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Item 8. Financial Statements and Supplementary Data

2026-02-17 compared with 2025-02-14 · 160 added, 202 removed, 400 unchanged (48% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Supplementary Data

For the required supplementary data, please see the section heading “ Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations ” above.

Management’s Report on Internal Control over Financial Reporting

The management of Trilogy Metals Inc.

is responsible for establishing and maintaining adequate internal control over financial reporting under Rule 13a-15(f) and 15d-15(f) of the U.S.

Exchange Act.

The Securities Exchange Act of 1934 defines this as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s Board of Directors, management and other personnel, 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 in the United States of America, and includes those policies and procedures that:

● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company;

● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that may have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of November 30, 2024.

In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (2013).

Based upon our assessment and those criteria, management concluded that the Company’s internal control over financial reporting is effective as of November 30, 2024.

/s/ Tony Giardini

/s/ Elaine Sanders

Tony Giardini

Elaine Sanders

President, Chief Executive Officer & Director

Vice President & Chief Financial Officer

February 13, 2025

Report of Independent Registered Public Accounting Firm

21 unchanged sentences

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Recoverability of the Investment in Ambler Metals LLC

Impairment indicator assessment of the Investment in Ambler Metals LLC

As described in Notes 2 and 3 to the consolidated financial statements, the Company has an investment in Ambler Metals LLC (Ambler) accounted for using the equity method of accounting.

As of November 30, 2024, the carrying value of the Company’s investment in Ambler was $107.5 million.

Management assesses whether there has been an other than temporary decrease in the fair value of their investment in Ambler whenever changes in facts and circumstances indicate there might be, including assessing the underlying mineral properties of Ambler.

During the year ended November 30,

2024, management identified facts and circumstances due to adverse changes in the regulatory environment impacting the investee, and therefore, tested the carrying value of the investment in Ambler for recoverability by assessing the underlying mineral properties of Ambler.

Management estimated a range of fair values for the investment in Ambler using a combination of valuation techniques, including the valuation of cohort companies with similar projects and in situ multiples observed in market transactions for comparable mineral properties that take into account, among other things, mineral reserve and resource estimates.

Management applies significant judgment in estimating the fair value of the investment in Ambler.

The mineral reserve and resource estimates are based on information prepared by qualified persons (management’s specialists).

No impairment was recorded as a result of the impairment test.

The principal considerations for our determination that performing procedures relating to the recoverability of the investment in Ambler is a critical audit matter are:

(i) the significant judgment by management, including the use of management’s specialists, in determining the fair value of the investment in Ambler, which in turn led to (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures to evaluate audit evidence relating to the fair value of the investment in Ambler, including assessing the reasonability of the mineral reserve and resource estimates developed by management, developing independent in situ value per pound of copper equivalent for Ambler’s mineral properties, and project-specific characteristics;

and (iii) the audit effort also involved the use of professionals with specialized skill and knowledge.

As of November 30, 2025, the carrying amount of the Company’s investment in Ambler was $105 million.

Management assesses the possibility of impairment in the carrying value of its equity method investment in Ambler whenever events or circumstances indicate that the carrying amount of the investment may not be recoverable.

Significant judgments are made by management in assessing the possibility of impairment.

Factors that may be indicative of an impairment include a loss in the value of an investment that is not temporary.

Management considers several factors in considering if an indicator of impairment has occurred, including but not limited to, sustained losses by the investment, the absence of the ability to recover the carrying amount of the investment, deterioration of market conditions inclusive of significant changes in the legal, business or regulatory environment, significant adverse changes impacting the investee and internal reporting indicating the economic performance of an investment is, or will be, worse than expected.

The principal considerations for our determination that performing procedures relating to the impairment indicator assessment of the investment in Ambler is a critical audit matter are the significant judgment by management when assessing whether impairment indicators exist, specifically related to assessing:

(i) an absence of the ability to recover the carrying amount of the investment in Ambler, and (ii) a deterioration of market conditions, inclusive of significant changes in the legal environment.

This in turn led to a high degree of auditor judgment and subjectivity in performing procedures to evaluate audit evidence relating to the significant judgments made by management in their assessment of these indicators of impairment related to the investment in Ambler.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included, among others (i) developing an independent point estimate of the fair value of the investment in Ambler based on an estimated in situ value per pound of copper equivalent, and (ii) comparing the independent point estimate to management’s estimate to evaluate the reasonableness of management’s estimate.

