Trilogy Metals Inc. 10-Q

Item 1. Financial Statements Trilogy Metals Inc. Condensed Interim Consolidated Balance Sheets (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ in thousands of US dollars ​ ​ ​ May 31, 2026 ​ ​ November 30, 2025 ​ ​ ​ ​ $ ​ ​ $ ​ Assets ​ ​ ​ ​ ​ ​ ​ Current assets ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ ​ 38,838 ​ ​ 51,613 ​ Accounts receivable ​ ​ 106 ​ ​ 118 ​ Deposits and prepaid amounts ​ ​ 69 ​ ​ 193 ​ Total current assets ​ ​ 39,013 ​ ​ 51,924 ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment in Ambler Metals LLC (note 3) ​ ​ 112,086 ​ ​ 105,263 ​ Right of use asset (note 5(a)) ​ ​ 96 ​ ​ 117 ​ Total assets ​ ​ 151,195 ​ ​ 157,304 ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ ​ ​ ​ ​ ​ Accounts payable and accrued liabilities (note 4) ​ ​ 646 ​ ​ 2,329 ​ Current portion of lease liability (note 5b) ​ ​ 44 ​ ​ 41 ​ Derivative liability (note 2) ​ ​ 34,534 ​ ​ 30,743 ​ Total current liabilities ​ ​ 35,224 ​ ​ 33,113 ​ ​ ​ ​ ​ ​ ​ ​ ​ Long-term portion of lease liability (note 5(b)) ​ ​ 48 ​ ​ 70 ​ Total liabilities ​ ​ 35,272 ​ ​ 33,183 ​ ​ ​ ​ ​ ​ ​ ​ ​ Shareholders' equity ​ ​ ​ ​ ​ ​ ​ Share capital (note 6) – unlimited common shares authorized, no par value issued – 172,745,639 (2025 – 171,069,888 ) ​ ​ 228,019 ​ ​ 225,241 ​ Contributed surplus ​ ​ 118 ​ ​ 118 ​ Contributed surplus – options (note 6(a)) ​ ​ 29,893 ​ ​ 27,294 ​ Contributed surplus – units (note 6(b)) ​ ​ 3,942 ​ ​ 4,109 ​ Deficit ​ ​ ( 146,049 ) ​ ​ ( 132,641 ) ​ Total shareholders' equity ​ ​ 115,923 ​ ​ 124,121 ​ Total liabilities and shareholders' equity ​ ​ 151,195 ​ ​ 157,304 ​ ​ (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. For the Quarter Ended May 31, 2026 3 ​ Table of contents 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, 2026 ​ ​ May 31, 2025 ​ May 31, 2026 ​ ​ May 31, 2025 ​ ​ ​ $ ​ ​ $ ​ ​ $ ​ ​ $ ​ Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exploration expenses ​ 9 ​ ​ — ​ ​ 34 ​ ​ — ​ Foreign exchange loss/(gain) ​ 15 ​ ​ — ​ ​ ( 43 ) ​ ​ ( 11 ) ​ General and administrative ​ 430 ​ ​ 353 ​ ​ 997 ​ ​ 696 ​ Investor relations ​ 39 ​ ​ 18 ​ ​ 107 ​ ​ 34 ​ Professional fees ​ 475 ​ ​ 612 ​ ​ 786 ​ ​ 1,059 ​ Salaries ​ 502 ​ ​ 316 ​ ​ 1,118 ​ ​ 523 ​ Salaries and directors expense – stock-based compensation (note 6) ​ 674 ​ ​ 367 ​ ​ 3,770 ​ ​ 2,597 ​ Total expenses ​ 2,144 ​ 1,666 ​ ​ 6,769 ​ 4,898 ​ Other items ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest and other income ​ ( 410 ) ​ ​ ( 253 ) ​ ​ ( 829 ) ​ ​ ( 443 ) ​ Share of loss on equity investment (note 3(b)) ​ 2,334 ​ ​ 764 ​ ​ 3,677 ​ ​ 1,345 ​ Loss on derivative carried at fair market value (note 7) ​ 2,277 ​ ​ — ​ ​ 3,791 ​ ​ — ​ Loss and comprehensive loss for the period ​ ( 6,345 ) ​ ( 2,177 ) ​ ​ ( 13,408 ) ​ ( 5,800 ) ​ Basic loss per common share ​ ( 0.04 ) ​ ​ ( 0.01 ) ​ ​ ( 0.08 ) ​ ​ ( 0.04 ) ​ Diluted loss per common share ​ ( 0.04 ) ​ ​ ( 0.01 ) ​ ​ ( 0.08 ) ​ ​ ( 0.04 ) ​ Basic weighted average number of common shares outstanding ​ 172,613,574 ​ ​ 164,199,342 ​ ​ 172,281,616 ​ ​ 163,523,974 ​ Diluted weighted average number of common shares outstanding ​ 172,613,574 ​ ​ 164,199,342 ​ ​ 172,281,616 ​ ​ 163,523,974 ​ (See accompanying notes to the condensed interim consolidated financial statements) ​ ​ ​ ​ ​ ​ Trilogy Metals Inc. For the Quarter Ended May 31, 2026 4 ​ Table of contents 