “assumes”, “intends”, “strategy”, “goals”, “objectives”, “potential”, “possible” or variations thereof or stating that certain actions, events, conditions or results “may”, “could”, “would”, “should”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.
Forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made, as well as on a number of material assumptions, which could prove to be significantly incorrect, including about:
| ● | our ability to achieve production at the Upper Kobuk Mineral Projects; |
| ● | the accuracy of our mineral resource and reserve estimates; |
| ● | the results, costs and timing of future exploration drilling and engineering; |
| ● | timing and receipt of approvals, consents and permits under applicable legislation; |
| ● | the adequacy of our financial resources; |
| ● | the receipt of third party contractual, regulatory and governmental approvals for the exploration, development, construction and production of our properties and any litigation or challenges to such approvals; |
| Trilogy Metals Inc. | 15 |
| ● | our expected ability to develop adequate infrastructure and that the cost of doing so will be reasonable; |
| ● | continued good relationships with South32, our joint venture partner, as well as local communities and other stakeholders; |
| ● | there being no significant disruptions affecting operations, whether relating to labor, supply, power damage to equipment or other matter; |
| ● | expected trends and specific assumptions regarding metal prices and currency exchange rates; and |
| ● | prices for and availability of fuel, electricity, parts and equipment and other key supplies remaining consistent with current levels. |
We have also assumed that no significant events will occur outside of our normal course of business. Although we have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. We believe that the assumptions inherent in the forward-looking statements are reasonable as of the date of this MD&A. However, forward-looking statements are not guarantees of future performance and, accordingly, undue reliance should not be put on such statements due to the inherent uncertainty therein.
Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation:
| ● | risks related to inability to define proven and probable reserves; |
| ● | risks related to our ability to finance the development of our mineral properties through external financing, strategic alliances, the sale of property interests or otherwise; |
| ● | uncertainty as to whether there will ever be production at the Company’s mineral exploration and development properties; |
| ● | risks related to our ability to commence production and generate material revenues or obtain adequate financing for our planned exploration and development activities; |
| ● | risks related to lack of infrastructure including but not limited to the risk whether or not the Ambler Mining District Industrial Access Project, or AMDIAP, will receive the requisite permits and, if it does, whether the Alaska Industrial Development and Export Authority will build the AMDIAP; |
| ● | risks related to the suspension by the BLM of the right-of-way permits with AIDEA relating to the AMDIAP to permit the Department of the Interior to carry out additional work on the environmental impact statement, and associated delays relating to such suspension; |
| ● | risks related to inclement weather which may delay or hinder exploration activities at our mineral properties; |
| ● | risks related to our dependence on a third party for the development of our projects; |
| ● | none of the Company’s mineral properties are in production or are under development; |
| ● | commodity price fluctuations; |
| ● | uncertainty related to title to our mineral properties; |
| Trilogy Metals Inc. | 16 |
| ● | our history of losses and expectation of future losses; |
| ● | risks related to increases in demand for equipment, skilled labor and services needed for exploration and development of mineral properties, and related cost increases; |
| ● | risks related to increases in costs of fuel and other required supplies and concerns relating to supply chain and the ability to obtain needed supplies at a reasonable cost, or at all; |
| ● | risks related to global economic instability, including global supply chain issues, inflation and fuel and energy costs may affect the Company’s business; |
| ● | uncertainties relating to the assumptions underlying our resource estimates, such as metal pricing, metallurgy, mineability, marketability and operating and capital costs; |
| ● | uncertainty related to inferred mineral resources; |
| ● | mining and development risks, including risks related to infrastructure, accidents, equipment breakdowns, labor disputes or other unanticipated difficulties with or interruptions in development, construction or production; |
| ● | risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of our mineral deposits; |
| ● | risks related to governmental regulation and permits, including environmental regulation, including the risk that more stringent requirements or standards may be adopted or applied due to circumstances unrelated to the Company and outside of our control; |
| ● | the risk that permits and governmental approvals necessary to develop and operate mines at our mineral properties will not be available on a timely basis or at all; |
| ● | risks related to the need for reclamation activities on our properties and uncertainty of cost estimates related thereto; |
| ● | risks related to the acquisition and integration of operations or projects; |