Professionals with specialized skill and knowledge were used to assist in the determination of the in situ value per pound of copper equivalent of the underlying mineral properties of Ambler based on comparable market transactions taking into account project-specific characteristics.

For project-specific characteristics, we evaluated evidence of actions taken and statements made by legislators in support of mineral resource development in the jurisdiction of the underlying mineral properties.

Professionals with specialized skill and knowledge also assisted in the assessment of the reasonability of the fair value of the investment in Ambler.

The work of management’s specialists was used in performing the procedures to evaluate the reasonableness of the mineral reserve and resource estimates.

As a basis for using this work, the specialists’ qualifications were understood and the Company’s relationship with the specialists was assessed.

The procedures performed also included evaluating the methods and assumptions used by the specialists, testing the data used by the specialists, and evaluating the specialists’ findings.

These procedures included, among others, evaluating the reasonableness of management’s assessment of impairment indicators related to the investment in Ambler which included (i) evaluating whether there was an absence of the ability to recover the carrying amount of the investment by considering the market capitalization of the company, and (ii) evaluating whether there was a deterioration of market conditions inclusive of significant changes in the legal environment and assessing the completeness of facts and circumstances that could be considered as impairment indicators of the Investment in Ambler by performing an audit of the financial statements of Ambler as of November 30, 2025.

Performing an audit of the financial statements of Ambler as of November 30, 2025 included (i) evaluating whether there were significant adverse changes in the business climate including significant decreases in copper, zinc, and other metal prices and (ii) evaluating whether there were significant adverse changes in legal factors with respect to mineral property title matters.

/s/ PricewaterhouseCoopers LLP

10 unchanged sentences

Current assets

Cash and cash equivalents

Accounts receivable

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Accounts payable and accrued liabilities (note 4)

Current portion of lease liability

Current portion of lease liability (note 5b)

Derivative liability (note 6)

Total current liabilities

Long-term portion of lease liability

Long-term portion of lease liability (note 5(b))

Total liabilities

6 unchanged sentences

Total liabilities and shareholders' equity

Commitments and contingencies (note 10)

Commitments (note 10)

Subsequent events (note 12)

3 unchanged sentences

Approved on behalf of the Board of Directors

Trilogy Metals Inc.

Net Trilogy Metals Inc.

Consolidated Statements of Loss and Comprehensive Loss

For the Years Ended November 30

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

Exploration expenses

3 unchanged sentences

Professional fees

Salaries and directors expense – stock-based compensation

Salaries and directors expense – stock-based compensation (note 7)

Total expenses

Gain on disposition of mineral property

Interest and other income

Services agreement income

Share of loss on equity investment (note 3(b))

Write off mineral properties

Loss on derivative carried at fair market value (note 6)

Loss and comprehensive loss for the year

12 unchanged sentences

Balance – 2022

Exercise of options

Exercise of warrants

Private Placement, net of share issue cost

Restricted share units

2 unchanged sentences

Services settled by common shares

NovaGold DSU conversion

Stock-based compensation

1 unchanged sentence

Balance – 2023

Private Placement, net of share issue cost

Exercise of options

Restricted share units

Deferred share units

Joint venture contribution

Services settled by common shares

NovaGold DSU conversion

Stock-based compensation

2 unchanged sentences

Exercise of options

At-the-market offering, net of share issue cost

Restricted share units

Joint venture contribution

Services settled by common shares

10 unchanged sentences

Adjustments to reconcile net loss to cash flows used in operating activities

Unpaid interest earned

Consulting fees settled by common shares

Office lease accounting

Gain on disposal of mineral property

Loss on equity investment in Ambler Metals LLC (note 3(c))

Loss on equity investment in Ambler Metals LLC

Loss on derivative carried at fair market value

Unrealized foreign exchange (gain)/loss

Stock-based compensation

Write off mineral properties

Net change in non-cash working capital

Decrease in accounts receivable

Decrease (Increase) in deposits and prepaid amounts

Decrease/(increase) in accounts receivable

Decrease in deposits and prepaid amounts

Increase/(decrease) in accounts payable and accrued liabilities

1 unchanged sentence

Cash flows from financing activities

Issuance of common shares, net of share issue cost

Proceeds from issuance of common shares, net of share issue costs

Proceeds from exercise of options

2 unchanged sentences

Return of capital from Ambler Metals LLC (note 3(b))

Proceeds from disposition of mineral property

Total cash flows from investing activities

Contribution to Ambler Metals LLC

Total cash (used in)/flows from investing activities

Change in cash

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These financial statements were approved by the Company’s Board of Directors for issue on February 16, 2026.