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, 2024 ​ 161,085,313 ​ ​ 190,503 ​ ​ 118 ​ ​ 28,801 ​ ​ 3,772 ​ ​ ( 90,400 ) ​ ​ 132,794 ​ Exercise of options 263,333 ​ ​ 195 ​ ​ — ​ ​ ( 64 ) ​ ​ — ​ ​ ​ ​ ​ 131 ​ Restricted Share Units 2,647,945 ​ ​ 1,863 ​ ​ — ​ ​ — ​ ​ ( 1,863 ) ​ ​ — ​ ​ — ​ Services settled by common shares 24,260 ​ ​ 30 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 30 ​ Stock-based compensation ​ — ​ ​ — ​ ​ — ​ ​ 738 ​ ​ 1,520 ​ ​ — ​ ​ 2,258 ​ Loss for the period — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 3,623 ) ​ ​ ( 3,623 ) ​ Balance – February 28, 2025 164,020,851 ​ ​ 192,591 ​ 118 ​ 29,475 ​ 3,429 ​ ( 94,023 ) ​ ​ 131,590 ​ Exercise of options ​ 86,667 ​ ​ 110 ​ ​ — ​ ​ ( 39 ) ​ ​ — ​ ​ — ​ ​ 71 ​ Restricted Share Units ​ 119,906 ​ ​ 145 ​ ​ — ​ ​ — ​ ​ ( 145 ) ​ ​ — ​ ​ — ​ Services settled by common shares ​ 13,986 ​ ​ 20 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 20 ​ Stock-based compensation ​ — ​ ​ — ​ ​ — ​ ​ 140 ​ ​ 372 ​ ​ — ​ ​ 512 ​ Loss for the period — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 2,177 ) ​ ​ ( 2,177 ) ​ Balance – May 31, 2025 ​ 164,241,410 ​ ​ 192,866 ​ ​ 118 ​ ​ 29,576 ​ ​ 3,656 ​ ​ ( 96,200 ) ​ ​ 130,016 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance – November 30, 2025 ​ 171,069,888 ​ ​ 225,241 ​ ​ 118 ​ ​ 27,294 ​ ​ 4,109 ​ ​ ( 132,641 ) ​ ​ 124,121 ​ Exercise of options 153,334 ​ ​ 246 ​ ​ — ​ ​ ( 80 ) ​ ​ — ​ ​ — ​ ​ 166 ​ At-the-market offering, net of share issue cost ​ 174,410 ​ ​ 1,164 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,164 ​ Restricted Share Units 1,148,007 ​ ​ 1,167 ​ ​ — ​ ​ — ​ ​ ( 1,167 ) ​ ​ — ​ ​ — ​ Stock-based compensation — ​ ​ — ​ ​ — ​ ​ 2,263 ​ ​ 833 ​ ​ — ​ ​ 3,096 ​ Loss for the period ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 7,063 ) ​ ​ ( 7,063 ) ​ Balance – February 28, 2026 ​ 172,545,639 ​ ​ 227,818 ​ ​ 118 ​ ​ 29,477 ​ ​ 3,775 ​ ​ ( 139,704 ) ​ ​ 121,484 ​ Exercise of options ​ 100,000 ​ ​ 158 ​ ​ — ​ ​ ( 48 ) ​ ​ — ​ ​ — ​ ​ 110 ​ Restricted Share Units ​ 100,000 ​ ​ 43 ​ ​ — ​ ​ — ​ ​ ( 43 ) ​ ​ — ​ ​ — ​ Stock-based compensation ​ — ​ ​ — ​ ​ — ​ ​ 464 ​ ​ 210 ​ ​ — ​ ​ 674 ​ Loss for the period — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 6,345 ) ​ ​ ( 6,345 ) ​ Balance – May 31, 2026 172,745,639 ​ ​ 228,019 ​ 118 ​ 29,893 ​ 3,942 ​ ( 146,049 ) ​ ​ 115,923 ​ (See accompanying notes to the condensed interim consolidated financial statements) ​ ​ ​ ​ ​ ​ Trilogy Metals Inc. For the Quarter Ended May 31, 2026 5 ​ Table of contents Trilogy Metals Inc. Condensed Interim Consolidated Statements of Cash Flows (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ in thousands of US dollars ​ ​ For the six months ended ​ ​ ​ May 31, 2026 ​ ​ May 31, 2025 ​ ​ ​ ​ ​ ​ $ ​ ​ $ ​ Cash flows used in operating activities ​ ​ ​ ​ ​ ​ Loss for the period ​ ​ ( 13,408 ) ​ ( 5,800 ) ​ Adjustments to reconcile net loss to cash flows used in operating activities ​ ​ ​ ​ ​ ​ Consulting fees settled by common shares ​ ​ — ​ ​ 30 ​ Office lease accounting ​ ​ — ​ ​ 2 ​ Loss on equity investment in Ambler Metals LLC ​ ​ 3,677 ​ ​ 1,345 ​ Loss on derivative carried at fair market value ​ ​ 3,791 ​ — ​ Unrealized foreign exchange gain ​ ​ ( 62 ) ​ ( 3 ) ​ Stock-based compensation ​ ​ 3,770 ​ 2,597 ​ Net change in non-cash working capital ​ ​ ​ ​ ​ ​ Decrease/(increase) in accounts receivable ​ ​ 12 ​ ( 4 ) ​ Decrease in