Trilogy Metals Inc 10-Q for FY2022 Q3

Trilogy Metals Inc. (TMQ)

10-Q 2022-10-05 For: 2022-08-31

Added on April 11, 2026

About this 10-Q

Trilogy Metals Inc filed this 10-Q on October 5, 2022, covering the quarter ended August 31, 2022 (FY2022 Q3).

Headline figures

Quarter ended August 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $9.94M; compared with a net loss of $7.66M a year earlier
Diluted EPS: -$0.07; compared with -$0.05 a year earlier

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

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


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


		Page
PART I - FINANCIAL INFORMATION		3
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 4.	Controls and Procedures	22

PART II - OTHER INFORMATION		23
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	24


		in thousands of US dollars
	August 31, 2022		November 30, 2021
	$		$
Assets
Current assets
Cash and cash equivalents	3,133		6,308
Accounts receivable	11		19
Deposits and prepaid amounts	487		285
	3,631		6,612

Investment in Ambler Metals LLC (note 3)	146,819		160,063
Fixed assets	14		29
Mineral properties	—		119
Right of use asset (note 5 (a))	361		482
	150,825		167,305
Liabilities
Current liabilities
Accounts payable and accrued liabilities (note 4)	502		852
Current portion of lease liability	190		179
	692		1,031

Long-term portion of lease liability (note 5 (b))	85		235
	777		1,266
Shareholders’ equity
Share capital (note 6) – unlimited common shares authorized, no par value Issued – 145,868,502 (2021 – 144,451,485)	181,945		180,820
Contributed surplus	122		122
Contributed surplus – options (note 6(a))	27,327		25,990
Contributed surplus – units (note 6(b))	2,294		1,712
Deficit	(61,640)		(42,605)
	150,048		166,039
	150,825		167,305


	in thousands of US dollars, except share and per share amounts
		For the three months ended			For the nine months ended
		August 31, 2022		August 31, 2021		August 31, 2022	August 31, 2021
		$		$		$	$
Expenses
Amortization			4	5		15	16
Exploration expenses			11	130		11	130
Foreign exchange loss (gain)			(11)	(31)		(7)	44
General and administrative			279	425		1,014	1,188
Investor relations			18	170		155	440
Professional fees			131	123		568	627
Salaries			172	365		847	1,210
Salaries and directors expense – stock-based compensation			562	409		3,146	3,081
Total expenses			1,166	1,596		5,749	6,736
Other items
Gain on disposition of mineral property			(84)	—		(84)	—
Interest and other income			(11)	(4)		(15)	(13)
Services agreement income			—	—		—	(22)
Share of loss on equity investment (note 3(b))			8,925	6,072		13,295	8,892
Write off mineral properties			(58)	—		90	—
Comprehensive loss for the period			(9,938)	(7,664)		(19,035)	(15,593)
Basic loss per common share			(0.07)	(0.05)		(0.13)	(0.11)
Diluted loss per common share			(0.07)	(0.05)		(0.13)	(0.11)
Basic weighted average number of common shares outstanding			145,865,847	144,447,463		145,555,376	144,347,948
Diluted weighted average number of common shares outstanding			145,865,847	144,447,463		145,555,376	144,347,948


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

Approved on behalf of the Board of Directors


				Contributed	Contributed		Total
			Contributed	surplus –	surplus –		shareholders’
	Number of shares	Share capital	surplus	options	units	Deficit	equity
	outstanding	$	$	$	$	$	$
Balance – November 30, 2020	144,137,850	179,746	122	23,303	1,585	(20,945)	183,811
Exercise of options	76,635	334	—	(334)	—	—	—
Stock-based compensation	—	—	—	2,112	36	—	2,148
Earnings for the period	—	—	—	—	—	(4,516)	(4,516)
Balance – February 28, 2021	144,214,485	180,080	122	25,081	1,621	(25,461)	181,443
Exercise of options	232,000	308	—	(202)	—	—	106
Stock-based compensation	—	—	—	488	36	—	524
Loss for the period	—	—	—	—	—	(3,413)	(3,413)
Balance – May 31, 2021	144,446,485	180,388	122	25,367	1,657	(28,874)	178,660
Exercise of options	5,000	4	—	(1)	—	—	3
Stock-based compensation	—	—	—	384	25	—	409
Loss for the period	—	—	—	—	—	(7,664)	(7,664)
Balance - August 31, 2021	144,451,485	180,392	122	25,750	1,682	(36,538)	171,408