| ● | our need to attract and retain qualified management and technical personnel; |
| ● | risks related to conflicts of interests of some of our directors and officers; |
| ● | risks related to potential future litigation; |
| ● | risks related to market events and general economic conditions; |
| ● | risks related to future sales or issuances of equity securities decreasing the value of existing Trilogy common shares, diluting voting power and reducing future earnings per share; |
| ● | risks related to the voting power of our major shareholders and the impact that a sale by such shareholders may have on our share price; |
| ● | uncertainty as to the volatility in the price of the Company’s common shares; |
| ● | the Company’s expectation of not paying cash dividends; |
| Trilogy Metals Inc. | 17 |
| ● | adverse federal income tax consequences for U.S. shareholders should the Company be a passive foreign investment company; |
| ● | risks related to global climate change; |
| ● | risks related to adverse publicity from non-governmental organizations; |
| ● | uncertainty as to our ability to maintain the adequacy of internal control over financial reporting as per the requirements of Section 404 of the Sarbanes-Oxley Act; and |
| ● | increased regulatory compliance costs, associated with rules and regulations promulgated by the United States Securities and Exchange Commission, Canadian Securities Administrators, the NYSE American, the Toronto Stock Exchange, and the Financial Accounting Standards Boards, and more specifically, our efforts to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act. |
This list is not exhaustive of the factors that may affect any of the Company’s forward-looking statements. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including, without limitation, those referred to in Trilogy’s Form 10-K for the fiscal year ended November 30, 2023, filed with the Canadian securities regulatory authorities and the SEC on February 9, 2024, and other information released by Trilogy and filed with the appropriate regulatory agencies.
The Company’s forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made, and the Company does not assume any obligation to update forward-looking statements if circumstances or management’s beliefs, expectations or opinions should change, except as required by law. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.
General
This Management’s Discussion and Analysis (“MD&A”) of Trilogy Metals Inc. (“Trilogy”, “Trilogy Metals”, “the Company” or “we”) is dated July 10, 2024 and provides an analysis of our unaudited condensed interim financial results for the quarter ended May 31, 2024 compared to the quarter ended May 31, 2023.
The following information should be read in conjunction with our May 31, 2024 unaudited condensed interim consolidated financial statements and related notes which were prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”). The MD&A should also be read in conjunction with our audited consolidated financial statements and related notes for the year ended November 30, 2023. A summary of the U.S. GAAP accounting policies is outlined in note 2 of the audited consolidated financial statements. All amounts are in United States dollars unless otherwise stated. References to “Canadian dollars” and “CDN$” are to the currency of Canada and references to “U.S. dollars”, “$” or “US$” are to the currency of the United States.
Richard Gosse, P.Geo., Vice President, Exploration of the Company, is a Qualified Person under National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”), and has approved the scientific and technical information in this MD&A.
Trilogy’s shares are listed on the Toronto Stock Exchange (“TSX”) and the NYSE American Stock Exchange (“NYSE American”) under the symbol “TMQ”. Additional information related to Trilogy, including our annual report on Form 10-K for the fiscal year ended November 30, 2023, is available on SEDAR+ at www.sedarplus.com and on EDGAR at www.sec.gov.
| Trilogy Metals Inc. | 18 |
Description of business
We are a base metals exploration company focused on the exploration and development of mineral properties, through our equity investee, in the Ambler mining district located in Alaska, U.S.A. We conduct our operations through a wholly owned subsidiary, NovaCopper US Inc. which is doing business as Trilogy Metals US (“Trilogy Metals US”). Our Upper Kobuk Mineral Projects, (“UKMP” or “UKMP Projects”) were contributed into a 50/50 joint venture named Ambler Metals LLC (“Ambler Metals”) between Trilogy and South32 Limited (“South32”) on February 11, 2020 (see below). The projects contributed to Ambler Metals consist of: i) the Ambler lands which host the Arctic copper-zinc-lead-gold-silver project (the “Arctic Project”); and ii) the Bornite lands being explored under a collaborative long-term agreement with NANA Regional Corporation, Inc. (“NANA”), a regional Alaska Native Corporation, which hosts the Bornite carbonate-hosted copper project (the “Bornite Project”) and related assets. The Company may also conduct early-stage exploration through a wholly owned subsidiary, 995 Exploration Inc.
Corporate and project activities
The Company has a 2024 fiscal year cash budget totaling $2.8 million. For the six-month period ended May 31, 2024, we used $1.1 million in operating activities mainly for personnel costs, professional fees, regulatory and office expenses compared with budgeted cash expenditures totaling $1.5 million. The difference is due to the timing of paying our annual insurance premiums which occurred in June 2024.