deposits and prepaid amounts ​ ​ 124 ​ 136 ​ (Decrease)/increase in accounts payable and accrued liabilities ​ ​ ( 1,684 ) ​ 272 ​ Total cash flows used in operating activities ​ ​ ( 3,780 ) ​ ( 1,425 ) ​ Cash flows from financing activities ​ ​ ​ ​ ​ ​ Proceeds from issuance of common shares, net of share issue costs ​ ​ 1,164 ​ — ​ Proceeds from exercise of options ​ ​ 276 ​ ​ 202 ​ Total cash flows from financing activities ​ ​ 1,440 ​ 202 ​ Cash flows from investing activities ​ ​ ​ ​ ​ ​ Contribution to Ambler Metals LLC ​ ​ ( 10,500 ) ​ — ​ Total cash used in investing activities ​ ​ ( 10,500 ) ​ — ​ Change in cash ​ ​ ( 12,840 ) ​ ( 1,223 ) ​ Effect of exchange rate on cash ​ ​ 65 ​ 5 ​ Cash – beginning of the period ​ ​ 51,613 ​ 25,834 ​ Cash – end of the period ​ ​ 38,838 ​ 24,616 ​ (See accompanying notes to the condensed interim consolidated financial statements) ​ ​ ​ ​ ​ ​ ​ Trilogy Metals Inc. For the Quarter Ended May 31, 2026 6 ​ Table of contents Trilogy Metals Inc. Notes to the Condensed Interim Consolidated Financial Statements ​ 1) Nature of operations and basis of presentation 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 its equity investee Ambler Metals LLC (“Ambler Metals”), 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. The Company also conducts early-stage exploration through a wholly owned subsidiary, 995 Exploration Inc. 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. and 995 Exploration Inc. All intercompany transactions are eliminated on consolidation. 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, 2025 (“Annual Report on Form 10-K”). 2) Summary of significant accounting policies Investment in Ambler Metals LLC The Company accounts for its investment in Ambler Metals as an investment in associate. For a variable interest entity (“VIE”) where Trilogy is not the primary beneficiary, we use the equity method of accounting. 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 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. This assessment is subjective and requires consideration at each period end. Fair value measurement of derivative liability On October 6, 2025, the Company entered into a binding letter of intent with the U.S. Department of War 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 one common share of the Company and ¾ of a 10 -year warrant. Each full warrant is exercisable to acquire one common share of the Company at a price of $ 0.01 per share. The Company has accounted for the obligation to issue shares and warrants as a derivative financial instrument under ASC 815-40 and initially measured at fair value. Subsequently, at each period end, the derivative liability is re-measured at fair value with changes recorded in the consolidated statement of loss and comprehensive loss. ​ ​ ​ ​ ​ Trilogy Metals Inc. For the Quarter Ended May 31, 2026 7 ​ Table of contents Trilogy Metals Inc. Notes to the Condensed Interim Consolidated Financial Statements ​ Stock-based payments The Company records share-based compensation awards exchanged for employee, director and certain contractor services at fair value on the date of the grant and expenses the awards over the requisite service period. The fair values of stock options are determined at the time of the grant using a Black-Scholes option pricing model, which takes into account, as of the grant date, the fair market value of the shares, expected