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


		in thousands of dollars
		$
November 30, 2021, Investment in Ambler Metals		160,063
Joint venture equity contribution		51
Share of loss on equity investment for the nine-month period ending August 31, 2022		(13,295)
August 31, 2022, Investment in Ambler Metals		146,819


			in thousands of dollars
	Three months ended			Nine months ended
	August 31, 2022	August 31, 2021		August 31, 2022	August 31, 2021
	$	$		$	$
Depreciation	32	22		77	55
Corporate salaries and wages	477	655		1,437	1,864
General and administrative	158	397		560	767
Mineral property expense	17,120	11,139		24,527	15,109
Professional fees	125	207		626	791
Foreign exchange (gain)/loss	10	(16)		5	4
Interest income	(72)	(260)		(642)	(807)
Comprehensive loss	17,850	12,144		26,590	17,783


		in thousands of dollars
		$
Balance as at November 30, 2021		482
Net amortization		(121)
Balance as at August 31, 2022		361


		in thousands of dollars
		August 31, 2022
Fiscal year		$
2022		51
2023		205
2024		34
Total undiscounted lease payments		290
Effect of discounting		(15)
Present value of lease payments recognized as lease liability		275


	in thousands of dollars, except share amounts
	Number of shares	Ascribed value
		$
November 30, 2021	145,009,811	180,820
Exercise of options	81,674	76
Restricted Share Units	745,548	998
Joint venture equity contribution (note 3(b))	31,469	51
August 31, 2022, issued and outstanding	145,868,502	181,945


		August 31, 2022
Risk-free interest rates		1.07%
Exercise price		CDN$2.28
Expected life		3 years
Expected volatility		60.6%
Expected dividends		Nil


	August 31, 2022
		Weighted average
		exercise price
	Number of options	CDN$
Balance – beginning of the fiscal year	10,539,324	2.54
Granted	1,734,500	2.21
Exercised	(81,674)	0.85
Expired	(5,000)	2.52
Balance – end of the period	12,187,150	2.50


	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
$1.01 to $1.50	870,000	0.27	1.05	870,000	1.05	—
$2.01 to $2.50	2,599,500	3.59	2.26	1,676,498	2.29	923,002
$2.51 to $3.00	6,920,150	2.70	2.64	6,063,648	2.66	856,502
$3.01 to $3.41	1,797,500	2.31	3.03	1,797,500	3.03	—
	12,187,150	2.66	2.50	10,407,646	2.52	1,779,504


	Number of RSUs	Number of DSUs
Balance – beginning of the fiscal year	—	1,277,445
Granted	1,002,816	230,203
Vested	(745,548)	—
Balance – end of the period	257,268	1,507,648


	in thousands of dollars
	Total	< 1 Year	1–2 Years	2–5 Years	Thereafter
	$	$	$	$	$
Accounts payable and accrued liabilities	502	502	—	—	—
Office lease	290	204	86	—	—
	792	706	86	—	—


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

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

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

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

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

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

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


101		Interactive Data Files

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

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


Date: October 5, 2022	TRILOGY METALS INC.


	By:	/s/ Tony Giardini
		Tony Giardini

		President and Chief Executive Officer


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

		Vice President and Chief Financial Officer

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

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

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

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


Date:	October 5, 2022
By:	/s/ Tony Giardini
	Tony Giardini
	President and Chief Executive Officer
	(principal executive officer)