Cash consists of bank deposits that are held with a single Canadian Financial Institution.

Cash consists of bank deposits that are held at two large Canadian financial institutions.

The majority of cash is uninsured as at November 30, 2025.

Investment in affiliates

Investments in unconsolidated ventures over which the Company has the ability to exercise significant influence, but does not control, are accounted for under the equity method and include the Company’s investment in the Ambler Metals project.

We identified Ambler Metals LLC (“Ambler Metals”) as a VIE as the entity is dependent on funding from its owners.

We identified Ambler Metals as a VIE as the entity is dependent on funding from its owners.

All funding, ownership, voting rights and power to exercise control is shared equally on a 50/ 50 basis between the owners of the VIE.

2 unchanged sentences

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.

Significant judgments are made in assessing the possibility of impairment.

Significant judgments are made by management in assessing the possibility of impairment.

Factors that may be indicative of an impairment include a loss in the value of an investment that is not temporary.

32 unchanged sentences

Notes to Consolidated Financial Statements

Uncertainty in income tax positions

The Company recognizes tax benefits from uncertain tax positions only if it is at least more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

Any tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50 % likelihood of being realized upon settlement with the taxing authorities.

Related interest and penalties, if any, are recorded as tax expense in the tax provision.

Financial instruments

1 unchanged sentence

Loans and receivables consist of cash, accounts receivable, and deposits.

Derivative financial instruments are recorded initially and subsequently at fair value, with changes in fair value recorded in the statement of loss and comprehensive loss.

Other financial liabilities are recorded initially at fair value and subsequently at amortized cost using the effective interest rate method.

1 unchanged sentence

Translation of foreign currencies

The functional currency of the Company and its subsidiaries and the Company’s reporting currency is the United States dollar.

Monetary assets and liabilities are translated into United States dollars at the exchange rate in effect at the balance sheet date, and non-monetary assets and liabilities at the exchange rate in effect at the time of acquisition or issue.

1 unchanged sentence

Exchange gains or losses arising on translation are included in income or loss for the period.

The functional currency of the Company and its subsidiaries and the Company’s reporting currency is the United States dollar.

Earnings and loss per share

Earnings and loss per common share is calculated based on the weighted average number of common shares outstanding during the year.

The Company follows the treasury stock method in the calculation of diluted earnings per share.

Under the treasury stock method, the weighted average number of common shares outstanding used for the calculation of diluted loss per share assumes that the proceeds to be received on the exercise of dilutive stock options and in the prior year, warrants are used to repurchase common shares at the average market price during the period.

Basic and diluted income (loss) per share are presented for net income (loss).

Basic income (loss) per share is computed by dividing net income (loss) by the weighted-average number of outstanding common shares for the period.

Diluted income per share reflects the potential dilution that could occur if securities or other contracts that may require the issuance of common shares in the future were converted.

Diluted income per share is computed by increasing the weighted average number of outstanding common shares to include the additional common shares that would be outstanding after conversion and adjusting the net income for changes that would result from the conversion.

Only those securities or other contracts that result in a reduction in earnings per share are included in the calculation.

Stock-based compensation

3 unchanged sentences

Shares are issued from treasury in settlement of options exercised.

Compensation expense for restricted share units (“RSUs”) and deferred share units (“DSUs”) granted to employees and directors, respectively, is determined based on estimated fair values of the units at the time of grant using quoted market prices or at the time the units qualify for equity classification under ASC 718.

The cost is recognized using the graded attribution method over the vesting period of the respective units.

6 unchanged sentences

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.

Significant estimates include the valuation of stock-based compensation.

Actual results could differ materially from those reported.

2 unchanged sentences

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.

The Company assesses whether there has been a potential triggering event of an 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 of 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.

The Company measures the derivative liability based on an option valuation model.

Estimates and assumptions used in the model include the probability of the occurrence of the exercise contingency.

New accounting pronouncements

Updates to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 “Segment Reporting (Topic 280):

Recently Adopted Accounting Standards

In fiscal year 2025, we adopted Accounting Standards Update (“ASU”) 2023-07 “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures”.

AUS 2023-7 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss and interim disclosures of a reportable segment’s profit or loss and assets.

The standard is effective for the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2025, and subsequent interim periods, with early adoption permitted.