volatility, expected dividend yield, the risk-free interest rate, and the expected life of the option. The Company’s estimates may be impacted by certain variables including, but not limited to, stock price volatility, employee stock option exercise behaviors, additional stock option grants, and estimates of forfeitures. New accounting pronouncements Issued and Not Effective In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 enhances the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information. 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 is evaluating the impact of ASU 2023-09 on its disclosures in the annual consolidated financial statements. In December 2025, the FASB issued ASU 2025-11 “Interim Reporting (Topic 270): Narrow Scope Improvements” (“ASU 2025-11”), to improve the guidance for interim reporting and clarify when that guidance is applicable. ASU 2025-11 provides a comprehensive list of required disclosures and also requires entities to disclose events since the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. For the Company, the guidance becomes effective in the first interim reporting period of the fiscal period of the fiscal year ended November 30, 2029. Early adoption is permitted. Management is currently evaluating ASU 2025-11 to determine its impact on the Company’s disclosures. ​ 3) Investment in Ambler Metals LLC (a) Formation of Ambler Metals LLC On February 11, 2020, the Company completed the formation of Ambler Metals, a 50 / 50 joint venture with South32 Limited (“South32”). As part of the formation of the joint venture, Trilogy contributed all its assets associated with the UKMP, including the Arctic and Bornite Projects, while South32 contributed cash of $ 145.0 million, resulting in each party’s subsidiaries directly owning a 50 % interest in Ambler Metals. Ambler Metals is a company jointly controlled by Trilogy and South32 through a four -member board, of which two members are appointed by Trilogy based on its 50 % equity interest. All significant decisions related to the UKMP require the approval of both companies. We determined that Ambler Metals is a VIE because it is expected to need additional funding from its owners for its significant activities. However, we concluded that we are not the primary beneficiary of Ambler Metals as the power to direct its activities, through its board, is shared under the Ambler Metals LLC limited liability company agreement. As we have significant influence over Ambler Metals through our representation on its board, we use the equity method of accounting for our investment in Ambler Metals. Our maximum exposure to loss in this entity is limited to the carrying amount of our investment in Ambler Metals, which, as of May 31, 2026, totaled $ 112.1 million (November 30, 2025 - $ 105.3 million). ​ ​ ​ ​ ​ ​ Trilogy Metals Inc. For the Quarter Ended May 31, 2026 8 ​ Table of contents Trilogy Metals Inc. Notes to the Condensed Interim Consolidated Financial Statements ​ (b) Carrying value of equity method investment 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 $ 2.3 million for the three-month period ended May 31, 2026 (2025 - $ 0.8 million) and $ 3.7 million for the six-month period ended May 31, 2026 (2025 - $ 1.3 million). During the six-month period ended May 31, 2026, Trilogy and South32 each contributed $ 10.5 million in cash to Ambler Metals to fund its