Trilogy Metals Inc 10-Q for FY2021 Q3

Trilogy Metals Inc. (TMQ)

10-Q 2021-10-05 For: 2021-08-31

Added on April 11, 2026

About this 10-Q

Trilogy Metals Inc filed this 10-Q on October 5, 2021, covering the quarter ended August 31, 2021 (FY2021 Q3).

Headline figures

Quarter ended August 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $7.66M; compared with a net loss of $3.18M a year earlier
Diluted EPS: -$0.05; compared with -$0.02 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


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	25
Item 4.	Controls and Procedures	25

PART II - OTHER INFORMATION		27
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	28
Item 6.	Exhibits	28


		in thousands of US dollars
	August 31, 2021		November 30, 2020
	$		$
Assets
Current assets
Cash and cash equivalents	6,831		11,125
Accounts receivable (note 3)	16		129
Deposits and prepaid amounts	481		184
	7,328		11,438

Investment in Ambler Metals LLC (note 4)	164,253		173,145
Fixed assets	34		206
Mineral properties	119		—
Right of use asset (note 6 (a))	521		476
	172,255		185,265
Liabilities
Current liabilities
Accounts payable and accrued liabilities (note 5)	385		888
Current portion of lease liability	176		158
	561		1,046

Long-term portion of lease liability (note 6 (b))	286		408
	847		1,454
Shareholders’ equity
Share capital (note 7) – unlimited common shares authorized, no par value Issued – 144,451,485 (2020 – 144,137,850)	180,392		179,746
Contributed surplus	122		122
Contributed surplus – options (note 7(a))	25,750		23,303
Contributed surplus – units (note 7(b))	1,682		1,585
Deficit	(36,538)		(20,945)
	171,408		183,811
	172,255		185,265


	in thousands of US dollars, except share and per share amounts

	For the three months ended			For the nine months ended
	August 31, 2021		August 31, 2020		August 31, 2021	August 31, 2020
	$		$		$	$
Expenses
Amortization		5	17		16	75
Exploration expense		130	—		130	—
Feasibility study (note 4(a))		—	232		—	974
Foreign exchange loss (gain)		(31)	37		44	44
General and administrative		425	265		1,188	1,349
Investor relations		170	156		440	383
Mineral properties expense		—	—		—	1,545
Professional fees		123	165		627	1,031
Salaries		365	170		1,210	620
Salaries – stock-based compensation		409	1,064		3,081	3,030
Total expenses		1,596	2,106		6,736	9,051
Other items
Share of loss on equity investment (note 4(b))		6,072	1,094		8,892	1,833
Interest and other income		(4)	(8)		(13)	(82)
Services agreement income (note 4(e))		—	(8)		(22)	(25)
Gain on derecognition of assets contributed to joint venture (note 4(a))		—	—		—	(175,770)
Comprehensive (loss) earnings for the period		(7,664)	(3,184)		(15,593)	164,993
Basic (loss) earnings per common share		(0.05)	(0.02)		(0.11)	1.17
Diluted (loss) earnings per common share		(0.05)	(0.02)		(0.11)	1.12
Basic weighted average number of common shares outstanding		144,447,463	141,018,130		144,347,948	140,807,319
Diluted weighted average number of common shares outstanding		144,447,463	141,018,130		144,347,948	146,660,689


/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, 2019	140,427,761	177,971	122	21,123	1,759	(182,712)	18,263
Exercise of options	19,514	6	—	(6)	—	—	—
Restricted Share Units	212,501	330	—	—	(330)	—	—
Stock-based compensation	—	—	—	1,155	41	—	1,196
Earnings for the period	—	—	—	—	—	171,179	171,179
Balance – February 29, 2020	140,659,776	178,307	122	22,272	1,470	(11,533)	190,638
Exercise of options	63,110	31	—	(31)	—	—	—
Restricted Share Units	200,000	312	—	—	(312)	—	—
Stock-based compensation	—	—	—	420	350	—	770
Loss for the period	—	—	—	—	—	(3,002)	(3,002)
Balance – May 31, 2020	140,922,886	178,650	122	22,661	1,508	(14,535)	188,406
Exercise of options	2,055,919	660	—	(660)	—	—	—
Stock-based compensation	—	—	—	1,023	41	—	1,064
Loss for the period	—	—	—	—	—	(3,184)	(3,184)
Balance - August 31, 2020	142,978,805	179,310	122	23,024	1,549	(17,719)	186,286

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


	in thousands of dollars
	August 31, 2021	November 30, 2020
	$	$
GST input tax credits	16	15
Ambler Metals LLC	—	114
Accounts receivable	16	129