Annual General Meeting
The Annual General Meeting of shareholders was held on May 22, 2024. All directors nominated by the Company were elected by shareholders of the Company, with each director receiving greater than 98% of the votes cast. The shareholders of the Company also approved the adoption of a new Fixed Deferred Share Unit Plan for non-employee directors to receive up to 1,200,000 common shares of the Company in lieu of cash compensation. Upon the approval of the new Fixed Deferred Share Unit Plan, the Company terminated the Ambler Metals Equity Plan which had 1,181,519 outstanding common shares available for future grants. The adoption of the new Fixed Deferred Share Unit Plan along with the termination of the Ambler Metals Equity Plan allows the Company to continue its cash preservation activities without significantly impacting potential dilution.
Ambler Metals LLC
The Board of Ambler Metals approved a 2024 fiscal year budget totaling $5.5 million to support external and community affairs, to maintain the State of Alaska mineral claims in good standing and for the maintenance of physical assets. During the six-month period ended May 31, 2024 Ambler Metals expended $2.4 million on salaries and wages, professional fees, engineering, project support costs and mineral property expenses, excluding Ambler Access Project costs compared with the budget of $2.6 million.
The Board of Ambler Metals also approved a 2024 fiscal year budget totaling $2.5 million to support the Ambler Access Project (“AAP”). During the six-month period ended May 31, 2024 Ambler Metals funded $1.1 million to the Alaska Industrial Development and Export Authority (“AIDEA”) in support of the AAP compared with the budget of $1.3 million.
During the second quarter of 2024, Trilogy and South32 agreed to return excess cash held by Ambler Metals to the owners for ease of cash management. The owners also agreed to maintain a minimum cash balance at Ambler Metals of $10 million which will be reviewed on a regular basis. Ambler Metals returned $25 million to Trilogy and South32 prior to the end of May 2024 and another $25 million during the first half of June 2024.
| Trilogy Metals Inc. | 19 |
Ambler Mining District Industrial Access Project (“AMDIAP” or “Ambler Access Project”)
On April 22, 2024, the Company announced that the United States Bureau of Land Management (“BLM”) had filed the Final Supplemental Environmental Impact Statement (“SEIS”) for the AAP on its website. The Final SEIS identifies “No Action” as the BLM’s preferred alternative. The proponent for the AAP is AIDEA which is a public corporation of the State of Alaska. AIDEA’s purpose is to promote, develop, and advance general prosperity and economic welfare of the people of Alaska. AIDEA strongly objected to both the process used by the BLM to reach a “No Build” decision and the effect of the decision which illegally blocks access to statehood lands, minerals, and federally patented mining claims. On May 8, 2024 NANA announced its withdrawal from further involvement with the AAP and stated intentions to not renew the surface access permit with AIDEA upon its expiry this year.
On June 28, 2024, the BLM issued the Record of Decision confirming their selection of the No Action Alternative and thus denies AIDEA’s application for a Right-Of-Way grant (“ROW Grant”) across BLM-managed lands and terminates the BLM ROW Grant issued to AIDEA on January 5, 2021.
Summary of results
| | | | | | | | | | ||||
| | | | ||||||||||
in thousands of US dollars, except per share amounts | |||||||||||||
| | Three months ended | Six months ended | | |||||||||
| | May 31, 2024 | | | May 31, 2023 | | | May 31, 2024 | | | May 31, 2023 | | |
Selected expenses |
| | $ |
| | $ |
| | $ |
| | $ |
|
General and administrative | | | 319 | | | 328 | | | 734 | | | 736 | |
Investor relations | | | 19 | | | 23 | | | 31 | | | 53 | |
Professional fees | | | 192 | | | 188 | | | 392 | | | 758 | |
Salaries | | | 178 | | | 193 | | | 369 | | | 430 | |
Salaries and directors expense – stock-based compensation | | | 509 | | | 491 | | | 2,508 | | | 2,853 | |
Share of loss on equity investment | | | 602 | | | 1,603 | | | 1,394 | | | 3,088 | |
Comprehensive loss for the period | | | (1,759) | | | (2,803) | | | (5,360) | | | (7,875) | |
Basic and diluted loss per common share | | | (0.01) | | | (0.02) | | | (0.03) | | | (0.05) | |
For the three-month period ended May 31, 2024, we reported a net loss of $1.8 million compared to a net loss of $2.8 million for the three-month period ended May 31, 2023. The decrease in comprehensive loss in the second quarter of 2024 compared to the same quarter in 2023 is due to the decrease in general and administrative, professional fees, our share of loss of Ambler Metals, and stock-based compensation and salaries. The decrease of our share of losses of Ambler Metals is mainly due to the decrease in corporate wages and in mineral property expenses partially offset from the increase in professional fees. The primary drivers in decrease in mineral property expenses over the comparative quarter in the prior year were from a reduction in activities both at the project level and at the AAP.