operations. The carrying value of Trilogy’s 50 % investment in Ambler Metals as at May 31, 2026 is summarized in the following table. ​ ​ ​ ​ ​ ​ in thousands of dollars ​ ​ $ ​ November 30, 2025, Investment in Ambler Metals ​ 105,263 ​ Joint venture equity contribution ​ 10,500 ​ Share of loss on equity investment for the six-month period ended May 31, 2026 ​ ( 3,677 ) ​ May 31, 2026, Investment in Ambler Metals ​ 112,086 ​ ​ (c) The following table provides Ambler Metals’ balances on a 100% basis as at May 31, 2026. 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 ​ ​ May 31, 2026 ​ ​ November 30, 2025 ​ ​ ​ ​ ​ $ ​ ​ $ ​ Cash and cash equivalents ​ 17,394 ​ ​ 3,507 ​ Mineral properties ​ 30,899 ​ ​ 30,899 ​ Other assets ​ 2,987 ​ ​ 1,303 ​ Total assets ​ 51,280 ​ ​ 35,709 ​ ​ ​ ​ ​ ​ ​ ​ Accounts payable and accrued liabilities ​ 2,543 ​ ​ 961 ​ Other liabilities ​ 359 ​ ​ 16 ​ Total liabilities ​ 2,902 ​ ​ 977 ​ ​ ​ ​ ​ ​ ​ ​ Members' equity (total assets less total liabilities) ​ 48,378 ​ ​ 34,732 ​ ​ Ambler Metals’ cash and cash equivalents are held at one bank. The majority of the cash and cash equivalents is uninsured as at May 31, 2026. ​ (d) The following table summarizes Ambler Metals’ loss for the six-month period ended May 31, 2026. ​ ​ ​ ​ ​ in thousands of dollars ​ ​ For the six months ended ​ ​ ​ May 31, 2026 ​ ​ ​ $ ​ Project costs ​ 4,938 ​ Corporate costs ​ 2,368 ​ Other items ​ 48 ​ Comprehensive loss ​ 7,354 ​ ​ ​ ​ ​ ​ ​ Trilogy Metals Inc. For the Quarter Ended May 31, 2026 9 ​ Table of contents Trilogy Metals Inc. Notes to the Condensed Interim Consolidated Financial Statements ​ (e) Related party transactions ​ During the six-month period ended May 31, 2026, the Company charged $ 17,800 (2025 - $ 105,200 ) related to administration services, accounting services and reimbursements of expenditure paid on behalf of Ambler Metals; all in connection with a service agreement between the Company and Ambler Metals. As at May 31, 2026, $ 4,600 remains outstanding and is recorded as a receivable. Subsequent to May 31, 2026, the Company funded an additional $ 6.5 million to Ambler Metals, bringing total funding to $ 17.0 million. ​ 4) Accounts payable and accrued liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ in thousands of dollars ​ ​ May 31, 2026 ​ ​ November 30, 2025 ​ ​ ​ $ ​ ​ $ ​ Trade accounts payable ​ 125 ​ ​ 646 ​ Accrued liabilities 386 ​ 311 ​ Accrued payroll liabilities 135 ​ 1,372 ​ Accounts payable and accrued liabilities 646 ​ 2,329 ​ ​ ​ ​ ​ ​ ​ 5) Leases (a) Right-of-use asset ​ ​ ​ ​ ​ ​ ​ in thousands of dollars ​ ​ $ ​ Balance as at November 30, 2025 ​ 117 ​ Net amortization ​ ( 21 ) ​ Balance as at May 31, 2026 ​ 96 ​ ​ (b) Lease liabilities 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ in thousands of dollars ​ ​ Six months ended ​ ​ Six months ended ​ ​ ​ May 31, 2026 ​ ​ May 31, 2025 ​ ​ ​ $ ​ ​ $ ​ Fixed rent expense ​ 25 ​ ​ 25 ​ Variable rent expense ​ 17 ​ ​ 5 ​ Total lease expense ​ 42 ​ ​ 30 ​ ​ 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. For the six-month period ended May 31, 2025, variable lease costs have been reduced by a refund received for adjusted operating costs. ​ ​ ​ ​ ​ Trilogy Metals Inc. For the Quarter Ended May 31, 2026 10 ​ Table of contents Trilogy Metals Inc. Notes to the Condensed Interim Consolidated Financial Statements ​ As at May 31, 2026, the remaining lease term