The Company will be evaluating the impact of the guidance on the consolidated financial statements or disclosures.

Updates to Income Tax Disclosure

Management has evaluated the Company’s operations and concluded it has one reportable operating segment.

The new standard expands segment disclosure requirements.

This standard has not changed the processing, recording, or presentation of financial data, other than providing additional disclosures regarding management oversight for the Company’s single operating segment.

The additional disclosures required by the standard are included in Note 11.

Issued and Not Effective

In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740):

1 unchanged sentence

The standard is effective beginning with the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2026, and subsequent interim periods, with early adoption permitted.

The Company will be evaluating the impact of the guidance on the consolidated financial statements.

The Company is evaluating the impact of the guidance on the consolidated financial statements.

3) Investment in Ambler Metals LLC

12 unchanged sentences

Trilogy recognized, based on its 50 % ownership interest in Ambler Metals, an equity loss equivalent to its pro rata share of Ambler Metals’ comprehensive loss of $ 6.5 million for the year ended November 30, 2025 (2024 - $ 5.3 million).

During the year ended November 30, 2024, Trilogy made a $ 112,000 equity contribution to Ambler Metals through the issuance of 143,507 common shares of the Company as part of the long-term incentive compensation for Ambler Metals executives.

Likewise, South32 made an equivalent equity contribution to Ambler Metals for $ 112,000 in cash for their 50 % share.

The carrying value of Trilogy’s 50 % investment in Ambler Metals as at November 30, 2024 is summarized on the following table.

During the month of November 2025, Trilogy and South32 each contributed $ 1.0 million in cash to Ambler Metals to fund its operations.

The carrying value of Trilogy’s 50 % investment in Ambler Metals as at November 30, 2025 is summarized in the following table.

in thousands of dollars

1 unchanged sentence

Joint venture equity contribution

Return of capital

Share of loss on equity investment for the year ending November 30, 2024

November 30, 2024, Investment in Ambler Metals

Joint venture equity contribution

Return of capital

Member contribution of U.S.

government support costs

Share of loss on equity investment for the year ending November 30, 2025

November 30, 2025, Investment in Ambler Metals

During the year, the Company assessed whether there had been a decline in the fair value of its investment in Ambler Metals below its carrying value that was other than temporary as of a result of the United States Bureau of Land Management’s (“BLM”) preferred “No Action” alternative published in the BLM’s Final Supplemental Environmental Impact Statement (“SEIS”) for the Ambler Access Project and the BLM’s Record of Decision confirming the no action alternative.

Accordingly, the Company estimated the fair value of the investment based on various techniques including the valuation of cohort companies with similar projects and in situ multiplies observed in market transactions for comparable mineral properties.

No impairment was identified.

Trilogy Metals Inc.

Notes to Consolidated Financial Statements

The following table summarizes Ambler Metals’ Balance Sheet as at November 30, 2024.

The following table provides Ambler Metals’ balances on a 100% basis as at November 30, 2025.

The Company’s carrying value of the investment in Ambler Metals exceeds its share of the carrying value of the net assets of Ambler Metals as a result of recording the Company’s initial investment in 2020 at fair value.

in thousands of dollars

3 unchanged sentences

Mineral properties

Total liabilities

Accounts payable and accrued liabilities

Other liabilities

Total liabilities

Members' equity (total assets less total liabilities)

The following table summarizes Ambler Metals’ net loss for the years ended November 30, 2024, November 30, 2023 and November 30, 2022.

Trilogy Metals Inc.

Notes to Consolidated Financial Statements

Ambler Metals’ cash and cash equivalents are held at one bank.

The majority of the cash and cash equivalents is uninsured as at November 30, 2025.

The following table summarizes Ambler Metals’ loss for the years ended November 30, 2025, November 30, 2024 and November 30, 2023.

in thousands of dollars

For the year ended

7 unchanged sentences

Foreign exchange (gain)/loss

Members contribution of U.S.

government support costs

Interest and other income

1 unchanged sentence

Related party transactions

During the fiscal year 2024, the Company charged $ 63,000 (2023 - $ nil ) related to administration and accounting services in connection with a service agreement between the Company and Ambler Metals.

In addition, the Company received payments of $ 68,000 (2023 - $ 27,000 ) related to operating expenses paid on behalf of Ambler Metals pursuant to the service agreement.

During the fiscal year 2025, the Company charged $ 212,902 (2024 - $ 131,000 ) related to administration services, accounting services and reimbursements of expenditures paid on behalf of Ambler Metals;

all in connection with a service agreement between the Company and Ambler Metals.