For the six-month period ended May 31, 2024, we reported a net loss of $5.4 million compared to a net loss of $7.9 million for the six-month period ended May 31, 2023. The decrease for the six-month period ended May 31, 2024 when compared to the same period in 2023, is primarily due to the decrease in our share of loss of Ambler Metals, professional fees and stock-based compensation and salaries. The decrease of our share of losses of Ambler Metals is mainly due to the decrease in corporate wages due to a reduction in staffing and a reduction in mineral property expenses due to a reduction in project activities which was partially offset by the increase in professional consulting fees related to government and external affairs.
| Trilogy Metals Inc. | 20 |
Liquidity and capital resources
We expended $1.1 million on operating activities during the six-month period ending May 31, 2024 with the majority of cash spent on professional fees and American and Canadian securities commission fees related to our annual regulatory filings, annual fees paid to the Toronto Stock Exchange and the NYSE American Exchange and corporate salaries.
As at May 31, 2024, we had cash and cash equivalents of $14.0 million and working capital of $13.6 million. At the end of the fiscal quarter, Trilogy received $12.5 million from Ambler Metals as a return of excess cash to the owners. Although the Company has a strong cash position, Management continues with cash preservation strategies to reduce cash expenditures where feasible, including but not limited to reductions in marketing and investor conferences and office expenses. In addition, the Company’s Board of Directors continue to take all of their fees in deferred share units in an effort to preserve cash. The Company’s senior management team is also continuing to take a portion of their base salaries in shares of the Company to preserve cash.
All project related costs are funded by Ambler Metals. Amber Metals had $35.1 million in cash and cash equivalents and $34.9 million in working capital as at May 31, 2024. During the first half of June, Ambler Metals retuned $25 million to the owners, resulting in a cash position of approximately $11 million which is sufficient for Ambler Metals to fund this fiscal year’s budget for the UKMP and the Ambler Access Project.
Off-balance sheet arrangements
We have no material off-balance sheet arrangements.
Outstanding share data
As at July 10, 2024, we had 160,552,808 common shares issued and outstanding. As at July 10, 2024, we had 14,316,900 stock options outstanding with a weighted-average exercise price of CDN$1.78, 2,980,377 Deferred Share Units (“DSUs”), and 2,318,339 Restricted Share Units (“RSUs”) outstanding. As at July 10, 2024 we hold 5,144 NovaGold Resources Inc. (“NovaGold”) DSUs for which the NovaGold director is entitled to receive one common share of Trilogy for every six NovaGold shares to be received upon their retirement from the NovaGold board. A total of 859 common shares will be issued upon redemption of the NovaGold DSUs. Upon the exercise of all the foregoing convertible securities, the Company would be required to issue an aggregate of 19,616,475 common shares.
New accounting pronouncements
There are no new accounting pronouncements affecting the Company.
Critical accounting estimates
The most critical accounting estimates upon which our financial status depends are those requiring estimates of the recoverability of our equity method investment in Ambler Metals, income taxes and valuation of stock‐based compensation.
| Trilogy Metals Inc. | 21 |
Impairment of Investment in Ambler Metals LLC
Management assesses the possibility of impairment in the carrying value of its equity method investment in Ambler Metals whenever events or circumstances indicate that the carrying amount of the investment may not be recoverable. Ambler Metals is a non-publicly traded equity investment owning exploration and development projects. Significant judgments are made in assessing the possibility of impairment. The Company assesses whether there has been a potential triggering event for other-than-temporary impairment by assessing the underlying assets of Ambler Metals for recoverability and assessing whether there has been a change in the development plan or strategy for the projects. If the Company concludes there is sufficient evidence for an other-than-temporary impairment, an assessment of fair value is performed. If the underlying assets are not recoverable, the Company will record an impairment charge equal to the difference between the carrying amount of the equity investment and its fair value. This assessment is subjective and require consideration at each period end.
Income taxes
We must make estimates and judgments in determining the provision for income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits including interest and penalties. We are subject to income tax law in the United States and Canada. The evaluation of tax liabilities involving uncertainties in the application of complex tax regulation is based on factors such as changes in facts or circumstances, changes in tax law, new audit activity, and effectively settled issues. The evaluation of an uncertain tax position requires significant judgment, and a change in such recognition would result in an additional charge to the income tax expense and liability.