is 2.0 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 six-month period ended May 31, 2026, is as follows: ● Cash paid for base rent included in the measurement of lease liabilities was approximately $ 24,500 . ​ Future minimum payments relating to the lease recognized in our balance sheet as of May 31, 2026 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ in thousands of dollars ​ ​ May 31, 2026 Fiscal year ​ $ ​ 2026 25 ​ 2027 50 ​ 2028 25 ​ Total undiscounted lease payments 100 ​ Effect of discounting ( 8 ) ​ Present value of lease payments recognized as lease liability 92 ​ Less: current portion of lease liability ​ ( 44 ) ​ Long-term portion of lease liability ​ 48 ​ ​ ​ 6) Share capital Authorized: unlimited common shares, no par value ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ in thousands of dollars, except share amounts ​ ​ ​ ​ ​ Number of shares ​ ​ $ ​ November 30, 2025 171,069,888 ​ ​ 225,241 ​ At-the-market offering, net of share issue costs ​ 174,410 ​ ​ 1,164 ​ Exercise of options ​ 253,334 ​ ​ 404 ​ Shares issued from restricted share units ​ 1,248,007 ​ ​ 1,210 ​ May 31, 2026, issued and outstanding ​ 172,745,639 ​ ​ 228,019 ​ ​ On November 7, 2025, the Company entered into an equity distribution agreement with Cantor Fitzgerald & Co. and BMO Capital Markets Corp., as lead agents (the “Lead Agents”), and Canaccord Genuity LLC, National Bank of Canada Financial Inc. and Raymond James (USA) Ltd. (together with the Lead Agents, the “Agents”), for an at-the-market equity program pursuant to which the Company may offer and issue up to $ 200 million of common shares of the Company from time to time through the Agents (the “Nov ATM Program”). The offering is being made in the United States under the terms of the Company’s registration statement on Form S-3 filed with the SEC (“November Prospectus Supplement”). No sales of common shares under this November Prospectus Supplement will be made in Canada, to anyone known by the Agents to be a resident of Canada or over or through the facilities of the TSX or any other exchange or market in Canada. ​ ​ ​ ​ ​ Trilogy Metals Inc. For the Quarter Ended May 31, 2026 11 ​ Table of contents Trilogy Metals Inc. Notes to the Condensed Interim Consolidated Financial Statements ​ During the three-month period ended February 28, 2026, the Company issued 174,410 common shares under its Nov ATM Program, resulting in gross proceeds of $ 1.19 million at an average price of $ 6.83 per share. After deducting commissions, the Company received net proceeds of $ 1.16 million. No shares were issued under its Nov ATM Program during the three-month ended May 31, 2026. (a) Stock options During the three-month period ended February 28, 2026, the Company granted 1,655,000 stock options (2025 - 2,125,000 stock options) at a weighted exercise price of CDN$ 6.53 (2025 - CDN$ 1.52 ) to employees, consultants and directors exercisable for a period of five years with various vesting terms from immediate vesting to vesting over a two-year period. The fair value attributable to option grants was $ 2.49 (2025 - $ 0.59 ). No grants were made during the three-month periods ended May 31, 2026 and 2025. 