As at November 30, 2025, $ 15,300 remains outstanding and is recorded as a receivable.

4) Accounts payable and accrued liabilities

4 unchanged sentences

Accrued liabilities

Accrued salaries and vacation

Accrued payroll liabilities

Accounts payable and accrued liabilities

Subsequent to the year ended on November 30, 2024, approximately $ 153,000 of accrued salaries was settled through the issuance of common shares of the Company.

Trilogy Metals Inc.

3 unchanged sentences

Balance as at November 30, 2023

Net amortization

Balance as at November 30, 2023

Net amortization for lease ended June 30, 2024

2 unchanged sentences

Balance as at November 30, 2024

The Company’s previous office lease ended on June 30, 2024.

The Company entered into a new office lease commencing on July 1, 2024, with a 4-year term ending June 20, 2028, with no renewal option.

During the year ending November 30, 2024, the Company recognized a ROU asset of $ 170,000 for the new office lease.

Net amortization

Balance as at November 30, 2025

(b) Lease liabilities

The Company’s lease arrangement consists of an operating lease of our office space ending on June 30, 2028.

There are no extension options.

The Company’s lease arrangement consists of an operating lease for the corporate office.

On July 1, 2024, the Company entered into a four-year lease for office space expiring in June 2028.

The lease has no extension option.

The current monthly lease payment is approximately CDN $ 9,500 consisting of both base rent and variable operating costs.

Total lease expense recorded within general and administrative expenses was comprised of the following components:

2 unchanged sentences

November 30, 2024

Operating lease costs

Variable lease costs

Fixed rent expense

Variable rent expense

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 of November 30, 2024, the remaining lease term was 3.5 years and the discount rate is 9 % .

Significant judgment was used in the determination of the incremental borrowing rate which included estimating the Company’s credit rating.

Supplemental cash and non-cash information relating to our leases during the year ended November 30, 2024 are as follows:

● Cash paid for amounts included in the measurement of lease liabilities was $ 57,939 , of which $ 33,159 related to the office lease that expired on June 30, 2024 and $ 24,780 related to the new office lease that commenced on July 1, 2024.

For the year ending November 30, 2025, variable lease costs have been reduced by a refund received for adjusted operating costs from the previous lease.

As at November 30, 2025, the remaining lease term is 2.6 years.

The discount rate used to measure the lease liability is 9 % .

Judgment was used in the determination of the incremental borrowing rate which included estimating the Company’s credit rating.

Supplemental cash flow information relating to our leases during the year ended November 30, 2025 is as follows:

● Cash paid for base rent included in the measurement of lease liabilities was approximately $ 48,100 .

Trilogy Metals Inc.

6 unchanged sentences

Present value of lease payments recognized as lease liability

current portion of lease liability

Long-term portion of lease liability

6) Derivative liability

On October 6, 2025, the Company entered into a binding letter of intent with the U.S.

Department of War (“DOW”) for their conditional investment of approximately $ 17.8 million in exchange for 8,215,570 units at a price of $ 2.17 per unit, with each unit comprising of one common share of the Company and ¾ of a 10 -year warrant to acquire up to 6,161,678 common shares of the Company at a price of $ 0.01 per share.

The binding agreement expires March 31, 2026 if the conditions have not been met at that date.

Because the Company is obligated to issue common shares and warrants upon satisfaction of conditions that are not solely within the Company’s control, the commitment is accounted for as a written option for the sale of a unit on October 6, 2025.

The Company has accounted for the obligation as a derivative financial instrument under ASC 815 - 40 as the obligation, which is partially conditional on the completion of the Ambler Access Project, is not considered indexed solely to the Company’s own stock.

On October 6, 2025 the Company recognized an initial liability of $ 8.1 million and a corresponding expense related to the DOW’s proposed collaboration agreement which was contributed to Ambler Metals and at November 30, 2025, the Company increased the liability by $ 22.6 million representing the change in the fair value of the obligation to issue the common shares and warrants and recognized a corresponding loss for the period.

Also see fair value accounting assumptions in note 8.

7) Share capital

2 unchanged sentences

Number of shares

Ascribed value

November 30, 2024

At-the-market offering, net of share issue cost

Exercise of options

Restricted Share Units

Shares issued from Restricted Share Units

Services settled by common shares

Joint venture equity contribution (note 3(a))

November 30, 2025, issued and outstanding

Trilogy Metals Inc.