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


		in thousands of dollars
		$
November 30, 2020, investment in Ambler Metals LLC		173,145
Share of loss on equity investment for the nine-month period ending August 31, 2021		(8,892)
August 31, 2021, investment in Ambler Metals LLC		164,253


		in thousands of dollars
		$
ASC transition as at December 1, 2019		681
Net amortization		(112)
Derecognition of Fairbanks warehouse lease		(93)
Balance as at November 30, 2020		476
Net amortization		(111)
Previously classified in fixed assets		156
Balance as at August 31, 2021		521


	in thousands of dollars
	Nine months ended	Nine months ended
	August 31, 2021	August 31, 2020
	$	$
Operating lease costs	140	124
Variable lease costs	86	97
Total lease expense	226	221


		in thousands of dollars
		August 31, 2021
Fiscal year		$
2021		51
2022		207
2023		213
2024		36
Total undiscounted lease payments		507
Effect of discounting		(45)
Present value of lease payments recognized as lease liability		462


	in thousands of dollars, except share amounts
	Number of shares	Ascribed value
		$
November 30, 2019	140,427,761	177,971
Exercise of options	3,297,588	1,133
Restricted Share Units	412,501	642
November 30, 2020	144,137,850	179,746
Exercise of options	313,635	646
August 31, 2021, issued and outstanding	144,451,485	180,392


		August 31, 2021
Risk-free interest rates		0.31%
Exercise price		1.98
Expected life		3 years
Expected volatility		64.4%
Expected dividends		Nil


	in thousands of dollars
	August 31, 2021	November 30, 2020
	$	$
Current assets: Cash, deposits and prepaid expenses	69,452	82,226
Non - current assets: Property, equipment and mineral properties	32,231	31,287
Loan receivable from South32	56,070	58,478
Current liabilities: Accounts payable and accrued liabilities	(4,083)	(1,445)
Non - current liabilities: Lease obligation	(957)	(51)
Net assets	152,713	170,495


	August 31, 2021
		Weighted average
		exercise price
	Number of options	$
Balance – beginning of the year	8,647,500	1.90
Granted	3,374,150	2.00
Exercised	(772,000)	1.59
Cancelled	(131,334)	2.41
Balance – end of the period	11,118,316	1.94


	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	options	to expiry	$	options	$	options
$0.56 to $1.00	1,435,000	0.84	0.70	1,435,000	0.84	—
$1.01 to $1.50	75,000	1.31	1.17	75,000	1.31	—
$1.51 to $2.00	4,269,150	4.03	1.97	2,779,483	3.91	1,489,667
$2.01 to $2.50	5,301,666	3.22	2.26	4,148,329	3.11	1,153,337
$2.51 to $2.70	37,500	2.72	2.70	37,500	2.72	—
	11,118,316	3.21	1.94	8,475,312	2.97	2,643,004


		Number of DSUs
Balance – beginning of the year		1,218,520
Granted		44,550
Balance – end of the period		1,263,070


	in thousands of dollars
	Total	< 1 Year	1–2 Years	2–5 Years	Thereafter
	$	$	$	$	$
Accounts payable and accrued liabilities	385	385	—	—	—
Office lease	507	206	301	—	—
	892	591	301	—	—



	in thousands of dollars,
	except for per share amounts
	Three months ended				Nine months ended
	August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020
Selected expenses	$		$		$		$
Exploration expense		130		—		130		—
Mineral properties and feasibility study expenses		—		232		440		2,519
General and administrative		425		265		1,188		1,349
Investor relations		170		156		440		383
Professional fees		123		165		627		1,031
Salaries		365		170		1,210		620
Salaries – stock-based compensation		409		1,064		3,081		3,030
Gain on derecognition of assets contributed to joint venture		—		—		—		(175,770)
Share of loss on equity investment		6,072		1,094		8,892		1,833
Comprehensive earnings (loss) for the year		(7,664)		(3,184)		(15,593)		164,993
Basic earnings (loss) per common share		(0.05)		(0.02)		(0.11)		1.17
Diluted earnings (loss) per common share		(0.05)		(0.02)		(0.11)		1.12


		in thousands of dollars,
		except per share amounts
	Q3 2021	Q2 2021	Q1 2021	Q4 2020	Q3 2020	Q2 2020	Q1 2020	Q4 2019
	8/31/21	5/31/21	02/28/21	11/30/20	08/31/20	05/31/20	02/29/20	11/30/19
	$	$	$	$	$	$	$	$
Interest and other income	4	5	5	5	8	12	62	91
Exploration expense	130	—	—	—	—	—	—	—
Mineral properties and feasibility study expenses	—	—	—	91	232	742	1,545	3,819
Share of loss on equity investment	6,072	1,700	1,120	1,022	1,094	561	178	—
Earnings (loss) for the period	(7,664)	(3,413)	(4,516)	(3,226)	(3,184)	(3,002)	171,179	(6,525)
Earnings (loss) per common share – basic	(0.05)	(0.02)	(0.03)	(0.04)	(0.02)	(0.02)	1.22	(0.05)
Earnings (loss) per common share – diluted	(0.05)	(0.02)	(0.03)	(0.01)	(0.01)	(0.02)	1.16	(0.05)


	In thousands of dollars
	Total	<1 Year	1–2 Years	2–5 Years	Thereafter
	$	$	$	$	$
Accounts payable and accrued liabilities	385	385	—	—	—
Office lease	507	206	301	—	—
	892	591	301	—	—


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, 2021	TRILOGY METALS INC.


	By:	/s/ Tony Giardini
		Tony Giardini

		President and Chief Executive Officer


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

		Vice President and Chief Financial Officer