Stock-based compensation
Compensation expense for options granted to employees, directors and certain service providers is determined based on estimated fair values of the options at the time of grant using the Black-Scholes option pricing model, which takes into account, as of the grant date, the fair market value of the shares, expected volatility, expected life, expected forfeiture rate, expected dividend yield and the risk-free interest rate over the expected life of the option. The use of the Black-Scholes option pricing model requires input estimation of the expected life of the option, volatility, and forfeiture rate which can have a significant impact on the valuation model, and resulting expense recorded.
Additional information
Additional information regarding the Company, including our annual report on Form 10-K for the fiscal year ended November 30, 2023, is available on SEDAR+ at www.sedarplus.com and EDGAR at www.sec.gov and on our website at www.trilogymetals.com. Information contained on our website is not incorporated by reference.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
| Trilogy Metals Inc. | 22 |
Item 4. Controls and Procedures
Disclosure controls and procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted by the Company under U.S. and Canadian securities legislation is recorded, processed, summarized and reported within the time periods specified in those rules, including providing reasonable assurance that material information is gathered and reported to senior management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to permit timely decisions regarding public disclosure. Management, including the CEO and CFO, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules of Canadian Securities Administration, as of May 31, 2024. Based on this evaluation, the CEO and CFO have concluded that the Company’s disclosure controls and procedures were effective.
Internal control over financial reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act and National Instrument 52-109 Certification of Disclosure in Issuer’s Annual and Interim filings. Any system of internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Changes in internal control over financial reporting
There have been no changes in our internal controls over financial reporting during the fiscal quarter ended May 31, 2024 which have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. We continue to evaluate our internal control over financial reporting on an ongoing basis to identify improvements.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we are a party to routine litigation and proceedings that are considered part of the ordinary course of its business. We are not aware of any material current, pending, or threatened litigation.
Item 1A. Risk Factors
Trilogy and its future business, operations and financial condition are subject to various risks and uncertainties due to the nature of its business and the present stage of exploration of its mineral properties. Certain of these risks and uncertainties are under the heading “Risk Factors” under Trilogy’s Form 10-K for the fiscal year ended November 30, 2023 (“Form 10-K”) which is available on SEDAR+ at www.sedarplus.com and EDGAR at www.sec.gov and on our website at www.trilogymetals.com. There have been no material changes to the risk factors set forth in Trilogy’s Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
| Trilogy Metals Inc. | 23 |
Item 4. Mine Safety Disclosures
These disclosures are not applicable to us.
Item 5. Other Information
Insider trading arrangements
During the quarterly period ended May 31, 2024, no director or officer
Item 6. Exhibits
Exhibit No. |
| Description |
3.1 | | |
| ||
3.2 | | |
| | |
3.3 | | |
| | |
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 |
| Trilogy Metals Inc. | 24 |
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 thereunto duly authorized.
Date: July 10, 2024 | 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 |
| Trilogy Metals Inc. | 25 |
Exhibit 31.1
CERTIFICATION PURSUANT TO
RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Tony Giardini, certify that:
| 1) | I have reviewed this Quarterly Report on Form 10-Q of Trilogy Metals Inc. |
| 2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4) | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5) | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: July 10, 2024
By: | /s/ Tony Giardini | |
| Tony Giardini | |
| President and Chief Executive Officer | |
| (principal executive officer) | |
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Elaine Sanders, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Trilogy Metals Inc. |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
Date: July 10, 2024
By: | /s/ Elaine Sanders | |
| Elaine Sanders | |
| Vice President and Chief Financial Officer | |
| (principal financial officer) | |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. §1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Trilogy Metals Inc. (the “Registrant”) for the period ended May 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Tony Giardini, President and Chief Executive Officer of the Registrant, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(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: | July 10, 2024 | |
By: | /s/ Tony Giardini |
|
| Tony Giardini |
|
| President and Chief Executive Officer |
|
| (principal executive officer) |
|
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. §1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Trilogy Metals Inc. (the “Registrant”) for the period ended May 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Elaine Sanders, Vice President and Chief Financial Officer of the Registrant, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(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: | July 10, 2024 |
|
By: | /s/ Elaine Sanders |
|
| Elaine Sanders |
|
| Vice President and Chief Financial Officer |
|
| (principal financial officer) |
|