Notes to Consolidated Financial Statements

In October 2025, the Company issued 3,513,495 common shares under its May ATM Program, resulting in gross proceeds of $ 25.0 million at an average price of $ 7.12 per share.

After deducting commissions, the Company received net proceeds of $ 24.3 million.

The May ATM Program was terminated upon completion of these sales.

(a) Stock options

5 unchanged sentences

During the year ended November 30, 2025, the Company granted 2,125,000 stock options (2024 – 2,775,000 , 2023 – 3,230,000 stock options) at an exercise price of CDN$ 1.52 (2024 - CDN$ 0.59 , 2023 – CDN$ 0.78 ) to employees, consultants and directors exercisable for a period of five years with various vesting terms from immediate vesting to over a two-year period.

The fair value attributable to options granted in 2024 was CDN$ 0.28 (2023 - CDN$ 0.37 , 2022 - CDN$ 0.96 ).

The fair value of the stock options recognized has been estimated using the Black-Scholes option pricing model.

Trilogy Metals Inc.

Notes to Consolidated Financial Statements

Assumptions used in the pricing model for the year are as provided below.

November 30, 2024

The fair value attributable to options granted in 2025 was $ 0.59 (2024 - CDN$ 0.28 , 2023 - CDN$ 0.37 ).

The fair value of the stock options recognized in the year has been estimated using the Black-Scholes option pricing model.

Assumptions used in the pricing model for stock options granted for the year are as provided below.

November 30, 2025

8 unchanged sentences

The unvested stock option expense not yet recognized was $ 0.2 million.

This expense is expected to be recognized over the next twelve months .

A summary of the Company’s stock option plan and changes during the year ended is as follows:

This expense is expected to be recognized over the next thirteen months .

Trilogy Metals Inc.

Notes to Consolidated Financial Statements

A summary of the Company’s stock option outstanding and changes during the year ended is as follows:

November 30, 2025

4 unchanged sentences

( 3,664,983 )

Cancelled/forfeited

( 3,640,000 )

Balance – end of the year

During the year ended November 30, 2024, the Company issued 136,666 common shares (2023 – nil , 2022 – nil ) of the Company on the exercise of options with a weighted average exercise price of CDN$ 0.75 per share.

The Company also reclassified $ 0.04 million from reserves to share capital on the exercise of these options.

During the year ended November 30, 2025, the Company issued 3,664,983 common shares (2024 – 136,666 , 2023 – nil ) of the Company on the exercise of options with a weighted average exercise price of CDN$ 2.17 per share.

The Company also reclassified $ 2.67 million from reserves to share capital on exercise of these stock options.

The following table summarizes information about the stock options outstanding at November 30, 2025.

6 unchanged sentences

$ 2.01 to $ 3.00

The aggregate intrinsic value of vested share options (the market value less the exercise price) at November 30, 2024 was $ 2.07 million (2023 - $nil, 2022 - $nil) and the aggregate intrinsic value of exercised options for the year ended November 30, 2023 was $ 0.06 million (2023 - $nil, 2022 - $ 0.04 million).

Trilogy Metals Inc.

Notes to Consolidated Financial Statements

The aggregate intrinsic value of vested share options (the market value less the exercise price) at November 30, 2025 was $ 22.62 million (2024 - $ 2.07 million, 2023 - $nil) and the aggregate intrinsic value of exercised options for the year ended November 30, 2024 was $ 17.68 million (2023 - $ 0.06 million, 2023 - $nil).

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, DSU Plan, and Fixed DSU Plan will be settled in common shares at the Company with each restricted share unit (“RSU”) and deferred share unit (“DSU”) entitling the holder to receive one common share of the Company.

Awards under the RSU Plan, DSU Plan, and Fixed DSU Plan will be settled in common shares of the Company with each restricted share unit (“RSU”) and deferred share unit (“DSU”) entitling the holder to receive one common share of the Company.

All units are accounted for as equity-settled awards.

There were 6,061,851 RSUs granted during the fiscal year ended November 30, 2024 (2022 – 4,640,089 , 2022 – 1,359,349 ).

Directors were granted 704,711 DSUs throughout the year ended November 30, 2024 (2023 – 1,283,023 , 2022 – 283,289 ) based on their election to receive 100 % of their annual retainer in DSUs.