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 stock options granted in the six-month period ended May 31, 2026 are as provided below. ​ ​ ​ ​ ​ ​ ​ ​ Weighted average Risk-free interest rates 2.58 % Exercise price CDN$ 6.53 Expected life 3 years Expected volatility 79.1 % Expected dividends Nil ​ The Company recognized a stock option expense of $ 0.5 million for the three-month period ended May 31, 2026 (2025 - $ 0.1 million) and $ 2.7 million for the six-month period ended May 31, 2026 (2025 - $ 0.9 million), net of forfeitures. As at May 31, 2026, there were 1,435,005 unvested stock options outstanding with a weighted average exercise price of CDN$ 4.67 . The unvested stock option expense not yet recognized was $ 1.6 million. This expense is expected to be recognized over the next nineteen months . A summary of the Company’s stock options outstanding and changes during the six-month period ended May 31, 2026 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average ​ ​ ​ ​ ​ ​ exercise price ​ ​ ​ ​ ​ Number of options ​ ​ CDN$ ​ Balance – beginning of the year 8,433,584 ​ ​ 1.11 ​ Granted 1,655,000 ​ ​ 6.53 ​ Exercised ( 253,334 ) ​ ​ 1.49 ​ Balance – end of the period 9,835,250 ​ ​ 2.01 ​ ​ ​ ​ ​ ​ ​ Trilogy Metals Inc. For the Quarter Ended May 31, 2026 12 ​ Table of contents Trilogy Metals Inc. Notes to the Condensed Interim Consolidated Financial Statements ​ During the six-month period ended May 31, 2026, the Company issued 253,334 common shares (2025 – 350,000 ) of the Company on the exercise of stock options with a weighted average price of CDN$ 1.49 per share. Upon exercise of these stock options, $ 0.1 million was reclassified from additional paid-in capital related to stock-based compensation to common stock. The following table summarizes information about the stock options outstanding at May 31, 2026. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ $ 0.59 to $ 1.00 5,115,000 ​ ​ 2.00 ​ ​ 0.69 ​ ​ 5,115,000 ​ ​ 2.00 ​ ​ — ​ $ 1.01 to $ 2.00 1,935,000 ​ ​ 3.52 ​ ​ 1.52 ​ ​ 1,393,332 ​ ​ 3.52 ​ ​ 541,668 ​ $ 2.01 to $ 3.00 ​ 1,130,250 ​ ​ 0.52 ​ ​ 2.21 ​ ​ 1,130,250 ​ ​ 0.52 ​ ​ — ​ $ 3.01 to $ 7.85 ​ 1,655,000 ​ ​ 4.55 ​ ​ 6.53 ​ ​ 761,663 ​ ​ 4.54 ​ ​ 893,337 ​ ​ ​ 9,835,250 ​ ​ 2.56 ​ ​ 2.01 ​ ​ 8,400,245 ​ ​ 2.28 ​ ​ 1,435,005 ​ ​ The aggregate intrinsic value of vested stock options (the market value less the exercise price) at May 31, 2026 was $ 29.6 million (2025 - $ 4.0 million) and the aggregate intrinsic value of exercised stock options for the six-month period ended May 31, 2026 was $ 0.9 million (2025 - $ 0.3 million). (b) Restricted Share Units and Deferred Share Units The Company has a Restricted Share Unit Plan (the “RSU Plan”) to provide long-term incentives to employees and consultants, a Non-Executive Director Deferred Share Unit Plan and a Non-Executive Directors Fixed Deferred Share Unit Plan (together, the “DSU Plans”) to offset cash payments for fees to directors. Awards under the RSU Plan and DSU Plans 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. A summary of the Company’s unit plans and changes during the six-month period ended May 31, 2026 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of RSUs ​ ​ Number of DSUs ​ Balance – beginning of the year ​ 1,798,338 ​ 3,560,305 ​ Granted 301,339 ​ ​ 20,557 ​ Settled in common shares ( 1,248,007 ) ​ ​ — ​ Balance – end of the period 851,670 ​ 3,580,862 ​ ​ During the six-month period ended May 31, 2026, the Company issued 1,248,007 common shares to settle previously granted and vested RSUs to employees and consultants. For the three-month period ended May 31, 2026, the