A summary of the Company’s RSU, DSU and Fixed DSU plans and changes during the year ended November 30, 2024 is as follows:

During the fiscal year ended November 30, 2025, the Company granted 1,811,096 RSUs (2024 – 6,061,851 , 2023 – 4,640,089 ) to employees and consultants under RSU Plan.

These RSU grants were made for the purposes of employee retention and long-term compensation, settlement of consulting services and in lieu of cash salaries for executives.

In addition, Directors were granted 426,893 DSUs during the year ended November 30, 2025 (2024 – 704,711 , 2023 – 1,283,023 ) based on their election to receive 100 % of their annual retainer in DSUs.

Trilogy Metals Inc.

Notes to Consolidated Financial Statements

A summary of the Company’s unit plans and changes during the year ended November 30, 2025 is as follows:

Number of RSUs

2 unchanged sentences

Balance – beginning of the year

Vested/Converted

Settled in common shares

( 2,806,097 )

Balance – end of the year

For the year ended November 30, 2024, Trilogy recognized a stock-based compensation expense of $ 2.9 million (2023 - $ 3.0 million, 2022 - $ 2.0 million).

7) Management of capital risk

The Company relies upon management to manage capital in order to accomplish the objectives of safeguarding the Company’s ability to continue as a going concern in order to pursue the development of the mineral properties, at the UKMP, through our equity investee (note 3) and maintain a capital structure which optimizes the costs of capital at an acceptable risk.

The Company’s current capital consists of equity funding through capital markets.

As the Company is currently in the exploration phase none of its financial instruments are exposed to commodity price risk;

however, the Company’s ability to obtain long-term financing and its economic viability may be affected by commodity price volatility.

The Company will need to raise additional funds to support its operations and administration expenses.

Future sources of liquidity may include equity financing, debt financing, convertible debt, or other means.

To facilitate the management of its capital requirements, the Company prepares annual expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions.

8) 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, 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

Trilogy Metals Inc.

Notes to Consolidated Financial Statements

nature of their maturity.

The Company’s financial instruments initially measured at fair value and then held at amortized cost include cash, accounts receivable, deposits, and accounts payable and accrued liabilities.

Financial risk management

The Company’s activities expose them to certain financial risks, including currency risk, credit risk, liquidity risk, interest risk and price risk.

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 November 30, 2024 is limited to the Canadian dollar balances consisting of cash of CDN$ 116,000 , accounts receivable of CDN$ 23,000 and certain trade payables and accrued personnel costs CDN$ 548,000 .

Based on a 10 % change in the US-Canadian exchange rate, assuming all other variables remain constant, the Company’s net loss would change by approximately $ 29,000 .

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 Canadian chartered financial institutions.

The Company’s only significant exposure to credit risk is equal to the balance of cash as recorded in the financial statements.

The majority of the Company’s cash held at November 30, 2024 is uninsured.

The Company does not consider any of its financial assets to be impaired as of November 30, 2024.

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 cash flow requirements as at November 30, 2024 are as follows.

in thousands of dollars

Accounts payable and accrued liabilities

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 November 30, 2024 a 1 % change in interest rates would result in a change of approximately $250,000 over a one-year period in net loss, assuming all other variables remain constant.

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.

Trilogy Metals Inc.

Notes to Consolidated Financial Statements

For the year ended November 30, 2025, Trilogy recognized a combined RSU and DSU stock-based compensation charge of $ 2.2 million (2024 - $ 2.9 million, 2023 - $ 3.0 million).

8) Fair value accounting

4 unchanged sentences

Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

The Company did no t have any financial assets and liabilities that were measured and recognized at fair value as at November 30, 2024.

The Company’s financial instruments consist of cash, accounts receivable, deposits, and accounts payable and accrued liabilities and derivative liability.

The fair value of the Company’s financial instruments other than the derivative liability approximate 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, accounts receivable, deposits, and accounts payable and accrued liabilities.

The majority of the Company’s cash is held with two Canadian Financial Institutions and is uninsured as at November 30, 2025.

The derivative liability is carried at fair value on a recurring basis.

The fair value of the derivative liability is valued on the basis of Level 3 inputs.

The estimated fair value is based on the Company’s common stock price of $ 4.28 at November 30, 2025 ($ 2.09 on October 7, 2025), volatility of 79 %, a risk-free rate of 3.53 % and management’s estimate of the equal probability of completion and non-completion of the Ambler Access Project, which is beyond the control of the Company.

A 10 % change in the Company’s stock price affects the gain or loss on the derivative liability by approximately $ 4.8 million at November 30, 2025.

A 10 % change in management’s estimate of the likelihood of completion affects the gain or loss on the derivative liability by approximately $ 1.3 million at November 30, 2025.

Trilogy Metals Inc.

Notes to Consolidated Financial Statements

9) Income taxes

14 unchanged sentences

Change in estimates in respect of prior years

Share issuance costs

Change in valuation allowance

Income tax recovery (expense)

Trilogy Metals Inc.

Notes to Consolidated Financial Statements

Deferred income taxes arise from temporary differences in the recognition of income and expenses for financial reporting and tax purposes.

11 unchanged sentences

Share issuance costs

Other deductible temporary differences

Stock-based compensation

Total deferred tax assets

5 unchanged sentences

Deferred income tax liabilities

Net deferred income tax assets

Net deferred income tax assets (liabilities)

Trilogy Metals Inc.

Notes to Consolidated Financial Statements

The Company has loss carry-forwards of approximately $ 233 million that may be available for tax purposes.

10 unchanged sentences

loss carry-forwards is subject to certain limitations under provisions of the Internal Revenue Code including limitations subject to Section 382, which relates to a 50 % change in control over a three-year period and are further dependent upon the Company attaining profitable operations.

An ownership change under Section 382 occurred

Trilogy Metals Inc.

Notes to Consolidated Financial Statements

on January 22, 2009 regarding losses incurred by AGC, of which the attributes of those losses were transferred to Trilogy Metals US with the purchase of the mineral property in October 2011.

Therefore, approximately $ 39.4 million of the U.S.

losses above are subject to limitation under Section 382.

Accordingly, the Company’s ability to use these losses may be limited.

An ownership change under Section 382 occurred on January 22, 2009, regarding losses incurred by AGC, of which the attributes of those losses were transferred to Trilogy Metals US with the purchase of the mineral property in October 2011.

Accordingly, the Company’s ability to use these losses may be limited or may expire un-utilized.

An additional change in control may have occurred after November 30, 2011, which may further limit the availability of losses prior to the date of change in control.

3 unchanged sentences

The Company has commitments with respect to an office lease requiring future minimum lease payments as summarized in note 5(b).

Trilogy Metals Inc.

Notes to Consolidated Financial Statements

11) Segment information

The Company’s operating segments are reported in a manner consistent with the internal reporting provided to its Chief Operating Decision Makers (“CODM”).

The CODM, who are responsible for allocating resources and assessing the performance of the operating segments, have been identified as the Chief Executive Officer and Chief Financial Officer.

The CODM evaluates the Company’s performance based on the overall results of the Company, including the performance of its investment Ambler Metals LLC, which holds the Upper Kobuk Mineral Projects in Alaska.

The Company uses a single U.S.

GAAP-consistent measure of segment profit or loss with no reconciling items or measurement differences.

Management has concluded that consolidated net income (loss) is the appropriate measure of segment of profit or loss.

The CODM does not regularly receive or review discrete segment-level expense categories separate from those presented in the consolidated statements of operations.

Accordingly, no significant segment expenses are separately disclosed, as all expenses are included within the consolidated statement of loss.

12) Subsequent events

On December 2, 2024, pursuant to previous elections, the Board of Directors were granted 72,943 DSUs in settlement of approximately $ 85,750 of director fees and senior management were granted 210,744 RSUs in lieu of cash salaries of approximately $ 151,000 , all vesting immediately.

The grants were in support of continued cash preservation efforts.

On December 9, 2024, the Company granted 652,200 RSUs for short term incentives to executive and employees, all vesting immediately.

Directors received an annual grant of 180,000 DSUs and 475,000 stock options, all vesting immediately.

Employees and consultants received an annual grant of 1,650,000 stock options and 790,000 RSUs with a vesting schedule of one-third vesting immediately on the grant date, one-third to vest on the one year anniversary of the grant date and one-third to vest on the second year anniversary of the grand date.

On December 1, 2025, pursuant to previous elections, the Board of Directors were granted 19,742 DSUs in settlement of approximately $ 80,000 of director fees.

Subsequent to November 30, 2025, the Company granted 1,340,000 stock options to employees and consultants and 282,500 RSUs for long term incentives to executives with a vesting schedule of one-third vesting immediately on the grant date, one-third to vest on the one year anniversary of the grant date and one-third to vest on the second year anniversary of the grand date.

Directors received an annual grant of 315,000 stock options, all vesting immediately.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data