Company recognized a combined RSU and DSU stock-based compensation charge of $ 0.2 million (2025 - $ 0.2 million) and $ 1.0 million for the six-month period ended May 31, 2026 (2025 - $ 1.6 million), net of estimated forfeitures. ​ ​ ​ ​ ​ Trilogy Metals Inc. For the Quarter Ended May 31, 2026 13 ​ Table of contents Trilogy Metals Inc. Notes to the Condensed Interim Consolidated Financial Statements ​ 7) Fair value accounting Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the significance of the inputs used in making the measurement. The three levels of the fair value hierarchy are as follows: Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 – Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and 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’s financial instruments consist of cash and cash equivalents, accounts receivable, deposits, and accounts payable and accrued liabilities and the derivative liability. The fair value of the Company’s financial instruments other than derivative liability 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. The majority of the Company’s cash and cash equivalents is held with two Canadian Financial Institutions and is uninsured as at May 31, 2026. The derivative liability representing the Company’s obligation to issue shares and warrants to the U.S. Department of War 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 at May 31, 2026 of $ 34.5 million (November 2025 - $ 30.7 million) is based on the Company’s common stock price of $ 4.63 at that date, volatility of 82.07 %, a risk-free rate of 3.63 % 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. During the six-month ended May 31, 2026, the Company recorded a fair value loss of $ 3.8 million primarily reflecting a small increase in the Company’s share price in the period. A 10 % change in the Company’s stock price affects the gain or loss on the derivative liability by approximately $ 5.2 million at May 31, 2026. A 10 % change in management’s estimate of the likelihood of completion affects the gain or loss on the derivative liability by approximately $ 1.4 million at May 31, 2026. On March 30, 2026, the Company, South32, Ambler Metals and the United States Department of War agreed to enter into an amendment to the previously disclosed binding letter of intent (“LOI”) dated October 6, 2025. The first amendment extended the completion date of the transaction from March 31, 2026 to May 31, 2026. On May 30, 2026, the parties entered into a second amendment to extend the completion date of the transaction from May 31, 2025 to July 31, 2026. All other terms and conditions of the original LOI remain unchanged. 8) Commitment The Company has commitments with respect to an office lease requiring future minimum lease payments as summarized in note 5(b) above. ​ ​ ​ ​ ​ ​ Trilogy Metals Inc. For the Quarter Ended May 31, 2026 14 ​ Table of contents Trilogy Metals Inc. Notes to the Condensed Interim Consolidated Financial Statements ​ 9) Supplemental cash flow information ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ in thousands of dollars ​ ​ ​ ​ Six months ended ​ ​ Six months ended ​ ​ May 31, 2026 ​ ​ May 31, 2025 ​ ​ $ ​ ​ $ Interest received ​ 822 ​ ​ 433 ​ ​ ​ 10) 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, 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ Trilogy Metals Inc. For the Quarter Ended May 31, 2026 15 ​ Table of contents